UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

FORM 10-Q



þ☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	~~May 31,~~November 30, 2019



¨☐	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,

Dublin2, Ireland

(Address of principal executive offices)

~~(353) (1)~~ (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 filerþ	☑	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 ~~June 13,~~December 2, 2019 was ~~671,999,633~~656,946,050 (which number includes ~~34,858,446~~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 ~~June 13,~~December 2, 2019 was ~~637,146.~~593,689.

Table of Contents

ACCENTURE PLC

INDEX




	Page
Part I. Financial Information	3
Item 1. Financial Statements	3
Consolidated Balance Sheets as of ~~May 31,~~November 30, 2019 (Unaudited) and August 31, ~~2018~~2019	3
Consolidated Income Statements (Unaudited) for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2019 and 2018	4
Consolidated Statements of Comprehensive Income (Unaudited) for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2019 and 2018	5
Consolidated Shareholders’ Equity Statement (Unaudited) for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2019 and 2018	6
Consolidated Cash Flows Statements (Unaudited) for the ~~nine~~three months ended ~~May 31,~~November 30, 2019 and 2018	108
Notes to Consolidated Financial Statements (Unaudited)	119
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2321
Item 3. Quantitative and Qualitative Disclosures About Market Risk	3529
Item 4. Controls and Procedures	3630
Part II. Other Information	3731
Item 1. Legal Proceedings	3731
Item 1A. Risk Factors	3731
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	3731
Item 3. Defaults Upon Senior Securities	3832
Item 4. Mine Safety Disclosures	3832
Item 5. Other Information	3832
Item 6. Exhibits	3832
Signatures	3933

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ACCENTURE PLC

CONSOLIDATED BALANCE SHEETS

~~May 31,~~November 30, 2019 and August 31, ~~2018~~2019

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


	May 31, 2019			August 31, 2018			November 30, 2019			August 31, 2019
	(Unaudited)						(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	4,769,158		$	5,061,360		$	5,810,537		$	6,126,853
Short-term investments	3,338			3,192			3,303			3,313
Receivables and contract assets	8,134,147			7,496,368			8,577,386			8,095,071
Other current assets	1,235,017			1,024,639			1,214,878			1,225,364
Total current assets	14,141,660			13,585,559			15,606,104			15,450,601
NON-CURRENT ASSETS:
Contract assets	19,739			23,036			58,071			71,002
Investments	235,286			215,532			278,765			240,313
Property and equipment, net	1,341,548			1,264,020			1,386,440			1,391,166
Lease assets							3,154,501			—
Goodwill	6,078,816			5,383,012			6,300,004			6,205,550
Deferred contract costs	685,605			705,124			691,727			681,492
Deferred income taxes, net	4,222,011			2,086,807
Deferred tax assets							4,300,909			4,349,464
Other non-current assets	1,431,695			1,185,993			1,394,191			1,400,292
Total non-current assets	14,014,700			10,863,524			17,564,608			14,339,279
TOTAL ASSETS	$	28,156,360		$	24,449,083		$	33,170,712		$	29,789,880
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and bank borrowings	$	4,137		$	5,337		$	3,698		$	6,411
Accounts payable	1,562,995			1,348,802			1,581,112			1,646,641
Deferred revenues	3,255,784			2,837,682			2,986,524			3,188,835
Accrued payroll and related benefits	4,461,985			4,569,172			4,652,038			4,890,542
Income taxes payable	512,820			497,885			448,010			378,017
Lease liabilities							710,787			—
Other accrued liabilities	754,266			892,873			817,239			951,450
Total current liabilities	10,551,987			10,151,751			11,199,408			11,061,896
NON-CURRENT LIABILITIES:
Long-term debt	19,855			19,676			15,935			16,247
Deferred revenues	571,769			618,124			585,301			565,224
Retirement obligation	1,419,191			1,410,656			1,784,347			1,765,914
Deferred income taxes, net	149,196			125,729
Deferred tax liabilities							144,659			133,232
Income taxes payable	875,850			956,836			905,952			892,688
Lease liabilities							2,651,651			—
Other non-current liabilities	425,554			441,723			282,251			526,988
Total non-current liabilities	3,461,415			3,572,744			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 May 31, 2019 and August 31, 2018	57			57
Class A ordinary shares, par value $0.0000225 per share, 20,000,000,000 shares authorized, 671,836,371 and 663,327,677 shares issued as of May 31, 2019 and August 31, 2018, respectively	15			15
Class X ordinary shares, par value $0.0000225 per share, 1,000,000,000 shares authorized, 637,146 and 655,521 shares issued and outstanding as of May 31, 2019 and August 31, 2018, respectively	—			—
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	1,195,983			1,234,623			1,525,898			1,411,903
Additional paid-in capital	6,059,471			4,870,764			6,162,252			5,804,448
Treasury shares, at cost: Ordinary, 40,000 shares as of May 31, 2019 and August 31, 2018; Class A ordinary, 34,640,120 and 24,293,199 shares as of May 31, 2019 and August 31, 2018, respectively	(3,761,010		)	(2,116,948		)
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	11,709,317			7,952,413			11,236,275			10,421,538
Accumulated other comprehensive loss	(1,466,509		)	(1,576,171		)	(1,779,968		)	(1,840,577		)
Total Accenture plc shareholders’ equity	13,737,324			10,364,753			15,167,138			14,409,008
Noncontrolling interests	405,634			359,835			434,070			418,683
Total shareholders’ equity	14,142,958			10,724,588			15,601,208			14,827,691
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	28,156,360		$	24,449,083		$	33,170,712		$	29,789,880

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

Table of Contents

ACCENTURE PLC

CONSOLIDATED INCOME STATEMENTS

For the Three ~~and Nine~~ Months Ended ~~May 31,~~November 30, 2019 and 2018

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

(Unaudited)


	Three Months Ended						Nine Months Ended
	May 31, 2019			May 31, 2018			May 31, 2019			May 31, 2018			2019			2018
REVENUES:
Revenues	$	11,099,688		$	10,694,996		$	32,159,363		$	30,488,547		$	11,358,958		$	10,605,546
OPERATING EXPENSES:
Cost of services	7,571,390			7,362,981			22,279,291			21,232,839			7,711,199			7,308,121
Sales and marketing	1,184,164			1,106,543			3,274,216			3,106,562			1,191,123			1,070,016
General and administrative costs	626,191			590,597			1,872,275			1,720,051			689,373			598,397
Total operating expenses	9,381,745			9,060,121			27,425,782			26,059,452			9,591,695			8,976,534
OPERATING INCOME	1,717,943			1,634,875			4,733,581			4,429,095			1,767,263			1,629,012
Interest income	21,402			12,687			60,114			33,582			27,419			19,631
Interest expense	(5,348		)	(5,839		)	(15,472		)	(14,386		)	(5,474		)	(4,505		)
Other income (expense), net	(29,690		)	(29,165		)	(87,178		)	(96,812		)	11,439			(33,654		)
INCOME BEFORE INCOME TAXES	1,704,307			1,612,558			4,691,045			4,351,479			1,800,647			1,610,484
Provision for income taxes	435,658			554,417			990,352			1,185,256
Income tax expense													425,479			319,160
NET INCOME	1,268,649			1,058,141			3,700,693			3,166,223			1,375,168			1,291,324
Net income attributable to noncontrolling interests in Accenture Holdings plc and Accenture Canada Holdings Inc.	(1,676		)	(6,997		)	(5,213		)	(93,531		)
Net income attributable to noncontrolling interest in Accenture Canada Holdings Inc.													(1,741		)	(1,888		)
Net income attributable to noncontrolling interests – other	(17,457		)	(8,124		)	(46,795		)	(42,309		)	(16,459		)	(14,716		)
NET INCOME ATTRIBUTABLE TO ACCENTURE PLC	$	1,249,516		$	1,043,020		$	3,648,685		$	3,030,383		$	1,356,968		$	1,274,720
Weighted average Class A ordinary shares:
Basic	637,831,341			639,217,344			638,439,707			624,365,464			635,722,309			638,877,445
Diluted	649,297,717			654,600,026			650,144,931			655,739,568			649,389,444			652,151,450
Earnings per Class A ordinary share:
Basic	$	1.96		$	1.63		$	5.72		$	4.85		$	2.13		$	2.00
Diluted	$	1.93		$	1.60		$	5.62		$	4.76		$	2.09		$	1.96
Cash dividends per share	$	1.46		$	1.33		$	2.92		$	2.66		$	0.80		$	1.46

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

Table of Contents

ACCENTURE PLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three ~~and Nine~~ Months Ended ~~May 31,~~November 30, 2019 and 2018

(In thousands of U.S. dollars)

(Unaudited)


	Three Months Ended						Nine Months Ended
	May 31, 2019			May 31, 2018			May 31, 2019			May 31, 2018			2019		2018
NET INCOME	$	1,268,649		$	1,058,141		$	3,700,693		$	3,166,223		$	1,375,168	$	1,291,324
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Foreign currency translation	(102,620		)	(230,997		)	(69,592		)	(136,706		)	37,730		(8,617		)
Defined benefit plans	5,890			(2,683		)	32,881			11,436			8,752		20,413
Cash flow hedges	96,382			(43,801		)	148,036			(124,795		)	14,127		88,344
Investments	(1,148		)	46			(1,663		)	1,148			—		(515		)
OTHER COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ACCENTURE PLC	(1,496		)	(277,435		)	109,662			(248,917		)	60,609		99,625
Other comprehensive income (loss) attributable to noncontrolling interests	(4,188		)	(5,926		)	(4,859		)	340			1,180		(2,296		)
COMPREHENSIVE INCOME	$	1,262,965		$	774,780		$	3,805,496		$	2,917,646		$	1,436,957	$	1,388,653

COMPREHENSIVE INCOME ATTRIBUTABLE TO ACCENTURE PLC	$	1,248,020		$	765,585		$	3,758,347		$	2,781,466		$	1,417,577	$	1,374,345
Comprehensive income attributable to noncontrolling interests	14,945			9,195			47,149			136,180			19,380		14,308
COMPREHENSIVE INCOME	$	1,262,965		$	774,780		$	3,805,496		$	2,917,646		$	1,436,957	$	1,388,653

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

Table of Contents

ACCENTURE PLC

CONSOLIDATED SHAREHOLDERS’ EQUITY STATEMENT

For the Three Months Ended ~~May 31,~~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			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									$								No. Shares								$		No. Shares		$		No. Shares			$			No. Shares
Balance as of February 28, 2019	$	57	40	$	15	670,313	$	—	651				$	954,613				$	5,783,062		$	(3,357,665	)		(32,439	)				$	11,421,964			$	(1,465,013		)		$	13,337,033			$	391,512	$	13,728,545
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																								1,249,516								1,249,516				19,133				1,268,649																												1,356,968						1,356,968			18,200			1,375,168
Other comprehensive income (loss)																												(1,496		)		(1,496		)		(4,188		)		(5,684		)																													60,609			60,609			1,180			61,789
Purchases of Class A shares															568			(485,625		)	(2,792	)										(485,057		)		(568		)		(485,625		)																	811			(724,618		)	(3,821	)								(723,807		)	(811		)	(724,618		)
Share-based compensation expense											226,158				37,516																	263,674								263,674																238,677			36,252															274,929						274,929
Purchases/redemptions of Accenture Canada Holdings Inc. exchangeable shares and Class X shares									(14	)					(2,829		)															(2,829		)						(2,829		)											(15	)					(4,593		)													(4,593		)				(4,593		)
Issuances of Class A shares for employee share programs						1,523					(16,437		)		242,228			82,280			551			(249		)						307,822				355				308,177									2,207							(142,925		)	323,660			135,603			836			(16,263		)				300,075			325			300,400
Dividends											31,649													(961,914		)						(930,265		)		(1,250		)		(931,515		)														18,243												(525,968		)				(507,725		)	(656		)	(508,381		)
Other, net															(1,074		)															(1,074		)		640				(434		)																	1,674															1,674			(2,851		)	(1,177		)
Balance as of May 31, 2019	$	57	40	$	15	671,836	$	—	637		$	1,195,983			$	6,059,471		$	(3,761,010	)	(34,680	)		$	11,709,317			$	(1,466,509	)		$	13,737,324			$	405,634			$	14,142,958
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.

