UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

FOR THE QUARTERLY PERIOD ENDED MAY 31, 2007

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

FOR THE TRANSITION PERIOD FROM                                        TO

ACCENTURE LTD

Bermuda		98-0341111
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

Canon’s Court
22 Victoria Street
Hamilton HM 12, Bermuda
(Address of principal executive offices)

(441) 296-8262
(Registrant’s telephone number, including area code)

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

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ      Accelerated filer o      Non-accelerated filer o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o      No þ

     The number of shares of the registrant’s Class A common shares, par value $0.0000225 per share, outstanding as of June 22, 2007 was 591,268,773 (which number does not include 38,567,209 issued shares held by subsidiaries of the registrant). The number of shares of the registrant’s Class X common shares, par value $0.0000225 per share, outstanding as of June 22, 2007 was 171,571,798.

 

 

ACCENTURE LTD

INDEX

				Page
Part I.		Financial Information			3
Item 1.		Financial Statements			3
		Consolidated Balance Sheets as of May 31, 2007 (Unaudited) and August 31, 2006			3
		Consolidated Income Statements (Unaudited) for the three and nine months ended May 31, 2007 and 2006			4
		Consolidated Shareholders’ Equity and Comprehensive Income Statements (Unaudited) for the nine
		months ended May 31, 2007			5
		Consolidated Cash Flows Statements (Unaudited) for the nine months ended May 31, 2007 and 2006			6
		Notes to Consolidated Financial Statements (Unaudited)			7
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			15
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			31
Item 4.		Controls and Procedures			31
Part II.		Other Information			32
Item 1.		Legal Proceedings			32
Item 1A.		Risk Factors			33
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			35
Item 3.		Defaults upon Senior Securities			36
Item 4.		Submission of Matters to a Vote of Security Holders			36
Item 5.		Other Information			36
Item 6.		Exhibits			37
Signatures					38

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ACCENTURE LTD

CONSOLIDATED BALANCE SHEETS
May 31, 2007 and August 31, 2006
(In thousands of U.S. dollars, except share and per share amounts)

		May 31,				August 31,
		2007				2006
		(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	3,093,634			$	3,066,988
Short-term investments			284,410				352,951
Receivables from clients, net of allowances of $46,837 and $48,069, respectively			2,378,134				1,916,450
Unbilled services			1,579,636				1,350,211
Deferred income taxes, net			269,079				187,720
Other current assets			434,796				479,501
Total current assets			8,039,689				7,353,821
NON-CURRENT ASSETS:
Unbilled services			62,309				105,081
Investments			82,519				125,119
Property and equipment, net of accumulated depreciation of $1,559,948 and $1,359,978, respectively			748,185				727,692
Goodwill			528,389				527,648
Deferred income taxes, net			408,396				392,211
Other non-current assets			179,529				186,508
Total non-current assets			2,009,327				2,064,259
TOTAL ASSETS		$	10,049,016			$	9,418,080
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Short-term bank borrowings		$	1,566			$	2,218
Current portion of long-term debt			23,440				22,574
Accounts payable			863,646				856,087
Deferred revenues			1,769,310				1,511,259
Accrued payroll and related benefits			2,104,543				1,693,796
Income taxes payable			985,886				722,096
Deferred income taxes, net			30,603				49,870
Other accrued liabilities			888,492				958,582
Total current liabilities			6,667,486				5,816,482
NON-CURRENT LIABILITIES:
Long-term debt			3,226				27,065
Retirement obligation			532,301				492,555
Deferred income taxes, net			15,313				16,880
Other non-current liabilities			237,123				302,965
Total non-current liabilities			787,963				839,465
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST			715,505				867,878
SHAREHOLDERS’ EQUITY:
Preferred shares, 2,000,000,000 shares authorized, zero shares issued and outstanding			—				—
Class A common shares, par value $0.0000225 per share, 20,000,000,000 shares authorized, 629,562,340 and 617,565,722 shares issued as of May 31, 2007 and August 31, 2006, respectively			14				14
Class X common shares, par value $0.0000225 per share, 1,000,000,000 shares authorized, 171,571,798 and 245,006,562 shares issued and outstanding as of May 31, 2007 and August 31, 2006, respectively			4				6
Restricted share units			626,198				482,289
Additional paid-in capital			—				701,006
Treasury shares, at cost, 38,799,489 and 36,990,533 shares as of May 31, 2007 and August 31, 2006, respectively			(983,020	)			(869,957	)
Retained earnings			2,192,252				1,607,391
Accumulated other comprehensive income (loss)			42,614				(26,494	)
Total shareholders’ equity			1,878,062				1,894,255
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	10,049,016			$	9,418,080

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

ACCENTURE LTD

CONSOLIDATED INCOME STATEMENTS
For the Three and Nine Months Ended May 31, 2007 and 2006
(In thousands of U.S. dollars, except share and per share amounts)
(Unaudited)

		Three Months Ended May 31,								Nine Months Ended May 31,
		2007				2006				2007				2006
REVENUES:
Revenues before reimbursements		$	5,081,804			$	4,408,069			$	14,585,730			$	12,680,339
Reimbursements			461,880				397,258				1,293,666				1,159,116
Revenues			5,543,684				4,805,327				15,879,396				13,839,455
OPERATING EXPENSES:
Cost of services:
Cost of services before reimbursable expenses			3,471,962				2,954,184				10,138,578				9,037,354
Reimbursable expenses			461,880				397,258				1,293,666				1,159,116
Cost of services			3,933,842				3,351,442				11,432,244				10,196,470
Sales and marketing			499,529				453,709				1,370,752				1,255,859
General and administrative costs			421,946				362,051				1,206,654				1,101,164
Reorganization costs (benefits), net			6,838				(51,999	)			19,233				(54,030	)
Total operating expenses			4,862,155				4,115,203				14,028,883				12,499,463
OPERATING INCOME			681,529				690,124				1,850,513				1,339,992
Gain on investments, net			10,146				15				13,033				3,245
Interest income			40,641				31,571				111,896				86,505
Interest expense			(6,841	)			(4,852	)			(18,825	)			(14,095	)
Other expense			(16,090	)			(4,971	)			(21,989	)			(18,113	)
INCOME BEFORE INCOME TAXES			709,385				711,887				1,934,628				1,397,534
Provision for income taxes			235,968				213,088				642,818				466,777
INCOME BEFORE MINORITY INTEREST			473,417				498,799				1,291,810				930,757
Minority interest in Accenture SCA and Accenture Canada Holdings Inc.			(121,925	)			(153,843	)			(349,049	)			(296,633	)
Minority interest — other			(6,092	)			(2,692	)			(16,407	)			(7,240	)
NET INCOME		$	345,400			$	342,264			$	926,354			$	626,884
Weighted average Class A common shares:
Basic			607,421,151				589,933,994				603,403,840				587,424,108
Diluted			859,179,215				887,347,119				866,835,185				898,546,621
Earnings per Class A common share:
Basic		$	0.57			$	0.58			$	1.54			$	1.07
Diluted		$	0.54			$	0.56			$	1.47			$	1.03
Cash dividends per share		$	—			$	—			$	0.35			$	0.30

