Welcome to Accenture's second quarter fiscal year 2007 earnings conference call. (Operator Instructions) I'd now like to turn the conference over to the Managing Director of Investor Relations, Richard Clark. Please go ahead, sir. Richard Clark : Thank you, operator and thank you, everyone for joining us today on our second quarter fiscal year 2007 earnings announcement. As the operator just mentioned, I'm Richard Clark, Managing Director of Investor Relations. With me this afternoon are Bill Green, our Chairman and Chief Executive Officer; Pam Craig, our Chief Financial Officer; and Steve Rohleder, our Chief Operating Officer. We hope you've had an opportunity to review the news release we issued a short time ago. Let me quickly outline the agenda for today's call. Bill will begin with an overview of our results. Pam will take you through the financial details, including the income statement and balance sheet. Steve will add some operational perspective. Pam will then provide our business outlook for the third quarter and full fiscal year 2007. Bill will close the presentation before we take questions. As a reminder, when we discuss revenues during today's call, we're talking about revenues before reimbursements, or net revenues. Some of the matters we'll discuss on this call are forward-looking and you should keep in mind that these forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to: general economic conditions and those factors set forth in today's press release and discussed under the Risk Factors section of our annual report on Form 10-K and other SEC filings. Accenture assumes no obligations to update the information presented on this conference call. During our call today, we…

(Operator Instructions) Our first question is from Julie Santoriello - Morgan Stanley. Julie Santoriello - Morgan Stanley: Good afternoon. Pam, could touch on the SG&A margins in the quarter? Clearly a nice improvement year over year and it did pick up sequentially by about 50 basis points. I realized you said that last quarter was not going to be sustainable at those especially low levels. Could you talk about some of the expenses that kicked in this quarter? Pam Craig: In SG&A last quarter, it was about 17% and this quarter, it was 17.7%. Again, we are clearly in the range of what we were looking for this year, Julie. We're down 100 basis points on an adjusted basis. This is right in the sweet spot of where we had hoped to be at this point with SG&A. So there's really nothing that isn't happening. We're executing our SG&A programs very well. Last quarter I think we just had perhaps more in cost of services. Julie Santoriello - Morgan Stanley: You also mentioned in your opening remarks about comp adjustments for some specialized skills. Can you go into a little bit more detail on what those skills might be, and what kind of inflation you may be seeing there? Pam Craig: We had some targeted comp adjustments for some management consulting skills and some hot skills in the SI area in different geographies around the world. Julie Santoriello - Morgan Stanley: Lastly, can you just talk about the impact to the top line growth from foreign exchange in the quarter? Pam Craig: Yes. Well, as you can see, it was 6%. We had thought it would be about 5% so we had a point uplift beyond that. And for next quarter, we're looking at 3% to 4%.

Our next question is from Jason Kupferberg - UBS. Jason Kupferberg - UBS: Bill, you made it very clear in your opening remarks that you guys continue to see really robust demand in consulting, despite what might be going on in the macro economy or the stock market or the geopolitical environment. Can you just walk us through where you stand from a visibility standpoint going forward on the consulting business now versus where you might have been a couple of quarters ago? Bill Green: On balance, the thing I always look at is the confidence of CEOs to invest in their business. I was just at several gatherings of CEOs both in the United States and Europe. People continue to make decisions about investing in their business to compete on the global stage and to compete globally. I think we're operating in a space where people are just used to some of the external factors, geopolitical factors, economic twists and turns and things like that and people are playing a little longer-term game. So if you look at the nature of the opportunities we get, the nature of what's in the pipeline, it is people stepping up to do small, strategic things as well as very large transformational programs that will replatform their entire companies. We haven't seen any downturn or any drop-off in that kind of activity. Jason Kupferberg - UBS: That's good news for the space. Steve, could you maybe give us an update on the grow America program? I know the Americas lag some of the other regions a little bit this quarter. Things can obviously bounce around in any given period, but any new insights there would be great. Bill Green: Yes. As you correctly point out, we kind of bounced around. I think last year was a tough comp for us. As I look at the pipeline for the US and I look at each one of our operating units that operate there, with the exception of communications and high tech and specifically in the communications area, all of the others have very strong pipelines in both consulting and outsourcing. Frankly, I expect that the US is going to continue to grow at the rates that we've experienced over the last five or six quarters. Jason Kupferberg - UBS: Finally, any deeper color in Europe? Any soft spots that you would highlight or particularly hot areas as we go through the balance of fiscal '07? Bill Green: I'd focus on the strength of the UK, obviously in my speaking points I've talked about it, but we also saw real strong growth in France and Germany. I think Spain, if you look at one area that we're focusing on in terms of the growth and the people agenda, that's high on the agenda right now. Other than that, our EMEA region is just going gangbusters.

