Ladies and gentlemen, thank you for standing by. Welcome to Accenture’s first quarter fiscal 2010 earnings conference call. At this time all phone lines are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions) With that, I’d now like introduce your opening speaker for today Managing Director of Investor Relations, Richard Clark; please go ahead.

Thank you Doug and thanks to everyone for joining us today on our first quarter fiscal 2010 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; Pamela Craig, our Chief Financial Officer. We hope you have 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 along with some key operational metrics. Bill will then provide some insights and what we are seeing in the market and how we are positioning our business. Pam will then provide our business outlook for the second quarter and full fiscal year 2010 and that we will take your questions. As a reminder, when we discuss revenues during today’s call we are talking about revenues before reimbursements or net revenues. Some of the matters we will 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 news release and disclosed under the Risk Factors section of our Annual Report on Form 10-K and other SEC filings. During our call today we will reference certain non-GAAP financial measures which we believe provide useful information for investors. You can find reconciliation of those measures to GAAP on the Investor Relations section of our website at www.accenture.com. As always, Accenture assumes no obligation to update the information presented on this conference call. Now, let me turn the call over to, Bill.

Thank you Richard and thanks everybody for joining us today. We continue to drive our business with discipline this quarter, but also with an either the future. This enabled us to deliver strong profitability and solid cash flow for the quarter, well at the same time positioning us to ride the wave of economic recovery. More than ever we remain keenly focused on our clients and their needs and on generating real value for them and for our shareholders. Here are a few highlights for the quarter. Revenues were $5.4 billion within our expected range of $5.3 to $5.5 billion. We achieved very solid operating margin of 13.9%. Earnings per share were $0.67; new bookings were $5.5 billion with particularly strong consulting bookings of $3.5 billion. We generated free cash flow of $184 million and we continued have an exceptionally strong balance sheet with a cash balance of $4 billion after returning more than $1 billion to shareholders during in the quarter. While the economic environment remains challenging we are beginning to see signs of improvement in certain industries in markets. Overall we feel good about our position in the market and are seeing positive momentum. We are staying very close to our clients enhancing our relationships and helping them with their most important initiatives. Our focus remains on delivering value, expanding the breath and depth of our services with current clients, attracting new clients to Accenture and leveraging our strong marketplace position. With that, let me turn call over to Pam, who will provide some more detail on the numbers.

Thank you, Bill. Happy holidays to you all and thanks for listening today. Before we get into the numbers, let me provide some further context about how we see our business right now. While we continue to work through the economic challenges that began to affect our business in January 2009 and that are clearly evident in the revenue comparisons year-over-year for this quarter. Our pipeline of qualified opportunities has continued to expand and it’s now at a higher level than it was before the downturn. This is most evident in our consulting bookings, the highest in the year and up over 20% since Q4. So while we are continuing to manage our business through a challenging environment, we are now taking clear steps, such as in recruiting and business development to position our business for growth. Although this quarter was tough on a comparative basis, our revenues were within our expected range, we delivered strong operating margin and we continued our track record of cash flow generation. So let’s get into the numbers. Unless I state otherwise, all figures are U.S. GAAP, expect the items that are not part of the financial statements or that are calculations. New bookings for the quarter were $5.53 billion and reflected a positive 3% foreign exchange impact, compared with new bookings in the first quarter of last year. Consulting bookings were $3.51 billion. Outsourcing bookings were $2.02 billion. On bookings in consulting, we’ve recorded a highest level of bookings in the last four quarters. In management consulting, our bookings reflected heightened, client interest in projects, focused on risk management, strategic sourcing, and global expansion activities, and cost takeout remains a priority. In technology consulting, bookings grew significantly, as client have sought our services to consolidate data centers, virtualizes their infrastructures, and address cyber…

