Good morning ladies and gentlemen. Welcome to the CGI Third Quarter 2010 Results Conference Call. I would now like to turn the meeting over to Mr. Lorne Gorber, Vice President; Global communications and Investor Relations. Please go ahead Mr. Gorber.

Thank you, Joe and good morning. With me to discuss CGI’s third quarter of fiscal 2010 results are Michael Roach, our President and CEO and David Anderson, Executive Vice President and CFO. This call is being broadcast on cgi.com and recorded live at 9:00 am on Tuesday July 27, 2010. Supplemental slides, as well as the press release we issued earlier this morning are available for download on cgi.com along with our Q3 MD&A, financial statements and accompanying notes, all of which are being filed with both SEDAR and Edgar. Please note that some statements made on the call maybe forward-looking. Actual events or results may differ materially from those expressed or implied and CGI disclaims any intent or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The complete safe harbor statement is on both our MD&A and press release as well as on cgi.com. We encourage our investors to read it and its entirety. We report our financial results in accordance with Canadian GAAP, but we do discuss non-GAAP performance measures, which should be viewed as supplemental. The MD&A contains definitions of each of these non-GAAP performance indicators used in our reporting. All of the figures expressed on this call are from continuing operations and in Canadian dollar unless otherwise noted. I’ll turn the call over to David first to review the financial results for the third quarter and then he’ll pass it over to Mike who will discuss a few strategic highlights. So with that, David.

Thank you Lorne and good morning. Once again, I’m pleased to share the financial details of another good quarter. Revenue was $901.6 million, foreign exchange fluctuations negatively impacted revenue by $55.3 million or 5.8% compared with the same period last year. When adjusted for 4X, year-over-year growth, on a constant currency basis was 0.7%. EBIT of $124.5 is a 10% improvement versus Q3 of 2009. While our EBIT margins strengthened this quarter to 13.8% from 11.9% in the third quarter of 2009. Earnings from continued operations in Q3 2010 were $85.9 million or 12% better than the $76.7 million reported in Q3 of 2009. Our earnings margins from continuing operations was 9.5%, up from 8.1% in Q3 of fiscal 2009. Diluted earnings per share in the third quarter were $0.30. This compares with $0.25 in the same period last year or an increase of 20%. Included in these results were $4.2 million of professional service expenses related to our pending acquisition of Stanley. As well, there was a partially offsetting positive net tax adjustment of $3.6 Million related to the final determination and expiration of limitation periods. Excluding the effect of these items, our earnings from continuing operations was $86.5 million, representing a margin of 9.6% while the earnings per share on a diluted basis would have remained unchanged at $0.30 per share. We generated $102.8 million in cash from operations in the third quarter or $0.35 a share. This would have been $124.3 million for the quarter had it not been for the early funding of the Canadian payroll that fell on the Canadian statutory holiday of July 1st. This 21.5 million variance reverses in Q4. Against the target of 45 days or less, our DSO at the end of Q3 was 36 days; an improvement of 5 days…

Thank you David and good morning to everyone. I am very pleased with our performance this quarter and year to date. For the second consecutive quarter, year-over-year and on a constant currency basis, our global revenue stabilized and is growing in North America. We continue to anticipate a gradual strengthening of our revenue in the coming quarter. Our North American operations grew by nearly 2% at a constant currency basis during quarter three. In the US, at constant currency, we grew at 4% demonstrating the ongoing strength of our Federal state and local government franchisers as well as our ability to create and seize growth opportunities while increasing our recurring revenue and backlog in this key market despite some uncertainty at the macro level. In Canada, we grew by 0.4% in quarter three. As anticipated, each quarter gradual improvements continue to be seen as our long term outsourcing clients begin to invest in SINC projects. In addition, our business development efforts are beginning to attract new clients such as our end to end 7 year $125 million deal with Atlantic Collateral as well as our multiyear multimillion dollar deal with the Beer Store. With respect to Europe, European economy continues to have a short term marginal impact on our global operations. To address these adverse market conditions, we continue taking pro active measures which will better position us to take full advantage of the economic recovery as it occurs. Globally, quarter three bookings came in at $838 million or 93% of revenue. Once again, I want to remind you that bookings are lumpy in our business but we’re off to a good start in quarter four having booked and announced key deals with REXEL, DESO and the state of California. We believe bookings on a trailing 12 months are the…

Just a reminder that a replay of this call will be available either via our website or by dialing 1800-408-3053 and using the pass code 2614647 until 10th August, as well a podcast of this call will be available for download at either cgi.com or through iTunes within a couple of hours. Follow up questions can be directed to me at 514-841-3355. Joe, if we could poll for questions from the investment community, please.

