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Accenture plc - Quarter Report: 2019 November (Form 10-Q)



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________ 
FORM 10-Q
☑
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended
November 30, 2019
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from             to            

Commission File Number: 001-34448

Accenture plc
(Exact name of registrant as specified in its charter)
Ireland
98-0627530
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
1 Grand Canal Square,
Grand Canal Harbour,
Dublin 2, Ireland
(Address of principal executive offices)
(353) (1) 646-2000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A ordinary shares, par value $0.0000225 per share
ACN
New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☑
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ
The number of shares of the registrant’s Class A ordinary shares, par value $0.0000225 per share, outstanding as of December 2, 2019 was 656,946,050 (which number includes 21,902,507 issued shares held by the registrant). The number of shares of the registrant’s Class X ordinary shares, par value $0.0000225 per share, outstanding as of December 2, 2019 was 593,689.



ACCENTURE PLC
INDEX
 
 
 
Page

2


PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ACCENTURE PLC
CONSOLIDATED BALANCE SHEETS
November 30, 2019 and August 31, 2019
(In thousands of U.S. dollars, except share and per share amounts)
 
November 30,
2019
 
August 31,
2019
 
(Unaudited)
 
 
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
5,810,537

 
$
6,126,853

Short-term investments
3,303

 
3,313

Receivables and contract assets
8,577,386

 
8,095,071

Other current assets
1,214,878

 
1,225,364

Total current assets
15,606,104

 
15,450,601

NON-CURRENT ASSETS:
 
 
 
Contract assets
58,071

 
71,002

Investments
278,765

 
240,313

Property and equipment, net
1,386,440

 
1,391,166

Lease assets
3,154,501

 
—

Goodwill
6,300,004

 
6,205,550

Deferred contract costs
691,727

 
681,492

Deferred tax assets
4,300,909

 
4,349,464

Other non-current assets
1,394,191

 
1,400,292

Total non-current assets
17,564,608

 
14,339,279

TOTAL ASSETS
$
33,170,712

 
$
29,789,880

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 
Current portion of long-term debt and bank borrowings
$
3,698

 
$
6,411

Accounts payable
1,581,112

 
1,646,641

Deferred revenues
2,986,524

 
3,188,835

Accrued payroll and related benefits
4,652,038

 
4,890,542

Income taxes payable
448,010

 
378,017

Lease liabilities
710,787

 
—

Other accrued liabilities
817,239

 
951,450

Total current liabilities
11,199,408

 
11,061,896

NON-CURRENT LIABILITIES:
 
 
 
Long-term debt
15,935

 
16,247

Deferred revenues
585,301

 
565,224

Retirement obligation
1,784,347

 
1,765,914

Deferred tax liabilities
144,659

 
133,232

Income taxes payable
905,952

 
892,688

Lease liabilities
2,651,651

 
—

Other non-current liabilities
282,251

 
526,988

Total non-current liabilities
6,370,096

 
3,900,293

COMMITMENTS AND CONTINGENCIES

 

SHAREHOLDERS’ EQUITY:
 
 
 
Ordinary shares, par value 1.00 euros per share, 40,000 shares authorized and issued as of November 30, 2019 and August 31, 2019
57

 
57

Class A ordinary shares, par value $0.0000225 per share, 20,000,000,000 shares authorized, 656,946,050 and 654,739,267 shares issued as of November 30, 2019 and August 31, 2019, respectively
15

 
15

Class X ordinary shares, par value $0.0000225 per share, 1,000,000,000 shares authorized, 593,689 and 609,404 shares issued and outstanding as of November 30, 2019 and August 31, 2019, respectively
—

 
—

Restricted share units
1,525,898

 
1,411,903

Additional paid-in capital
6,162,252

 
5,804,448

Treasury shares, at cost: Ordinary, 40,000 shares as of November 30, 2019 and August 31, 2019; Class A ordinary, 21,950,289 and 18,964,863 shares as of November 30, 2019 and August 31, 2019, respectively
(1,977,391
)
 
(1,388,376
)
Retained earnings
11,236,275

 
10,421,538

Accumulated other comprehensive loss
(1,779,968
)
 
(1,840,577
)
Total Accenture plc shareholders’ equity
15,167,138

 
14,409,008

Noncontrolling interests
434,070

 
418,683

Total shareholders’ equity
15,601,208

 
14,827,691

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
33,170,712

 
$
29,789,880


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

3


ACCENTURE PLC
CONSOLIDATED INCOME STATEMENTS
For the Three Months Ended November 30, 2019 and 2018
(In thousands of U.S. dollars, except share and per share amounts)
(Unaudited)
 
2019
 
2018
REVENUES:
 
 
 
Revenues
$
11,358,958

 
$
10,605,546

OPERATING EXPENSES:
 
 
 
Cost of services
7,711,199

 
7,308,121

Sales and marketing
1,191,123

 
1,070,016

General and administrative costs
689,373

 
598,397

Total operating expenses
9,591,695

 
8,976,534

OPERATING INCOME
1,767,263

 
1,629,012

Interest income
27,419

 
19,631

Interest expense
(5,474
)
 
(4,505
)
Other income (expense), net
11,439

 
(33,654
)
INCOME BEFORE INCOME TAXES
1,800,647

 
1,610,484

Income tax expense
425,479

 
319,160

NET INCOME
1,375,168

 
1,291,324

Net income attributable to noncontrolling interest in Accenture Canada Holdings Inc.
(1,741
)
 
(1,888
)
Net income attributable to noncontrolling interests – other
(16,459
)
 
(14,716
)
NET INCOME ATTRIBUTABLE TO ACCENTURE PLC
$
1,356,968

 
$
1,274,720

Weighted average Class A ordinary shares:
 
 
 
Basic
635,722,309

 
638,877,445

Diluted
649,389,444

 
652,151,450

Earnings per Class A ordinary share:
 
 
 
Basic
$
2.13

 
$
2.00

Diluted
$
2.09

 
$
1.96

Cash dividends per share
$
0.80

 
$
1.46


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

4


ACCENTURE PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three Months Ended November 30, 2019 and 2018
(In thousands of U.S. dollars)
(Unaudited)
 
2019
 
2018
NET INCOME
$
1,375,168

 
$
1,291,324

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
 
 
 
Foreign currency translation
37,730

 
(8,617
)
Defined benefit plans
8,752

 
20,413

Cash flow hedges
14,127

 
88,344

Investments
—

 
(515
)
OTHER COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ACCENTURE PLC
60,609

 
99,625

Other comprehensive income (loss) attributable to noncontrolling interests
1,180

 
(2,296
)
COMPREHENSIVE INCOME
$
1,436,957

 
$
1,388,653




 


COMPREHENSIVE INCOME ATTRIBUTABLE TO ACCENTURE PLC
$
1,417,577

 
$
1,374,345

Comprehensive income attributable to noncontrolling interests
19,380

 
14,308

COMPREHENSIVE INCOME
$
1,436,957

 
$
1,388,653


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


5


ACCENTURE PLC
CONSOLIDATED SHAREHOLDERS’ EQUITY STATEMENT
For the Three Months Ended November 30, 2019
(In thousands of U.S. dollars and share amounts)
(Unaudited)
 
Ordinary
Shares
 
Class A
Ordinary
Shares
 
Class X
Ordinary
Shares
 
Restricted
Share
Units
 
Additional
Paid-in
Capital
 
Treasury Shares
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Loss
 
Total
Accenture plc
Shareholders’
Equity
 
Noncontrolling
Interests
 
Total
Shareholders’
Equity
 
$
 
No.
Shares
 
$
 
No.
Shares
 
$
 
No.
Shares
 
 
 
$
 
No.
Shares
 
 
 
 
 
Balance as of August 31, 2019
$
57

 
40

 
$
15

 
654,739

 
$
—

 
609

 
$
1,411,903

 
$
5,804,448

 
$
(1,388,376
)
 
(19,005
)
 
$
10,421,538

 
$
(1,840,577
)
 
$
14,409,008

 
$
418,683

 
$
14,827,691

Net income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,356,968

 
 
 
1,356,968

 
18,200

 
1,375,168

Other comprehensive income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
60,609

 
60,609

 
1,180

 
61,789

Purchases of Class A shares
 
 
 
 
 
 
 
 
 
 
 
 
 
 
811

 
(724,618
)
 
(3,821
)
 
 
 
 
 
(723,807
)
 
(811
)
 
(724,618
)
Share-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
238,677

 
36,252

 
 
 
 
 
 
 
 
 
274,929

 
 
 
274,929

Purchases/redemptions of Accenture Canada Holdings Inc. exchangeable shares and Class X shares
 
 
 
 
 
 
 
 
 
 
(15
)
 
 
 
(4,593
)
 
 
 
 
 
 
 
 
 
(4,593
)
 
 
 
(4,593
)
Issuances of Class A shares for employee share programs
 
 
 