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

     

ACCENTURE LTD

CONSOLIDATED SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME STATEMENTS
For the Nine Months Ended May 31, 2007
(In thousands of U.S. dollars and in thousands of share amounts)
(Unaudited)

						Class A								Class X
						Common								Common
						Shares								Shares												Additional				Treasury Shares												Accumulated Other
		Preferred								No.								No.				Restricted				Paid-in								No.				Retained				Comprehensive
		Shares				$				Shares				$				Shares				Share Units				Capital				$				Shares				Earnings				(Loss) Income				Total
Balance as of August 31, 2006		$	—			$	14				617,566			$	6				245,007			$	482,289			$	701,006			$	(869,957	)			(36,991	)		$	1,607,391			$	(26,494	)		$	1,894,255
Comprehensive income:
Net income																																							926,354								926,354
Other comprehensive income:
Unrealized gains on marketable securities, net of reclassification adjustments																																											1,574				1,574
Foreign currency translation adjustments																																											67,534				67,534
Other comprehensive income																																											69,108
Comprehensive income																																															995,462
Income tax benefit on share-based compensation plans																											16,171																				16,171
Purchases of Class A common shares											(472	)															(15,819	)			(321,128	)			(10,229	)											(336,947	)
Share-based compensation expense																							179,602				47,363																				226,965
Purchases/redemptions of Accenture SCA Class I common shares, Accenture Canada Holdings Inc. exchangeable shares and Class X common shares															(2	)			(73,435	)							(1,547,896	)											(22,084	)							(1,569,982	)
Issuances of Class A common shares related to employee share programs											12,468												(51,526	)			283,728				208,065				8,421				(10,517	)							429,750
Dividends																							15,833																(308,892	)							(293,059	)
Minority interest																											515,447																				515,447
Balance as of May 31, 2007		$	—			$	14				629,562			$	4				171,572			$	626,198			$	—			$	(983,020	)			(38,799	)		$	2,192,252			$	42,614			$	1,878,062

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

ACCENTURE LTD

CONSOLIDATED CASH FLOWS STATEMENTS
For the Nine Months Ended May 31, 2007 and 2006
(In thousands of U.S. dollars)
(Unaudited)

		2007				2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	926,354			$	626,884
Adjustments to reconcile Net income to Net cash provided by operating activities —
Depreciation, amortization and asset impairments			328,928				229,033
Reorganization costs (benefits), net			19,233				(54,030	)
Share-based compensation expense			228,858				200,530
Deferred income taxes, net			(91,873	)			(98,641	)
Minority interest			365,456				303,873
Other, net			(7,931	)			(963	)
Change in assets and liabilities, net of acquisitions (1) —
Receivables from clients, net			(386,732	)			(166,397	)
Other current assets			55,122				18,619
Unbilled services, current and non-current			(217,862	)			426,729
Other non-current assets			(22,600	)			(12,993	)
Accounts payable			(28,499	)			(18,175	)
Deferred revenues			219,038				228,037
Accrued payroll and related benefits			371,879				87,519
Income taxes payable			233,814				94,221
Other accrued liabilities			(157,595	)			28,235
Other non-current liabilities			17,934				(34,856	)
Net cash provided by operating activities			1,853,524				1,857,625
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities and sales of available-for-sale investments			668,865				580,746
Purchases of available-for-sale investments			(538,744	)			(190,049	)
Proceeds from sales of property and equipment			12,577				13,172
Purchases of property and equipment			(225,051	)			(209,166	)
Purchases of businesses and investments, net of cash acquired			(33,616	)			(114,874	)
Net cash (used in) provided by investing activities			(115,969	)			79,829
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common shares			429,750				385,144
Purchases of common shares			(1,906,929	)			(1,826,941	)
Proceeds from long-term debt			2,367				6,213
Repayments of long-term debt			(25,134	)			(22,706	)
Proceeds from short-term borrowings			26,129				38,860
Repayments of short-term borrowings			(26,931	)			(49,626	)
Cash dividends paid			(293,059	)			(267,973	)
Excess tax benefits from share-based payment arrangements			31,903				30,625
Other, net			(17,353	)			(12,886	)
Net cash used in financing activities			(1,779,257	)			(1,719,290	)
Effect of exchange rate changes on cash and cash equivalents			68,348				91,562
NET INCREASE IN CASH AND CASH EQUIVALENTS			26,646				309,726
CASH AND CASH EQUIVALENTS, beginning of period			3,066,988				2,483,990
CASH AND CASH EQUIVALENTS, end of period		$	3,093,634			$	2,793,716

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

ACCENTURE LTD

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 Ltd, a Bermuda company, and its controlled subsidiary companies (collectively, the “Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “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 for complete financial statements. 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, 2006 included in the Company’s Annual Report on Form 10-K filed with the SEC on October 18, 2006. The accompanying unaudited interim Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles and reflect all adjustments of a normal, recurring nature that are, in the opinion of management, necessary for a fair presentation of results for these interim periods. The results of operations for the three and nine months ended May 31, 2007 are not necessarily indicative of the results that may be expected for the fiscal year ending August 31, 2007. Certain prior-period amounts have been reclassified to conform to the current-period presentation.