Certainly. (Operator Instructions). The first question will be from Tom Liston with Versant Partners. Please go ahead.

Thank you, and good morning. Just on the overall conditions and outsourcing, you had a pretty good bookings quarter mainly in Canada but some of your peers like IBM reported something like 19% down year-over-year. What do you feel there globally in terms of size and what have you -- just throughout the market overall?

Yeah, I think Tom it’s -- I -- kind of mentioned that there is mixed conditions out there. Europe as I said continues to be severely challenged by the economic recession. Canada seems to be coming along nicely. US I would tell you in the last 3 months a little more uncertainty in US market. Having said that you mentioned, our bookings were a little light relative to the quarter, but on a year to date basis; 12 months basis, we are still well over one. I was pleased with the bookings in Canada and if you look at some of the bookings that we made there, there were new clients and outsourcing deals. I think, in my senses, that there is going to be continuing growth in outsourcing that middle sized deal is a sweet spot for us. Our local proximity model plays well with that market; you saw that with the Atlantic Lottery, the Beer Store on the other hand Rextile is a North American wide, state of California opportunities. So we still feel good about where we sit in the market. We are very focused in areas that are continuing to invest and grow so even though conditions may be a little more mixed than they were a quarter ago, we still feel good about where we are and the opportunities that we have in front of us.

And with that, obviously California you were on the health care services side and you announced LA County going live with the HR payroll system and certainly there -- fully baked if you will with your products. Can you talk about the project, I guess, if you will and these three competitors and where there is competitive positioning, is there -- it seems to us that you have a leg up on that situation given that LA county is something like 27% of the stake. Can you comment on the conditions and what that project looks like and some of the timing elements?

Sure. Again just to give everyone the background on what’s been referred to is that we were selected for a stage 1 contract for the state of California Financial Information Systems which is called Cisco and again, what are really bidding here is our full [end N] AMS Advantage which is our enterprise resource planning solution and as Tom mentioned, we do have LA County on this platform. LA County is not the largest -- one of the largest counties in the United States. Our Advantage solution it’s a proven solution and it’s functioning and working in over 40 states and we’ve been chosen for a seven month fifth gap project. We believe that we obviously have the best solutions. This is a large multi hundred million dollar initiative and we like where we’re positioned and I think the decision is probably in to next year August or so of 2011. So, again, I think Tom, it shows a couple of things. One, as I mentioned earlier, there’s still good opportunities out there. And as I mentioned in my remarks, we have both the IP and the people here to win these types of deals.

Thank you very much for [inaudible] OK.

Thanks Tom.

Thank you, the next question will be from Paul Lechem from CIBC. Please go ahead

Thank you good morning. Mike, on this Stanley acquisitions I know you are limited in what you can say. You previously stated that you hoped to get this deal wrapped up by the end of your fiscal year. Are you still confident that that’s achievable?

Yes, I haven’t changed that position -- I am not in a position to say a lot. The processes are sensitive and confidential. So again, we continue to work through the process and as we said I think the original call that the fall was certainly a goal that we had to trying and get the deal completed.

So it’s an ongoing dialogue that you are having with the regulatory authorities on closing this?

As I said in my prepared remarks there is two processes, they are both confidential and we continue to work through those processes.

Okay, and is there anything unusual that might have -- you don’t have to give details but from prior to the acquisition starting off here, is there anything that’s unexpected in terms of the regulatory process that you weren’t aware of that might have definitely be extracted?

If I comment on that Paul I will have definitely stepping beyond what I have said in my remarks. I really don’t think it is in the best interest of the customers, the Stanley employees, quite frankly investors to get in to a public dialogue around a confidential and very sensitive process and I think as I explained before, as you know 75% of the revenue of Stanley is in the Intel space and I think it is prudent for me to let that process continue.