 
 
 
2,207

 
 
 
 
 
(142,925
)
 
323,660

 
135,603

 
836

 
(16,263
)
 
 
 
300,075

 
325

 
300,400

Dividends
 
 
 
 
 
 
 
 
 
 
 
 
18,243

 
 
 
 
 
 
 
(525,968
)
 
 
 
(507,725
)
 
(656
)
 
(508,381
)
Other, net
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,674

 
 
 
 
 
 
 
 
 
1,674

 
(2,851
)
 
(1,177
)
Balance as of November 30, 2019
$
57

 
40

 
$
15

 
656,946

 
$
—

 
594

 
$
1,525,898

 
$
6,162,252

 
$
(1,977,391
)
 
(21,990
)
 
$
11,236,275

 
$
(1,779,968
)
 
$
15,167,138

 
$
434,070

 
$
15,601,208


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

6


ACCENTURE PLC
CONSOLIDATED SHAREHOLDERS’ EQUITY STATEMENT
For the Three Months Ended November 30, 2018
(In thousands of U.S. dollars and share amounts)
(Unaudited)
 
Ordinary
Shares
 
Class A
Ordinary
Shares
 
Class X
Ordinary
Shares
 
Restricted
Share
Units
 
Additional
Paid-in
Capital
 
Treasury Shares
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Loss
 
Total
Accenture plc
Shareholders’
Equity
 
Noncontrolling
Interests
 
Total
Shareholders’
Equity
 
$
 
No.
Shares
 
$
 
No.
Shares
 
$
 
No.
Shares
 
 
 
$
 
No.
Shares
 
 
 
 
 
Balance as of August 31, 2018
$
57

 
40

 
$
15

 
663,328

 
$
—

 
656

 
$
1,234,623

 
$
4,870,764

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

 
$
(1,576,171
)
 
$
10,364,753

 
$
359,835

 
$
10,724,588

Cumulative effect adjustment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,134,818

 
 
 
2,134,818

 
3,158

 
2,137,976

Net income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,274,720

 
 
 
1,274,720

 
16,604

 
1,291,324

Other comprehensive income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
99,625

 
99,625

 
(2,296
)
 
97,329

Purchases of Class A shares
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,026

 
(787,508
)
 
(4,861
)
 
 
 
 
 
(786,482
)
 
(1,026
)
 
(787,508
)
Share-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
214,713

 
31,803

 
 
 
 
 
 
 
 
 
246,516

 
 
 
246,516

Purchases/redemptions of Accenture Canada Holdings Inc. exchangeable shares and Class X shares
 
 
 
 
 
 
 
 
 
 
(5
)
 
 
 
(819
)
 
 
 
 
 
 
 
 
 
(819
)
 


 
(819
)
Issuances of Class A shares for employee share programs
 
 
 
 
 
 
2,213

 
 
 
 
 
(133,965
)
 
277,039

 
156,008

 
988

 
(33,244
)
 
 
 
265,838

 
344

 
266,182

Dividends
 
 
 
 
 
 

 
 
 
 
 
27,594

 


 
 
 
 
 
(959,054
)
 
 
 
(931,460
)
 
(1,378
)
 
(932,838
)
Other, net
 
 
 
 
 
 


 
 
 
 
 
 
 
(3,064
)
 
 
 
 
 
14,411

 
 
 
$
11,347

 
$
1,471

 
$
12,818

Balance as of November 30, 2018
$
57

 
40

 
$
15

 
665,541

 
$
—

 
651

 
$
1,342,965

 
$
5,176,749

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

 
$
(1,476,546
)
 
$
12,678,856

 
$
376,712

 
$
13,055,568


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


7


ACCENTURE PLC
CONSOLIDATED CASH FLOWS STATEMENTS
For the Three Months Ended November 30, 2019 and 2018
(In thousands of U.S. dollars)
(Unaudited)
 
2019
 
2018
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$
1,375,168

 
$
1,291,324

Adjustments to reconcile Net income to Net cash provided by (used in) operating activities —
 
 
 
Depreciation, amortization and other
399,458

 
211,685

Share-based compensation expense
274,929

 
246,516

Deferred tax expense (benefit)
36,591

 
(2,634
)
Other, net
(120,927
)
 
(42,244
)
Change in assets and liabilities, net of acquisitions —
 
 
 
Receivables and contract assets, current and non-current
(436,872
)
 
(536,882
)
Other current and non-current assets
(101,096
)
 
(155,787
)
Accounts payable
(61,929
)
 
(14,487
)
Deferred revenues, current and non-current
(185,313
)
 
13,280

Accrued payroll and related benefits
(261,592
)
 
81,117

Income taxes payable, current and non-current
84,840

 
(47,554
)
Other current and non-current liabilities
(216,346
)
 
(16,826
)
Net cash provided by (used in) operating activities
786,911

 
1,027,508

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Purchases of property and equipment
(95,063
)
 
(77,691
)
Purchases of businesses and investments, net of cash acquired
(109,848
)
 
(200,417
)
Proceeds from sales of businesses and investments
39,200

 
441

Other investing, net
(182
)
 
4,799

Net cash provided by (used in) investing activities
(165,893
)
 
(272,868
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Proceeds from issuance of shares
300,400

 
266,182

Purchases of shares
(729,211
)
 
(788,327
)
Proceeds from (repayments of) long-term debt, net
(570
)
 
(369
)
Cash dividends paid
(508,381
)
 
(932,838
)
Other, net
(10,462
)
 
(6,816
)
Net cash provided by (used in) financing activities
(948,224
)
 
(1,462,168
)
Effect of exchange rate changes on cash and cash equivalents
10,890

 
9,958

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(316,316
)
 
(697,570
)
CASH AND CASH EQUIVALENTS, beginning of period
6,126,853

 
5,061,360

CASH AND CASH EQUIVALENTS, end of period
$
5,810,537

 
$
4,363,790

SUPPLEMENTAL CASH FLOW INFORMATION:
 
 
 
Income taxes paid, net
$
292,787

 
$
297,166

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

8
ACCENTURE PLC

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



1. BASIS OF PRESENTATION
The accompanying unaudited interim Consolidated Financial Statements of Accenture plc and its controlled subsidiary companies have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. We use the terms “Accenture,” “we” and “our” in the Notes to Consolidated Financial Statements to refer to Accenture plc and its subsidiaries. These Consolidated Financial Statements should therefore be read in conjunction with the Consolidated Financial Statements and Notes thereto for the fiscal year ended August 31, 2019 included in our Annual Report on Form 10-K filed with the SEC on October 29, 2019.
The accompanying unaudited interim Consolidated Financial Statements have been prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions that we may undertake in the future, actual results may differ from those estimates. The Consolidated Financial Statements reflect all adjustments of a normal, recurring nature that are, in the opinion of management, necessary for a fair presentation of results for these interim periods. The results of operations for the three months ended November 30, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending August 31, 2020.
Allowances for Client Receivables
As of November 30, 2019 and August 31, 2019, total allowances recorded for client receivables were $45,016 and $45,538, respectively.
Depreciation and Amortization
Depreciation expense was $97,090 and $102,713 for the three months ended November 30, 2019 and 2018, respectively. As of November 30, 2019 and August 31, 2019, total accumulated depreciation was $2,096,462 and $1,956,029, respectively. Deferred transition amortization expense was $67,914 and $68,879 for the three months ended November 30, 2019 and 2018, respectively. See Note 6 (Goodwill and Intangible Assets) to these Consolidated Financial Statements for intangible asset amortization balances.

9
ACCENTURE PLC

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


Recently Adopted Accounting Pronouncements
Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2016-02 and related updates (“Topic 842”)
On September 1, 2019, we adopted FASB ASU No. 2016-02, Leases, and related updates (“Topic 842”) using the effective date method. Prior period amounts were not adjusted. The primary impact of adoption is the requirement for lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by both operating and finance leases. Enhanced quantitative and qualitative disclosures about leasing arrangements are also required. We elected the package of practical expedients which does not require reassessment of prior conclusions related to identifying leases, lease classification or initial direct costs. We also elected the practical expedient to combine lease and nonlease components, accounting for the combined components as a single lease component, for our office real estate and automobile leases. The standard did not have a material impact on our Consolidated Income Statement.
The impact of adopting Topic 842 on our Consolidated Balance Sheets was as follows:
Balance Sheet
Balance as of August 31, 2019
 
Adjustments due to ASU 2016-02 (Topic 842)
 
Balance as of September 1, 2019
CURRENT ASSETS
 
 
 
 
 
Other current assets
$
1,225,364

 
$
(38,666
)
 
$
1,186,698

NON-CURRENT ASSETS
 
 
 
 
 
Lease assets
—

 
3,169,608

 
3,169,608

Other non-current assets
1,400,292

 
(10,333
)
 
1,389,959

CURRENT LIABILITIES
 
 
 
 
 
Lease liabilities
—

 
699,399

 
699,399

Other accrued liabilities
951,450

 
(703
)
 
950,747

NON-CURRENT LIABILITIES
 
 
 
 
 
Lease liabilities
—

 
2,666,344

 
2,666,344

Other non-current liabilities
526,988

 
(244,431
)
 
282,557


See Note 7 (Leases) to these Consolidated Financial Statements for further details.
FASB ASU No. 2018-09 (“Subtopic 350-40”)
On September 1, 2019, we prospectively adopted FASB ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. ASU 2018-15 clarifies and aligns the accounting and capitalization of implementation costs in cloud computing arrangements that are service arrangements with the accounting for implementation costs incurred to develop or obtain internal-use software under ASC No. 350-40. Implementation costs that are currently capitalized in software licensing arrangements (e.g. costs to configure the software) will be capitalized in cloud computing arrangements, and costs expensed in software license arrangements (e.g. data conversion, training, and business process re-engineering) will be expensed in cloud computing arrangements. The adoption did not have a material impact on our Consolidated Financial Statements.