2. EARNINGS PER SHARE

     Basic and diluted earnings per share were calculated as follows:

     Basic earnings per share

		Three Months Ended								Nine Months Ended
		May 31,								May 31,
		2007				2006				2007				2006
Net income available for Class A common shareholders		$	345,400			$	342,264			$	926,354			$	626,884
Basic weighted average Class A common shares			607,421,151				589,933,994				603,403,840				587,424,108
Basic earnings per share		$	0.57			$	0.58			$	1.54			$	1.07

ACCENTURE LTD

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

     Diluted earnings per share

		Three Months Ended								Nine Months Ended
		May 31,								May 31,
		2007				2006				2007				2006
Net income available for Class A common shareholders		$	345,400			$	342,264			$	926,354			$	626,884
Minority interest in Accenture SCA and Accenture Canada Holdings Inc. (1)			121,925				153,843				349,049				296,633
Net income per share calculation		$	467,325			$	496,107			$	1,275,403			$	923,517
Basic weighted average Class A common shares			607,421,151				589,933,994				603,403,840				587,424,108
Class A common shares issuable upon redemption/exchange of minority interest (1)			214,377,862				265,196,103				228,280,494				280,011,917
Diluted effect of employee compensation related to Class A common shares			37,351,280				32,129,359				35,143,724				31,036,370
Diluted effect of employee share purchase plan related to Class A common shares			28,922				87,663				7,127				74,226
Diluted weighted average Class A common shares			859,179,215				887,347,119				866,835,185				898,546,621
Diluted earnings per share		$	0.54			$	0.56			$	1.47			$	1.03

3. REORGANIZATION COSTS (BENEFITS)

     In fiscal 2001, the Company accrued reorganization liabilities in connection with its transition to a corporate structure. These liabilities included certain non-income tax liabilities, such as stamp taxes, as well as liabilities for certain individual income tax exposures related to the transfer of interests in certain entities to the Company as part of the reorganization. These primarily represent unusual and disproportionate individual income tax exposures assumed by certain, but not all, of the Company’s shareholders and partners in certain tax jurisdictions specifically related to the transfer of their partnership interests in certain entities to the Company as part of the reorganization. The Company has identified certain shareholders and partners who may incur such unusual and disproportionate financial damage in certain jurisdictions. These include shareholders and partners who were subject to tax in their jurisdiction on items of income arising from the reorganization transaction that were not taxable for most other shareholders and partners. In addition, certain other shareholders and partners were subject to different rates or amounts of tax than other shareholders or partners in the same jurisdiction. If additional taxes are assessed on these shareholders or partners in connection with these transfers, the Company intends to make payments to reimburse certain of the costs associated with the assessment either to the shareholder or partner, or to the taxing authority. The Company has recorded reorganization expense and a related liability for the amount it estimates it will reimburse in situations where assessments occur. Interest accruals are made to cover interest on this liability.

ACCENTURE LTD

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

     The Company’s reorganization activity was as follows:

		Three Months Ended								Nine Months Ended
		May 31,								May 31,
		2007				2006				2007				2006
Reorganization liability, beginning of period		$	374,182			$	374,524			$	350,864			$	381,440
Final determinations (1)			—				(57,683	)			—				(72,321	)
Changes in estimates			—				—				—				—
Benefit recorded			—				(57,683	)			—				(72,321	)
Interest expense accrued			6,838				5,684				19,233				18,291
Payments			—				—				—				—
Costs			6,838				(51,999	)			19,233				(54,030	)
Foreign currency translation			8,879				21,884				19,802				16,999
Reorganization liability, end of period		$	389,899			$	344,409			$	389,899			$	344,409

     As of May 31, 2007, reorganization liabilities of $361,071 were included in Other accrued liabilities because expirations of statutes of limitations or other final determinations could occur within 12 months, and reorganization liabilities of $28,828 were included in Other non-current liabilities in the Consolidated Balance Sheet. The Company anticipates that reorganization liabilities will be substantially diminished by the end of fiscal 2008 because the Company expects final determinations will have occurred. However, resolution of current tax audits, initiation of additional audits or litigation may delay final settlements. Final settlement will result in a payment on a final settlement and/or recording a reorganization benefit or cost in the Company’s Consolidated Income Statement.

4. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

     The components of Accumulated other comprehensive income (loss) were as follows:

		May 31,				August 31,
		2007				2006
Unrealized losses on marketable securities, net of reclassification adjustments		$	(1,905	)		$	(3,479	)
Foreign currency translation adjustments			76,921				9,387
Minimum pension liability adjustments, net of tax of $22,863 and $22,863, respectively			(32,402	)			(32,402	)
Accumulated other comprehensive income (loss)		$	42,614			$	(26,494	)

     Comprehensive income was as follows:

		May 31,
		2007				2006
Three months ended		$	398,557			$	393,074
Nine months ended		$	995,462			$	671,412

ACCENTURE LTD

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

5. GOODWILL

     The changes in the carrying amount of goodwill by reportable operating segment were as follows:

										Foreign
		Balance as of								Currency				Balance as of
		August 31,				Additions/				Translation				May 31,
		2006				Adjustments				Adjustments				2007
Communications & High Tech		$	82,739			$	17,308			$	3,288			$	103,335
Financial Services			123,592				(10,240	)			1,367				114,719
Government			33,253				(4,434	)			904				29,723
Products			258,390				(8,369	)			3,259				253,280
Resources			29,674				(3,318	)			976				27,332
Total		$	527,648			$	(9,053	)		$	9,794			$	528,389

     During the nine months ended May 31, 2007, the Company recorded net reductions to goodwill, primarily resulting from reversals of valuation allowances related to pre-acquisition tax attributes recorded under purchase accounting for previous acquisitions and other adjustments related to purchase accounting for previous acquisitions, partially offset by a fiscal 2007 acquisition.

6. RETIREMENT PLANS

     In the United States and certain other countries, the Company maintains and administers retirement plans and postretirement medical plans for certain current, retired and resigned employees. The components of net periodic pension and postretirement expense were as follows:

		Pension Benefits
		Three Months Ended May 31,
		2007								2006
Components of pension benefits expense		U.S. Plans				Non-U.S. Plans				U.S. Plans				Non-U.S. Plans
Service cost		$	12,706			$	13,629			$	16,103			$	12,172
Interest cost			13,510				7,138				12,481				5,284
Expected return on plan assets			(14,946	)			(6,637	)			(13,080	)			(4,949	)
Amortization of loss			325				354				7,785				462
Amortization of prior service cost			182				151				287				380
Total		$	11,777			$	14,635			$	23,576			$	13,349

		Pension Benefits
		Nine Months Ended May 31,
		2007								2006
Components of pension benefits expense		U.S. Plans				Non-U.S. Plans				U.S. Plans				Non-U.S. Plans
Service cost		$	38,118			$	40,465			$	48,308			$	37,176
Interest cost			40,530				21,135				37,442				15,796
Expected return on plan assets			(44,838	)			(19,718	)			(39,239	)			(14,636	)
Amortization of transitional obligation			—				(20	)			—				—
Amortization of loss			975				1,048				23,355				1,381
Amortization of prior service cost			546				461				861				1,144
Special termination benefits charge			—				—				—				501
Total		$	35,331			$	43,371			$	70,727			$	41,362