Table of Contents

ACCENTURE PLC

CONSOLIDATED SHAREHOLDERS’ EQUITY STATEMENT

For the Three Months Ended ~~May 31,~~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 February 28, 2018 $ 57
40
$ 14
646,634
$ —
19,719
$ 884,982
$ 4,266,838
$ (2,552,028 ) (28,913 ) $ 8,149,090
$ (1,066,266 ) $ 9,682,687
$ 755,739
$ 10,438,426
Net income 1,043,020
1,043,020
15,121
1,058,141
Other comprehensive income (loss) (277,435 ) (277,435 ) (5,926 ) (283,361 )
Purchases of Class A ordinary shares 965
(719,873 ) (4,687 ) (718,908 ) (965 ) (719,873 )
Share-based compensation expense 211,739
34,161
245,900
245,900
Purchases/redemptions of Accenture Holdings plc ordinary shares, Accenture Canada Holdings Inc. exchangeable shares and Class X ordinary shares (312 ) (312 ) (312 )
Issuances of Class A ordinary shares:
Employee share programs 1,674
(15,157 ) 227,497
70,889
587
283,229
376
283,605
Upon redemption of Accenture Holdings plc ordinary shares 1
25,554
(19,054 ) 404,911
404,912
(404,912 )
Dividends 29,387
(883,218 ) (853,831 ) (1,279 ) (855,110 )
Other, net 125
(12,062 ) (11,937 ) (2,743 ) (14,680 )
Balance as of May 31, 2018 $ 57
40
$ 15
673,862
$ —
665
$ 1,110,951
$ 4,934,185
$ (3,201,012 ) (33,013 ) $ 8,296,830
$ (1,343,701 ) $ 9,797,325
$ 355,411
$ 10,152,736



	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		Restricted Share Units			Additional Paid-in Capital			$			No. Shares		Retained Earnings			Accumulated Other Comprehensive Loss			Total Accenture plc Shareholders’ Equity			Noncontrolling Interests			Total Shareholders’ Equity
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.

~~Table of Contents~~

~~ACCENTURE PLC~~

~~CONSOLIDATED SHAREHOLDERS’ EQUITY STATEMENT~~

~~For the Nine Months Ended May 31, 2019~~

~~(In thousands of U.S. dollars and share amounts)~~

~~(Unaudited)~~

Ordinary
Shares

Class A
Ordinary
Shares

Class X
Ordinary
Shares

Restricted
Share
Units

Additional
Paid-in
Capital
Treasury Shares
Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Total
Accenture plc
Shareholders’
Equity

Noncontrolling
Interests

Total
Shareholders’
Equity
$
No.
Shares
$
No.
Shares
$
No.
Shares
$
No.
Shares

Balance as of August 31, 2018 $ 57
40
$ 15
663,328
$ —
656
$ 1,234,623
$ 4,870,764
$ (2,116,948 ) (24,333 ) $ 7,952,413
$ (1,576,171 ) $ 10,364,753
$ 359,835
$ 10,724,588
Cumulative effect adjustment 2,134,818
2,134,818
3,158
2,137,976
Net income 3,648,685
3,648,685
52,008
3,700,693
Other comprehensive income (loss) 109,662
109,662
(4,859 ) 104,803
Purchases of Class A shares 2,841
(2,268,189 ) (14,316 ) (2,265,348 ) (2,841 ) (2,268,189 )
Share-based compensation expense 787,633
69,319
856,952
856,952
Purchases/redemptions of Accenture Canada Holdings Inc. exchangeable shares and Class X shares (19 ) (16,399 ) (16,399 ) (16,399 )
Issuances of Class A shares for employee share programs 8,508
(884,308 ) 1,134,959
624,127
3,969
(121,250 ) 753,528
926
754,454
Dividends 58,035
(1,919,760 ) (1,861,725 ) (2,628 ) (1,864,353 )
Other, net (2,013 ) 14,411
12,398
35
12,433
Balance as of May 31, 2019 $ 57
40
$ 15
671,836
$ —
637
$ 1,195,983
$ 6,059,471
$ (3,761,010 ) (34,680 ) $ 11,709,317
$ (1,466,509 ) $ 13,737,324
$ 405,634
$ 14,142,958

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

~~Table of Contents~~

~~ACCENTURE PLC~~

~~CONSOLIDATED SHAREHOLDERS’ EQUITY STATEMENT~~

~~For the Nine Months Ended May 31, 2018~~

~~(In thousands of U.S. dollars and share amounts)~~

~~(Unaudited)~~

Ordinary
Shares Class A
Ordinary
Shares Class X
Ordinary
Shares Restricted
Share
Units Additional
Paid-in
Capital Treasury Shares Retained
Earnings Accumulated
Other
Comprehensive
Loss Total
Accenture plc
Shareholders’
Equity Noncontrolling
Interests Total
Shareholders’
Equity
$ No.
Shares $ No.
Shares $ No.
Shares $ No.
Shares
Balance as of August 31, 2017 $ 57
40
$ 14
638,966
$ —
20,531
$ 1,095,026
$ 3,516,399
$ (1,649,090 ) (23,449 ) $ 7,081,855
$ (1,094,784 ) $ 8,949,477
$ 760,723
$ 9,710,200
Net income 3,030,383
3,030,383
135,840
3,166,223
Other comprehensive income (loss) (248,917 ) (248,917 ) 340
(248,577 )
Purchases of Class A ordinary shares 49,029
(2,004,114 ) (13,337 ) (1,955,085 ) (49,029 ) (2,004,114 )
Share-based compensation expense 688,719
63,107
751,826
751,826
Purchases/redemptions of Accenture Holdings plc ordinary shares, Accenture Canada Holdings Inc. exchangeable shares and Class X ordinary shares (812 ) (78,318 ) (78,318 ) (4,838 ) (83,156 )
Issuances of Class A ordinary shares:
Employee share programs 8,990
(729,020 ) 997,725
452,192
3,773
(68,656 ) 652,241
14,589
666,830
Upon redemption of Accenture Holdings plc ordinary shares 1
25,906
(19,054 ) 408,652
408,653
(408,653 ) —
Dividends 56,226
(1,727,298 ) (1,671,072 ) (37,652 ) (1,708,724 )
Other, net (22,409 ) (19,454 ) (41,863 ) (55,909 ) (97,772 )
Balance as of May 31, 2018 $ 57
40
$ 15
673,862
$ —
665
$ 1,110,951
$ 4,934,185
$ (3,201,012 ) (33,013 ) $ 8,296,830
$ (1,343,701 ) $ 9,797,325
$ 355,411
$ 10,152,736

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

Table of Contents

ACCENTURE PLC

CONSOLIDATED CASH FLOWS STATEMENTS

For the ~~Nine~~Three Months Ended ~~May 31,~~November 30, 2019 and 2018

(In thousands of U.S. dollars)

(Unaudited)


	May 31, 2019			May 31, 2018			2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	3,700,693		$	3,166,223		$	1,375,168		$	1,291,324
Adjustments to reconcile Net income to Net cash provided by (used in) operating activities —
Depreciation, amortization and asset impairments	652,592			691,686
Depreciation, amortization and other							399,458			211,685
Share-based compensation expense	856,952			751,826			274,929			246,516
Deferred income taxes, net	(47,130		)	(75,985		)
Deferred tax expense (benefit)							36,591			(2,634		)
Other, net	(85,725		)	44,135			(120,927		)	(42,244		)
Change in assets and liabilities, net of acquisitions —
Receivables and contract assets, current and non-current	(493,733		)	(652,315		)	(436,872		)	(536,882		)
Other current and non-current assets	(373,142		)	(241,979		)	(101,096		)	(155,787		)
Accounts payable	94,144			(132,607		)	(61,929		)	(14,487		)
Deferred revenues, current and non-current	342,633			85,853			(185,313		)	13,280
Accrued payroll and related benefits	(67,970		)	7,469			(261,592		)	81,117
Income taxes payable, current and non-current	(52,518		)	100,939			84,840			(47,554		)
Other current and non-current liabilities	(16,096		)	172,188			(216,346		)	(16,826		)
Net cash provided by (used in) operating activities	4,510,700			3,917,433			786,911			1,027,508
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(357,749		)	(439,804		)	(95,063		)	(77,691		)
Purchases of businesses and investments, net of cash acquired	(1,055,915		)	(456,402		)	(109,848		)	(200,417		)
Proceeds from sales of businesses and investments, net of cash transferred	27,915			14,325
Proceeds from sales of businesses and investments							39,200			441
Other investing, net	6,041			7,245			(182		)	4,799
Net cash provided by (used in) investing activities	(1,379,708		)	(874,636		)	(165,893		)	(272,868		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of ordinary shares	754,453			666,830
Proceeds from issuance of shares							300,400			266,182
Purchases of shares	(2,284,587		)	(2,087,270		)	(729,211		)	(788,327		)
Proceeds from (repayments of) long-term debt, net	(983		)	(456		)	(570		)	(369		)
Cash dividends paid	(1,864,353		)	(1,708,724		)	(508,381		)	(932,838		)
Other, net	(20,683		)	(47,792		)	(10,462		)	(6,816		)
Net cash provided by (used in) financing activities	(3,416,153		)	(3,177,412		)	(948,224		)	(1,462,168		)
Effect of exchange rate changes on cash and cash equivalents	(7,041		)	(63,400		)	10,890			9,958
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(292,202		)	(198,015		)	(316,316		)	(697,570		)
CASH AND CASH EQUIVALENTS, beginning of period	5,061,360			4,126,860			6,126,853			5,061,360
CASH AND CASH EQUIVALENTS, end of period	$	4,769,158		$	3,928,845		$	5,810,537		$	4,363,790
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid, net	$	1,052,517		$	1,133,641		$	292,787		$	297,166

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

108

Table of Contents

ACCENTURE PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

1. BASIS OF PRESENTATION

The accompanying unaudited interim Consolidated Financial Statements of Accenture plc and its controlled subsidiary companies have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. We use the terms “Accenture,” “we” and “our” in the Notes to Consolidated Financial Statements to refer to Accenture plc and its subsidiaries. These Consolidated Financial Statements should therefore be read in conjunction with the Consolidated Financial Statements and Notes thereto for the fiscal year ended August 31, ~~2018~~2019 included in our Annual Report on Form 10-K filed with the SEC on October ~~24, 2018.~~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 ~~and nine~~ months ended ~~May 31,~~November 30, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending August 31, ~~2019.~~

On March 13, 2018, Accenture Holdings plc merged with and into Accenture plc, with Accenture plc as the surviving entity. As a result, all of the assets and liabilities of Accenture Holdings plc were acquired by Accenture plc, and Accenture Holdings plc ceased to exist. In connection with this internal merger, shareholders of Accenture Holdings plc (other than Accenture entities that held shares of Accenture Holdings plc), who primarily consisted of current and former members of Accenture Leadership and their permitted transferees, received one Class A ordinary share of Accenture plc for each share of Accenture Holdings plc that they owned, and Accenture plc redeemed all Class X ordinary shares of Accenture plc owned by such shareholders.2020.