Thank you, Pam. Let me just say a few things about what we’re seeing out there in the market and also provide a little more detail on what we’re doing to position ourselves for the upturn in future growth. Well there’s still plenty of uncertainty, there are some positive signs. Things seem to be stabilizing with early signs of recovery in certain industries in markets, and frankly, this improvement differs on the company by company basis. Our clients have become a custom to today’s world with its new set of challenges in opportunities, their actions to improve from the past year have taken hold and are beginning to yield improved operating results. Our businesses are looking towards the future again. We are seeing some early signs in technology spending are beginning to come back and although the picture will become more clear as we get further into the new calendar year. Against that backdrop, here’s what we are doing. Our strategy initiative and our human capital strategy projects, which we completed this past summer, are yielding nicely. From those, we are onboarding new talent and the best people are choosing Accenture. We are driving new technology and industry offerings in the market and getting very strong take up. We are executing our geographic expansion strategy in key emerging markets across the world and preparing to enter additional promising markets. We have enhanced our alliances with the winners in the technology space and we are attracting important new clients to Accenture that are the leaders in their industries around the world. In addition, our pipeline of opportunities is growing, we are focused on accelerating the sales cycles of these opportunities and converting them, and we are exploding our unique and differentiated consulting strength and our track record of superior execution both…

Thank you, Bill. As a reminder each quarter we provide an outlook for the next quarter’s revenue and an update on our annual outlook for the full fiscal year. As I mentioned in our Q4 call the first half of fiscal 2010 will be challenging year-on-year, given that 6% local currency revenue growth in the first half of fiscal ‘09. While we do see continuing positive signs we remain cautious about timing particularly as we move from calendar 2009 to calendar 2010. For the second quarter we expect revenues to be in the range of $5.1 to $5.3 billion, which assumes of foreign exchange up lift of approximately 7% for the quarter. This range reflects the rates over the past two weeks. Now turning to the full fiscal year we are assuming a foreign exchange impact of positive 5% for the full fiscal year. Based on our qualified pipeline we see strong demand for our services particularly and consulting and we see good future business taking shape. We continue to expect our fiscal year 2010 revenue outlook to be at 3% decline to a 1% increase in local currency. Although the first quarters results and the second quarters outlook would tilt us to the lower end of the range. Our ability to land higher in the range will depend on the phase and timing of recovery in calendar 2010. We continue to expect new bookings for the fiscal year to land in the range of $23 to $26 billion. We continue to expect operating margin to be 13.4%, you should expect some fluctuations quarter-to-quarter as we have seen in the past. We continue to expect our annual effective tax rate to be in a range of 30% to 32%. We are slightly updating our outlook for earnings per share for the full fiscal year to a range of $2.67 to $2.75 and an increase of $0.03 which reflects the 1% change in our foreign exchange assumption. Finally we continue to expect operating cash flow to be in the range of $2.39 to $2.59 billion, property and equipment additions to be $290 million and free cash flow to be in a range of $2.1 to $2.3 billion. Regarding free cash flow for Q2 we do expect to slight up tick in DSOs and to substantially complete our restructuring severance payments. There is still quite a bit of uncertainty in the environment given that indicators are mixed in most of the economy around the world. Although the demand environment as started to improve predictability and timing are still a challenge, we are doing what we said, we would do, focusing on profitable revenue growth first and foremost, maintaining a strong balance sheet and continuing to return a substantial portion of the cash we generate to shareholders. Richard, let’s take some questions.

Thanks Pam. Operator, would you provide instructions for those on the call?

(Operator Instructions) Your first question comes from Rod Bourgeois - Bernstein.

I just wanted to first start with the guidance. The data points on the pipeline sound really you see encouraging and consistent with what we are seeing elsewhere in the industry, but I guess if you are tilting the guidance to the lower end of the prior range, I’m trying to reconcile that with the really positive commentary about the pipeline. Is that just a timing issue where the pipeline is taking off, but you still need time to book it and translate it into revenues and you may not capture all of that before you may not capture all of that until well into your fiscal ‘10? Is that why the issue on why pipeline looks so good, but the revenue guidance outlook has a little less conviction attached to it maybe?

Yes. I think that is a fair characterization. If you look at how the first quarter came out, the second quarter outlook it’s really based on that. If you just continued that, it would tilt it probably towards the low end of the guidance. However, based on how things come through after we turn the corner on the calendar here into calendar 2010. I think that’s the part that we’re just still not sure exactly how that timing will come out and so based on that it could lead to the higher end of the guidance and that’s just where we are right now and how we see it.