Fair enough. Switching gears then. And in terms of the US, as you mentioned, in constant currency, US revenue is up 4% year-over-year, but relative to fiscal Q2, US revenues were down $38 million in constant currency. Is there anything that we should be thinking of quarter-to-quarter sequentially that might have been different? What leads to the variability there?

Just the market -- time the closed deals. Again, I know you gentlemen look at the quarters; I really look at the trailing 12 months. I think again as the way we operate our business is that we’re focused on doing deals that we can live with and deliver value over long periods of time so I really don’t push to have something done on a quarter. I don’t think you should read anything into that. As I said, it takes time to close these deals. If you look at the state of California, it’s a good example. We’re sitting here in July of 2010 and that (19:02) deal should be successful when close to August of 2011. So I think one needs to take a look at duration, size of contracts and things we are working on. So I don’t read anything in to a quarter-over-quarter. I think what’s important here is that we’ve continued to grow in constant currency. Our business in the United States which against the many of our peers is rather rare. So I think it shows that the franchise we have there is strong and it continues to deliver significant value not only on the revenue side but again when you look at our margins our operating margins in the United states and Canada in fact are exceptionally strong and I just again I think if you look at it in total we continue to run a very strong operation in the US and in fact Globally. Top line bottom line cash balance sheet across the whole spectrum.

I agree I was wondering if there was anything in particular that might have dropped off in this Q2 that wasn’t in Q3.

No there was no contract loss.

Or anything finishing any major contract which will finish it.

Not that would be material here.

OK thank you very much I’ll talk to you

Thanks Paul.

Thank you. The next question will be from Eric Boyer from Wells Fargo. Please go ahead.

HI thanks you. Were some of the conditions starting to become more mixed with you as you discussed. Do you expect organic revenue growth to stay positive going forward? I think the last part you indicated you know with a positive a quarter early but were not expecting a linear progression higher in terms of organic growth?

Yeah I still think again where we are positioned you know our Canadian operations now is as I mentioned is also positive for the 2nd quarter. So you know the summer quarter as David mentioned is a bit of an anomaly when you look at the ramifications. But I am expecting that you know the October-December quarter has a lot of clients as a lot of clients push through their final projects for the year that we should see activity continuing to pick up there. So yeah I still think that directionally the market is coming back but I would say it’s a little more mixed and a little more tentative than I would have thought given where we are on the recovery.

Ok then just on the US Commercial side. Are you starting to see a slow down again in the system integration consulting or a pause again in the larger outsourcing field or it is more of a timing issue?

Yeah I look at that Eric our vitals are still healthier there I think it’s just time to get the deal over the line. There seems to be a lot more diligence around crossing the T’s and dotting the I’s. So some of these are just slipping over. The thing is that I mentioned earlier Eric if you look at it we are doing more international business and you know approvals across the ocean and they add time to getting deals done and some deals don’t make the quarter they make it ten days after the quarter. But you know our finals are still healthy. We have a good visibility on some great opportunities but it just seems that certainly last quarter getting deals over the line took a little longer than I had anticipated.

OK thanks a lot.

Thank you the next question I will hear from Eyal Ofir of Canaccord Genuity. Please go ahead.

Okay, great, thanks. Hi guys good morning. Just a quick question again n the revenue looking for the last first and second quarter of the year you guys booked some really healthy findings. Are you going to see some other contracts that you booked coming on the stream on the fourth quarter. Or is it something we should expect more in Q1 and Q2 next year?

I think there is a slow ramp up I would say more of it is going to be on our first quarter which is in most cases the final quarter of our clients because they are on a calendar fiscal. So I think you will see that in the October-December period. But we are trying to ramping up on some of those. But again going through the summer quarter I don’t think we will see a lot of that.

Okay. So I guess from more of our modeling perspective we should think about revenue been slightly smothered or suddenly up from where it is and when we look at cost and currency in this quarter compared to Q4.