Allowances for Client Receivables

As of ~~May 31,~~November 30, 2019 and August 31, ~~2018,~~2019, total allowances recorded for client receivables were ~~$49,216~~$45,016 and ~~$49,913,~~$45,538, respectively.

Depreciation and Amortization

Depreciation expense was ~~$109,398~~$97,090 and ~~$322,746~~$102,713 for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2019~~, respectively,~~ and ~~$101,814 and $315,410 for the~~ ~~three and nine months ended May 31,~~ 2018, respectively. As of ~~May 31,~~November 30, 2019 and August 31, ~~2018,~~2019, total accumulated depreciation was ~~$2,074,736~~$2,096,462 and ~~$1,862,098,~~$1,956,029, respectively. Deferred transition amortization expense was ~~$67,225~~$67,914 and ~~$204,313~~$68,879 for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2019~~, respectively,~~ and ~~$95,696 and $248,838 for the~~ ~~three and nine months ended May 31,~~ 2018, respectively. See Note 6 (Goodwill and Intangible Assets) to these Consolidated Financial Statements for intangible asset amortization balances.

~~Recently Adopted Accounting Pronouncements~~

~~Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2014-09~~ (~~“Topic 606”)~~

On September 1, 2018, we adopted FASB ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which replaced most existing revenue recognition guidance. The core principle of Topic 606 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. Topic 606 has been applied to contracts that were not completed as of September 1, 2018. Results for reporting periods beginning after September 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting. See Note 2 (Revenues) to these Consolidated Financial Statements for further details.

In connection with the adoption of Topic 606, we are now presenting total revenues and no longer reporting revenues before reimbursements. Prior period results have been revised to reflect this change in presentation. As a result of this change, for the ~~three and nine months ended May 31, 2018, both total revenues and cost of services~~

119

Table of Contents

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

~~decreased~~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 ~~$143,858~~both operating and ~~$472,632, respectively,~~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 ~~hardware/software resale previously included in reimbursements. This change had no~~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 ~~operating income.~~

~~The impact of adopting the new standard was not material to~~ our Consolidated Financial Statements. The primary impacts included additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from client contracts, including judgments and changes in estimates. Upon adoption, we recorded a decrease to retained earnings of $6,451, net of a tax impact of $3,071, as of September 1, 2018.Income Statement.

The impact of adopting ~~the new standard for the~~ ~~three and nine months ended May 31, 2019~~ was an increase to revenues of approximately $35.8 million and $54.5 million, respectively. The impact on our balance sheet as of May 31, 2019 was not material with the exception of the classification of $2.4 billion of receivables and $589.6 million of contract assets, which were previously classified as Unbilled services, net.

~~FASB ASU No. 2016-16~~

On September 1, 2018, we adopted FASB ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, which requires an entity to recognize the income tax consequences of intra-entity transfers, other than inventory, when the transfer occurs. Upon adoption, we recorded deferred tax assets and an increase in retained earnings of $2,144,427, and we will recognize incremental income tax expense as these deferred tax assets are utilized. Our fiscal 2019 annual effective tax rate is expected to be approximately 3.3% higher due to the adoption. The adoption had no impact on cash flows.

~~The impact of adoption as of September 1, 2018 of FASB ASU No. 2014-09 (Topic 606) and No. 2016-16 (Topic 740)~~Topic 842 on our Consolidated Balance Sheets was as follows:

Balance as of
August 31, 2018 Adjustments Due to ASU 2014-09 (Topic 606) Adjustments Due to ASU 2016-16 (Topic 740) Balance as of September 1, 2018
Balance Sheet
CURRENT ASSETS
Receivables from clients, net $ 4,996,454
$ 2,100,402
$ —
$ 7,096,856
Unbilled services, net 2,499,914
(2,499,914 ) —
—
Contract assets —
547,809
—
547,809
Receivables and contract assets $ 7,496,368
$ 148,297
$ —
$ 7,644,665
NON-CURRENT ASSETS
Unbilled services, net $ 23,036
$ (23,036 ) $ —
$ —
Contract assets —
23,036
—
23,036
Deferred contract costs 705,124
(2,867 ) —
702,257
Deferred income taxes, net 2,086,807
3,071
2,144,427
4,234,305

CURRENT LIABILITIES
Deferred revenues 2,837,682
154,952
—
2,992,634
SHAREHOLDERS' EQUITY
Retained earnings 7,952,413
(6,451 ) 2,144,427
10,090,389



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. ~~2017-07~~2018-09 (“Subtopic 350-40”)

On September 1, ~~2018,~~2019, we prospectively adopted FASB ASU No. ~~2017-07, Compensation-Retirement Benefits (Topic 715): Improving~~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 ~~Presentation~~accounting and capitalization of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The new guidance amends certain presentation and disclosure requirements for employers with defined benefit pension and post-retirement medical plans. The standard requires theimplementation costs in cloud computing arrangements that are service cost component of the net benefit cost to be in the same line item as other compensation in operating income and the other components of net benefit cost to be presented outside of operating income on a retrospective basis. Upon adoption, we reclassified $15 million and $41 million for the ~~three and nine months ended May 31, 2018, respectively and $58 million for~~ ~~fiscal 2018~~ ~~of operating expenses to non-operating expense to conform~~arrangements with the ~~fiscal 2019~~ ~~treatment of these expenses.~~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.

Table of Contents

ACCENTURE PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

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

(Unaudited)

~~FASB ASU No. 2016-01~~

On September 1, 2018, we adopted FASB ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The standard requires investments previously accounted for under the cost method of accounting to be measured at fair value with changes in fair value recognized in net income. Investments in equity securities that do not have readily determinable fair values will be measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions. We adopted this standard using the prospective method. The adoption did not have a material impact on our Consolidated Financial Statements.

~~New Accounting Pronouncement~~

~~The following standard, issued by the FASB, will result in a change in practice and will have a financial impact on our Consolidated Financial Statements:~~

2. REVENUES

~~We account for revenue in accordance with Topic 606, which we adopted on September 1, 2018 using the modified retrospective method.~~Disaggregation of Revenue

~~Performance Obligations~~

~~A performance obligation is a promise in a contract~~See Note 12 (Segment Reporting) to transfer a distinct good or service to the client and is the unit of accounting in Topic 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation based on the relative standalone selling price. The primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which we forecast our expected costs of satisfying a performance obligation and then add an appropriate margin for that distinct good or service based on margins for similar services sold on a standalone basis. While determining relative standalone selling price and identifying separate performance obligations require judgment, generally relative standalone selling prices and the separate performance obligations are readily identifiable as we sell those performance obligations unaccompanied by other performance obligations. Contract modifications are routine in the performance of our contracts. Contracts are often modified to account for changes in the contract specifications, requirements or duration. If a contract modification results in the addition of performance obligations priced at a standalone selling price or if the post-modification services are distinct from the services provided prior to the modification, the modification is accounted for separately. If the modified services are not distinct, they are accounted for as part of the existing contract.

Our revenues are derived from contracts for outsourcing services, technology integration consulting services and non-technology consulting services. These contracts have different terms based on the scope, performance obligations and complexity of the engagement, which frequently require us to make judgments and estimates in recognizing revenues. We have many types of contracts, including time-and-materials contracts, fixed-price contracts, fee-per-transaction contracts and contracts with multiple fee types.

The nature of our contracts gives rise to several types of variable consideration, including incentive fees. Many contracts include incentives or penalties related to costs incurred, benefits produced or adherence to schedules that

~~Table of Contents~~

~~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)~~

may increase the variability in revenues and margins earned on such contracts. These variable amounts generally are awarded or refunded upon achievement of or failure to achieve certain performance metrics, milestones or cost targets and can be based upon client discretion. We include these variable fees in the estimated transaction price when there is a basis to reasonably estimate the amount of the fee and it is not probable a significant reversal of revenue will occur. These estimates reflect the expected value of the variable fee and are based on an assessment of our anticipated performance, historical experience and other information available at the time.

Our performance obligations are satisfied over time as work progresses or at a point in time. The majority of our revenues are recognized over time based on the extent of progress towards satisfying our performance obligations. The selection of the method to measure progress towards completion requires judgment and is based on the contract and the nature of the services to be provided.

~~Outsourcing Contracts~~

Our outsourcing contracts typically span several years. Revenues are generally recognized on outsourcing contracts over time because our clients benefit from the services as they are performed. Outsourcing contracts require us to provide a series of distinct services each period over the contract term. Revenues from unit-priced contracts are recognized as transactions are processed. When contractual billings represent an amount that corresponds directly with the value provided to the client (e.g., time-and-materials contracts), revenues are recognized as amounts become billable in accordance with contract terms.

~~Technology Integration Consulting Services~~

~~Revenues from contracts for technology integration consulting services where we design/redesign, build and implement new or enhanced systems and related processes~~Consolidated Financial Statements for our clients are recognized over time as control of the system is transferred continuously to the client. Contracts for technology integration consulting services generally span six months to two years. Generally, revenue is recognized using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Revenues, including estimated fees, are recorded proportionally as costs are incurred. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the client.

~~Non-Technology Integration Consulting Services~~

Our contracts for non-technology integration consulting services are typically less than a year in duration. Revenues are generally recognized over time as our clients benefit from the services as they are performed, or the contract includes termination provisions enabling payment for performance completed to date. When contractual billings represent an amount that corresponds directly with the value provided to the client (e.g. time-and-materials contracts), revenues are recognized as amounts become billable in accordance with contract terms. Revenues from fixed-price contracts are generally recognized using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the client. For non-technology integration consulting contracts which do not qualify to recognize revenue over time, we recognize revenues at a point in time when we satisfy our performance obligations and the client obtains control of the promised good or service.disaggregated revenues.

Remaining Performance Obligations

~~On May~~We had remaining performance obligations of approximately $19 billion and $20 billion as of November 30, 2019 and August 31, 2019, ~~we had approximately $18 billion of remaining performance obligations.~~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 ~~39%~~61% of our remaining performance obligations as of November 30, 2019 as revenue in fiscal ~~2019,~~2020, an additional ~~37%~~19% in fiscal ~~2020,~~2021, and the balance thereafter.

~~See Note 11 (Segment Reporting) to these Consolidated Financial Statements for our disaggregated revenues.~~

~~Table of Contents~~

~~ACCENTURE PLC~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)~~

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

~~(Unaudited)~~

Contract Estimates

Estimates of total contract revenues and costs are continuously monitored over the life of our contracts, and recorded revenues and cost estimates are subject to revision as the contract progresses. If at any time the estimate of contract profitability indicates an anticipated loss on a technology integration consulting contract, we recognize the loss in the quarter it first becomes probable and reasonably estimable.