The next question comes from Bryan Keane - Prudential. Bryan Keane - Prudential: Good afternoon. You guys expect local currency revenues to be at the high end of the range, 9 to 12. This quarter, I think you guys did 10 so you expect to pick-up, if I'm reading this correctly, in the second half of '07. I just wanted to make sure I know where that pickup is coming from. Where's the strength you're seeing that'll drive that higher organic growth? Pam Craig: Bryan, we're just trying to recognize that the fourth quarter will have a good amount of revenue growth because of the reversal of revenue that we took in the fourth quarter of last year for the NHS. So that's the primary reason. Bryan Keane - Prudential: Then the $0.08 extra in earnings that's taken up the guidance, is that mostly just due to the tax rate benefit this quarter? Pam Craig: Well, the tax rate is part of it but I mean when you think about it, with revenues up and margins up, it's all part of the mix. But yes, the tax rate is part of it. Bryan Keane - Prudential: Steve, just on the Texas contract, I know it's winding down and the results won't be material, but will there be any writedown that we should expect in the next couple quarters due to that contract? Or will it all be in operating and we won't see any major one-time event? Stephen Rohleder: Well, I don't want to comment on it because we're still in discussions so I really can't answer your question, just because of where we're at in it right now. Pam Craig: We don't expect a material financial impact going forward, Bryan.

Your next question will be from Rod Bourgeois - Bernstein. Rod Bourgeois - Bernstein: I wanted to press a little harder on the tax rate effect for the year. Does the 34% to 36% tax rate guidance for the year include the one-time $21 million benefit in the February quarter? Pam Craig: No. Rod Bourgeois - Bernstein: So it excludes that. So how much of the $0.08 of upward guidance for the year is coming from tax rate? Is it $0.05 of the $0.08? Pam Craig: Well, I'm not going to give you that exactly because when you think about it, it all goes into the formula of how we get to our margins and delivering results. So I think that clearly, the improvement down to 34.9% is contributing towards that. Rod Bourgeois - Bernstein: Let me turn to pricing. It appeared over the last couple of quarters that your pricing improvement was offsetting the annual salary hikes that you gave at the beginning of your fiscal year. Is that trend continuing, where pricing power is offsetting the impact of your annual salary hike, or are you starting to get to a point where pricing can contribute to margin expansion? Bill Green: I think it's a little bit of both, Rod. The increases that we put through that Pam commented on, we were very diligent and planned out price increases to correspond to those salary increases. So our ability to push through price increases is expanding, as I said, into some other areas of management consulting and into some other areas of systems integration. Before, I think in Q1, I talked about the fact that we were focused on strategy and supply-chain primarily in the management consulting area. We've now expanded that across-the-board in management consulting. In technology consulting, we're…

Your next question will be from Julio Quinteros - Goldman Sachs. Julio Quinteros - Goldman Sachs: Hi, guys. I wanted to check real quickly on a couple of operating unit level questions. First, on the communications and high tech sector, when can we expect that to bounce back and what's driving some of the lagging performance on that group, first of all? Stephen Rohleder: Well, I think there's been some consolidation of the industry, specifically in the US, Julio that's affecting some of the results there. We've got a focused program not only in consulting, but in outsourcing for the communications guys and they're working that very diligently. So I'm not going to predict a timeframe, but I think we're on the case. I would also tell you that the EHT piece of communications and high tech is really growing very nicely. We're seeing strong demand, both in outsourcing and consulting on that side of the operating unit, as well. I expect that we'll move forward in a positive way there. We've got some programs underway to help juice the growth. Bill Green: Let me add and maybe it's my heritage talking, since I know something about CHT. But frankly, when we look at that business, obviously in North America, there's been a lot of restructuring going on. The thing that I'm pumped about in North America is the practice has really started to shift to focus on the cable, on the satellite guys and on the digital content, broadly. I think the business in North America has gone through some amount of a transformation of sorts. But we feel good about the business. I don't know how long it takes to turn. There are a lot of big numbers there that get moved around. But at the end of…

Your next question will be from Pat Burton - Citigroup. Pat Burton - Citigroup: Within the government business then, there were no reversals on any contracts without getting into specifics? Pam Craig: There were no one-time type of things. There was, I think, normal good contract management across the portfolio. Pat Burton - Citigroup: On the earlier comments on SG&A, would you expect them, on a year-over-year basis, to continue to trend down? Or at some point, do you get to as efficient as you can be there? Pam Craig: Well, at some point we'll probably get to as efficient, but we're not there yet. We're continuing in our multi-year program to drive it down, year-over-year. Stephen Rohleder: We're out ahead of the multi-year program. Sooner or later, we'll hit the spot. But I'm frankly taking mental possession of some of this, and we're delighted with the outcome we're getting. Pat Burton - Citigroup: Bill, is the spot moving lower and lower the more you get into it? Bill Green: No, no. When you look at our five-year plan, we just think in terms of our competitive profile of where we need to be. We have a plan to continue to work away at that and we set out to execute it under Steve's leadership. We just happen to be outperforming where we thought we'd be, at this point in time.