10
ACCENTURE PLC

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


2. REVENUES
Disaggregation of Revenue
See Note 12 (Segment Reporting) to these Consolidated Financial Statements for our disaggregated revenues.
Remaining Performance Obligations
We had remaining performance obligations of approximately $19 billion and $20 billion as of November 30, 2019 and August 31, 2019, respectively. Our remaining performance obligations represent the amount of transaction price for which work has not been performed and revenue has not been recognized. The majority of our contracts are terminable by the client on short notice with little or no termination penalties, and some without notice. Under Topic 606, only the non-cancelable portion of these contracts is included in our performance obligations. Additionally, our performance obligations only include variable consideration if we assess it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty is resolved. Based on the terms of our contracts, a significant portion of what we consider contract bookings is not included in our remaining performance obligations. We expect to recognize approximately 61% of our remaining performance obligations as of November 30, 2019 as revenue in fiscal 2020, an additional 19% in fiscal 2021, and the balance thereafter.
Contract Estimates
Adjustments in contract estimates related to performance obligations satisfied or partially satisfied in prior periods were immaterial for the three months ended November 30, 2019 and 2018, respectively.
Contract Balances
Deferred transition revenues were $583,531 and $563,245 as of November 30, 2019 and August 31, 2019, respectively, and are included in Non-current deferred revenues. Costs related to these activities are also deferred and are expensed as the services are provided. Generally, deferred amounts are protected in the event of early termination of the contract and are monitored regularly for impairment. Impairment losses are recorded when projected remaining undiscounted operating cash flows of the related contract are not sufficient to recover the carrying amount of contract assets. Deferred transition costs were $691,727 and $681,492 as of November 30, 2019 and August 31, 2019, respectively, and are included in Deferred contract costs.
The following table provides information about the balances of our Receivables, Contract assets and Contract liabilities (Deferred revenues):
 
As of November 30, 2019
 
As of August 31, 2019
Receivables, net of allowance
$
7,908,781

 
$
7,467,338

Contract assets (current)
668,605

 
627,733

Receivables and contract assets (current)
8,577,386

 
8,095,071

Contract assets (non-current)
58,071

 
71,002

Deferred revenues (current)
2,986,524

 
3,188,835

Deferred revenues (non-current)
585,301

 
565,224


Changes in the contract asset and liability balances during the three months ended November 30, 2019, were a result of normal business activity and not materially impacted by any other factors.
Revenues recognized during the three months ended November 30, 2019 that were included in Deferred revenues as of August 31, 2019 were $1.8 billion. Revenues recognized during the three months ended November 30, 2018 that were included in Deferred revenues as of September 1, 2018 were $1.8 billion.

11
ACCENTURE PLC

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


3. EARNINGS PER SHARE
Basic and diluted earnings per share were calculated as follows:
 
Three Months Ended
 
November 30, 2019
 
November 30, 2018
Basic earnings per share
 
 
 
Net income attributable to Accenture plc
$
1,356,968

 
$
1,274,720

Basic weighted average Class A ordinary shares
635,722,309

 
638,877,445

Basic earnings per share
$
2.13

 
$
2.00

Diluted earnings per share
 
 
 
Net income attributable to Accenture plc
$
1,356,968

 
$
1,274,720

Net income attributable to noncontrolling interest in Accenture Canada Holdings Inc. (1)
1,741

 
1,888

Net income for diluted earnings per share calculation
$
1,358,709

 
$
1,276,608

Basic weighted average Class A ordinary shares
635,722,309

 
638,877,445

Class A ordinary shares issuable upon redemption/exchange of noncontrolling interest (1)
815,515

 
945,336

Diluted effect of employee compensation related to Class A ordinary shares
12,626,225

 
12,093,353

Diluted effect of share purchase plans related to Class A ordinary shares
225,395

 
235,316

Diluted weighted average Class A ordinary shares
649,389,444

 
652,151,450

Diluted earnings per share
$
2.09

 
$
1.96

_______________
(1)
Diluted earnings per share assumes the exchange of all Accenture Canada Holdings Inc. exchangeable shares for Accenture plc Class A ordinary shares on a one-for-one basis. The income effect does not take into account “Net income attributable to noncontrolling interests - other,” since those shares are not redeemable or exchangeable for Accenture plc Class A ordinary shares.



12
ACCENTURE PLC

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


4. ACCUMULATED OTHER COMPREHENSIVE LOSS
The following table summarizes the changes in the accumulated balances for each component of accumulated other comprehensive loss attributable to Accenture plc:
 
Three Months Ended
 
November 30, 2019
 
November 30, 2018
Foreign currency translation
 
 
 
    Beginning balance
$
(1,207,975
)
 
$
(1,075,268
)
             Foreign currency translation
40,145

 
(12,396
)
             Income tax benefit (expense)
(1,264
)
 
1,324

             Portion attributable to noncontrolling interests
(1,151
)
 
2,455

             Foreign currency translation, net of tax
37,730

 
(8,617
)
    Ending balance
(1,170,245
)
 
(1,083,885
)
 
 
 
 
Defined benefit plans
 
 
 
    Beginning balance
(672,323
)
 
(419,284
)
             Reclassifications into net periodic pension and
post-retirement expense (1)
12,784

 
22,894

             Income tax benefit (expense)
(4,021
)
 
(2,451
)
             Portion attributable to noncontrolling interests
(11
)
 
(30
)
             Defined benefit plans, net of tax
8,752

 
20,413

    Ending balance
(663,571
)
 
(398,871
)
 
 
 
 
Cash flow hedges
 
 
 
    Beginning balance
38,993

 
(84,010
)
             Unrealized gain (loss)
38,408

 
115,678

             Reclassification adjustments into Cost of services
(20,019
)
 
1,878

             Income tax benefit (expense)
(4,244
)
 
(29,082
)
             Portion attributable to noncontrolling interests
(18
)
 
(130
)
             Cash flow hedges, net of tax
14,127

 
88,344

    Ending balance (2)
53,120

 
4,334

 
 
 
 
Investments
 
 
 
    Beginning balance
728

 
2,391

             Unrealized gain (loss)
—

 
(516
)
             Portion attributable to noncontrolling interests
—

 
1

             Investments, net of tax
—

 
(515
)
    Ending balance
728

 
1,876

 
 
 
 
Accumulated other comprehensive loss
$
(1,779,968
)
 
$
(1,476,546
)
_______________
(1)
Reclassifications into net periodic pension and post-retirement expense are recognized in Cost of services, Sales and marketing, General and administrative costs and non-operating expenses.
(2)
As of November 30, 2019, $49,723 of net unrealized gains related to derivatives designated as cash flow hedges is expected to be reclassified into Cost of services in the next twelve months.