Adjustments in contract estimates related to performance obligations satisfied or partially satisfied in prior periods ~~increased our revenues by approximately $16 million and decreased our revenues by approximately $13 million~~were immaterial for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2019, and 2018, respectively. ~~No adjustment on any one contract was material to our Consolidated Financial Statements for the~~ ~~three and nine months ended May 31, 2019~~.

Contract Balances

The timing of revenue recognition, billings and cash collections results in Receivables, Contract assets, and Deferred revenues (Contract liabilities) on our Consolidated Balance Sheet. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., monthly or quarterly) or upon achievement of contractual milestones. Our receivables are rights to consideration that are conditional only upon the passage of time as compared to our contract assets, which are rights to consideration conditional upon additional factors. When we bill or receive payments from our clients before revenue is recognized, we record Contract liabilities. Contract assets and liabilities are reported on our Consolidated Balance Sheet on a contract-by-contract basis at the end of each reporting period.

For some outsourcing contracts, we receive payments for transition or set-up activities, which are deferred and recognized as revenue as the services are provided. These advance payments are typically not a significant financing component because they are used to meet working capital demands in the early stages of a contract and to protect us from the other party failing to complete its obligations under the contract. Deferred transition revenues were ~~$570,310~~$583,531 and ~~$581,395~~$563,245 as of ~~May 31,~~November 30, 2019 and August 31, ~~2018,~~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 ~~$685,605~~$691,727 and ~~$690,868~~$681,492 as of ~~May 31,~~November 30, 2019 and August 31, ~~2018,~~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):


	May 31, 2019		As of September 1, 2018 (as adjusted)		As of November 30, 2019		As of August 31, 2019
Receivables, net of allowance	$	7,544,573	$	7,096,856	$	7,908,781	$	7,467,338
Contract assets (current)	589,574		547,809		668,605		627,733
Receivables and contract assets (current)	8,134,147		7,644,665		8,577,386		8,095,071
Contract assets (non-current)	19,739		23,036		58,071		71,002
Deferred revenues (current)	3,255,784		2,992,634		2,986,524		3,188,835
Deferred revenues (non-current)	571,769		618,124		585,301		565,224

Changes in the contract asset and liability balances during the ~~nine~~three months ended ~~May 31,~~November 30, 2019, were a result of normal business activity and not materially impacted by any other factors.

Revenues recognized during the three ~~and nine~~ months ended ~~May 31,~~November 30, 2019 that were included in Deferred revenues as of ~~February 28,~~August 31, 2019 ~~and~~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 ~~$1.7 billion and $2.7 billion, respectively.~~$1.8 billion.

1511

Table of Contents

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				Nine Months Ended				Three Months Ended
	May 31, 2019		May 31, 2018		May 31, 2019		May 31, 2018		November 30, 2019		November 30, 2018
Basic earnings per share
Net income attributable to Accenture plc	$	1,249,516	$	1,043,020	$	3,648,685	$	3,030,383	$	1,356,968	$	1,274,720
Basic weighted average Class A ordinary shares	637,831,341		639,217,344		638,439,707		624,365,464		635,722,309		638,877,445
Basic earnings per share	$	1.96	$	1.63	$	5.72	$	4.85	$	2.13	$	2.00
Diluted earnings per share
Net income attributable to Accenture plc	$	1,249,516	$	1,043,020	$	3,648,685	$	3,030,383	$	1,356,968	$	1,274,720
Net income attributable to noncontrolling interests in Accenture Holdings plc and Accenture Canada Holdings Inc. (1)	1,676		6,997		5,213		93,531
Net income attributable to noncontrolling interest in Accenture Canada Holdings Inc. (1)									1,741		1,888
Net income for diluted earnings per share calculation	$	1,251,192	$	1,050,017	$	3,653,898	$	3,123,914	$	1,358,709	$	1,276,608
Basic weighted average Class A ordinary shares	637,831,341		639,217,344		638,439,707		624,365,464		635,722,309		638,877,445
Class A ordinary shares issuable upon redemption/exchange of noncontrolling interests (1)	855,508		4,294,411		912,175		19,354,992
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	10,531,355		11,017,024		10,680,792		11,853,822		12,626,225		12,093,353
Diluted effect of share purchase plans related to Class A ordinary shares	79,513		71,247		112,257		165,290		225,395		235,316
Diluted weighted average Class A ordinary shares	649,297,717		654,600,026		650,144,931		655,739,568		649,389,444		652,151,450
Diluted earnings per share	$	1.93	$	1.60	$	5.62	$	4.76	$	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 and the redemption of all Accenture Holdings plc ordinary shares owned by holders of noncontrolling interests prior to March 13, 2018, when these were redeemed for Accenture plc Class A ordinary shares.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.

Table of Contents

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						Nine Months Ended						Three Months Ended
	May 31, 2019			May 31, 2018			May 31, 2019			May 31, 2018			November 30, 2019			November 30, 2018
Foreign currency translation
Beginning balance	$	(1,042,240	)	$	(675,752	)	$	(1,075,268	)	$	(770,043	)	$	(1,207,975	)	$	(1,075,268	)
Foreign currency translation	(108,056		)	(240,840		)	(74,444		)	(137,279		)	40,145			(12,396		)
Income tax benefit (expense)	1,115			1,264			(246		)	1,081			(1,264		)	1,324
Portion attributable to noncontrolling interests	4,321			8,579			5,098			(508		)	(1,151		)	2,455
Foreign currency translation, net of tax	(102,620		)	(230,997		)	(69,592		)	(136,706		)	37,730			(8,617		)
Ending balance	(1,144,860		)	(906,749		)	(1,144,860		)	(906,749		)	(1,170,245		)	(1,083,885		)

Defined benefit plans
Beginning balance	(392,293		)	(426,500		)	(419,284		)	(440,619		)	(672,323		)	(419,284		)
Actuarial gains (losses)	—			12,044			—			12,044
Pension settlement	—			—			—			2,119
Prior service costs arising during the period	—			(29,796		)	—			(29,796		)
Reclassifications into net periodic pension and post-retirement expense (1)	8,389			9,675			39,718			28,472			12,784			22,894
Income tax benefit (expense)	(2,492		)	4,806			(6,793		)	(1,386		)	(4,021		)	(2,451		)
Portion attributable to noncontrolling interests	(7		)	588			(44		)	(17		)	(11		)	(30		)
Defined benefit plans, net of tax	5,890			(2,683		)	32,881			11,436			8,752			20,413
Ending balance	(386,403		)	(429,183		)	(386,403		)	(429,183		)	(663,571		)	(398,871		)

Cash flow hedges
Beginning balance	(32,356		)	33,641			(84,010		)	114,635			38,993			(84,010		)
Unrealized gain (loss)	142,416			(33,755		)	219,441			(79,140		)	38,408			115,678
Reclassification adjustments into Cost of services	(19,512		)	(21,265		)	(25,772		)	(81,986		)	(20,019		)	1,878
Income tax benefit (expense)	(26,395		)	14,506			(45,436		)	36,145			(4,244		)	(29,082		)
Portion attributable to noncontrolling interests	(127		)	(3,287		)	(197		)	186			(18		)	(130		)
Cash flow hedges, net of tax	96,382			(43,801		)	148,036			(124,795		)	14,127			88,344
Ending balance (2)	64,026			(10,160		)	64,026			(10,160		)	53,120			4,334

Investments
Beginning balance	1,876			2,345			2,391			1,243			728			2,391
Unrealized gain (loss)	(1,454		)	—			(1,970		)	1,454			—			(516		)
Income tax benefit (expense)	305			—			305			(305		)
Portion attributable to noncontrolling interests	1			46			2			(1		)	—			1
Investments, net of tax	(1,148		)	46			(1,663		)	1,148			—			(515		)
Ending balance	728			2,391			728			2,391			728			1,876

Accumulated other comprehensive loss	$	(1,466,509	)	$	(1,343,701	)	$	(1,466,509	)	$	(1,343,701	)	$	(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 ~~May 31,~~November 30, 2019, $~~55,844~~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.

1713

Table of Contents

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 ~~nine~~three months ended ~~May 31,~~November 30, 2019, we completed individually immaterial acquisitions for total consideration of ~~$1,034,730,~~$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, 2018		Additions/ Adjustments		Foreign Currency Translation			May 31, 2019		August 31, 2019		Additions/ Adjustments			Foreign Currency Translation		November 30, 2019
Communications, Media & Technology	$	865,509	$	109,966	$	(13,736	)	$	961,739	$	992,743	$	19,381		$	4,577	$	1,016,701
Financial Services	1,162,066		193,802		(12,487		)	1,343,381		1,393,628		(1,027		)	8,736		1,401,337
Health & Public Service	959,048		40,585		(4,823		)	994,810		1,005,428		27,076			3,014		1,035,518
Products	1,948,401		373,042		(28,009		)	2,293,434		2,328,317		19,355			10,526		2,358,198
Resources	447,988		43,518		(6,054		)	485,452		485,434		381			2,435		488,250
Total	$	5,383,012	$	760,913	$	(65,109	)	$	6,078,816	$	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, 2018							May 31, 2019							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		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer-related	$	862,418	$	(299,702	)	$	562,716	$	1,008,968	$	(326,828	)	$	682,140	$	1,013,976	$	(358,130	)	$	655,846	$	1,053,237	$	(398,751	)	$	654,486
Technology	94,844		(55,690		)	39,154		83,655		(50,701		)	32,954		119,686		(45,851		)	73,835		111,510		(42,838		)	68,672
Patents	128,179		(66,659		)	61,520		129,042		(67,075		)	61,967		127,796		(66,167		)	61,629		127,552		(65,833		)	61,719
Other	50,490		(26,770		)	23,720		90,888		(24,106		)	66,782		78,344		(28,875		)	49,469		76,985		(32,555		)	44,430
Total	$	1,135,931	$	(448,821	)	$	687,110	$	1,312,553	$	(468,710	)	$	843,843	$	1,339,802	$	(499,023	)	$	840,779	$	1,369,284	$	(539,977	)	$	829,307

Total amortization related to our intangible assets was ~~$44,686~~$53,372 and ~~$125,533~~$40,093 for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2019~~, respectively. Total amortization related to our intangible assets was $40,879~~ and ~~$127,438 for the~~ ~~three and nine months ended May 31,~~ 2018, respectively. Estimated future amortization related to intangible assets held as of ~~May 31,~~November 30, 2019 is as follows:


Fiscal Year	Estimated Amortization		Estimated Amortization
Remainder of 2019	$	67,692
2020	166,331
Remainder of 2020			$	145,127
2021	146,590		158,646
2022	127,480		137,918
2023	111,037		123,029
2024			98,037
Thereafter	224,713		166,550
Total	$	843,843	$	829,307

1814

Table of Contents

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%.

Table of Contents

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	)

Table of Contents

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 ~~nine~~three months ended ~~May 31,~~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, 2018
$ 1.46

October 18, 2018
$ 931,460

October 16, 2018
$ 1,378
$ 932,838
May 15, 2019
$ 1.46

April 11, 2019
$ 930,265

April 9, 2019
$ 1,250
$ 931,515
Total Dividends $ 1,861,725
$ 2,628
$ 1,864,353

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.