ACCENTURE LTD

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

		Postretirement Benefits
		Three Months Ended May 31,
		2007								2006
Components of postretirement benefits expense		U.S. Plans				Non-U.S. Plans				U.S. Plans				Non-U.S. Plans
Service cost		$	1,666			$	295			$	2,526			$	532
Interest cost			1,520				371				1,538				446
Expected return on plan assets			(375	)			—				(355	)			—
Amortization of transitional obligation			20				—				20				—
Amortization of loss			—				16				630				317
Amortization of prior service cost			(200	)			(185	)			(200	)			(335	)
Total		$	2,631			$	497			$	4,159			$	960

		Postretirement Benefits
		Nine Months Ended May 31,
		2007								2006
Components of postretirement benefits expense		U.S. Plans				Non-U.S. Plans				U.S. Plans				Non-U.S. Plans
Service cost		$	5,000			$	918			$	7,577			$	1,576
Interest cost			4,560				1,154				4,613				1,323
Expected return on plan assets			(1,125	)			—				(1,064	)			—
Amortization of transitional obligation			60				—				59				—
Amortization of loss			—				49				1,889				171
Amortization of prior service cost			(600	)			(574	)			(601	)			(223	)
Total		$	7,895			$	1,547			$	12,473			$	2,847

7. MATERIAL TRANSACTIONS AFFECTING SHAREHOLDERS’ EQUITY

Share Purchase Activity

     The Board of Directors of Accenture Ltd has authorized funding for the Company’s publicly announced open-market share purchase program for acquiring Accenture Ltd Class A common shares and for redemptions and repurchases of Accenture Ltd Class A common shares, Accenture SCA Class I common shares and Accenture Canada Holdings Inc. exchangeable shares held by the Company’s current and former senior executives and their permitted transferees. In addition, during the nine months ended May 31, 2007, the Board of Directors of Accenture Ltd separately authorized funding for two discounted tender offers for Accenture SCA Class I common shares.

     The Company’s share purchase activity during the nine months ended May 31, 2007 was as follows:

										Accenture SCA Class I
										Common Shares and
		Accenture Ltd Class A								Accenture Canada Holdings
		Common Shares								Inc. Exchangeable Shares (5)								Total
		Shares				Amount				Shares				Amount				Shares				Amount
Open-Market Share Purchases (1)			—			$	—												—			$	—
Discounted Tender Offers (2)			—				—				16,538,239			$	485,245				16,538,239				485,245
Other Share Purchase Programs			9,858,011				308,762	(3)			30,609,298				1,084,737				40,467,309				1,393,499
Other purchases (4)			842,524				28,185				—				—				842,524				28,185
Total			10,700,535			$	336,947				47,147,537			$	1,569,982				57,848,072			$	1,906,929

ACCENTURE LTD

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

 

     On March 2, 2007, an additional $1,500,000 was authorized by the Board of Directors of Accenture Ltd for purchases under the Company’s other share purchase programs.

     As of May 31, 2007, the Company’s available authorization was $2,026,736, which included $978,339 and $1,048,397 for the open-market share purchase program and other share purchase programs, respectively.

Dividend

     On November 15, 2006, a cash dividend of $0.35 per share was paid on Accenture Ltd’s Class A common shares to shareholders of record at the close of business on October 13, 2006, resulting in a cash outlay of $204,452. On November 15, 2006, a cash dividend of $0.35 per share was also paid on Accenture SCA’s Class I common shares to shareholders of record at the close of business on October 5, 2006 and on Accenture Canada Holdings Inc. exchangeable shares to shareholders of record at the close of business on October 13, 2006, resulting in cash outlays of $87,232 and $1,375, respectively. 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. Diluted weighted average Accenture Ltd Class A common share amounts have been restated for all periods presented to reflect this issuance.

Modifications to Restrictions on the Transfer of Certain Accenture Shares

     On June 21, 2007, the Board of Directors of Accenture Ltd approved a modification to the transfer restrictions that apply to certain of the Company’s current and former senior executives (“covered persons”) who hold Accenture Ltd Class A common shares and/or Accenture SCA Class I common shares they received in connection with the initial public offering of Accenture Ltd Class A common shares in July 2001 (“covered shares”). The modification grants covered persons who are active employees of the Company a waiver (the “waiver”) that eliminates the requirement that these covered persons continue to maintain beneficial ownership of at least 25 percent of their covered shares as long as they remain employed by the Company. The waiver, which will be effective on July 3, 2007, accelerates the release of the transfer restrictions on covered shares that would otherwise not become available for transfer until the later of July 24, 2009 or the termination of the employee’s employment with the Company. The transfer restrictions will be released in quarterly installments over the next nine quarters, beginning in the fourth quarter of fiscal 2007.

ACCENTURE LTD

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

8. COMMITMENTS AND CONTINGENCIES

Commitments and Guarantees

     As a result of its increase in ownership percentage of Accenture HR Services from 50 percent to 100 percent in February 2002, the Company may be required to make up to $177,500 of additional purchase price payments through September 30, 2008, conditional on Accenture HR Services achieving certain levels of qualifying revenues. The remaining potential liability as of May 31, 2007 was $157,818.

     In February 2005, the Company signed an amendment to the stockholders agreement of Avanade Inc. (a consolidated subsidiary of Accenture Ltd). As a result of the amendment, there is no longer a fixed purchase price minimum or maximum payable by the Company for the Avanade Inc. shares not already owned by the Company. The Company now has the right to purchase substantially all of the remaining outstanding shares of Avanade Inc. not owned by the Company at fair value if certain events occur. The Company may also be required to purchase substantially all of the remaining outstanding shares of Avanade Inc. at fair value if certain events occur.

     The Company has various agreements in which it may be obligated to indemnify other parties with respect to certain matters. Generally, these indemnification provisions are included in contracts arising in the normal course of business under which the Company customarily agrees to hold the indemnified party harmless against losses arising from a breach of representations related to such matters as title to assets sold, licensed or certain intellectual property rights and other matters. Payments by the Company under such indemnification clauses are generally conditioned on the other party making a claim. Such claims are typically subject to challenge by the Company and to dispute resolution procedures specified in the particular contract. Further, the Company’s obligations under these agreements may be limited in terms of time and/or amount and, in some instances, the Company may have recourse against third parties for certain payments made by the Company. It is not possible to predict the maximum potential amount of future payments under these indemnification agreements due to the conditional nature of the Company’s obligations and the unique facts of each particular agreement. Historically, the Company has not made any payments under these agreements that have been material individually or in the aggregate. As of May 31, 2007, management was not aware of any obligations arising under indemnification contracts that would require material payments.