And your next question will be from the line of George Price - Stifel Nicolaus. George Price - Stifel Nicolaus: First, on the margins. When you indicated not at the high end of the range, investments in the business and in people, can you just give maybe a little bit more color? Specifically obviously wages, bonus comp; anything beyond that, Pam? Pam Craig: Sure, George. Well first of all, we're halfway through the year. There's a lot of runway ahead of us. As you've probably calculated, we're at 12.3% year-to-date and we certainly expect to deliver higher margin in the second half of the year. So I think we're intentionally continuing to balance the margin expansion with the need to invest in a business that's very hot right now. Stephen Rohleder: I think we could settle for any one of these things. At the end of the day, we settle for the business, the forward momentum, the growth, the profitability. We're balancing. We have incredible demand for skills in the marketplace. There's incredible demand for our people from our clients and from the outside. We're balancing a series of things, to make sure that we have the best people on the planet to drive this business forward as well as we meet or exceed whatever promises that we've made. I think on balance, we're delighted with the results and doing a pretty good job of that. I would say there are 10 or 15 moving parts in all of this. I think as a leadership team, our job is to make those judgments as we go, and try to keep this thing heading in the right direction and playing a game that not only delivers results in the short term, but positions us for the future, as well. That's what…

Your next question will be from the line of Andrew Steinerman, Bear Stearns Andrew Steinerman - Bear Stearns: It's great that the business is strong enough that it would continue to accrue a bonus. Pam, I just wanted to make sure I understood your point on that well. If it wasn't for the accrued bonus that we put into the February quarter, it sounds like gross margins would have been up year over year. In other words, we're on a very healthy gross-margin trend, here. Pam Craig: Yes. The real margins were very strong. Andrew Steinerman - Bear Stearns: Okay. And you would expect more of the same going forward, right? Pam Craig: Yes.

The next question will be from the line of Ed Caso - Wachovia. Ed Caso - Wachovia Securities: I was wondering if you'd talk a little bit about the US federal government market. I don't think I've heard much from there. What are you seeing? Are you continuing to focus resources there? Or maybe are you redirecting people, given how strong other areas are? Bill Green: We are focusing on the US federal business, specifically in the systems integration area and just this year, a renewed focus on the management consulting area. You may have seen a couple of wins that we've had, one with the Navy. I think that's evidence that we are still successful in the market. We're going to continue to pursue the right kinds of projects for our business. That said, I think that everyone is experiencing a bit of a slowdown because of the continuing resolution but it's not going to halt our focus on that area and we're continuing to go after it. Ed Caso - Wachovia Securities: Can you talk a little bit about Texas? I think in the past, there was Florida and NHS. There seem to be special challenges with State or State-like entities sort of shifting priorities, and getting contracts lined up. Are there some lessons learned? Or are they just forever going to be difficult, occasional blow-up kind of spaces? Bill Green: Well, I won't characterize the whole market segment. But I will tell you what we're doing. At the beginning of the fiscal year, we focused our efforts on specific states where we feel the market is there. The states are in a position, basically, to undertake transformational work. That's where we're going to focus our efforts. That's where we're going to focus our business development and that's where we're going to focus our people. I don't want to comment on the overall market or the characteristics of the states. Are there lessons learned? Darn right there are. I think importantly, we recognize the brand of Accenture and our financial performance is precious and important. We're going to make choices about the nature of what we do that supports and defends and enhances our brand and our financial performance. We're going to do that in the best interest of our shareholders, and the men and women who come to work here everyday.

And our next question is from the line of Brandt Sakakeeny from Deutsche Bank. Please go ahead. Brandt Sakakeeny - Deutsche Bank: A question on some color around the bookings number. In the outsourcing segment, can you just give us a little more color? Are you seeing particular strength on the HR side or in accounting and finance? And then maybe on the consulting side, can you just again give us a little more color on where the strength is both geographically and also by vertical? Also too if there's been any mix between sole-sourced and RFP work? Bill Green: Yes, Brandt. Just on your first question of outsourcing versus consulting, the trends that we're seeing in outsourcing if I had to pick two I would say strong bookings in application outsourcing, strong bookings in the BPO area specifically in HR and finance. That trend has been there for a quarter or two but we're continuing to see that drive the bookings growth. On the consulting side, the story is really systems integration with a good healthy mix of management consulting and technology consulting. But it's clear that clients are going through application rationalization and legacy-renewal projects which is driving our systems integration business, specifically in the packaged software area. Brandt Sakakeeny - Deutsche Bank: Steve, any switch between RFP and sole-source work? Is that still staying sort of two-thirds, one-third? Stephen Rohleder: I think it's about the same. I wouldn't suggest there's been any change from the past.