8.9. 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 ~~and nine~~ months ended ~~May 31,~~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 ~~$10,319~~$56,619 and ~~$88,247~~$48,983 for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2019~~, respectively,~~ and ~~net losses of $84,480 and $37,698 for the~~ ~~three and nine months ended May 31,~~ 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.

1917

Table of Contents

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:


	May 31, 2019		August 31, 2018			November 30, 2019		August 31, 2019
Assets
Cash Flow Hedges
Other current assets	$	65,691	$	29,380		$	59,675	$	53,033
Other non-current assets	57,006		1,065			50,686		49,525
Other Derivatives
Other current assets	23,206		28,700			7,126		8,059
Total assets	$	145,903	$	59,145		$	117,487	$	110,617
Liabilities
Cash Flow Hedges
Other accrued liabilities	$	9,847	$	50,870		$	9,952	$	18,826
Other non-current liabilities	4,969		64,365			6,390		8,770
Other Derivatives
Other accrued liabilities	8,185		25,455			14,292		32,195
Total liabilities	$	23,001	$	140,690		$	30,634	$	59,791
Total fair value	$	122,902	$	(81,545	)	$	86,853	$	50,826
Total notional value	$	8,923,252	$	8,783,014		$	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:


	May 31, 2019		August 31, 2018			November 30, 2019		August 31, 2019
Net derivative assets	$	131,648	$	23,599		$	98,125	$	88,811
Net derivative liabilities	8,746		105,144			11,272		37,985
Total fair value	$	122,902	$	(81,545	)	$	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 ~~$125,724~~$149,525 and $131,675 as of ~~May~~November 30, 2019 and August 31, 2019. Prior to the adoption of FASB ASU No. 2016-01, these investments were accounted for under the cost method. For additional information, see Note 1 (Basis of Presentation) to these Consolidated Financial Statements.2019, respectively.

~~Table of Contents~~

~~ACCENTURE PLC~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)~~

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

~~(Unaudited)~~

9.10. INCOME TAXES

On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the “Tax Act”), which significantly changed U.S. tax law. The Tax Act lowered the U.S. statutory federal income tax rate from 35% to 21%, effective January 1, 2018, resulting in a blended U.S. statutory federal income tax rate of 25.7% for our fiscal year ended August 31, 2018. In the three months ended February 28, 2018, we recognized tax expense of $136,724, primarily to remeasure our net deferred tax assets at the new, lower rates. In the three months ended May 31, 2018, we recorded additional tax expense of $40,927 resulting from our continued analysis of the Tax Act. Our analysis and accounting for the Tax Act is complete.

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 ~~May 31,~~November 30, 2019 and 2018 were ~~25.6%~~23.6% and ~~34.4%, respectively. Our effective tax rates for the~~ ~~nine months ended May 31, 2019~~ and 2018 were 21.1% and 27.2%, respectively. Excluding tax expense associated with the enactment of the Tax Act and $80,847 of expense from a non-U.S. tax law change, the effective tax rates would have been 26.8% and 21.3% for the ~~three and nine months ended May 31, 2018~~19.8%, respectively. The effective tax rate for the three months ended ~~May 31,~~November 30, 2019 was ~~lower~~higher primarily due to ~~changes in prior year tax liabilities and the geographic distribution of earnings, partially offset by higher expense from the adoption of FASB ASU No. 2016-16. The effective tax rate for the~~ ~~nine months ended May 31, 2019~~ ~~was~~ lower ~~primarily due to higher~~ benefits from final determinations of prior year taxes ~~changes in~~and the ~~geographic distribution~~phased-in effects of ~~earnings and adjustments to prior year~~US tax liabilities. These decreases were partially offset by higher expense from the adoption of FASB ASU No. 2016-16 and lower tax benefits from share-based payments. For additional information, see Note 1 (Basis of Presentation) to these Consolidated Financial Statements.reform.

~~10.~~Table of Contents

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

~~Commitments~~

~~We have either the right to purchase at fair value or, if certain events occur, may be required to purchase at fair value outstanding shares of our SinnerSchrader AG subsidiary. As of May 31, 2019~~ ~~and~~ August 31, 2018, we have reflected the fair value of approximately $41,000 and $47,000, respectively, related to redeemable common stock of the subsidiary in Other accrued liabilities in the Consolidated Balance Sheets.

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 ~~May 31,~~November 30, 2019 and August 31, ~~2018,~~2019, our aggregate potential liability to our clients for expressly limited guarantees involving the performance of third parties was approximately ~~$702,000~~$730,000 and $~~782,000,~~794,000, respectively, of which all but approximately ~~$130,000~~$144,000 and ~~$130,000,~~$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 ~~May 31,~~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.

2119

Table of Contents

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.~~12. SEGMENT REPORTING

Our reportable operating segments are our ~~five~~5 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								Revenues
	Three Months Ended				Nine Months Ended				Three Months Ended
	May 31, 2019		May 31, 2018 (1)		May 31, 2019		May 31, 2018 (1)		November 30, 2019		November 30, 2018
OPERATING GROUPS
Communications, Media & Technology	$	2,253,136	$	2,188,353	$	6,533,319	$	6,086,335	$	2,245,448	$	2,134,576
Financial Services	2,196,595		2,230,969		6,369,477		6,476,035		2,189,913		2,120,162
Health & Public Service	1,819,775		1,753,407		5,283,364		5,122,021		1,968,837		1,754,490
Products	3,077,227		2,971,195		8,912,588		8,417,382		3,216,705		2,928,510
Resources	1,747,977		1,546,138		5,040,143		4,352,006		1,733,533		1,651,539
Other	4,978		4,934		20,472		34,768		4,522		16,269
TOTAL REVENUES	$	11,099,688	$	10,694,996	$	32,159,363	$	30,488,547	$	11,358,958	$	10,605,546
GEOGRAPHIC REGIONS(1)
North America	$	5,147,948	$	4,743,465	$	14,758,046	$	13,601,132	$	5,287,812	$	4,856,302
Europe	3,770,458		3,875,429		11,112,038		11,056,792		3,789,657		3,713,832
Growth Markets	2,181,282		2,076,102		6,289,279		5,830,623		2,281,489		2,035,412
TOTAL REVENUES	$	11,099,688	$	10,694,996	$	32,159,363	$	30,488,547	$	11,358,958	$	10,605,546
TYPE OF WORK
Consulting	$	6,236,630	$	6,062,696	$	17,990,967	$	17,083,929	$	6,377,251	$	5,967,372
Outsourcing	4,863,058		4,632,300		14,168,396		13,404,618		4,981,707		4,638,174
TOTAL REVENUES	$	11,099,688	$	10,694,996	$	32,159,363	$	30,488,547	$	11,358,958	$	10,605,546

Operating Income
Three Months Ended Nine Months Ended
May 31, 2019 May 31, 2018 (1) May 31, 2019 May 31, 2018 (1)
OPERATING GROUPS
Communications, Media & Technology $ 425,059
$ 386,558
$ 1,180,418
$ 1,001,096
Financial Services 346,697
386,154
976,759
1,069,329
Health & Public Service 196,203
218,817
539,288
602,047
Products 459,276
456,026
1,272,039
1,247,468
Resources 290,708
187,320
765,077
509,155
TOTAL OPERATING INCOME $ 1,717,943
$ 1,634,875
$ 4,733,581
$ 4,429,095

_______________

(1)

Effective September 1, ~~2018,~~2019 we ~~adopted FASB ASU No. 2014-09, Revenue~~revised the reporting of our geographic regions for the movement of one country from Contracts with Customers (Topic 606) and FASB ASU No. 2017-07, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.Growth Markets to Europe. Prior period amounts have been ~~revised~~reclassified to conform with the current period presentation. ~~In addition, we updated operating group results for fiscal 2018 to include an acquisition previously categorized within Other.~~



	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

2220

Table of Contents

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, ~~2018~~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, ~~2018~~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 ~~2019”~~2020” means the 12-month period that will end on August 31, ~~2019~~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.

2321

Table of Contents

As a result of our geographically diverse operations and our growth strategy to continue ~~geographic expansion,~~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.


•	~~Our ability to attract and retain business and employees may depend on our reputation in the marketplace.~~


•	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 ~~payments that link some of our~~ fees subject to the attainment of ~~performance~~targets or ~~business targets and/or require us to meet~~ specific service levels. This could increase the variability of our revenues and impact our margins.


•	~~Our results of operations and share price could be adversely affected if we are unable to maintain effective internal controls.~~


•	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, ~~2018.~~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.

2422

Table of Contents

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 and Japanese yen.~~pound. Unfavorable fluctuations in foreign currency exchange rates have had and could have in the future a material effect on our financial results.

Effective September 1, 2018, we adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). In connection with the adoption, we present total revenues and no longer report revenues before reimbursements (net revenues). This change has no impact on operating income but does affect ratios calculated as a percentage of revenue, such as operating margin. Prior period results have been revised to reflect the fiscal 2019 presentation. For additional information, see Note 1 (Basis of Presentation) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

Summary of Results

Revenues for the ~~third~~first quarter of fiscal ~~2019~~2020 increased ~~4% in U.S. dollars and 8% in local currency compared to the~~ ~~third quarter of fiscal 2018. Revenues for the~~ ~~nine months ended May 31, 2019~~ ~~increased 5%~~7% in U.S. dollars and 9% in local currency compared to the ~~nine months ended May 31, 2018~~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 ~~third~~first quarter of fiscal ~~2019~~2020, revenue growth in local currency was very strong in ~~Resources, strong in Products, Communication, Media & Technology and~~ Health & Public Service and ~~solid~~Products and strong in Resources, Communications, Media & Technology and Financial Services. We experienced local currency revenue growth that was very strong ~~growth~~ in Growth Markets and strong ~~growth~~ in North America and ~~solid growth in~~ Europe. Revenue growth in local currency was ~~very~~ strong in both outsourcing and ~~strong in~~ consulting during the ~~third~~first quarter of fiscal ~~2019~~2020. While the business environment remained competitive, we experienced pricing improvement in ~~several~~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 ~~third~~first quarter of fiscal ~~2019~~2020 increased ~~3% in U.S. dollars and~~ 7% ~~in local currency compared to the~~ ~~third quarter of fiscal 2018. Consulting revenues for the~~ ~~nine months ended May 31, 2019~~ ~~increased 5%~~ in U.S. dollars and 9% in local currency compared to the ~~nine months ended May 31, 2018~~first quarter of fiscal 2019. Consulting revenue growth in local currency in the ~~third~~first quarter of fiscal ~~2019~~2020 was led by very ~~strong growth in Resources,~~ strong growth in Health & Public Service and Products and ~~modest~~strong growth in Communications, Media & Technology and Resources, while Financial ~~Services.~~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 ~~third~~first quarter of fiscal ~~2019~~2020 increased ~~5% in U.S. dollars and 10% in local currency compared to the~~ ~~third quarter of fiscal 2018. Outsourcing revenues for the~~ ~~nine months ended May 31, 2019~~ ~~increased 6%~~7% in U.S. dollars and 9% in local currency compared to the ~~nine months ended May 31, 2018~~first quarter of fiscal 2019. Outsourcing revenue growth in local currency in the ~~third~~first quarter of fiscal ~~2019~~2020 was led by very strong growth in Financial Services and Resources and strong growth in Health & Public Service, Products and Communications, Media & ~~Technology, strong growth in Financial Services and solid growth in Health & Public Service.~~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 ~~three and nine months ended May 31, 2019~~first quarter of fiscal 2020 compared to the ~~three and nine months ended May 31, 2018~~first quarter of fiscal 2019, resulting in unfavorable currency translation and U.S. dollar revenue growth that was approximately ~~5% and 4%~~2% lower ~~respectively,~~ than our revenue growth in local currency. Assuming that exchange rates stay within recent

~~Table of Contents~~

ranges for the remainder of fiscal ~~2019~~2020, we estimate that our full fiscal ~~2019~~2020 revenue growth in U.S. dollars will be approximately 3%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.