13
ACCENTURE PLC

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


5. BUSINESS COMBINATIONS
During the three months ended November 30, 2019, we completed individually immaterial acquisitions for total consideration of $97,028, net of cash acquired. The pro forma effects of these acquisitions on our operations were not material.
6. GOODWILL AND INTANGIBLE ASSETS
Goodwill
The changes in the carrying amount of goodwill by reportable operating segment were as follows:
 
August 31,
2019
 
Additions/
Adjustments
 
Foreign
Currency
Translation
 
November 30,
2019
Communications, Media & Technology
$
992,743

 
$
19,381

 
$
4,577

 
$
1,016,701

Financial Services
1,393,628

 
(1,027
)
 
8,736

 
1,401,337

Health & Public Service
1,005,428

 
27,076

 
3,014

 
1,035,518

Products
2,328,317

 
19,355

 
10,526

 
2,358,198

Resources
485,434

 
381

 
2,435

 
488,250

Total
$
6,205,550

 
$
65,166

 
$
29,288

 
$
6,300,004


Goodwill includes immaterial adjustments related to prior period acquisitions.
Intangible Assets
Our definite-lived intangible assets by major asset class were as follows:
 
 
August 31, 2019
 
November 30, 2019
Intangible Asset Class
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Customer-related
 
$
1,013,976

 
$
(358,130
)
 
$
655,846

 
$
1,053,237

 
$
(398,751
)
 
$
654,486

Technology
 
119,686

 
(45,851
)
 
73,835

 
111,510

 
(42,838
)
 
68,672

Patents
 
127,796

 
(66,167
)
 
61,629

 
127,552

 
(65,833
)
 
61,719

Other
 
78,344

 
(28,875
)
 
49,469

 
76,985

 
(32,555
)
 
44,430

Total
 
$
1,339,802

 
$
(499,023
)
 
$
840,779

 
$
1,369,284

 
$
(539,977
)
 
$
829,307


Total amortization related to our intangible assets was $53,372 and $40,093 for the three months ended November 30, 2019 and 2018, respectively. Estimated future amortization related to intangible assets held as of November 30, 2019 is as follows:
Fiscal Year
 
Estimated Amortization
Remainder of 2020
 
$
145,127

2021
 
158,646

2022
 
137,918

2023
 
123,029

2024
 
98,037

Thereafter
 
166,550

Total
 
$
829,307



14
ACCENTURE PLC

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


7. LEASES
We account for leases in accordance with Topic 842. See Note 1 (Basis of Presentation) to these Consolidated Financial Statements for further information on our adoption.
As a lessee, substantially all of our lease obligation is for office real estate. Our significant judgments used in determining our lease obligation include whether a contract is or contains a lease and the determination of the discount rate used to calculate the lease liability.
Our leases may include the option to extend or terminate before the end of the contractual term and are often non-cancelable or cancelable only by the payment of penalties. Our lease assets and liabilities include these options in the lease term when it is reasonably certain that they will be exercised. In certain cases, we sublease excess office real estate to third-party tenants.
Lease assets and liabilities recognized at the lease commencement date are determined predominantly as the present value of the payments due over the lease term. Unless the implicit rate can be determined, we use our incremental borrowing rate on that date to calculate the present value. Our incremental borrowing rate approximates the rate at which we could borrow, on a secured basis for a similar term, an amount equal to our lease payments in a similar economic environment.
Effective September 1, 2019, when we are the lessee, all leases are recognized as lease liabilities and associated lease assets on the Consolidated Balance Sheet. Lease liabilities represent our obligation to make payments arising from the lease. Lease assets represent our right to use an underlying asset for the lease term and may also include advance payments, initial direct costs or lease incentives. Fixed and variable payments that depend upon an index or rate, such as the Consumer Price Index (CPI), are included in the recognition of lease assets and liabilities at the commencement-date rate. Other variable payments, such as common area maintenance, property and other taxes, utilities and insurance that are based on the lessor’s cost, are recognized in the Consolidated Income Statement in the period incurred.
As of November 30, 2019, we had no material finance leases. Operating lease expense is recorded on a straight-line basis over the lease term. Lease costs were as follows:
 
Three Months Ended November 30, 2019
Operating lease cost
$
181,082

Variable lease cost
48,159

Sublease income
(6,538
)
Total net lease cost
$
222,703


Supplemental information related to operating lease transactions was as follows:
 
Three Months Ended November 30, 2019
Lease liability payments
$
174,857

Lease assets obtained in exchange for liabilities
$
111,949


As of November 30, 2019, our operating leases had a weighted average remaining lease term of 7.4 years and a weighted average discount rate of 4.2%.

15
ACCENTURE PLC

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


The following maturity analysis presents future undiscounted cash outflows for operating leases as of November 30, 2019:
 
Lease Payments
 
Sublease Receipts
2020 (Remainder)
$
545,128

 
$
(15,789
)
2021
668,309

 
(15,975
)
2022
567,493

 
(7,616
)
2023
463,033

 
(7,493
)
2024
388,902

 
(7,459
)
Thereafter
1,255,478

 
(32,479
)
Total lease payments (receipts)
3,888,343

 
$
(86,811
)
Less interest
(525,905
)
 
 
Total lease liabilities
$
3,362,438

 
 

As of November 30, 2019, we have entered into operating leases that have not yet commenced with future lease payments of $430 million that are not reflected in the table above. These leases are primarily related to office real estate and will commence in or before fiscal year 2022 with lease terms of up to 17 years.
Future minimum rental commitments under non-cancelable operating leases as of August 31, 2019, which were accounted for in accordance with Topic 840, were as follows:
 
Lease Payments
 
Sublease Receipts
2020
$
688,020

 
$
(24,884
)
2021
597,307

 
(17,908
)
2022
516,544

 
(8,535
)
2023
428,481

 
(7,541
)
2024
363,107

 
(7,184
)
Thereafter
1,246,097

 
(30,708
)
 
$
3,839,556

 
$
(96,760
)


16
ACCENTURE PLC

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


8. MATERIAL TRANSACTIONS AFFECTING SHAREHOLDERS’ EQUITY
Dividends
Our dividend activity during the three months ended November 30, 2019 was as follows:
 
 
Dividend Per
Share
 
Accenture plc Class A
Ordinary Shares
 
Accenture Canada Holdings
Inc. Exchangeable Shares
 
Total Cash
Outlay
Dividend Payment Date
 
 
Record Date
 
Cash Outlay
 
Record Date
 
Cash Outlay
 
November 15, 2019
 
$
0.80

 
October 17, 2019
 
$
507,725

 
October 15, 2019
 
$
656

 
$
508,381


The payment of the cash dividends also resulted in the issuance of an immaterial number of additional restricted share units to holders of restricted share units.
Subsequent Event
On December 16, 2019, the Board of Directors of Accenture plc declared a quarterly cash dividend of $0.80 per share on its Class A ordinary shares for shareholders of record at the close of business on January 16, 2020 payable on February 14, 2020. The payment of the cash dividend will result in the issuance of an immaterial number of additional restricted share units to holders of restricted share units.
9. FINANCIAL INSTRUMENTS
Derivatives
In the normal course of business, we use derivative financial instruments to manage foreign currency exchange rate risk. Our derivative financial instruments consist of deliverable and non-deliverable foreign currency forward contracts.
Cash Flow Hedges
For a cash flow hedge, the effective portion of the change in estimated fair value of a hedging instrument is recorded in Accumulated other comprehensive loss as a separate component of Shareholders’ Equity and is reclassified into Cost of services in the Consolidated Income Statements during the period in which the hedged transaction is recognized. For information related to derivatives designated as cash flow hedges that were reclassified into Cost of services during the three months ended November 30, 2019 and 2018, as well as those expected to be reclassified into Cost of services in the next 12 months, see Note 4 (Accumulated Other Comprehensive Loss) to these Consolidated Financial Statements.
Other Derivatives
Realized gains or losses and changes in the estimated fair value of foreign currency forward contracts that have not been designated as hedges were net losses of $56,619 and $48,983 for the three months ended November 30, 2019 and 2018, respectively. Gains and losses on these contracts are recorded in Other income (expense), net in the Consolidated Income Statements and are offset by gains and losses on the related hedged items.

17
ACCENTURE PLC

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


Fair Value of Derivative Instruments
The notional and fair values of all derivative instruments were as follows:
 
November 30,
2019
 
August 31,
2019
Assets
 
 
 
Cash Flow Hedges
 
 
 
Other current assets
$
59,675

 
$
53,033

Other non-current assets
50,686

 
49,525

Other Derivatives
 
 
 
Other current assets
7,126

 
8,059

Total assets
$
117,487

 
$
110,617

Liabilities
 
 
 
Cash Flow Hedges
 
 
 
Other accrued liabilities
$
9,952

 
$
18,826

Other non-current liabilities
6,390

 
8,770

Other Derivatives
 
 
 
Other accrued liabilities
14,292

 
32,195

Total liabilities
$
30,634

 
$
59,791

Total fair value
$
86,853

 
$
50,826

Total notional value
$
8,953,147

 
$
8,709,917


We utilize standard counterparty master agreements containing provisions for the netting of certain foreign currency transaction obligations and for the set-off of certain obligations in the event of an insolvency of one of the parties to the transaction. In the Consolidated Balance Sheets, we record derivative assets and liabilities at gross fair value. The potential effect of netting derivative assets against liabilities under the counterparty master agreements was as follows:
 
November 30,
2019
 
August 31,
2019
Net derivative assets
$
98,125

 
$
88,811

Net derivative liabilities
11,272

 
37,985

Total fair value
$
86,853

 
$
50,826


Equity Securities Without Readily Determinable Fair Values
We hold investments in equity securities that do not have readily determinable fair values. We record these investments at cost and remeasure them to fair value based on certain observable price changes or impairment events as they occur. The carrying amount of these investments was $149,525 and $131,675 as of November 30, 2019 and August 31, 2019, respectively. 
10. INCOME TAXES
We apply an estimated annual effective tax rate to our year-to-date operating results to determine the interim provision for income tax expense. In addition, we recognize taxes related to unusual or infrequent items or resulting from a change in judgment regarding a position taken in a prior year as discrete items in the interim period in which the event occurs.
Our effective tax rates for the three months ended November 30, 2019 and 2018 were 23.6% and 19.8%, respectively. The effective tax rate for the three months ended November 30, 2019 was higher primarily due to lower benefits from final determinations of prior year taxes and the phased-in effects of US tax reform.