So just to clarify, I mean it sort of implies that your November quarter revenues were maybe softer than what you hope for, but at the same time, the pipeline increase was maybe better than what it could have happened. It seems like you were very pleasantly happy with the pipeline. Is that an accurate characterization, where the near term revenues were soft, but the pipeline up tick was even better than what it was hoped for?

I think soft is too strong a work. I mean I think we came in within the guidance. It was slightly on the lower end of it, but nonetheless that’s what we expected for the quarter and I think the pipeline is strong at this point.

Specifically on the pipeline, are you seeing more of the larger transformational type deals or is the consulting market rebound still sort of reliant on a lot of the shorter cycles, smaller deal sizes?

Rod, I guess I’d say that I’m not sure. I’d call them small or shorter, but the big transformational deals have not become in vogue again yet. People are still putting their foot in the water, up to their ankles, up to their knees. They’re doing supply chain strategies, they are doing rationalizations, they’re doing all kinds of things, but that big billion dollar transformational thing that you see in the pipeline, I mean those are a lot harder to come by and so we do see a higher volume of smaller things. That said, they’re important things, right. These are must dos for these companies and thanks to the consulting savvy that we have at the top of the business. I think it puts us in a very good position to not only get those things done, but also benefit from the downstream work that historically comes our way from those.

One final question, you mentioned the uncertainty attached to moving from calendar ‘09 to calendar 2010. Is that uncertainty at all related to issues that you are seeing in your large clients budgeting process or is the budgeting process looking more normal this year and you’re just being prudently cautious until you actually see it fully come into fruition?

I’d say when we cross into 2010, if it comes back half as well, as it dropped and then the 2009, we’re going to be in hog heaven, because there’s a lot going on out there. If you think back to when we crossed into 2009, it was profound across all industries. So I would tell you that my sense and I’ve been out on the trail a lot is people are feeling better, broadly better about the economy, broadly better about their business, their planning to invest in 2010. They’re not going to do it on the first or second of January. They’re going to see a few weeks how things unfold, but then they’re prepared to make investments in improving their business performance and all that is wind that is at our back as opposed to our nose.

Your next question comes from Moshe Katri - Cowen & Co. Moshe Katri - Cowen & Co.: Looking at your outsourcing bookings, they were down sequentially. Did you have any major deferrals during the quarter? Then are we talking about weakness in any specific areas on the outsourcing side?

I mean, we had some things slip as we always do. I think I expected us to do a little better in the outsourcing bookings. We did have a few big things slip at the last minute, which happens, I guess happens every quarter truth be told, but I was a little disappointed in it. The things didn’t go away, which I guess is what’s important to me and both in the BPO side and the AO side. We’re starting to get better pipelines in that space than we’ve had in sometime. So I feel good about the business over the medium term. I would have liked to have seen better bookings for the quarter. Moshe Katri - Cowen & Co.: Then there’s been a lot of talk obviously in the last quarter about pipeline conversion rates. Have we seen any improvements on that side either on outsourcing or on the consulting side during the past few months of the quarter?

I guess I’d say win rates are pretty consistent, and nobody is in a hurry, would be I guess the way I put it. In the remainder of the calendar year, which is just a month that we have left or the days that we have left, there are certainly people that are targeting getting things done this calendar year in their companies. People have been particularly thoughtful in my opinion, and more interested in getting it right than getting it started would be the way I would put it and I think that had some drag on the business, but frankly I think it’s good, because we have a chance to make sure we are getting it right as opposed to just getting it started. Moshe Katri - Cowen & Co.: Last question on the U.K., I think it’s about 10% or so of revenues. Can you give us an update on what you’re seeing in that market? Thanks.

I mean in the U.K., it’s been on our list for a long time. U.K. market is frankly if you stand back and look at it, probably the worst hit by the downturn. We have stabilized nicely in the U.K. We’re starting to get some momentum back in that business. The leading companies, they’re starting to invest. There’s no question. Those leading companies are global in nature for the most part. So that market we see as much more stable. We have done a good job of getting our supply and demand aligned in the U.K., and we have several of our top leadership people specifically with feet on the street over there in terms of bringing in new business and that has helped us a great deal. So we feel we’re getting on a good trajectory with that. I would also add that, we did make a change in leadership in the United States, broadly North America and it wasn’t as much a leadership change, but an operating model change and we’re starting to get good yield from that as well in terms of looking at the pipeline and the amount of feet on the street we have in the United States.