Next question is from the line of Tien-tsin Huang from JP Morgan. Please go ahead. Tien-tsin Huang - JP Morgan: Did I hear it correctly that the transition costs for NHS came in below plan in the quarter? And if so, could you quantify this? Pam Craig: They were below our maximum, and no I will not quantify it. Tien-tsin Huang - JP Morgan: Can you remind us of how much in the way of NHS-related losses were actually recognized on the P&L in fiscal '06? I'm just trying to isolate the easier comparison for the balance of '07. Pam Craig: I'm not going to trust my memory on that, Tien-tsin so we'll get you that. Tien-tsin Huang - JP Morgan: Does your guidance include the expected effects of the discounted SCHR tender? Pam Craig: We had some of that in there and we'll update you once the transaction's completed. Tien-tsin Huang - JP Morgan: So you have some assumption in there, but it sounds like it's modest. Pam Craig: Yes. Tien-tsin Huang - JP Morgan: Lastly, on utilization which has been trending, I guess, at record levels. How sustainable is this quarter's utilization? Are we at or near peak utilization? I'm curious to hear how you're addressing the management of utilization. Bill Green: Well, frankly, every quarter that goes by, we ask ourselves the same thing. Now we have gotten our staffing process very finely tuned. How we leverage and move people around the world is one of the core competencies of Accenture. So it's important. I think that the opportunity we have now continues to be more selective. There was a question earlier about pricing. We think that this situation gives us opportunities to be more selective, and take some steps to improve the pricing and the economic return that we get from the work. So that's really where we're focused.

Your final question comes from Elizabeth Buckley -Arete Research.

What was your staff attrition and your management consulting workforce relative to your group attrition level? Stephen Rohleder: We don't separate out the attrition. We look at it in the aggregate. So we've not disclosed a separate number just for that component of our business.

But should we assume a slightly higher rate for the management consulting part? Stephen Rohleder: I wouldn't assume anything. I would just clarify that a little bit. We've mentioned over the last quarter or so this re-energizing of our management consulting business. I think that has created a buzz in this place that is remarkable. I think people want to be part of it. As a result, we have had a lot of people that may have otherwise historically chosen to move on, or look at a client opportunity, that are continuing to stay the course to be part of what we're trying to do here. So we feel pretty good about where consulting is sitting right now. But it's a very insightful question.

On the management-consulting ramp that you mentioned, Bill, a few weeks ago, would you expect that to mirror your current on-shore GDN head count ratio or would it be biased more in favor of on-shore recruitment? Bill Green: I guess I never thought of it in those terms. I sort of think of it in terms of where are the hot areas, where is the capability we need. There will be an element of those that will be leveraging offshore talent. There will be a very large element of those that'll be out facing clients every day. That's sort of the tip of the spear that consulting provides to us and that's what we're trying to really get done.

The reason why I asked that an is because clearly the doubling if that's your ambition over a three -year period of the management consulting business, that's clearly higher than your revenue guidance this year. Just looking at the trends for the different verticals, can you comment on the demand trends that you're seeing and the sources of visibility to substantiate such an increase over an extended timeframe? Stephen Rohleder: I'll give you sort of a high-level pass through it. I think first of all it's about what are you responding to? Second is, what kind of company are you trying to be and how are you going to differentiate or compete in the marketplace? So we have two things going on here right now. You can see by the consulting bookings that that element of the business has some momentum so we need arms and legs and brainpower in order to serve the clients we have there. Maybe more importantly is the opportunity to differentiate. That is, if you look at the full set of services Accenture provides to clients through consulting, technology and outsourcing, that consulting part of our business, there's a lot of opportunities to attract new clients to the firm by expanding the nature of our work, and having better penetration in geographies around the world. We believe we have tremendous consulting headroom in every country in which we operate. That's what the expansion is meant to be about. Now we're going to do it thoughtfully. We're going to do it smart. And right now, we're already behind. In fact, if we had thousands more consulting resources, we could put them to work today. So in my mind, it's about setting a mission. It's about defining where we're trying to get and it's about driving the business in that direction. At the end of the day, we want three growth platforms that all have the same amount of juice behind them driving the business on a global basis.

Thank you. Bill Green: Let me just wrap up here quickly. In closing, I just wanted to say a couple of things. We had a great quarter, and we're moving into the second half of the year with enthusiasm and with confidence. We're focused on advancing our growth agenda and further expanding our capabilities globally which will enable us to continue to deliver superior value to our clients, and in turn, to our shareholders. I want to remind you that Pam, Steve and I as well as our broader leadership team, as always, are available and happy to talk to you. You can just call Richard to make any arrangements. Thank you for joining us today on the call. Thanks for your continued support of Accenture.