18
ACCENTURE PLC

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


11. COMMITMENTS AND CONTINGENCIES
Indemnifications and Guarantees
In the normal course of business and in conjunction with certain client engagements, we have entered into contractual arrangements through which we may be obligated to indemnify clients with respect to certain matters.
As of November 30, 2019 and August 31, 2019, our aggregate potential liability to our clients for expressly limited guarantees involving the performance of third parties was approximately $730,000 and $794,000, respectively, of which all but approximately $144,000 and $128,000, respectively, may be recovered from the other third parties if we are obligated to make payments to the indemnified parties as a consequence of a performance default by the other third parties. For arrangements with unspecified limitations, we cannot reasonably estimate the aggregate maximum potential liability, as it is inherently difficult to predict the maximum potential amount of such payments, due to the conditional nature and unique facts of each particular arrangement.
To date, we have not been required to make any significant payment under any of the arrangements described above. We have assessed the current status of performance/payment risk related to arrangements with limited guarantees, warranty obligations, unspecified limitations and/or indemnification provisions and believe that any potential payments would be immaterial to the Consolidated Financial Statements, as a whole.
Legal Contingencies
As of November 30, 2019, we or our present personnel had been named as a defendant in various litigation matters. We and/or our personnel also from time to time are involved in investigations by various regulatory or legal authorities concerning matters arising in the course of our business around the world. Based on the present status of these matters, including the putative class action lawsuit discussed below, management believes the range of reasonably possible losses in addition to amounts accrued, net of insurance recoveries, will not have a material effect on our results of operations or financial condition.
On July 24, 2019, Accenture was named in a putative class action lawsuit filed by consumers of Marriott International, Inc. (“Marriott”) in the U.S. District Court for the District of Maryland. The complaint alleges negligence by us, and seeks monetary damages, costs and attorneys’ fees and other related relief, relating to a data security incident involving unauthorized access to the reservations database of Starwood Worldwide Resorts, Inc. (“Starwood”), which was acquired by Marriott on September 23, 2016. Since 2009, we have provided certain IT infrastructure outsourcing services to Starwood. We believe the lawsuit is without merit and we will vigorously defend it. We cannot reasonably estimate a range of loss, if any, at this time.


19
ACCENTURE PLC

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


12. SEGMENT REPORTING
Our reportable operating segments are our five operating groups, which are Communications, Media & Technology; Financial Services; Health & Public Service; Products; and Resources. Information regarding our reportable operating segments, geographic regions and type of work is as follows:
 
Revenues
 
Three Months Ended
 
November 30, 2019
 
November 30, 2018
OPERATING GROUPS
 
 
 
Communications, Media & Technology
$
2,245,448

 
$
2,134,576

Financial Services
2,189,913

 
2,120,162

Health & Public Service
1,968,837

 
1,754,490

Products
3,216,705

 
2,928,510

Resources
1,733,533

 
1,651,539

Other
4,522

 
16,269

TOTAL REVENUES
$
11,358,958

 
$
10,605,546

GEOGRAPHIC REGIONS (1)
 
 
 
North America
$
5,287,812

 
$
4,856,302

Europe
3,789,657

 
3,713,832

Growth Markets
2,281,489

 
2,035,412

TOTAL REVENUES
$
11,358,958

 
$
10,605,546

TYPE OF WORK
 
 
 
Consulting
$
6,377,251

 
$
5,967,372

Outsourcing
4,981,707

 
4,638,174

TOTAL REVENUES
$
11,358,958

 
$
10,605,546


_______________ 
(1)
Effective September 1, 2019 we revised the reporting of our geographic regions for the movement of one country from Growth Markets to Europe. Prior period amounts have been reclassified to conform with the current period presentation.
 
Operating Income
 
Three Months Ended
 
November 30, 2019
 
November 30, 2018
OPERATING GROUPS
 
 
 
Communications, Media & Technology
$
391,157

 
$
387,021

Financial Services
316,232

 
360,848

Health & Public Service
251,992

 
197,435

Products
521,978

 
437,585

Resources
285,904

 
246,123

TOTAL OPERATING INCOME
$
1,767,263

 
$
1,629,012





20


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements and related Notes included elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended August 31, 2019, and with the information under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended August 31, 2019.
We use the terms “Accenture,” “we,” “our” and “us” in this report to refer to Accenture plc and its subsidiaries. All references to years, unless otherwise noted, refer to our fiscal year, which ends on August 31. For example, a reference to “fiscal 2020” means the 12-month period that will end on August 31, 2020. All references to quarters, unless otherwise noted, refer to the quarters of our fiscal year.
We use the term “in local currency” so that certain financial results may be viewed without the impact of foreign currency exchange rate fluctuations, thereby facilitating period-to-period comparisons of business performance. Financial results “in local currency” are calculated by restating current period activity into U.S. dollars using the comparable prior year period’s foreign currency exchange rates. This approach is used for all results where the functional currency is not the U.S. dollar.
Disclosure Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) relating to our operations, results of operations and other matters that are based on our current expectations, estimates, assumptions and projections. Words such as “may,” “will,” “should,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “positioned,” “outlook” and similar expressions are used to identify these forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Actual outcomes and results may differ materially from what is expressed or forecast in these forward-looking statements. Risks, uncertainties and other factors that might cause such differences, some of which could be material, include, but are not limited to:
•
Our results of operations could be adversely affected by volatile, negative or uncertain economic and political conditions and the effects of these conditions on our clients’ businesses and levels of business activity.
•
Our business depends on generating and maintaining ongoing, profitable client demand for our services and solutions, including through the adaptation and expansion of our services and solutions in response to ongoing changes in technology and offerings, and a significant reduction in such demand or an inability to respond to the evolving technological environment could materially affect our results of operations.
•
If we are unable to keep our supply of skills and resources in balance with client demand around the world and attract and retain professionals with strong leadership skills, our business, the utilization rate of our professionals and our results of operations may be materially adversely affected.
•
We could face legal, reputational and financial risks if we fail to protect client and/or Accenture data from security breaches or cyberattacks.
•
The markets in which we operate are highly competitive, and we might not be able to compete effectively.
•
Changes in our level of taxes, as well as audits, investigations and tax proceedings, or changes in tax laws or in their interpretation or enforcement, could have a material adverse effect on our effective tax rate, results of operations, cash flows and financial condition.
•
Our profitability could materially suffer if we are unable to obtain favorable pricing for our services and solutions, if we are unable to remain competitive, if our cost-management strategies are unsuccessful or if we experience delivery inefficiencies.
•
Our results of operations could be materially adversely affected by fluctuations in foreign currency exchange rates.

21


•
As a result of our geographically diverse operations and our growth strategy to continue to expand in our key markets around the world, we are more susceptible to certain risks.
•
Our business could be materially adversely affected if we incur legal liability.
•
Our work with government clients exposes us to additional risks inherent in the government contracting environment.
•
If we are unable to manage the organizational challenges associated with our size, we might be unable to achieve our business objectives.
•
Our ability to attract and retain business and employees may depend on our reputation in the marketplace.
•
If we do not successfully manage and develop our relationships with key alliance partners or if we fail to anticipate and establish new alliances in new technologies, our results of operations could be adversely affected.
•
We might not be successful at acquiring, investing in or integrating businesses, entering into joint ventures or divesting businesses.
•
If we are unable to protect or enforce our intellectual property rights, or if our services or solutions infringe upon the intellectual property rights of others or we lose our ability to utilize the intellectual property of others, our business could be adversely affected.
•
Our results of operations and share price could be adversely affected if we are unable to maintain effective internal controls.
•
Changes to accounting standards or in the estimates and assumptions we make in connection with the preparation of our consolidated financial statements could adversely affect our financial results.
•
Many of our contracts include fees subject to the attainment of targets or specific service levels. This could increase the variability of our revenues and impact our margins.
•
We might be unable to access additional capital on favorable terms or at all. If we raise equity capital, it may dilute our shareholders’ ownership interest in us.
•
We are incorporated in Ireland and a significant portion of our assets is located outside the United States. As a result, it might not be possible for shareholders to enforce civil liability provisions of the federal or state securities laws of the United States. We may also be subject to criticism and negative publicity related to our incorporation in Ireland.
•
Irish law differs from the laws in effect in the United States and might afford less protection to shareholders.
For a more detailed discussion of these factors, see the information under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended August 31, 2019. Our forward-looking statements speak only as of the date of this report or as of the date they are made, and we undertake no obligation to update any forward-looking statements.