     From time to time, the Company enters into contracts with clients whereby it has joint and several liability with other participants and/or third parties providing related services and products to clients. Under these arrangements, the Company and other parties may assume some responsibility to the client or a third party for the performance of others under the terms and conditions of the contract with or for the benefit of the client or in relation to the performance of certain contractual obligations. In some arrangements, the extent of the Company’s obligations for the performance of others is not expressly specified. The Company estimates that, as of May 31, 2007, it had assumed an aggregate potential liability of approximately $886,638 to its clients for the performance of others under arrangements described in this paragraph. These contracts typically provide recourse provisions that would allow the Company to recover from the other parties all but approximately $138,412 if the Company is obligated to make payments to the clients that are the consequence of a performance default by the other parties. To date, the Company has not been required to make any payments under any of the contracts described in this paragraph.

Legal Contingencies

     As of May 31, 2007, the Company or its present personnel had been named as a defendant in various litigation matters. Based on the present status of these litigation matters, the management of the Company believes these matters will not ultimately have a material effect on the results of operations, financial position or cash flows of the Company.

9. SEGMENT REPORTING

     The Company’s reportable operating segments are the five operating groups, which are Communications & High Tech, Financial Services, Government, Products and Resources. Information regarding the Company’s reportable operating segments was as follows:

ACCENTURE LTD

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

		Three Months Ended May 31,
		2007								2006
		Revenues Before				Operating				Revenues Before				Operating
		Reimbursements				Income				Reimbursements				Income
Communications & High Tech		$	1,200,761			$	168,021			$	1,079,220			$	173,516
Financial Services			1,107,506				106,144				921,676				125,542
Government			638,058				74,408				598,842				66,136
Products			1,279,838				192,813				1,116,766				229,951
Resources			849,673				140,143				687,412				94,979
Other			5,968				—				4,153				—
Total		$	5,081,804			$	681,529			$	4,408,069			$	690,124

		Nine Months Ended May 31,
		2007								2006
		Revenues Before				Operating				Revenues Before				Operating
		Reimbursements				Income				Reimbursements				Income (Loss)
Communications & High Tech		$	3,383,315			$	416,022			$	3,152,853			$	523,310
Financial Services			3,225,420				343,845				2,609,910				309,477
Government			1,920,950				195,399				1,794,648				(8,826	)
Products			3,639,600				540,223				3,138,006				265,006
Resources			2,400,083				355,024				1,976,764				251,025
Other			16,362				—				8,158				—
Total		$	14,585,730			$	1,850,513			$	12,680,339			$	1,339,992

10. NEWLY ISSUED ACCOUNTING STANDARDS

     In July 2006, the Financial Accounting Standards Board (“FASB”) issued Financial Interpretation No. 48, “Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109” (“FIN 48”), which is a change in accounting for income taxes. FIN 48 specifies how tax benefits for uncertain tax positions are to be recognized, measured and derecognized in financial statements; requires certain disclosures of uncertain tax matters; specifies how reserves for uncertain tax positions should be classified in the balance sheet; and provides transition and interim-period guidance, among other provisions. FIN 48 is effective for fiscal years beginning after December 15, 2006 and, as a result, will be effective for the Company beginning September 1, 2007. The Company is currently evaluating the impact of FIN 48 on its Consolidated Financial Statements.

     In September 2006, the FASB issued Statement of Financial Accounting Standards No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R)” (“SFAS No. 158”). SFAS No. 158 requires companies to recognize a net liability or asset and an offsetting adjustment to accumulated other comprehensive income to report the funded status of defined benefit pension and other postretirement benefit plans. SFAS No. 158 requires prospective application, recognition and disclosure requirements effective for the Company’s fiscal year ending August 31, 2007. Additionally, SFAS No. 158 requires companies to measure plan assets and obligations at their year-end balance sheet date. This requirement is effective for the Company’s fiscal year ending August 31, 2009. The Company is currently evaluating the impact of SFAS No. 158 on its Consolidated Financial Statements.

     In September 2006, the SEC issued Staff Accounting Bulletin (“SAB”) No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (“SAB No. 108”). SAB No. 108 provides guidance on the consideration of the effects of prior year misstatements in quantifying current year misstatements for the purpose of a materiality assessment. SAB No. 108 is effective for fiscal years ending after November 15, 2006 and, as a result, is effective for the Company’s fiscal year ending August 31, 2007. The Company is currently evaluating the impact of SAB No. 108 on its Consolidated Financial Statements.

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, 2006, 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, 2006.

     We use the terms “Accenture,” “we,” “our Company,” “our” and “us” in this report to refer to Accenture Ltd 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 2006” means the 12-month period that ended on August 31, 2006. All references to quarters, unless otherwise noted, refer to the quarters of our fiscal year.

Disclosure Regarding Forward-Looking Statements

     This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act 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” 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 negatively affected if we cannot expand and develop our services and solutions in response to changes in technology and client demand.
	•		The management consulting, systems integration and technology, and outsourcing markets are highly competitive, and we might not be able to compete effectively.
	•		Our results of operations could be affected by economic and political conditions and the effects of these conditions on our clients’ businesses and levels of business activity.
	•		Our work with government clients exposes us to additional risks inherent in the government contracting process.
	•		Our business could be adversely affected if our clients are not satisfied with our services.
	•		Our business could be negatively affected if we incur legal liability in connection with providing our solutions and services.
	•		Our results of operations could be adversely affected if our clients terminate their contracts with us on short notice.
	•		Outsourcing services are a significant part of our business and subject us to operational and financial risk.
	•		We could be subject to liabilities if our subcontractors or the third parties with whom we partner cannot deliver their project contributions on time or at all.
	•		Our results of operations may be affected by the rate of growth in the use of technology in business and the type and level of technology spending by our clients.
	•		Our profitability could suffer if we are not able to maintain favorable pricing rates.
	•		Our profitability could suffer if we are not able to maintain favorable utilization rates.
	•		If our pricing structures do not accurately anticipate the cost and complexity of performing our work, then our contracts could be unprofitable.

	•		Many of our contracts utilize performance pricing that links some of our fees to the attainment of various performance or business targets. This could increase the variability of our revenues and margins.
	•		Our alliance relationships may not be successful.
	•		Our global operations are subject to complex risks, some of which might be beyond our control.
	•		Our profitability could suffer if we are not able to control our costs.
	•		If we are unable to attract, retain and motivate employees or efficiently utilize their skills, we might not be able to compete effectively and will not be able to grow our business.
	•		If we are unable to collect our receivables or amounts extended to our clients as financing, our results of operations could be adversely affected.
	•		Tax legislation and negative publicity related to Bermuda companies could lead to an increase in our tax burden or affect our relationships with our clients.
	•		Our services or solutions could infringe upon the intellectual property rights of others or we might lose our ability to utilize the intellectual property of others.
	•		We have only a limited ability to protect our intellectual property rights, which are important to our success.
	•		If we are unable to manage the organizational challenges associated with the size and expansion of our company, we might be unable to achieve our business objectives.
	•		We might acquire other businesses or technologies, and there is a risk that we might not successfully integrate them with our business or might otherwise fail to achieve our strategic objectives.
	•		The share price of Accenture Ltd Class A common shares could be adversely affected from time to time by sales, or the anticipation of future sales, of Class A common shares held by our employees and former employees.
	•		Our share price has fluctuated in the past and could continue to fluctuate, including in response to variability in revenues, operating results and profitability, and as a result our share price could be difficult to predict.
	•		Our share price could be adversely affected if we are unable to maintain effective internal controls.
	•		We are registered in Bermuda and a significant portion of our assets are 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.
	•		Bermuda law differs from the laws in effect in the United States and might afford less protection to shareholders.
	•		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.