Your next question comes from Tien-Tsin Huang - JP Morgan.

I wanted to clarify something you said around consulting revenue per workday bottom. Did I hear that correctly? Can we interpret that to mean adjusting for seasonality, which you’d start to see some sequential revenue growth in consulting? Starting at the end of the third quarter?

Yes. In consulting, the way we look at sequential and I know this is a little bit confusing, but it’s not like a month-to-month thing. It really is on per workday, what is the revenue per workday. So as we go forward, we’re here in consulting, we are expecting it sequentially on this per workday basis to turn positive in the second quarter.

Obviously, fewer workdays overall in the second quarter?

That’s right. The second quarter because of the holidays and them being holidays all around the world has five or six less workdays usually each year.

We don’t like the holidays.

That’s right. We want to get utilization, which is actually my next question. My next question was on utilization rate. Running pretty hot I guess at 88%, which I assumed helped the gross margin up beat our forecast quite handily. My question is, both of these metrics are they sustainable from here or should we expect both metrics to trend lower as we progress through the year utilization and gross margin?

Let me do utilization and I’ll let Pam as the steward of margins. The utilization has been hot and continues to be hot. 88% is too hot, particularly in a market that is starting to expand. So we mentioned we’re going to be bringing in a lot of people this year and that involves two things, it involves building bench and involves particularly investment and consulting talent. So you can expect, we’d just like to run the company with an eight in front of it and have some flexibility in there to make sure we have the get people where we need. One of the things I mentioned last time is not leaving profitable revenue growth on the table, and at 88% frankly you could be doing that. So I think we’re doing a good job now of making sure we continue to run with lots of economic discipline, but at the same time make sure that we have the horses we need to take advantage of the business that is out there.

On the gross margin, I mentioned that there’s some shift into sales and marketing and really that was just about implementing our new sales effectiveness model, making that clear in terms of how people spent their time. So I think there’s a piece of that that is a permanent shift into sales and marketing from gross margin. The time in gross margin were non-contract activities where sometime had been spent.

That’s the new sort of starting point to work from the 33%?

Yes. It reflected again good outsourcing profitability and clearly, a couple hundred basis points really in terms of the shift.

Last one really quick. Just the headcount, the 45,000 that you’re looking to add, which I believe is net, what’s the mix there between GDN and non-GDN count?

It’s gross headcount, I don’t know what you mean by net, but that is the number of people that we expect to hire and a substantial portion is in the GDN.

Your next question comes from Darrin Peller - Barclays Capital.

A quick commentary on the operating groups, would you mind giving more color on the specific groups? You touched on financial services showing some specific strength in the pipeline and clearly the margins were up quite a bit as well. Any sense on how, the types of projects in that vertical specifically and then maybe comment briefly on the others as well?

First in financial services as you mentioned, we are seeing some signs of turnaround there with consulting improving first. So I think that’s helping the profitability with some higher margin consulting work. Clients are definitely more engaged. Insurance remains the mort resilient across the financial services industry group, but really broadly in FX we see consulting opportunities in post merger integration, cost reduction, finance and performance management, risk and regulatory management, that type of work. That’s definitely kicking in financial services. You want me to go through the others or you…?

Is there anything that really stood out on the other operating groups? That would be helpful.

Let me just hit a couple of highlights I guess. I think the resources group, that used to be very ERP and energy related, now it’s sort of across all the businesses within resources and tons going on in the smart grid and really, related technologies, related to energy efficiency and reliability, and sustainability and that is just a global phenomenon. I think today in the press there was an article that we had ten smart grid projects in China alone. That is the nature of that thing. So that’s kind of a new frontier for resources and we still have the big base of ERP work, but a lot of these front end things that we’re doing around the grids and electricity broadly is going to pickup nicely. Then of course, in the U.S., I mean as we all sit and look for whatever is going to happen in Washington having to do with legislation regulation, what have you on health. Our business in health continues to be very good as it relates to both the payer and providers sections and then our traditional business that was in pharma, so that we’ve good momentum on it as well. CHT is a challenge. It’s going great in Asia, but in Europe and in North America, the telecom sector is particularly challenged. Some of that is just structural things that are going on in the industry, some of that is just individual company and competitive things, but we’re trying to put more power behind that one and get some things turned around there, but basically there’s aren’t any of our operating groups that are outpacing the other ones. They’re all fighting the good fight every day in the market.