I think Dave gave you some inputs to look at your modeling there. But again this is going to be a gradual return as I said a year ago. I don’t think you are going to see a big uptake here. If you look at the whole market and look at the competitors as well. This thing is going to be gradually turning back up. But again I remain very optimistic as I said numerous times there is very little that can be done in government and business without technology. Companies can slow down for a while but to meet their demands and competitive pressures they have to invest in information Technology we have a nice mix of solutions IT various offering in terms of how people can buy and finance their technology investments and I think we are well positioned to take advantage of that up take as it continues.

Okay, one last question from me on your finals you talked about are you seeing stuff geared towards the government side and the financial services segments or are you seeing some opportunities in other [inaudible] sizable there.

Yeah we certainly seeing some opportunities if you look at some of the bookings that are just 2 or 3. I can draw your attention to you Rextile, Beer Store, Atlantic Lottery Deso. So we are seeing some more opportunities in the more general business market are starting to come back and again they are nice deals in their sweet spots that play well to our proximity model and our global delivery model. So yeah we are seeing more deals in those space and there are new customers for us which is another positive indicator of activity in the market.

Okay, Gorber Thanks a lot.

Thank you the next question will be from Michael Abramsky from RBC Capital Markets. Please go ahead.

Thanks just a look a back on some of the growth. You do talk and I do understand about very much about your point of long term booking. But even on a trailing of a long term booking. But even on a trailing 12 months basis US constant currency growth is now 7% for the past [inaudible] 9% US growth the weakest has been the weakest it’s been in six quarters. So I understand the whole point about lumpiness and long term booking but past orders do need to flow in the revenue and I am just wondering what visibility you know how two quarterly revenue over the next few quarters and how that plays in your common and mixed markets conditions.

Well again I think you know we do have good visibility and what we can’t control of course is the timing of these things Michael and as we become a larger company and you know I use at the state of California but you can look at other deals that are large long term deals and one invests a long time sometimes in some cases years before those business development activities actually turn into booking and revenue.

Thank you Mr. Gorber. (Operator Instructions). Our first question from Jason Kupferberg from UBS. Please go ahead.

Couple of questions for you, first I wanted to make sure I understand the dynamics that you guys are seeing in the project based part of the business in SI&C. Mike I think you mentioned that it may be true that the March quarter may prove to have been the bottom there. I guess the revenues in SI&C were down quarter-over-quarter in June versus March. So, just wanted to make sure, I am understanding what you guys are actually seeing in that market place, if you really are seeing some firming up and some stabilization and may be that some what reflective of intra quarter trends that you saw during June, any additional color that would be great?

Okay. What I had said in the last quarter results that the projects were slow and starting up right from the get go with the business on the business side of the clients. When I see and I look at some of the major clients that we have, we saw some indications where they're gradually moving these projects now from the business side over to the systems analyst side that will eventually show up on our revenue line. We're seeing that in Canada and that's kind of where we were most impacted. As far as the SI&C I think it's pretty flat, isn't it?

Yes, 44% to 43%

Yeah, so it's pretty, it's pretty flat, Jason, that's why I kind of called it a bottom, what I believe is the bottom. Now I should caution you and remind you that we are in our summer quarters. So normally our summer quarter is impacted by vacations in terms of our clients and our people. So when you look quarter, a quarter we normally see an impact of anywhere between $25 million and $30 million due to the vacation period. But notwithstanding that, we are seeing signs that clients are coming back and investing. Of course in Canada, the banking financial sector has not been hit as hard as in the U.S. and as you know the valuations have nicely returned there and there are opportunities to do project work in the financial institutions as well as in some of our other clients. So, I don't think a quarter makes a trend, but I got the sense in looking at the numbers and talking to the account managers that we may have bottomed in the March quarter.

Okay, that's very helpful. If we turn to the verticals here I know telecom utilities continue to be the weak link here. Can you talk about how much of this weakness might be due to the BCE cutbacks versus what's happening with other clients in this space and are they earning other specific factors that you think you would call out here to explain the relative weakness versus some of the vertical group?