     For a more detailed discussion of these factors, see the information under the heading “Risk Factors” beginning on page 33 herein and in our Annual Report on Form 10-K for the year ended August 31, 2006. We undertake no obligation to update or revise any forward-looking statements.

Overview

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

     Our results of operations are also affected by the economic conditions, levels of business activity and rates of change in the industries we serve, as well as by the pace of technological change and the type and level of technology spending by our clients. The ability to identify and capitalize on these market and technological changes early in their cycles is a key driver of our performance.

The current economic environment continues to stimulate the technology spending of many companies. We are also continuing to see strong demand for our services. We continue to expect that revenue growth rates across our segments for the fourth quarter of fiscal 2007 may vary from prior quarters as economic conditions vary in different industries and geographic markets.

     Revenues before reimbursements for the three and nine months ended May 31, 2007 were $5.08 billion and $14.59 billion, respectively, compared with $4.41 billion and $12.68 billion for the three and nine months ended May 31, 2006, respectively, increases of 15% for both periods in U.S. dollars and 9% and 10%, respectively, in local currency terms.

     Consulting revenues before reimbursements for the three and nine months ended May 31, 2007 were $3.08 billion and $8.82 billion, respectively, compared with $2.66 billion and $7.70 billion for the three and nine months ended May 31, 2006, respectively, increases of 16% and 15%, respectively, in U.S. dollars and 9% and 10%, respectively, in local currency terms.

     Outsourcing revenues before reimbursements for the three and nine months ended May 31, 2007 were $2.00 billion and $5.77 billion, respectively, compared with $1.75 billion and $4.98 billion for the three and nine months ended May 31, 2006, respectively, increases of 15% and 16%, respectively, in U.S. dollars and 9% and 11%, respectively, in local currency terms. Outsourcing contracts typically have longer terms than consulting contracts and generally have lower gross margins than consulting contracts, particularly in the first year. Long-term relationships with many of our clients continue to contribute to our success in growing our outsourcing business. Consistent with broader market trends, our recently signed outsourcing contracts are of shorter duration and therefore of smaller value than they have been in the past. Despite this, our average annualized revenue per contract is steady. Long-term, complex outsourcing contracts, including their consulting components, require ongoing review of their terms and scope of work in light of our clients’ evolving business needs and our performance expectations. Should the size or number of modifications to these arrangements increase, as our business continues to grow and these contracts evolve, we may experience increased variability in expected cash flows, revenues and profitability.

     As we are a global company, our revenues are denominated in multiple currencies and may be significantly affected by currency exchange-rate fluctuations. During the majority of fiscal 2006, the weakening of various currencies versus the U.S. dollar resulted in an unfavorable currency translation and decreased our reported revenues, operating expenses and operating income. In the first three quarters of fiscal 2007, the U.S. dollar weakened against many currencies, resulting in favorable currency translation and greater reported U.S. dollar revenues, operating expenses and operating income compared to the same period in the prior year. If this trend continues in the remainder of fiscal 2007, our U.S. dollar revenue growth will be higher than our growth in local currency terms. In the future, if the U.S. dollar strengthens against other currencies, our U.S. dollar revenue growth may be lower than our growth in local currency terms.

     The primary categories of operating expenses are cost of services, sales and marketing and general and administrative costs. Cost of services is primarily driven by the cost of client-service personnel, which consists mainly of compensation, sub-contractor and other personnel costs, and non-payroll outsourcing costs. Cost of services as a percentage of revenues is driven by the prices we obtain for our solutions and services, the utilization of our client-service personnel and the level of non-payroll costs associated with the growth of new outsourcing contracts. Utilization represents the percentage of our professionals’ time spent on billable work. Sales and marketing expense is driven primarily by business-development activities, the development of new service offerings and client-targeting, image-development and brand-recognition activities. General and administrative costs primarily include costs for non-client-facing personnel, information systems and office space, which we seek to manage, as a percentage of revenues, at levels consistent with or lower than levels in prior-year periods. Operating expenses also include reorganization costs and benefits, which may vary substantially from year to year.

     Gross margin (revenues before reimbursements less cost of services before reimbursements as a percentage of revenues before reimbursements) for the three and nine months ended May 31, 2007 was 31.7% and 30.5%, respectively, compared with 33.0% and 28.7% for the three and nine months ended May 31, 2006, respectively. The decrease in gross margin for the three months ended May 31, 2007 was principally due to the impact of revenues recognized in connection with a contract termination in our Retail industry group within our Products operating group during fiscal 2006 and higher annual bonus accruals during fiscal 2007. In the second quarter of fiscal 2006, we recorded a $450 million loss provision as a result of adverse developments associated with the NHS Contracts (as defined below). The increase in gross margin for the nine months ended May 31, 2007 was principally due to this loss provision, partially offset by higher annual bonus accruals during fiscal 2007.

     Our cost-management strategy is to anticipate changes in demand for our services and to identify cost-management initiatives. A primary element of this strategy is to aggressively plan and manage our payroll costs to meet the anticipated demand for our services, given that payroll costs are the most significant portion of our operating expenses.

     Annualized attrition in the third quarter of fiscal 2007 was 18%, excluding involuntary terminations, up from the second quarter of fiscal 2007, but consistent with quarterly trends we historically experience in the third quarter. We continue to add substantial numbers of new employees and will continue to actively recruit new employees to balance our mix of skills and resources to meet current and projected future demands, replace departing employees and expand our global sourcing approach, which includes our Global Delivery Network and other capabilities around the world. We have adjusted compensation in fiscal 2007 in certain skill sets and geographies in order to attract and retain appropriate numbers of qualified employees and we may need to continue to adjust compensation in the future. As in previous fiscal years, we have adjusted and expect to continue to adjust pricing with the objective of recovering these increases. Our margins and ability to grow our business could be adversely affected if we do not continue to manage attrition, recover increases in compensation and effectively assimilate and utilize large numbers of new employees.