Just in products, farm and automotive they have restructuring going on, so that is creating opportunity for us. Retail has clearly been hit hardest, but the clients are cautious there. The consumer goods companies, they’ve been cautious, but they’re picking up a lot of activity and cost reduction globalization, BPO, that sort of thing. As usual, it’s a good mix around the world and around the industries.

I would just mention one other thing and that is when we look at a lot of what’s happening and what’s coming back, it’s less about an industry and more about a technology or an offering. For instance our technology consulting business is just roaring back with data center consolidations, virtualization, security, IT governance in general, like just a ton going on there. So that’s affecting all the industries. In some way we’re seeing the recovery more in the horizontal view across our business than the vertical view that we traditionally look at the world in.

Then real quickly, Pam you’d mentioned the guidance for EPS as up a few cents, I think it was partly related to the assumption changes. Yet the operating margin guidance was 13.4% for the full year even with your 13.9% in this quarter. Can you just help me understand exactly how you just reconcile that for us?

First of all on the earnings per share, the change is entirely is due to the foreign exchange assumption. We’re not really changing anything as it relates to the guidance and similarly, on the operating margin, it’s always lumpy how operating margin occurs through the year. First quarter is typically a stronger quarter and that was the case here. So we’re going to continue to manage to operating margin and we’re going to continue to make the investments in our business and we still see a 13.4% as the right place to land this year.

Your next question comes from Jason Kupferberg - UBS.

So I had a question in terms, rather than talking about the conversion of pipeline to bookings. Just wanted to touch on the conversion of bookings to revenue and I guess, I’m looking specifically in consulting, because you did have a pretty solid quarter here of consulting bookings in Q1 I think better than most folks were expecting, yet the revenue outlook for Q2 is a little bit on the light side again, relative to expectations. I know typically consulting bookings invert with revenues relatively quickly. So, is there anything going on there just in terms of client hesitancy of actually ramping up some of these new consulting bookings? If there is, would you expect some of that to ease as we move into the new calendar year and new budgets get established?

No, not on the bookings, Jason I think it’s more just, I mean how we see Q2. I mean Q2 is usually our light quarter, lighter of the four and just in terms of how the stuff manifests itself among the four quarters we just may have had slightly different assumptions than were out there.

Now, in terms of reinvestments back into the business, which I think you just mentioned as one of the factors why margins are going to be lower during the balance of the year than they were in Q1 based on your full year guidance. Can you drill in a little bit there, I know you mentioned $45,000 hires and most of those in the GDN, but I’m assuming business development is part of this as well. Can you drill down into specific skill sets that you’re focused on heading or which of the industry groups might be seeing the biggest increases in terms of business development funding and any other color there would be terrific?

It’s across the board and you mentioned it when you sort of get to that point of building the business, you’re going to see that the recruiting, the hiring, business development and really it’s across the board around the world in terms of where we’re building the business. Also in our offerings and just how we build out the horizontal things that Bill mentioned. I mean, we’re putting effort into that and we are investing in those things very intentionally.

Just one last kind of longer term question, when we think about the global delivery network, I guess it’s as of this past quarter roughly what 47ish percent of total Accenture headcount and obviously the bulk of the new hires in fiscal ‘10 will be in the global delivery network as well. I mean, over time do you guys think about some kind of structural level at which the GDN could potentially max out as a percent of your total headcounts just based on where you see customer demand trending over the next several years? Is there any framework for us to think about along those lines?

I think the GDN has gotten dramatically more capable. It’s moved from a horizontal thing to a vertical thing as it specializes and focuses on the industries that we serve. We put the centers of excellence across the GDN broadly, and so the level of work that gets down in there just keeps going higher and higher up in the food chain. That works very well for us in terms of economics and in terms of integration of sort of the envisioning and architecting work, connected down to getting the work done thing. The other thing that will happen is, right now we have incredible demand for talent in our consulting business. So this stuff sort of ebbs and flows, we’re bringing them on by the thousands in the global delivery network, but we’re looking for direct entry, senior level people and major developed markets around the world for our consulting business and each of those people will drive a pyramid full of talent. So I think you’ll see over the quarters, you’ll see some acceleration in the headcount in the developed markets and consulting as well.