22


Overview
Revenues are driven by the ability of our executives to secure new contracts, to renew and extend existing contracts, and to deliver services and solutions that add value relevant to our clients’ current needs and challenges. The level of revenues we achieve is based on our ability to deliver market-leading services and solutions and to deploy skilled teams of professionals quickly and on a global basis.
Our results of operations are affected by economic conditions, including macroeconomic conditions and levels of business confidence. There continues to be significant volatility and economic and geopolitical uncertainty in many markets around the world, which may impact our business. We continue to monitor the impact of this volatility and uncertainty and seek to manage our costs in order to respond to changing conditions. There also continues to be volatility in foreign currency exchange rates. The majority of our revenues are denominated in currencies other than the U.S. dollar, including the Euro, Japanese yen and U.K. pound. Unfavorable fluctuations in foreign currency exchange rates have had and could have in the future a material effect on our financial results.
Summary of Results
Revenues for the first quarter of fiscal 2020 increased 7% in U.S. dollars and 9% in local currency compared to the first quarter of fiscal 2019. Demand for our services and solutions continued to be strong, resulting in growth across all areas of our business. During the first quarter of fiscal 2020, revenue growth in local currency was very strong in Health & Public Service and Products and strong in Resources, Communications, Media & Technology and Financial Services. We experienced local currency revenue growth that was very strong in Growth Markets and strong in North America and Europe. Revenue growth in local currency was strong in both outsourcing and consulting during the first quarter of fiscal 2020. While the business environment remained competitive, we experienced pricing improvement in some areas of our business. We use the term “pricing” to mean the contract profitability or margin on the work that we sell.
In our consulting business, revenues for the first quarter of fiscal 2020 increased 7% in U.S. dollars and 9% in local currency compared to the first quarter of fiscal 2019. Consulting revenue growth in local currency in the first quarter of fiscal 2020 was led by very strong growth in Health & Public Service and Products and strong growth in Communications, Media & Technology and Resources, while Financial Services was flat. Our consulting revenue growth continues to be driven by strong demand for digital-, cloud- and security-related services and assisting clients with the adoption of new technologies. In addition, clients continue to be focused on initiatives designed to deliver cost savings and operational efficiency, as well as projects to integrate their global operations and grow and transform their businesses.
In our outsourcing business, revenues for the first quarter of fiscal 2020 increased 7% in U.S. dollars and 9% in local currency compared to the first quarter of fiscal 2019. Outsourcing revenue growth in local currency in the first quarter of fiscal 2020 was led by very strong growth in Financial Services and Resources and strong growth in Health & Public Service, Products and Communications, Media & Technology. We continue to experience growing demand to assist clients with the operation and maintenance of digital-related services and cloud enablement. In addition, clients continue to be focused on transforming their operations to improve effectiveness and cost efficiency.
As we are a global company, our revenues are denominated in multiple currencies and may be significantly affected by currency exchange rate fluctuations. If the U.S. dollar weakens against other currencies, resulting in favorable currency translation, our revenues, revenue growth and results of operations in U.S. dollars may be higher. If the U.S. dollar strengthens against other currencies, resulting in unfavorable currency translation, our revenues, revenue growth and results of operations in U.S. dollars may be lower. The U.S. dollar strengthened against various currencies during the first quarter of fiscal 2020 compared to the first quarter of fiscal 2019, resulting in unfavorable currency translation and U.S. dollar revenue growth that was approximately 2% lower than our revenue growth in local currency. Assuming that exchange rates stay within recent ranges for the remainder of fiscal 2020, we estimate that our full fiscal 2020 revenue growth in U.S. dollars will be approximately 1% lower in U.S. dollars than our revenue growth in local currency.
The primary categories of operating expenses include Cost of services, Sales and marketing and General and administrative costs. Cost of services is primarily driven by the cost of client-service personnel, which consists mainly of compensation, subcontractor and other personnel costs, and non-payroll costs on outsourcing contracts. Cost of services includes a variety of activities such as: contract delivery; recruiting and training; software development; and integration of acquisitions. Sales and marketing costs are driven primarily by: compensation costs for business development activities; marketing- and advertising-related activities; and certain acquisition-related costs. General and administrative costs primarily include costs for non-client-facing personnel, information systems, office space and certain acquisition-related costs.

23


Utilization for the first quarter of fiscal 2020 was 91%, down from 92% in the first quarter of fiscal 2019. We hire to meet current and projected future demand. We proactively plan and manage the size and composition of our workforce and take actions as needed to address changes in the anticipated demand for our services and solutions, given that compensation costs are the most significant portion of our operating expenses. Based on current and projected future demand, we have increased our headcount, the majority of which serve our clients, to approximately 505,000 as of November 30, 2019, compared to approximately 469,000 as of November 30, 2018. The year-over-year increase in our headcount reflects an overall increase in demand for our services and solutions, as well as headcount added in connection with acquisitions. Attrition, excluding involuntary terminations, for the first quarter of fiscal 2020 was 14%, down from 15% in the first quarter of fiscal 2019. We evaluate voluntary attrition, adjust levels of new hiring and use involuntary terminations as means to keep our supply of skills and resources in balance with changes in client demand. In addition, we adjust compensation in certain skill sets and geographies in order to attract and retain appropriate numbers of qualified employees. For the majority of our personnel, compensation increases become effective December 1st of each fiscal year. We strive to adjust pricing and/or the mix of resources to reduce the impact of compensation increases on our margin. Our ability to grow our revenues and maintain or increase our margin could be adversely affected if we are unable to: keep our supply of skills and resources in balance with changes in the types or amounts of services and solutions clients are demanding; recover increases in compensation; deploy our employees globally on a timely basis; manage attrition; and/or effectively assimilate and utilize new employees.
Gross margin (Revenues less Cost of services as a percentage of Revenues) for the first quarter of fiscal 2020 was 32.1%, compared with 31.1% for the first quarter of fiscal 2019. The increase in gross margin for the first quarter of fiscal 2020 was primarily due to lower labor costs as a percentage of revenues compared to the same period in fiscal 2019.
Sales and marketing and General and administrative costs as a percentage of revenues were 16.6% for the first quarter of fiscal 2020, compared with 15.7% for the first quarter of fiscal 2019. For the first quarter of fiscal 2020 compared to the same period in fiscal 2019, Sales and marketing costs as a percentage of revenues increased 40 basis points, primarily due to higher selling and other business development costs, and General and administrative costs as a percentage of revenues increased 50 basis points, primarily due to higher technology and facilities costs. We continuously monitor these costs and implement cost-management actions, as appropriate.
Operating margin (Operating income as a percentage of revenues) for the first quarter of fiscal 2020 was 15.6%, compared with 15.4% for the first quarter of fiscal 2019.
New Bookings
New bookings for the first quarter of fiscal 2020 were $10.3 billion, with consulting bookings of $6.0 billion and outsourcing bookings of $4.3 billion.

24


Results of Operations for the Three Months Ended November 30, 2019 Compared to the Three Months Ended November 30, 2018
Our five reportable operating segments are our operating groups, which are Communications, Media & Technology; Financial Services; Health & Public Service; Products; and Resources. Revenues (by operating group, geographic region and type of work) were as follows:
  
Three Months Ended
 
Percent
Increase
U.S.
Dollars
 
Percent
Increase
Local
Currency
 
Percent of Revenues
for the Three Months Ended
  
November 30, 2019
 
November 30,
2018
 
 
 
November 30,
2019
 
November 30,
2018
 
(in millions of U.S. dollars)
 
 
 
 
 
 
 
 
OPERATING GROUPS
 
 
 
 
 
 
 
 
 
 
 
Communications, Media & Technology
$
2,245

 
$
2,135

 
5
%
 
7
%
 
20
%
 
20
%
Financial Services
2,190

 
2,120

 
3

 
6

 
19

 
20

Health & Public Service
1,969

 
1,754

 
12

 
13

 
18

 
16

Products
3,217

 
2,929

 
10

 
12

 
28

 
28

Resources
1,734

 
1,652

 
5

 
7

 
15

 
16

Other
5

 
16

 
n/m

 
n/m

 
—

 
—

TOTAL REVENUES
$
11,359

 
$
10,606

 
7
%
 
9
%
 
100
%
 
100
%
GEOGRAPHIC REGIONS (1)
 
 
 
 
 
 
 
 
 
 
 
North America
$
5,288

 
$
4,856

 
9
%
 
9
%
 
47
%
 
46
%
Europe
3,790

 
3,714

 
2

 
7

 
33

 
35

Growth Markets
2,281

 
2,035

 
12

 
13

 
20

 
19

TOTAL REVENUES
$
11,359

 
$
10,606

 
7
%
 
9
%
 
100
%
 
100
%
TYPE OF WORK
 
 
 
