Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. Accenture plc (1467373) 10-Q published on Mar 28, 2019 at 4:27 pm
Reporting Period: Feb 27, 2019
Our effective tax rates for the three months ended February 28, 2019 and February 28, 2018 were 17.1% and 26.1%, respectively. Our effective tax rates for the six months ended February 28, 2019 and 2018 were 18.6% and 23.0%, respectively. Excluding tax expense associated with the enactment of the Tax Act, the effective tax rates would have been 15.1% and 18.0% for the three and six months ended February 28, 2018, respectively. The effective tax rate for the three months ended February 28, 2019 was higher primarily due to lower tax benefits from share-based payments and higher expense from the adoption of FASB ASU No. 2016-16, partially offset by a decrease in prior year tax liabilities. The effective tax rate for the six months ended February 28, 2019 was higher primarily due to lower tax benefits from share-based payments and higher expense from the adoption of FASB ASU No. 2016-16, partially offset by higher final determinations of prior year taxes. For additional information, see Note 1 (Basis of Presentation) to these Consolidated Financial Statements.
As previously announced, on January 10, 2019, Pierre Nanterme stepped down as our chairman and chief executive officer and as a director for health reasons. Effective January 10, 2019, the Board of Directors appointed David Rowland, who was serving as our chief financial officer, as the interim chief executive officer and a director of Accenture, and KC McClure, who was serving as our managing director—Finance Operations, as our chief financial officer, and named our lead independent director, Marge Magner, as the non-executive chair of the board. We subsequently announced the passing of Mr. Nanterme on January 31, 2019.
Gross margin (Revenues less Cost of services as a percentage of Revenues) for the second quarter of fiscal 2019 was 29.2%, compared with 28.9% for the second quarter of fiscal 2018. Gross margin for the six months ended February 28, 2019 was 30.2% compared with 29.9% for the six months ended February 28, 2018. The increase in gross margin for the second quarter of fiscal 2019 was primarily due to lower labor costs, compared to the second quarter of fiscal 2018. The increase in gross margin for the six months ended February 28, 2019 was primarily due to lower non-payroll costs, compared to the same period in fiscal 2018.
Sales and marketing and General and administrative costs as a percentage of revenues were 16.0% for the second quarter of fiscal 2019 and 15.8% for the six months ended February 28, 2019, compared with 15.8% for both the second quarter of fiscal 2018 and six months ended February 28, 2018. We continuously monitor these costs and implement cost-management actions, as appropriate. For the second quarter of fiscal 2019 compared to the same period in fiscal 2018, Sales and marketing costs as a percentage of revenues decreased 30 basis points, primarily due to improved operational efficiency in our business development activities and General and administrative costs as a percentage of revenues increased 50 basis points, primarily due to the recognition of share-based compensation upon the previously disclosed vesting and settlement of our former chairman and chief executive officer’s restricted share units in connection with his resignation for health reasons during the second quarter of fiscal 2019. For the six months ended February 28, 2019 compared to the same period in fiscal 2018, Sales and marketing costs as a percentage of revenues decreased 20 basis points, and General and administrative costs as a percentage of revenues increased 20 basis points.
Diluted earnings per share were $1.73 for the second quarter of fiscal 2019, compared with $1.37 for the second quarter of fiscal 2018. Diluted earnings per share were $3.69 for the six months ended February 28, 2019, compared with $3.16 for the six months ended February 28, 2018. The tax charge decreased fiscal 2018 diluted earnings per share by $0.21 in both the second quarter and six months ended February 28, 2018. Excluding the impact of this charge, diluted earnings per share would have been $1.58 for the second quarter of fiscal 2018 and $3.37 for the six months ended February 28, 2018.