     Sales and marketing and general and administrative costs as a percentage of revenues before reimbursements were 18.1% and 17.7% for the three and nine months ended May 31, 2007, respectively, compared with 18.5% and 18.6% for the three and nine months ended May 31, 2006, respectively. The decrease in these costs as a percentage of revenues before reimbursements for the nine months ended May 31, 2007 was primarily due to higher utilization of our client-service personnel on contracts and lower spending on facilities and technology costs as a percentage of revenues before reimbursements.

     Operating income as a percentage of revenues before reimbursements decreased to 13.4% for the three months ended May 31, 2007, from 15.7% for the three months ended May 31, 2006. Excluding the effects of reorganization benefits, operating income as a percentage of revenues before reimbursements for the three months ended May 31, 2007 decreased 0.9 percentage points compared with the three months ended May 31, 2006. This decrease was principally due to the impact of revenues recognized in connection with a contract termination in our Retail industry group within our Products operating group during fiscal 2006 and higher annual bonus accruals during fiscal 2007. Operating income as a percentage of revenues before reimbursements increased to 12.7% for the nine months ended May 31, 2007, from 10.6% for the nine months ended May 31, 2006. Excluding the effects of reorganization benefits, operating income as a percentage of revenues before reimbursements for the nine months ended May 31, 2007 increased 2.7 percentage points compared with the nine months ended May 31, 2006. This increase was principally due to a $450 million loss provision associated with the NHS Contracts recorded during the second quarter of fiscal 2006, partially offset by higher annual bonus accruals during fiscal 2007.

The NHS Contracts

     We previously entered into certain large, long-term contracts (the “NHS Contracts”) to provide systems and services to the National Health Service in England (the “NHS”). On September 28, 2006, we entered into an agreement (the “NHS Transfer Agreement”) to transfer to a third party all of our rights and obligations under the NHS Contracts, except those relating to the Picture Archiving Communication System. The transfer and substantially all related activities were completed in the second quarter of fiscal 2007 for less than the maximum $125 million loss we previously estimated we would incur this fiscal year, and no material obligations remain.

Bookings and Backlog

     New contract bookings for the three months ended May 31, 2007 were $6,221 million, with consulting bookings of $3,495 million and outsourcing bookings of $2,726 million. New contract bookings for the nine months ended May 31, 2007 were $17,028 million, with consulting bookings of $9,525 million and outsourcing bookings of $7,503 million.

     We provide information regarding our new contract bookings because we believe doing so provides useful trend information regarding changes in the volume of our new business over time. However, new bookings can vary significantly quarter to quarter depending on the timing of the signing of a small number of large contracts. Information regarding our new bookings is not comparable to, nor should it be substituted for, an analysis of our revenues over time. There are no third-party standards or requirements governing the calculation of bookings. New contract bookings involve estimates and judgments regarding new contracts as well as renewals, extensions and additions to existing contracts. Subsequent cancellations, extensions and other matters may affect the amount of bookings previously reported. New contract bookings are recorded using then existing currency exchange rates and are not subsequently adjusted for currency fluctuations.

     The majority of our contracts are terminable by the client on short notice or without notice. Accordingly, we do not believe it is appropriate to characterize bookings attributable to these contracts as backlog. Normally, if a client terminates a project, the client

remains obligated to pay for commitments we have made to third parties in connection with the project, services performed and reimbursable expenses incurred by us through the date of termination.

Critical Accounting Policies and Estimates

     For a description of our critical accounting policies and estimates, see our Annual Report on Form 10-K for the year ended August 31, 2006.

Revenues by Segment/Operating Group

     Our five reportable operating segments are our operating groups, which are Communications & High Tech, Financial Services, Government, Products and Resources. Operating groups are managed on the basis of revenues before reimbursements because our management believes revenues before reimbursements are a better indicator of operating group performance than revenues. From time to time, our operating groups work together to sell and implement certain contracts. The resulting revenues and costs from these contracts may be apportioned among the participating operating groups. Generally, operating expenses for each operating group have similar characteristics and are subject to the same factors, pressures and challenges. However, the economic environment and its effects on the industries served by our operating groups affect revenues and operating expenses within our operating groups to differing degrees. The mix between consulting and outsourcing is not uniform among our operating groups. Local-currency fluctuations also tend to affect our operating groups differently, depending on the geographic concentrations and locations of their businesses.

     Revenues for each of our operating groups, geographic regions and types of work were as follows:

																		Percent of Total
																		Revenues Before
														Percent				Reimbursements for
		Three Months Ended												Increase				the Three Months
		May 31,								Percent				Local				Ended May 31,
		2007				2006				Increase US$				Currency				2007				2006
		(in millions)
OPERATING GROUPS
Communications & High Tech		$	1,201			$	1,079				11	%			5	%			24	%			24	%
Financial Services			1,107				922				20				12				22				21
Government			638				599				7				2				12				14
Products			1,280				1,117				15				9				25				25
Resources			850				687				24				18				17				16
Other			6				4				n/m				n/m				—				—
TOTAL Revenues Before Reimbursements			5,082				4,408				15	%			9	%			100	%			100	%
Reimbursements			462				397				16
TOTAL REVENUES		$	5,544			$	4,805				15	%
GEOGRAPHY
Americas		$	2,157			$	2,018				7	%			6	%			42	%			46	%
EMEA (1)			2,468				2,073				19				8				49				47
Asia Pacific			457				317				44				37				9				7
TOTAL Revenues Before Reimbursements		$	5,082			$	4,408				15	%			9	%			100	%			100	%
TYPE OF WORK
Consulting		$	3,076			$	2,657				16	%			9	%			61	%			60	%
Outsourcing			2,006				1,751				15				9				39				40
TOTAL Revenues Before Reimbursements		$	5,082			$	4,408				15	%			9	%			100	%			100	%

Three Months Ended May 31, 2007 Compared to Three Months Ended May 31, 2006

  Revenues

     Our Communications & High Tech operating group achieved revenues before reimbursements of $1,201 million for the three months ended May 31, 2007, compared with $1,079 million for the three months ended May 31, 2006, an increase of 11% in U.S. dollars and 5% in local currency terms, primarily driven by consulting growth in our Asia Pacific and EMEA regions and outsourcing growth across all geographic regions. Strong growth in our Communications industry group in our Asia Pacific and EMEA regions was partially offset by a consulting revenue decline in our Communications industry group in our Americas region.

     Our Financial Services operating group achieved revenues before reimbursements of $1,107 million for the three months ended May 31, 2007, compared with $922 million for the three months ended May 31, 2006, an increase of 20% in U.S. dollars and 12% in local currency terms, with both consulting and outsourcing contributing to the growth. The increase was primarily driven by growth in our Capital Markets industry group across all geographic regions and our Banking and Insurance industry groups in our EMEA region.