Table of Contents

Utilization for the ~~third~~first quarter of fiscal ~~2019~~2020 was 91%, ~~consistent with~~down from 92% in the ~~third~~first quarter of fiscal ~~2018~~.2019. We ~~continue to~~ hire to meet current and projected future demand. We proactively plan and manage the size and composition of our workforce and take actions as needed to address changes in the anticipated demand for our services 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 ~~482,000~~505,000 as of ~~May 31,~~November 30, 2019, compared to approximately ~~449,000~~469,000 as of ~~May 31,~~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 ~~third~~first quarter of fiscal ~~2019~~2020 was ~~18%~~14%, updown from ~~17%~~15% in the ~~third~~first quarter of fiscal ~~2018~~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 ~~gross~~ 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.

Effective September 1, 2018, we adopted ASU No. 2017-07, Compensation—Retirement Benefits (Topic 715), which required us to reclassify certain components of pension costs from operating expenses to non-operating expenses. Prior period results have been revised to reflect the fiscal 2019 presentation. For additional information, see Note 1 (Basis of Presentation) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

Gross margin (Revenues less Cost of services as a percentage of Revenues) for the ~~third~~first quarter of fiscal ~~2019~~2020 was ~~31.8%~~32.1%, compared with ~~31.2%~~31.1% for the ~~third~~first quarter of fiscal ~~2018. Gross margin for the~~ ~~nine months ended May 31,~~ 2019 ~~was 30.7% compared with 30.4% for the~~ ~~nine months ended May 31, 2018~~. The increase in gross margin for the ~~third~~first quarter of fiscal ~~2019~~2020 was primarily due to lower labor costs as a percentage of revenues compared to the ~~third quarter of fiscal 2018. The increase in gross margin for the nine months ended May 31, 2019 was primarily due to lower non-payroll and labor costs as a percentage of revenues compared to the~~ same period in fiscal ~~2018.~~2019.

Sales and marketing and General and administrative costs as a percentage of revenues were ~~16.3%~~16.6% for the ~~third~~first quarter of fiscal 2020, compared with 15.7% for the first quarter of fiscal 2019 ~~and 16.0% for~~. For the ~~nine months ended May 31, 2019, compared with 15.9% for the~~ ~~third~~first quarter of fiscal ~~2018~~ ~~and 15.8% for the~~ ~~nine months ended May 31, 2018. We continuously monitor these costs and implement cost-management actions, as appropriate. For the~~ ~~third quarter of fiscal 2019~~2020 compared to the same period in fiscal ~~2018~~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 1050 basis ~~points. For the~~ ~~nine months ended May 31, 2019~~ ~~compared~~points, primarily due to ~~the same period in~~ ~~fiscal 2018, Sales~~higher technology and ~~marketing~~facilities costs. We continuously monitor these costs and implement cost-management actions, as ~~a percentage of revenues were flat, and General and administrative costs as a percentage of revenues increased 20 basis points.~~appropriate.

Operating margin (Operating income as a percentage of revenues) for the ~~third~~first quarter of fiscal 2020 was 15.6%, compared with 15.4% for the first quarter of fiscal 2019 ~~was 15.5%, compared with 15.3% for the~~ ~~third quarter of fiscal 2018~~. ~~Operating margin for the~~ ~~nine months ended May 31, 2019~~ ~~was 14.7%, compared with 14.5% for the~~ ~~nine months ended May 31, 2018~~.

Effective September 1, 2018, we adopted ASU No. 2016-16, Income Taxes (Topic 740). Upon adoption, we recorded deferred tax assets of $2.1 billion, and we will recognize incremental income tax expense going forward as these deferred tax assets are utilized. For additional information, see Note 1 (Basis of Presentation) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

~~Table of Contents~~

~~The effective tax rates for the~~ ~~three and nine months ended May 31, 2019~~ ~~were 25.6% and 21.1%, respectively. The effective tax rates for the~~ ~~three and nine months ended May 31, 2018~~ were 34.4% and 27.2%, respectively. For the three and nine months ended May 31, 2018, we recorded a tax charge associated with the enactment of the U.S. Tax Cuts and Jobs Act of $41 million and $178 million, respectively. Absent these charges and $81 million of expense from a non-U.S. tax law change recorded during the third quarter of fiscal 2018, our effective tax rate for the three and nine months ended May 31, 2018 would have been 26.8% and 21.3%, respectively. For additional information see Note 9 (Income Taxes) to our Consolidated Financial Statements under Item 1, “Financial Statements”.

~~Diluted earnings per share were~~ ~~$1.93~~ ~~for the~~ ~~third quarter of fiscal 2019, compared with~~ ~~$1.60~~ ~~for the~~ ~~third quarter of fiscal 2018. Diluted earnings per share were~~ ~~$5.62~~ ~~for the~~ ~~nine months ended May 31, 2019, compared with~~ ~~$4.76~~ ~~for the~~ ~~nine months ended May 31, 2018~~. The impact of tax law changes decreased diluted earnings per share by $0.19 and $0.40 during the three and nine months ended May 31, 2018, respectively. Excluding the impact of these changes, diluted earnings per share for the ~~three and nine months ended May 31, 2018~~ ~~would have been $1.79 and $5.16, respectively.~~

~~We have presented effective tax rate and diluted earnings per share excluding the impacts of the tax law changes in~~ ~~fiscal 2018, as we believe doing so facilitates understanding as to both the impact of these changes and our financial performance.~~

New Bookings

New bookings for the ~~third~~first quarter of fiscal ~~2019~~2020 were ~~$10.6~~$10.3 billion, with consulting bookings of $6.0 billion and outsourcing bookings of ~~$4.6~~$4.3 billion. ~~New bookings for the~~ ~~nine months ended May 31, 2019~~ ~~were $32.6 billion, with consulting bookings of $18.7 billion and outsourcing bookings of $13.9 billion.~~

2724

Table of Contents

Results of Operations for the Three Months Ended ~~May 31,~~November 30, 2019 Compared to the Three Months Ended ~~May 31,~~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 (Decrease) U.S. Dollars			Percent Increase Local Currency		Percent of Revenues for the Three Months Ended					Three Months Ended						Percent Increase U.S. Dollars		Percent Increase Local Currency			Percent of Revenues for the Three Months Ended
	May 31, 2019		May 31, 2018 (1)				May 31, 2019			May 31, 2018 (1)		November 30, 2019				November 30, 2018				November 30, 2019			Percent Increase Local Currency		November 30, 2018
	(in millions of U.S. dollars)				Percent Increase (Decrease) U.S. Dollars												(in millions of U.S. dollars)
OPERATING GROUPS								Percent Increase Local Currency													Percent Increase U.S. Dollars
Communications, Media & Technology	$	2,253	$	2,188	3	%		7	%	20	%		21	%	$	2,245		$	2,135		5	%	7	%		20	%	20	%
Financial Services	2,197		2,231		(2	)		4		20			21		2,190			2,120			3		6			19		20
Health & Public Service	1,820		1,753		4			6		16			16		1,969			1,754			12		13			18		16
Products	3,077		2,971		4			8		28			28		3,217			2,929			10		12			28		28
Resources	1,748		1,546		13			19		16			14		1,734			1,652			5		7			15		16
Other	5		5		n/m			n/m		—			—		5			16			n/m		n/m			—		—
TOTAL REVENUES	$	11,100	$	10,695	4	%		8	%	100	%		100	%	$	11,359		$	10,606		7	%	9	%		100	%	100	%
GEOGRAPHIC REGIONS(1)
North America	$	5,148	$	4,743	9	%		9	%	46	%		44	%	$	5,288		$	4,856		9	%	9	%		47	%	46	%
Europe	3,770		3,875		(3	)		5		34			36		3,790			3,714			2		7			33		35
Growth Markets	2,181		2,076		5			13		20			20		2,281			2,035			12		13			20		19
TOTAL REVENUES	$	11,100	$	10,695	4	%		8	%	100	%		100	%	$	11,359		$	10,606		7	%	9	%		100	%	100	%
TYPE OF WORK
Consulting	$	6,237	$	6,063	3	%		7	%	56	%		57	%	$	6,377		$	5,967		7	%	9	%		56	%	56	%
Outsourcing	4,863		4,632		5			10		44			43		4,982			4,638			7		9			44		44
TOTAL REVENUES	$	11,100	$	10,695	4	%		8	%	100	%		100	%	$	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, ~~2018,~~2019 we ~~adopted FASB ASU No. 2014-09, Revenue~~revised the reporting of our geographic regions for the movement of one country from ~~Contracts with Customers (Topic 606) and eliminated our net revenues presentation.~~Growth Markets to Europe. Prior period amounts have been ~~revised~~reclassified to conform with the current period presentation. ~~In addition, we updated operating group results for fiscal 2018 to include an acquisition previously categorized within Other.~~

Revenues

The following revenues commentary discusses local currency revenue changes for the ~~third~~first quarter of fiscal ~~2019~~2020 compared to the ~~third~~first quarter of fiscal ~~2018~~2019:

Operating Groups

Communications, Media & Technology revenues increased 7% in local currency, driven by growth in Software & Platforms across all geographic regions ~~led~~and Communications & Media in Europe, partially offset by a decline in High Tech in North America.

Financial Services revenues increased 4%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 6%13% in local currency, led by Public Service and Health in North America.

Products revenues increased 12% in local currency, driven by growth in ~~Public Service in~~Consumer Goods, Retail & Travel Services and Life Sciences across all geographic regions, led by North ~~America and Europe and Health in North America,~~America. These increases were partially offset by a decline in ~~Public Service~~Industrial in ~~Growth Markets.~~North America.

~~Products~~Resources revenues increased 8%7% in local currency, driven by growth in ~~Life Sciences~~Energy and Utilities across all geographic regions and ~~Consumer Goods, Retail~~Chemicals & ~~Travel Services~~Natural Resources in Europe and Growth Markets.

These increases were partially offset by a decline in Chemicals & Natural Resources ~~revenues increased 19%~~ in ~~local currency, driven by growth across all industry groups and geographic regions.~~North America.

2825

Table of Contents

Geographic Regions

North America revenues increased 9% in local currency, driven by the United States.

Europe revenues increased 5%7% in local currency, led by Italy, ~~the United Kingdom~~Germany, France and Ireland.

Growth Markets revenues increased 13% in local currency, driven by Japan, as well as ~~China,~~ Brazil and ~~Australia.~~Singapore.

Operating Expenses

Operating expenses for the ~~third~~first quarter of fiscal ~~2019~~2020 increased ~~$322~~$615 million, or 4%7%, over the ~~third~~first quarter of fiscal ~~2018~~2019, and decreased as a percentage of revenues to ~~84.5%~~84.4% from ~~84.7%~~84.6% during this period.