One follow-up on that, because it’s an interesting point, sounds like what you’re saying is more and more of your addressable market broadly speaking is becoming offshorable if you will, because the global delivery network is becoming more capable. Does that inherently create any more of a cannibalization effect to your top line over the longer term, because obviously the bill rates are going to be lower there even though relative to an on site person performing the same type of work.

If you think about the stuff that we’re investing in and the things that we’re doing, the nature of the smart grid things that we’re doing isn’t GDN stuff. The nature of the digital marketing stuff, the analytic stuff, I mean all of this is core innovative stuff that’s done with the client’s face on the other end of it. So, it’s not as if the work just drifts into the offshore space. We’ve replenish with the innovation in the front-end things and that becomes a bigger and bigger piece of our mix. If you looked over 10 years, we’ve seen this ebbing and flowing two or three times over the last 10 years, and I think we’re at the beginning of another period of time where a lot more content rich, high end, heavy knowledge capital work gets done in the consulting space in the big markets of the world.

Your next question comes from Julio Quinteros - Goldman Sachs.

Bill, can I just start with you real quickly on comparing the recovery that you guys are looking at 2010 versus sort of the timeframe 2003, 2004 as we were coming out of it? It sounds like at least one thing that I want to serve dig into that there is a bit more of a technology push and what seems to be happening out there. Would you sort of just characterize the differences in terms of recovery and is there really a technology angle to this that could actually help push things along further as go we kind of forward into ‘10?

The good news is the last downturn that we recovered from was minor by comparison and somewhat isolated. In other words there were a lot of pieces of the business, there were a lot of pieces of geography and a lot of pieces of industry they were isolated from that downturn. In this one, there are very few that are isolated. So that’s one thing just in terms of people’s mental state and activity, returning to the business world. So I guess that’s the first thing. Interesting also is people have stretched their labor capacity about as far as they can. I mean, the productivity improvements are profound that have been delivered in the last 12 months in the industry, but people are holding on by their fingernails to those improvements and in order to have those improvements be sustainable overtime or to have a platform to continue to improve performance, they have to leverage technology to get to the next level. I think that’s the thing. It’s not any of the gee whiz stuff, it’s not cloud sas and all that that’s all interesting stuff, but it’s how that intersects with the fact that what do people do now that they squeezed the lemon so tight, they’ve got as much performance as they can get out of the assets they have, what do you do for the next act, and I think that’s the thing that’s going to cause people to look for technology to find a way to get leverage.

If you have some sort of point to any specific example, it sounded like you were using things like virtualization type technologies and data centers consultancies is that the crux of what you end up trying to accomplish, or is there some other sort of technology component to this?

I think there’s back of the house and front of the house stuff. There is back of the house stuff, which is all about that, the data center. The virtualization thing is like a no brainier, but there is how do you enable the workforce, and that has to do with, if you take smart metering and you have the smart grid phenomenon is the back of the house thing, but the smart metering and what you do with truck rolls and utilities is the front of the house thing. I think if you look across financial services, retail consumer products broadly, you see all these technologies that are sort of waiting on the edge. Looking at the eHealth agenda, that sort of front of the house stuff, people have done the back of the house. So I think that there is technology innovation on both sides of it and I think we tend to always think about the data center in the back of the house and I think tons of the opportunities of the future are enabling the people that face the customers. When we look across telecom, when we look at utilities, and we look at what we’re in retail and consumer products, it’s all sort of front of the house innovation that I think are going to drive a lot of investment.

Just Pam really quickly on the sources of upside, you said that on some of the margins there can be lumpiness, etc., but if you have to kind of look that 13.9%, it looked like there was a 30 or 40 basis point improvement on a year-over-year basis. What was the source of that? It looked like utilization could have been a big driver. Were there any other components that would have driven the kind of improvement on a year-over-year basis in your operating margin?