 
 
 
 
 
 
 
 
Consulting
$
6,377

 
$
5,967

 
7
%
 
9
%
 
56
%
 
56
%
Outsourcing
4,982

 
4,638

 
7

 
9

 
44

 
44

TOTAL REVENUES
$
11,359

 
$
10,606

 
7
%
 
9
%
 
100
%
 
100
%
_______________ 
n/m = not meaningful
Amounts in table may not total due to rounding.
(1)
Effective September 1, 2019 we revised the reporting of our geographic regions for the movement of one country from Growth Markets to Europe. Prior period amounts have been reclassified to conform with the current period presentation.
Revenues
The following revenues commentary discusses local currency revenue changes for the first quarter of fiscal 2020 compared to the first quarter of fiscal 2019:
Operating Groups
•
Communications, Media & Technology revenues increased 7% in local currency, driven by growth in Software & Platforms across all geographic regions and Communications & Media in Europe, partially offset by a decline in High Tech in North America.
•
Financial Services revenues increased 6% in local currency, driven by growth in Insurance across all geographic regions and Banking & Capital Markets in Growth Markets and North America. These increases were partially offset by a decline in Banking & Capital Markets in Europe.
•
Health & Public Service revenues increased 13% in local currency, led by Public Service and Health in North America.
•
Products revenues increased 12% in local currency, driven by growth in Consumer Goods, Retail & Travel Services and Life Sciences across all geographic regions, led by North America. These increases were partially offset by a decline in Industrial in North America.
•
Resources revenues increased 7% in local currency, driven by growth in Energy and Utilities across all geographic regions and Chemicals & Natural Resources in Europe and Growth Markets. These increases were partially offset by a decline in Chemicals & Natural Resources in North America.

25


Geographic Regions
•
North America revenues increased 9% in local currency, driven by the United States.
•
Europe revenues increased 7% in local currency, led by Italy, Germany, France and Ireland.
•
Growth Markets revenues increased 13% in local currency, driven by Japan, as well as Brazil and Singapore.
Operating Expenses
Operating expenses for the first quarter of fiscal 2020 increased $615 million, or 7%, over the first quarter of fiscal 2019, and decreased as a percentage of revenues to 84.4% from 84.6% during this period.
Cost of Services
Cost of services for the first quarter of fiscal 2020 increased $403 million, or 6%, over the first quarter of fiscal 2019, and decreased as a percentage of revenues to 67.9% from 68.9% during this period. Gross margin for the first quarter of fiscal 2020 increased to 32.1% from 31.1% during the first quarter of fiscal 2019. The increase in gross margin was primarily due to lower labor costs as a percentage of revenues compared to the same period in fiscal 2019.
Sales and Marketing
Sales and marketing expense for the first quarter of fiscal 2020 increased $121 million, or 11%, over the first quarter of fiscal 2019, and increased as a percentage of revenues to 10.5% from 10.1% during this period. The increase as a percentage of revenues was primarily due to higher selling and other business development costs compared to the same period in fiscal 2019.
General and Administrative Costs
General and administrative costs for the first quarter of fiscal 2020 increased $91 million, or 15%, over the first quarter of fiscal 2019, and increased as a percentage of revenues to 6.1% from 5.6% during this period. The increase as a percentage of revenues was primarily due to higher technology and facilities costs compared to the same period in fiscal 2019.
Operating Income and Operating Margin
Operating income for the first quarter of fiscal 2020 increased $138 million, or 8%, over the first quarter of fiscal 2019.
Operating income and operating margin for each of the operating groups were as follows:
 
Three Months Ended
 
 
  
November 30, 2019
 
November 30, 2018
 
 
  
Operating
Income
 
Operating
Margin
 
Operating
Income
 
Operating
Margin
 
Increase
(Decrease)
 
 (in millions of U.S. dollars)
 

Communications, Media & Technology
$
391

 
17
%
 
$
387

 
18
%
 
$
4

Financial Services
316

 
14

 
361

 
17

 
(45
)
Health & Public Service
252

 
13

 
197

 
11

 
55

Products
522

 
16

 
438

 
15

 
84

Resources
286

 
16

 
246

 
15

 
40

TOTAL
$
1,767

 
15.6
%
 
$
1,629

 
15.4
%
 
$
138



26


We estimate that the aggregate percentage impact of foreign currency exchange rates on our operating income during the first quarter of fiscal 2020 was similar to that disclosed for revenue. The commentary below provides insight into other factors affecting operating group performance and operating margin for the first quarter of fiscal 2020 compared with the first quarter of fiscal 2019:
•
Communications, Media & Technology operating income was flat year-over-year as revenue growth was partially offset by lower contract profitability and higher sales and marketing costs as a percentage of revenues.
•
Financial Services operating income decreased as revenue growth was offset by lower contract profitability and higher sales and marketing costs as a percentage of revenues.
•
Health & Public Service operating income increased primarily due to revenue growth and higher consulting contract profitability.
•
Products operating income increased primarily due to revenue growth and higher consulting contract profitability.
•
Resources operating income increased primarily due to revenue growth and higher outsourcing contract profitability.
Other Income (Expense), net
Other income (expense), net primarily consists of foreign currency gains and losses, non-operating components of pension expense, as well as gains and losses associated with our investments. For the first quarter of fiscal 2020, other income (expense) increased $45 million over the first quarter of fiscal 2019, primarily due to gains on investments, partially offset by foreign exchange losses.
Income Tax Expense
The effective tax rate for the first quarter of fiscal 2020 was 23.6%, compared with 19.8% for the first quarter of fiscal 2019. The higher effective tax rate for the three months ended November 30, 2019 was primarily due to lower benefits from final determinations of prior year taxes and the phased-in effects of US tax reform. For additional information, see Note 1 (Basis of Presentation) to our Consolidated Financial Statements under Item 1, “Financial Statements.”
Our provision for income taxes is based on many factors and subject to volatility year to year. We expect the fiscal 2020 annual effective tax rate to be in the range of 23.5% to 25.5%. The effective tax rate for interim periods can vary because of the timing of when certain events occur during the year.
Earnings Per Share
Diluted earnings per share were $2.09 for the first quarter of fiscal 2020, compared with $1.96 for the first quarter of fiscal 2019. The $0.13 increase in our diluted earnings per share was due to an increase of $0.17 from higher revenues and operating results, $0.06 from higher non-operating income, and $0.01 from lower weighted average shares outstanding. These increases were partially offset by a decrease of $0.11 from a higher effective tax rate. For information regarding our earnings per share calculations, see Note 3 (Earnings Per Share) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

27


Liquidity and Capital Resources
As of November 30, 2019, Cash and cash equivalents was $5.8 billion, compared with $6.1 billion as of August 31, 2019.
Cash flows from operating, investing and financing activities, as reflected in our Consolidated Cash Flows Statements, are summarized in the following table:
  
Three Months Ended
 
 
  
November 30, 2019
 
November 30, 2018
 
Change
 
(in millions of U.S. dollars)
Net cash provided by (used in):
 
 
 
 
 
Operating activities
$
787

 
$
1,028

 
$
(241
)
Investing activities
(166
)
 
(273
)
 
107

Financing activities
(948
)
 
(1,462
)
 
514

Effect of exchange rate changes on cash and cash equivalents
11

 
10

 
1

Net increase (decrease) in cash and cash equivalents
$
(316
)
 
$
(698
)
 
$
381

_______________ 
Amounts in table may not total due to rounding.
Operating activities: The $241 million year-over-year decrease in operating cash flow was due to changes in operating assets and liabilities, including a change in timing of certain compensation payments, partially offset by higher net income.
Investing activities: The $107 million decrease in cash used was primarily due to lower spending on business acquisitions and investments and increased proceeds from investments. For additional information, see Note 5 (Business Combinations) to our Consolidated Financial Statements under Item 1, “Financial Statements.”
Financing activities: The $514 million decrease in cash used was primarily due to a decrease in cash dividends paid due to a change in the frequency of payments from semi-annually to quarterly. For additional information, see Note 8 (Material Transactions Affecting Shareholders’ Equity) to our Consolidated Financial Statements under Item 1, “Financial Statements.”
We believe that our current and longer-term working capital, investments and other general corporate funding requirements will be satisfied for the next twelve months and thereafter through cash flows from operations and, to the extent necessary, from our borrowing facilities and future financial market activities.
Substantially all of our cash is held in jurisdictions where there are no regulatory restrictions or material tax effects on the free flow of funds. Domestic cash inflows for our Irish parent, principally dividend distributions from lower-tier subsidiaries, have been sufficient to meet our historic cash requirements, and we expect this to continue into the future.
Borrowing Facilities
As of November 30, 2019, we had the following borrowing facilities, including the issuance of letters of credit, to support general working capital purposes:
 
Facility
Amount
 
Borrowings
Under
Facilities
 
(in millions of U.S. dollars)
Syndicated loan facility
$
1,000

 
$
—

Separate, uncommitted, unsecured multicurrency revolving credit facilities
803

 
—

Local guaranteed and non-guaranteed lines of credit
217

 
—

Total
$
2,020

 
$
—

Under the borrowing facilities described above, we had an aggregate of $414 million of letters of credit outstanding as of November 30, 2019.