Cost of Services

Cost of services for the ~~third~~first quarter of fiscal ~~2019~~2020 increased ~~$208~~$403 million, or 3%6%, over the ~~third~~first quarter of fiscal ~~2018~~2019, and decreased as a percentage of revenues to ~~68.2%~~67.9% from ~~68.8%~~68.9% during this period. Gross margin for the ~~third~~first quarter of fiscal ~~2019~~2020 increased to ~~31.8%~~32.1% from ~~31.2%~~31.1% during the ~~third~~first quarter of fiscal ~~2018~~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 ~~2018.~~2019.

Sales and Marketing

Sales and marketing expense for the ~~third~~first quarter of fiscal ~~2019~~2020 increased ~~$78~~$121 million, or 7%11%, over the ~~third~~first quarter of fiscal ~~2018~~2019, and increased as a percentage of revenues to ~~10.7%~~10.5% from ~~10.3%~~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 ~~2018.~~2019.

General and Administrative Costs

General and administrative costs for the ~~third~~first quarter of fiscal ~~2019~~2020 increased ~~$36~~$91 million, or 6%15%, over the ~~third~~first quarter of fiscal ~~2018~~2019, and increased as a percentage of revenues to ~~5.6%~~6.1% from ~~5.5%~~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 ~~third~~first quarter of fiscal ~~2019~~2020 increased ~~$83~~$138 million, or 5%8%, over the ~~third~~first quarter of fiscal ~~2018~~2019.

Operating income and operating margin for each of the operating groups were as follows:

Three Months Ended
May 31, 2019 May 31, 2018 (1)
Operating
Income Operating
Margin Operating
Income Operating
Margin Increase (Decrease)
(in millions of U.S. dollars)
Communications, Media & Technology $ 425
19 % $ 386
18 % $ 39
Financial Services 347
16
386
17
(39 )
Health & Public Service 196
11
219
12
(23 )
Products 459
15
456
15
3
Resources 291
17
187
12
103
TOTAL $ 1,718
15.5 % $ 1,635
15.3 % $ 83

~~_______________~~

~~Amounts in table may not total due to rounding.~~



	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

~~(1)~~

Effective September 1, 2018, we adopted FASB ASU No. 2017-07, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. Certain components of pension service costs were reclassified from Operating expenses to Non-operating expenses. Prior period amounts have been revised to conform with the current period presentation.

2926

Table of Contents

We estimate that the aggregate percentage impact of foreign currency exchange rates on our operating income during the ~~third~~first quarter of fiscal ~~2019~~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 ~~third~~first quarter of fiscal ~~2019~~2020 compared with the ~~third~~first quarter of fiscal ~~2018~~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.

~~Financial Services operating income decreased as revenue growth was offset by higher operating expenses as a percentage of revenues.~~

~~Health & Public Service operating income decreased as revenue growth was offset by lower consulting contract profitability.~~

Products operating income ~~was relatively flat year-over-year as~~increased primarily due to revenue growth ~~was offset by~~and higher ~~operating expenses as a percentage of revenues.~~consulting contract profitability.

Resources operating income increased primarily due to revenue growth and higher outsourcing contract profitability.

~~Provision for~~Other Income ~~Taxes~~(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 ~~third~~first quarter of fiscal 2020 was 23.6%, compared with 19.8% for the first quarter of fiscal 2019 ~~was 25.6%, compared with 34.4% for the~~ ~~third quarter of fiscal 2018. In the~~ ~~third quarter of fiscal 2018, we recorded a $122 million charge associated with tax law changes. Absent this charge, the effective tax rate would have been 26.8% for the~~ ~~third quarter of fiscal 2018~~. The ~~lower~~higher effective tax rate for the three months ended ~~May 31,~~November 30, 2019 was primarily due to changes in prior year tax liabilities and the geographic distribution of earnings, partially offset by higher expense from the adoption of FASB ASU No. 2016-16. For additional information, see Note 1 (Basis of Presentation) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

~~Earnings Per Share~~

~~Diluted earnings per share were $1.93 for the~~ ~~third quarter of fiscal 2019, compared with $1.60 for the~~ ~~third quarter of fiscal 2018. The $0.33 increase in our diluted earnings per share included the impact of tax law changes, which decreased diluted earnings per share for the~~ ~~third quarter of fiscal 2018~~ by ~~$0.19. Excluding the impact of these changes, diluted earnings per share for the~~ ~~third quarter of fiscal 2019~~ ~~increased $0.14 compared with the~~ ~~third quarter of fiscal 2018~~ ~~due to an increase of $0.09 from higher revenues and operating results, $0.03 from a~~ lower effective tax rate, $0.02 from lower weighted average shares outstanding and $0.01 from lower non-operating expense. These increases were partially offset by a decrease of $0.01 from higher net income attributable to non-controlling interests-other. For information regarding our earnings per share calculations, see Note 3 (Earnings Per Share) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

~~Table of Contents~~

~~Results of Operations for the Nine Months Ended May 31, 2019 Compared to the Nine Months Ended May 31, 2018~~

Nine Months Ended Percent
Increase (Decrease)
U.S.
Dollars Percent
Increase
Local
Currency Percent of Revenues
for the Nine Months Ended
May 31,
2019 May 31,
2018 (1) May 31,
2019 May 31,
2018 (1)
(in millions of U.S. dollars)
OPERATING GROUPS
Communications, Media & Technology $ 6,533
$ 6,086
7 % 11 % 20 % 20 %
Financial Services 6,369
6,476
(2 ) 2
20
21
Health & Public Service 5,283
5,122
3
5
16
17
Products 8,913
8,417
6
10
28
28
Resources 5,040
4,352
16
21
16
14
Other 20
35
n/m
n/m
—
—
TOTAL REVENUES $ 32,159
$ 30,489
5 % 9 % 100 % 100 %
GEOGRAPHIC REGIONS
North America $ 14,758
$ 13,601
9 % 9 % 46 % 45 %
Europe 11,112
11,057
—
6
34
36
Growth Markets 6,289
5,831
8
15
20
19
TOTAL REVENUES $ 32,159
$ 30,489
5 % 9 % 100 % 100 %
TYPE OF WORK
Consulting $ 17,991
$ 17,084
5 % 9 % 56 % 56 %
Outsourcing 14,168
13,405
6
9
44
44
TOTAL REVENUES $ 32,159
$ 30,489
5 % 9 % 100 % 100 %

~~_______________~~

~~n/m = not meaningful~~

~~Amounts in table may not total due to rounding.~~


~~(1)~~	Effective September 1, 2018, we adopted FASB ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) and eliminated our net revenues presentation. Prior period amounts have been revised to conform with the current period presentation. In addition, we updated operating group results for fiscal 2018 to include an acquisition previously categorized within Other.

~~Revenues~~

~~The following revenues commentary discusses local currency revenue changes for the~~ ~~nine months ended May 31, 2019~~ ~~compared to the~~ ~~nine months ended May 31, 2018~~:

~~Operating Groups~~


•	~~Communications, Media & Technology revenues increased 11% in local currency, driven by growth in Software & Platforms across all geographic regions, led by North America.~~


•	Financial Services revenues increased 2% in local currency, driven by growth in Insurance across all geographic regions and Banking & Capital Markets in Growth Markets, partially offset by a decline in Banking & Capital Markets in Europe.


•	~~Health & Public Service revenues increased 5% in local currency, driven by growth in Public Service in Europe and North America.~~


•	Products revenues increased 10% in local currency, driven by growth across all industry groups and geographic regions, led by Consumer Goods, Retail & Travel Services in Europe and Growth Markets, and Industrial in Europe.


•	~~Resources revenues increased 21% in local currency, driven by growth across all industry groups and geographic regions.~~

~~Table of Contents~~

~~Geographic Regions~~


•	~~North America revenues increased 9% in local currency, driven by the United States.~~


•	~~Europe revenues increased 6% in local currency, led by Italy, the United Kingdom, Ireland, Germany and France.~~


•	~~Growth Markets revenues increased 15% in local currency, driven by Japan, as well as Brazil and China.~~

~~Operating Expenses~~

~~Operating expenses for the~~ ~~nine months ended May 31, 2019~~ ~~increased $1,366 million, or 5%, over the~~ ~~nine months ended May 31, 2018, and decreased as a percentage of revenues to 85.3% from 85.5% during this period.~~

~~Cost of Services~~

~~Cost of services for the~~ ~~nine months ended May 31, 2019~~ ~~increased $1,046 million, or 5%, over the~~ ~~nine months ended May 31, 2018, and decreased as a percentage of revenues to 69.3% from 69.6% during this period. Gross margin for the~~ ~~nine months ended May 31, 2019~~ ~~increased to 30.7% from 30.4% during the~~ ~~nine months ended May 31, 2018. The increase in gross margin was primarily due to lower non-payroll and labor costs as a percentage of revenues compared to the same period in fiscal 2018.~~

~~Sales and Marketing~~

~~Sales and marketing expense for the~~ ~~nine months ended May 31, 2019~~ ~~increased $168 million, or 5%, over the~~ ~~nine months ended May 31, 2018, and remained flat as a percentage of revenues at 10.2% during this period.~~

~~General and Administrative Costs~~

~~General and administrative costs for the~~ ~~nine months ended May 31, 2019~~ ~~increased $152 million, or 9%, over the~~ ~~nine months ended May 31, 2018, and increased as a percentage of revenues to 5.8% from 5.6% during this period.~~

~~Operating Income and Operating Margin~~

~~Operating income for the~~ ~~nine months ended May 31, 2019~~ ~~increased $304 million, or 7%, over the~~ ~~nine months ended May 31, 2018~~.

~~Operating income and operating margin for each of the operating groups were as follows:~~

Nine Months Ended
May 31, 2019 May 31, 2018 (1)
Operating
Income Operating
Margin Operating
Income Operating
Margin Increase (Decrease)
(in millions of U.S. dollars)
Communications, Media & Technology $ 1,180
18 % $ 1,001
16 % $ 179
Financial Services 977
15
1,069
17
(92 )
Health & Public Service 539
10
602
12
(63 )
Products 1,272
14
1,247
15
25
Resources 765
15
509
12
256
TOTAL $ 4,734
14.7 % $ 4,429
14.5 % $ 304

~~_______________~~

~~Amounts in table may not total due to rounding.~~

~~(1)~~

~~Table of Contents~~

~~We estimate that the aggregate percentage impact of foreign currency exchange rates on our operating income during the~~ ~~nine months ended May 31, 2019~~ ~~was similar to that disclosed for revenue. The commentary below provides insight into other factors affecting operating group performance and operating margin for the~~ ~~nine months ended May 31, 2019~~ ~~compared with the~~ ~~nine months ended May 31, 2018~~:


•	~~Communications, Media & Technology operating income increased primarily due to revenue growth and higher contract profitability.~~


•	~~Financial Services operating income decreased as higher consulting contract profitability and revenue growth were offset by higher operating expenses as a percentage of revenues.~~


•	~~Health & Public Service operating income decreased as revenue growth was offset by lower consulting contract profitability.~~


•	~~Products operating income increased primarily due to revenue growth and higher contract profitability, partially offset by higher operating expenses as a percentage of revenues.~~


•	~~Resources operating income increased primarily due to revenue growth and higher contract profitability.~~

~~Provision for Income Taxes~~

~~The effective tax rate for the~~ ~~nine months ended May 31, 2019~~ ~~was 21.1%, compared with 27.2% for the~~ ~~nine months ended May 31, 2018. In the~~ ~~nine months ended May 31, 2018, we recorded a~~ ~~$258 million~~ ~~charge associated with tax law changes. Absent this charge, our effective tax rate for the~~ ~~nine months ended May 31, 2018~~ ~~would have been~~ ~~21.3%. The lower effective tax rate for the~~ ~~nine months ended May 31, 2019~~ ~~was primarily due to higher~~ benefits from final determinations of prior year taxes ~~changes in~~and the ~~geographic distribution~~phased-in effects of ~~earnings and adjustments to prior year~~US tax ~~liabilities. These decreases were partially offset by higher expense from the adoption of FASB ASU No. 2016-16 and lower tax benefits from share-based payments.~~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 ~~2019~~2020 annual effective tax rate to be in the range of ~~22.5%~~23.5% to ~~23.5%~~25.5%. The effective tax rate for interim periods can vary because of the timing of when certain events occur during the year.