Obviously, utilization was part of it. We did have improved outsourcing profitability. Last year, did have the bad debt provision in there. So as usual, there are a lot of things that go into the mix of managing to operating margin and we were really pleased with this result.

Target for the full year, unchange at 13.4%, correct?

Correct.

Your next question comes from George Price - Stifel Nicolaus.

Pam, I wonder if we can talk a little bit just to drill into the revenue growth guidance and some of the components, given this quarter’s report and the guide for next quarter. First thing, any changes to the consulting and outsourcing growth expectations in terms of constant currency growth for fiscal ‘10? I believe last quarter you said it was consulting would be low single digit negative, outsourcing was going to be flat to low positive.

It’s basically consistent with what I’ve said last time, Q2 expecting consulting to be high-single-to-low-double digits negative and outsourcing mid-single-digits negative and then in the second half of the year consulting low-single-to-double-digits positive, and outsourcing low-single-to-low-double digits positive.

So this is going to be the bottoming quarter then for outsourcing coming up fiscal 2Q?

That’s how we see it at this time, George. Yes.

If I’m working a little bit to try to model that relative to how currency seems to be shaping up and I know it’s awfully tough to model currency going forward, but with a 5% headwind now for the year, it seems like, first of all the guidance does imply a pretty significant snapback in the second half of the year. Even with that snapback and the 5% currency headwind, it seems like there could be further downside than the negative 3%. I’d like to just trying get a little bit more comfort as to how much visibility or how much confidence you have in that.

Well, first of all the 5% I think is a tailwind, at least that’s how I see it, because it makes the dollars higher.

I’m sorry if I said headwind.

Just in terms of the local currency growth, negative 3% to positive 1% I mean, we’ve kept that range, we’ve pushed it hard. We’ve looked at it from every direction in terms of the guys that run our business, the guys that run the operating groups, consulting outsourcing around the world without it and I think that we’re very comfortable with that range in terms of how we see the business right now.

If I could ask about a couple of the verticals, Asia Pac revenue growth was down 2% in constant currency, holding on better. What was going on there?

I think that Asia by and large has navigated through the downturn pretty well. There are certain segments that were impacted, but our SEAAC business has been particularly good. China wasn’t as hot as it had been, but we had a plan of 40%, so you come in half of that, it’s still a pretty good result. So on balance, a lot of the business held up nicely there, and the market held on. The other thing is that we’re doing a lot of new stuff there as opposed to traditional work.

We had very strong growth in Singapore and Malaysia, but we did have a decline in Japan.

Last thing just to clarify a prior answer, Pam, the 45,000 hire this year, is that I guess the question was gross or net. You are not expecting to add 45,000 people to your total headcount right, you are going to net out attrition out of that?

I get what you mean by net now. Yes. Exactly I mean attrition will be part of that, but the number of people we plan to hire is 45,000.

Your next question comes from Ed Caso - Wells Fargo Securities.

My question is on the use of free cash flow. If you can give us a sense between your bias or dividends and then repurchase and then within repurchase how much would come from sort of the inside and how much would come from out in the market?

Well, we haven’t really changed our bias here, last quarter, Ed we announced that we were going to be going to a semiannual dividend in the third quarter. We’re still on track to do that and of course we raised the dividend 50% this year. So we are continuing to do that and we do expect share repurchases this year to be at this point roughly the same as they were last year and the mix of those is very price sensitive because interestingly the founders will present them to us when the price is high and of course we probably are in the open market maybe we think the price is attractive. So it’s the way it works.

Can you give us a sense if the price is right, would you did into the $4 billion number or maybe the way to ask the question is what’s the level of cash that you desire to hold to run the business?

We have plenty of cash to run the business. It’s certainly below that level that we need for that.

Your next question comes from Bryan Keane - Credit Suisse

I just want to ask I think the key to the story right now is this reversal between 2Q and 3Q and in the guidance, 2Q is going to be negative almost double digits down and then 3Q it starts to reverse and 4Q even stronger. Can you help us understand the model Pam why that happens?