     Our Government operating group achieved revenues before reimbursements of $638 million for the three months ended May 31, 2007, compared with $599 million for the three months ended May 31, 2006, an increase of 7% in U.S. dollars and 2% in local currency terms. The increase was primarily driven by consulting growth across all geographic regions.

     Our Products operating group achieved revenues before reimbursements of $1,280 million for the three months ended May 31, 2007, compared with $1,117 million for the three months ended May 31, 2006, an increase of 15% in U.S. dollars and 9% in local

currency terms. The increase was primarily driven by strong growth in our Americas region, principally in our Retail and Health & Life Sciences industry groups, and in our EMEA region in our Consumer Goods & Services and Industrial Equipment industry groups. These increases more than offset an expected revenue decline in our Retail industry group in our EMEA region related to revenue recognized in connection with a contract termination during fiscal 2006.

     Our Resources operating group achieved revenues before reimbursements of $850 million for the three months ended May 31, 2007, compared with $687 million for the three months ended May 31, 2006, an increase of 24% in U.S. dollars and 18% in local currency terms, primarily driven by strong consulting growth across all geographic regions and strong outsourcing growth in our EMEA region. We experienced strong growth in our Energy, Utilities and Chemicals industry groups.

     In our Americas region, we achieved revenues before reimbursements of $2,157 million for the three months ended May 31, 2007, compared with $2,018 million for the three months ended May 31, 2006, an increase of 7% in U.S. dollars and 6% in local currency terms. Growth was principally driven by our business in the United States and Brazil.

     In our EMEA region, we achieved revenues before reimbursements of $2,468 million for the three months ended May 31, 2007, compared with $2,073 million for the three months ended May 31, 2006, an increase of 19% in U.S. dollars and 8% in local currency terms. Growth was principally driven by our business in Spain, the Netherlands, Italy and Germany.

     In our Asia Pacific region, we achieved revenues before reimbursements of $457 million for the three months ended May 31, 2007, compared with $317 million for the three months ended May 31, 2006, an increase of 44% in U.S. dollars and 37% in local currency terms. Growth was principally driven by our business in Australia and Japan.

  Operating Expenses

     Operating expenses for the three months ended May 31, 2007 were $4,862 million, an increase of $747 million, or 18%, over the three months ended May 31, 2006, and increased as a percentage of revenues to 87.7% from 85.6% during this period. Operating expenses before reimbursable expenses for the three months ended May 31, 2007 were $4,400 million, an increase of $682 million, or 18%, over the three months ended May 31, 2006, and increased as a percentage of revenues before reimbursements to 86.6% from 84.3% over this period. Excluding the effects of reorganization benefits recorded in fiscal 2006, operating expenses as a percentage of revenues before reimbursements for the three months ended May 31, 2007 increased 0.9 percentage points compared with the three months ended May 31, 2006.

  Cost of Services

     Cost of services for the three months ended May 31, 2007 was $3,934 million, an increase of $582 million, or 17%, over the three months ended May 31, 2006, and increased as a percentage of revenues to 71.0% from 69.7% over this period. Cost of services before reimbursable expenses for the three months ended May 31, 2007 was $3,472 million, an increase of $518 million, or 18%, over the three months ended May 31, 2006, and increased as a percentage of revenues before reimbursements to 68.3% from 67.0% over this period. Gross margin (revenues before reimbursements less cost of services before reimbursements as a percentage of revenues before reimbursements) decreased to 31.7% from 33.0% during this period. The increase in Cost of services as a percentage of revenues before reimbursements and decrease in gross margin were principally due to the impact of revenues recognized in connection with a contract termination in our Retail industry group within our Products operating group during fiscal 2006 and higher annual bonus accruals during fiscal 2007.

  Sales and Marketing

     Sales and marketing expense for the three months ended May 31, 2007 was $499 million, an increase of $45 million, or 10%, over the three months ended May 31, 2006, and decreased as a percentage of revenues before reimbursements to 9.8% from 10.3% over this period. This decrease as a percentage of revenues before reimbursements was primarily due to lower market- and business- development costs as a percentage of revenues before reimbursements.

  General and Administrative Costs

     General and administrative costs for the three months ended May 31, 2007 were $422 million, an increase of $60 million, or 17%, over the three months ended May 31, 2006, and increased as a percentage of revenues before reimbursements to 8.3% from 8.2% over this period.

  Reorganization Costs (Benefits)

     We recorded net reorganization costs of $7 million for the three months ended May 31, 2007 related to interest expense associated with our reorganization liabilities. As of May 31, 2007, the remaining liability for reorganization costs was $390 million, of which $361 million was classified as current liabilities because expirations of statutes of limitations could occur within 12 months. During the three months ended May 31, 2006, we recorded net reorganization benefits of $52 million, which included a $58 million reduction in reorganization liabilities offset by $6 million of interest expense associated with carrying these liabilities. In fiscal 2006, the reduction in the liabilities was primarily due to final determinations of certain reorganization liabilities established in connection with our transition to a corporate structure in 2001. For additional information, refer to Footnote 3 (Reorganization Costs (Benefits)) to our Consolidated Financial Statements under Item 1, “Financial Statements.” We anticipate that reorganization liabilities will be substantially diminished by the end of fiscal 2008 because we expect final determinations will have occurred. However, resolution of current tax audits, initiation of additional audits or litigation may delay final settlements. Final settlement will result in a payment on a final settlement and/or recording a reorganization benefit or cost in our Consolidated Income Statement.

  Operating Income

     Operating income for the three months ended May 31, 2007 was $682 million, a decrease of $8 million, or 1%, from the three months ended May 31, 2006, and decreased as a percentage of revenues before reimbursements to 13.4% from 15.7% over this period. Excluding the effects of reorganization benefits recorded in fiscal 2006, operating income as a percentage of revenues before reimbursements for the three months ended May 31, 2007 decreased 0.9 percentage points compared with the three months ended May 31, 2006. Operating income for each of the operating groups was as follows:

														Effect of				Net
		Three Months Ended May 31,								Increase				Reorganization				Increase
		2007				2006				(Decrease)				Benefits (1)				(Decrease) (2)
		(in millions)
Communications & High Tech		$	168			$	173			$	(5	)		$	14			$	8
Financial Services			106				126				(20	)			12				(8	)
Government			75				66				9				9				17
Products			193				230				(37	)			14				(23	)
Resources			140				95				45				9				54
Total		$	682			$	690			$	(8	)		$	58			$	50