28


Share Purchases and Redemptions
The Board of Directors of Accenture plc has authorized funding for our publicly announced open-market share purchase program for acquiring Accenture plc Class A ordinary shares and for purchases and redemptions of Accenture plc Class A ordinary shares and Accenture Canada Holdings Inc. exchangeable shares held by current and former members of Accenture Leadership and their permitted transferees.
Our share purchase activity during the three months ended November 30, 2019 was as follows:
  
Accenture plc Class A
Ordinary Shares
 
Accenture Canada
Holdings Inc. Exchangeable Shares
 
Shares
 
Amount
 
Shares
 
Amount
 
(in millions of U.S. dollars, except share amounts)
Open-market share purchases (1)
3,293,069

 
$
626

 
—

 
$
—

Other share purchase programs
—

 
—

 
23,715

 
5

Other purchases (2)
528,311

 
99

 
—

 
—

Total
3,821,380

 
$
725

 
23,715

 
$
5

_______________
(1)
We conduct a publicly announced open-market share purchase program for Accenture plc Class A ordinary shares. These shares are held as treasury shares by Accenture plc and may be utilized to provide for select employee benefits, such as equity awards to our employees.
(2)
During the three months ended November 30, 2019, as authorized under our various employee equity share plans, we acquired Accenture plc Class A ordinary shares primarily via share withholding for payroll tax obligations due from employees and former employees in connection with the delivery of Accenture plc Class A ordinary shares under those plans. These purchases of shares in connection with employee share plans do not affect our aggregate available authorization for our publicly announced open-market share purchase and the other share purchase programs.
We intend to continue to use a significant portion of cash generated from operations for share repurchases during the remainder of fiscal 2020. The number of shares ultimately repurchased under our open-market share purchase program may vary depending on numerous factors, including, without limitation, share price and other market conditions, our ongoing capital allocation planning, the levels of cash and debt balances, other demands for cash, such as acquisition activity, general economic and/or business conditions, and board and management discretion. Additionally, as these factors may change over the course of the year, the amount of share repurchase activity during any particular period cannot be predicted and may fluctuate from time to time. Share repurchases may be made from time to time through open-market purchases, in respect of purchases and redemptions of Accenture Canada Holdings Inc. exchangeable shares, through the use of Rule 10b5-1 plans and/or by other means. The repurchase program may be accelerated, suspended, delayed or discontinued at any time, without notice.
Off-Balance Sheet Arrangements
In the normal course of business and in conjunction with some client engagements, we have entered into contractual arrangements through which we may be obligated to indemnify clients with respect to certain matters.
To date, we have not been required to make any significant payment under any of the arrangements described above. For further discussion of these transactions, see Note 11 (Commitments and Contingencies) to our Consolidated Financial Statements under Item 1, “Financial Statements.”
Significant Accounting Policies
See Note 1 (Basis of Presentation) and Note 7 (Leases) to our Consolidated Financial Statements under Item 1, “Financial Statements.” Note 7 includes updates to our leases policy as a result of the implementation of FASB ASU No. 2016-02.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
During the three months ended November 30, 2019, there were no material changes to the information on market risk exposure disclosed in our Annual Report on Form 10-K for the year ended August 31, 2019. For a discussion of our market risk associated with foreign currency risk, interest rate risk and equity price risk as of August 31, 2019, see “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A, of our Annual Report on Form 10-K for the year ended August 31, 2019.

29


ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and our principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Based on that evaluation, the principal executive officer and the principal financial officer of Accenture plc have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
While we updated certain internal controls and supporting processes related to leases in connection with our adoption of FASB ASU No. 2016-02 (Topic 842), there has been no change in our internal control over financial reporting that occurred during the first quarter of fiscal 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

30


PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The information set forth under “Legal Contingencies” in Note 11 (Commitments and Contingencies) to our Consolidated Financial Statements under Part I, Item 1, “Financial Statements,” is incorporated herein by reference.
ITEM 1A. RISK FACTORS
For a discussion of our potential risks and uncertainties, see the information under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended August 31, 2019. There have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended August 31, 2019.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Purchases of Accenture plc Class A Ordinary Shares
The following table provides information relating to our purchases of Accenture plc Class A ordinary shares during the first quarter of fiscal 2020.
Period
 
Total Number
of Shares
Purchased
 
Average
Price Paid
per Share (1)
 
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs (2)
 
Approximate Dollar Value
of Shares that May Yet Be
Purchased Under the Plans or Programs (3)
 
 


 
 
 
 
 
(in millions of U.S. dollars)
September 1, 2019 — September 30, 2019
 
913,483

 
$
194.10

 
874,734

 
$
3,504

October 1, 2019 — October 31, 2019
 
1,829,298

 
$
185.69

 
1,453,201

 
$
3,230

November 1, 2019 — November 30, 2019
 
1,078,599

 
$
192.49

 
965,134

 
$
3,044

Total (4)
 
3,821,380

 
$
189.62

 
3,293,069

 
 
_______________
(1)
Average price paid per share reflects the total cash outlay for the period, divided by the number of shares acquired, including those acquired by purchase or redemption for cash and any acquired by means of employee forfeiture.
(2)
Since August 2001, the Board of Directors of Accenture plc has authorized and periodically confirmed a publicly announced open-market share purchase program for acquiring Accenture plc Class A ordinary shares. During the first quarter of fiscal 2020, we purchased 3,293,069 Accenture plc Class A ordinary shares under this program for an aggregate price of $626 million. The open-market purchase program does not have an expiration date.
(3)
As of November 30, 2019, our aggregate available authorization for share purchases and redemptions was $3,044 million, which management has the discretion to use for either our publicly announced open-market share purchase program or the other share purchase programs. Since August 2001 and as of November 30, 2019, the Board of Directors of Accenture plc has authorized an aggregate of $35.1 billion for share purchases and redemptions by Accenture plc and Accenture Canada Holdings Inc.
(4)
During the first quarter of fiscal 2020, Accenture purchased 528,311 Accenture plc Class A ordinary shares in transactions unrelated to publicly announced share plans or programs. These transactions consisted of acquisitions of Accenture plc Class A ordinary shares primarily via share withholding for payroll tax obligations due from employees and former employees in connection with the delivery of Accenture plc Class A ordinary shares under our various employee equity share plans. These purchases of shares in connection with employee share plans do not affect our aggregate available authorization for our publicly announced open-market share purchase and the other share purchase programs.

31


ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
(a) None.
(b) None.
ITEM 6. EXHIBITS
Exhibit Index:
Exhibit
Number
 
Exhibit
3.1
 
Amended and Restated Memorandum and Articles of Association of Accenture plc (incorporated by reference to Exhibit 3.1 to Accenture plc’s 8-K filed on February 7, 2018)
 
 
 
10.1*+
 
Agreement between Accenture (UK) Limited and Richard Lumb, dated as of June 26, 2019 (filed herewith)
 
 
 
10.2*+
 
Agreement between Accenture plc and Alexander van ’t Noordende, dated as of September 21, 2019 (filed herewith)
 
 
 
31.1
 
Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
 
 
 
31.2
 
Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
 
 
 
32.1
 
Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
 
 
 
32.2
 
Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
 
 
 
101
 
The following financial information from Accenture plc’s Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2019, formatted in Inline XBRL: (i) Consolidated Balance Sheets as of November 30, 2019 (Unaudited) and August 31, 2019, (ii) Consolidated Income Statements (Unaudited) for the three months ended November 30, 2019 and 2018, (iii) Consolidated Statements of Comprehensive Income (Unaudited) for the three months ended November 30, 2019 and 2018, (iv) Consolidated Shareholders’ Equity Statement (Unaudited) for the three months ended November 30, 2019 and 2018, (v) Consolidated Cash Flows Statements (Unaudited) for the three months ended November 30, 2019 and 2018 and (vi) the Notes to Consolidated Financial Statements (Unaudited)
 
 
 
104
 
The cover page from Accenture plc’s Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2019, formatted in Inline XBRL (included as Exhibit 101)
 
 
 

(*)     Indicates management contract or compensatory plan or arrangement.

(+)
Certain identified information has been excluded from these exhibits because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.


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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: December 19, 2019
 
 
ACCENTURE PLC
 
 
 
 
By:
/s/ KC McClure
 
Name:  
KC McClure
 
Title:
Chief Financial Officer
 
 
(Principal Financial Officer and Authorized Signatory)


33