Well, I think that it’s of course, dependent on what happened last year, right and you started of the first quarter 9%, second quarter 3% and then we went negative. So then as you are coming up here and we mentioned we are going positive sequentially on a per workday basis in consulting them when you start to do those compares, it starts to kick in. So, it’s that and then how we convert a pipeline that has grown significantly from a year ago.

It works the same way in outsourcing because I know I think you said outsourcing for the second half high single to low double positive which is a big change from the down mid single that were expected in the second quarter.

Yes I mean with the outsourcing, last year we really wasn’t until more like third quarter that it hit us with some of the cancellations and restructurings that we had in the business last year and then just also in terms of how the complexion and some of those deals changed in terms of size and that sort things. So, we are expecting it to lag a bit the consulting and again it’s based on those things and also the compare to last year.

I think there were some cancellations that happened in financial services that started impacting the third quarter. So part of it is probably anniversarying that.

Right.

How does pricing look in consulting and outsourcing and what is embedded in the guidance?

First of all in management consulting and the high value consulting business, pricing is good. Certainly stable and when you look at the technology businesses broadly, certainly over the past year we have had pressure to reduce costs. We’ve been able to respond very well by shifting work to the global delivery network and then being able to maintain the margins on that, but that has put pressure on prices overall. I think again that’s stable and we are working through that and getting closer to the end of that cycle.

Then do you start to see price increases as we move into fiscal ‘11 or how do we think about that?

It’s hard to tell right now. I mean I think, we were delighted with price stability. Some of the consulting stuff the high value stuff is pricing in a lot more favorable way. I think 2011 is a different world than the one we’ve been in right now, the thing that hasn’t gone away in all this is the drive for competitiveness on a global basis and I think as people get back into the game, they are going to start doing what they always do right flying to raise their game and they are going to try to do it without adding headcount, and the implications of that I think are exceptionally good for the back half of 2010 and 2011 for our company.

Your final question comes from Ashwin Shirvaikar - Citigroup.

I know you don’t comment specifically on variable compensation, but with consulting utilization running 88% is pretty high. You work smart people very hard presumably you pay them very well. Are you looking at variable comp coming back somewhat if you could have some qualitative comments?

I’ll tell you my view. We plan to earn variable comp. The thing we used to call variable comp whatever that thing is annual bonus this in our current terms, we build it in our plan. We drive the business to that plan. Our operating unit people are working to make their plan and if they make their plans we earn annual bonus and we get to pay it to our people. It’s sitting here right now. That’s high on my agenda and particularly being in a market where it’s going to come back and when the people are going to have opportunities. The thing I’m most focused on is making sure we attract and retain the best talent out there and our ability to deliver what is a very modest level of bonus is important to our proposition to people.

Ashwin, that all gets finalized at the end of the fiscal year.

The re-branding post title awards is that likely to be a material let’s call it $1500 million investment?

No I’m glad we went this deep in the questions before we got a Tiger Woods somebody had to ask. No, frankly we are very relaxed about this, sad and unfortunate and we made a decision on behalf of our company. We have incredible material that you’ll start to see. We’ll start rethinking our strategy and how to raise our game and our message as we get into next year, but we don’t see an economic impact of it at all and frankly we are incredibly excited about the opportunity to re-brand and raise our profile in the market.

Let me just say a couple of quick things in closing and then we’ll wrap up and our continued focus on operating discipline and delivery excellence is what enabled us to turn in a strong quarter in this environment. We are starting to see signs of recovery and we feel good about it the environment also remains somewhat uncertain and challenging. I think everyday that goes by we get more confident and broadly clients and business at large get more confident. I do want to thank the 176,000 men and women at Accenture around the world for staying focused on what we do best. That is delivering for our client’s day in and day out and that of course enables us to deliver for our shareholders. Thanks very much for joining us on the call today. We appreciate your continued support and look forward to talking to you again at our Q2 fiscal 2010 earnings call next year and finally I just want to wish everyone a happy and healthy and relaxing holiday season.

Ladies and gentlemen today’s conference call is being made available for replay starting today at 7:00 pm in the Eastern Time Zone and running through Thursday, March 25, 2010. You can access our service by dialing 800-475-6701 or 320-365-3844 and at the voice prompt enter today’s access code of 120395. That does conclude our conference call for today. Thank you for your participation. You may now disconnect.