~~Net Income Attributable to Noncontrolling Interests~~

~~Net income attributable to noncontrolling interests for the~~ ~~nine months ended May 31, 2019~~ ~~decreased $84 million, or 62%, from the~~ ~~nine months ended May 31, 2018~~ due to the decrease in the non-controlling ownership percentage in March 2018 from 4% held by Accenture Holdings plc and Accenture Canada Holdings Inc. to less than 1% held by only Accenture Canada Holdings Inc. driven by the Accenture Holdings plc merger with and into Accenture plc. For additional information on the merger, see Note 1 (Basis of Presentation) to our Consolidated Financial Statements under Item 1, “Financial Statements”.

Earnings Per Share

Diluted earnings per share were ~~$5.62~~$2.09 for the ~~nine months ended May 31, 2019~~first quarter of fiscal 2020, compared with ~~$4.76~~$1.96 for the ~~nine months ended May 31, 2018~~first quarter of fiscal 2019. The ~~$0.86~~$0.13 increase in our diluted earnings per share ~~included the impact of tax law changes, which decreased diluted earnings per share for the~~ ~~nine months ended May 31, 2018~~ by ~~$0.40. Excluding the impact of these changes, diluted earnings per share for the~~ ~~nine months ended May 31, 2019~~ ~~increased~~ ~~$0.46~~ ~~compared with the~~ ~~nine months ended May 31, 2018~~,was due to an increase of ~~$0.37~~$0.17 from higher revenues and operating results, ~~$0.05~~$0.06 from higher non-operating income, and $0.01 from lower weighted average shares ~~outstanding, $0.04 from lower non-operating expense and $0.01 from a lower effective tax rate.~~outstanding. These increases were partially offset by a decrease of ~~$0.01~~$0.11 from a higher ~~net income attributable to non-controlling interests-other.~~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.”

3327

Table of Contents

Liquidity and Capital Resources

As of ~~May 31,~~November 30, 2019, Cash and cash equivalents was $~~4.8~~5.8 billion, compared with $~~5.1~~6.1 billion as of August 31, ~~2018.~~2019.

Cash flows from operating, investing and financing activities, as reflected in our Consolidated Cash Flows Statements, are summarized in the following table:


	Nine Months Ended									Three Months Ended
	May 31, 2019			May 31, 2018			Change			November 30, 2019			November 30, 2018			Change
	(in millions of U.S. dollars)									(in millions of U.S. dollars)
Net cash provided by (used in):
Operating activities	$	4,511		$	3,917		$	593		$	787		$	1,028		$	(241	)
Investing activities	(1,380		)	(875		)	(505		)	(166		)	(273		)	107
Financing activities	(3,416		)	(3,177		)	(239		)	(948		)	(1,462		)	514
Effect of exchange rate changes on cash and cash equivalents	(7		)	(63		)	56			11			10			1
Net increase (decrease) in cash and cash equivalents	$	(292	)	$	(198	)	$	(94	)	$	(316	)	$	(698	)	$	381

_______________

Amounts in table may not total due to rounding.

Operating activities: The ~~$593~~$241 million year-over-year ~~increase~~decrease in operating cash flow was due to ~~higher net income and~~ changes in operating assets and liabilities, including ~~an increase~~a change in ~~accounts payable.~~timing of certain compensation payments, partially offset by higher net income.

Investing activities: The ~~$505~~$107 million ~~increase~~decrease in cash used was primarily due to ~~higher~~lower spending on business acquisitions and investments ~~partially offset by lower spending on property~~ and ~~equipment.~~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 ~~$239~~$514 million ~~increase~~decrease in cash used was primarily due to ~~increases~~a decrease in ~~the net purchases of shares and~~ cash dividends paid ~~partially offset by an increase~~due to a change in ~~net proceeds~~the frequency of payments from ~~share issuances.~~semi-annually to quarterly. For additional information, see Note 78 (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 ~~May 31,~~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		Facility Amount		Borrowings Under Facilities
	(in millions of U.S. dollars)				(in millions of U.S. dollars)
Syndicated loan facility	$	1,000	$	—	$	1,000	$	—
Separate, uncommitted, unsecured multicurrency revolving credit facilities	815		—		803		—
Local guaranteed and non-guaranteed lines of credit	220		—		217		—
Total	$	2,035	$	—	$	2,020	$	—

Under the borrowing facilities described above, we had an aggregate of $~~405~~414 million of letters of credit outstanding as of ~~May 31,~~November 30, 2019.

3428

Table of Contents

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 ~~nine~~three months ended ~~May 31,~~November 30, 2019 was as follows:


	Accenture plc Class A Ordinary Shares			Accenture Canada Holdings Inc. Exchangeable Shares			Accenture plc Class A Ordinary Shares			Accenture Canada Holdings Inc. Exchangeable Shares
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
	(in millions of U.S. dollars, except share amounts)						(in millions of U.S. dollars, except share amounts)
Open-market share purchases (1)	11,637,946	$	1,866	—	$	—	3,293,069	$	626	—	$	—
Other share purchase programs	—	—		100,540	16		—	—		23,715	5
Other purchases (2)	2,678,537	402		—	—		528,311	99		—	—
Total	14,316,483	$	2,268	100,540	$	16	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 ~~nine~~three months ended ~~May 31,~~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 ~~2019~~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 1011 (Commitments and Contingencies) to our Consolidated Financial Statements under Item 1, “Financial Statements.”

~~New Accounting Pronouncements and~~ Significant Accounting Policies

See Note 1 (Basis of Presentation) and Note ~~2 (Revenues)~~7 (Leases) to our Consolidated Financial Statements under Item 1, “Financial Statements.” Note 27 includes updates to our ~~revenue~~leases policy as a result of the implementation of FASB ASU No. ~~2014-09.~~2016-02.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the ~~nine~~three months ended ~~May 31,~~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, ~~2018.~~2019. For a discussion of our market risk associated with foreign currency risk, interest rate risk and equity price risk as of August 31, ~~2018,~~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, ~~2018.~~2019.

3529

Table of Contents

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

~~There~~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 ~~third~~first quarter of fiscal ~~2019~~2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

3630

Table of Contents

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth under “Legal Contingencies” in Note 1011 (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, ~~2018.~~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, ~~2018.~~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 ~~third~~first quarter of fiscal ~~2019~~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)
March 1, 2019 — March 31, 2019 927,048
$ 165.68
912,164
$ 4,380
April 1, 2019 — April 30, 2019 871,745
$ 178.48
846,329
$ 4,227
May 1, 2019 — May 31, 2019 993,434
$ 177.60
894,059
$ 4,068
Total (4) 2,792,227
$ 173.92
2,652,552



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 ~~third~~first quarter of fiscal ~~2019,~~2020, we purchased ~~2,652,552~~3,293,069 Accenture plc Class A ordinary shares under this program for an aggregate price of ~~$461~~$626 million. The open-market purchase program does not have an expiration date.

(3)

As of ~~May 31,~~November 30, 2019, our aggregate available authorization for share purchases and redemptions was ~~$4,068~~$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 ~~May 31,~~November 30, 2019, the Board of Directors of Accenture plc has authorized an aggregate of ~~$35,100 million~~$35.1 billion for share purchases and redemptions by Accenture plc and Accenture Canada Holdings Inc.

(4)

During the ~~third~~first quarter of fiscal ~~2019,~~2020, Accenture purchased ~~139,675~~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.

3731

Table of Contents

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 ~~May 31,~~November 30, 2019, formatted in ~~iXBRL (Inline eXtensible Business Reporting Language):~~Inline XBRL: (i) Consolidated Balance Sheets as of ~~May 31,~~November 30, 2019 (Unaudited) and August 31, ~~2018,~~2019, (ii) Consolidated Income Statements (Unaudited) for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2019 and 2018, (iii) Consolidated Statements of Comprehensive Income (Unaudited) for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2019 and 2018, (iv) Consolidated Shareholders’ Equity Statement (Unaudited) for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2019 and 2018, (v) Consolidated Cash Flows Statements (Unaudited) for the ~~nine~~three months ended ~~May 31,~~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.

3832

Table of Contents

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: ~~June 27,~~December 19, 2019



	ACCENTURE PLC

	By:	/s/ KC McClure
	Name:	KC McClure
	Title:	Chief Financial Officer
		(Principal Financial Officer and Authorized Signatory)

3933



	Balance as of August 31, 2018		Adjustments Due to ASU 2014-09 (Topic 606)			Adjustments Due to ASU 2016-16 (Topic 740)		Balance as of September 1, 2018
Balance Sheet
CURRENT ASSETS
Receivables from clients, net	$	4,996,454	$	2,100,402		$	—	$	7,096,856
Unbilled services, net	2,499,914		(2,499,914		)	—		—
Contract assets	—		547,809			—		547,809
Receivables and contract assets	$	7,496,368	$	148,297		$	—	$	7,644,665
NON-CURRENT ASSETS
Unbilled services, net	$	23,036	$	(23,036	)	$	—	$	—
Contract assets	—		23,036			—		23,036
Deferred contract costs	705,124		(2,867		)	—		702,257
Deferred income taxes, net	2,086,807		3,071			2,144,427		4,234,305

CURRENT LIABILITIES
Deferred revenues	2,837,682		154,952			—		2,992,634
SHAREHOLDERS' EQUITY
Retained earnings	7,952,413		(6,451		)	2,144,427		10,090,389

~~Standard~~

~~Description~~

~~Accenture Adoption Date~~

~~Impact on the Financial Statements or Other Significant Matters~~

~~2016-02: Leases~~ ~~and related updates~~ ~~(Topic 842)~~

The ASU amends existing guidance to require lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by leases and to disclose additional quantitative and qualitative information about leasing arrangements. The guidance allows either a modified retrospective or an effective date transition method.

~~September 1, 2019~~

While we are continuing to assess the potential impact of this ASU, we currently believe the most significant impact relates to our accounting for office space operating leases. We anticipate this ASU will have a material impact on our Consolidated Balance Sheets but will not have a material impact on our other Consolidated Financial Statements or footnotes. We will adopt the standard using the effective date method.