Now, again I don't comment on individual clients there, but I think the telecom vertical in comparison obviously isn't as strong as the financial vertical and governments. I think telecoms are also watching their capital expenditures very, very carefully in these times. But, again I always go back to the longer term picture here that telecom companies have always invested a large percentage in information technology. It's necessary there in order to drive efficiencies, bring new product and solutions on, so again on the medium long term, I still remain very optimistic that that's good sector for CGI to be in. But, I wouldn't read a lot into the quarter-to-quarter comparisons amongst the verticals other then I say obviously that the government and financial vertical remained fairly robust here, obviously in comparison to other years and to the other verticals.

Okay. Just last one for me on the balance sheet, obviously you have been paying down debt pretty consistently, which is nice to see. Maybe you can give us an update on the M&A pipeline. Are there other cash deployment options that yourselves with the Board might be thinking about whether it's even bigger buybacks or something along the lines of dividend at some point in time, would love your current thinking there? Thanks.

I wish I had more news other than to re-enforce the consistency and the discipline in which we think about cash deployment. First priority is, we invest in the business and with some of the deals that we are working on some of the deals we announced, we will be requiring some cash to re-invest in building out some of those solutions, continuing the strength in our organic growth base. We do look at acquisitions, but again we don't have anything else there. We're still working on the three criteria, the right target, right price, right time and with the debt as you say, our net debt is down the $15.9 million. We still have the option of buying back additional shares. I think we still have about 23.5 million shares, if you look at the end of June that are still permitted to be bought back between now and February. As far as the dividend goes, we look at it on an annual basis and the next review of that policy is just prior to the AGM in January.

Thank you. Our next is from Tom Liston from Versant Partners. Please go ahead.

Just on with Virginia, and then governor Kaine, obviously seems like your big fan here. But, one of the releases and I think it came directly out of Virginia maybe, comments about other countries and states looking at what they are doing and looking at those large cost savings since and obviously trying to replicate some of that. I think he mentioned Canada, Portugal, Indonesia and may be a couple of others. Can you comment on how that might extend your pipeline as well, I assume that most of these other jurisdictions will want to bring over the technology vendors as well to try to achieve those same cost savings. Can you talk just over all about that type of situation?

Yeah, for sure Tom and again I think the governor is rightfully very, very proud of how the state has worked with CGI to develop and implement a solution that has brought significant value to the state. I think the opportunity space there is that he was referring to is at a couple of levels. One, I think Virginia itself are constantly attempting to get other states surrounding Virginia to just jump on their platform, add more volume to it, which would be beneficial to the states and to Virginia and also obviously to CGI. The reference to Canada is we have one similar deal announced it a while ago called OECM with the Ontario government, which is a similar, very similar using the expertise and the platform solution that we built in Virginia to work with a portion of the Ontario government and of course our goal will be overtime to expand that. I can tell you that the volumes that Ontario could put through that very, very significant in comparison to Virginia. So that project is in the ramp up stage. Then I think the reference to other countries are either they get visits direct from other countries that want to look at this and or we bring clients from other jurisdictions in there and use Virginia as obviously a very marquee reference and they have been very generous and complimentary of their time to walk through the real value created by the platform.

Thanks and just on the bookings, obviously you gave us some color on new customers and what verticals are strong. Can you delve down a little bit down more into any changes in trends and in size of the contracts, length of contracts, any other specific underlying trends there for why they've been so strong last few quarters?

I think more and more them are I would say long-term contracts. The outsourcing managed services side is stronger than the SI&C side clearly by comparison and clients are looking for business solutions. I referenced a five year $123 million deal that we weren't able to name the clients, unfortunately we couldn't do the announcement. But, it's good example of where the client is looking to improve their management of receivables, improve cash flow, reduce losses and our solution was to bring to that client our full suite of credit and collections products, wrap it around our broader integration skills with some elements of business process outsourcing and as a result bring significant value to that client addressing the business problem and for us to book a five year US$120 million deal and have the opportunity now to work with this client in other areas. So these are the kind of deals that we are focusing on. In some cases they are new clients, in some cases where we get in there with an entry deal like the one I described and then obviously have the opportunity to hunt across the full account and help identify and introduce our full capabilities in other areas of the business. So this is why in my comments, I am kind of pleased that in the first nine months not only that we've won new clients and they have marquee and global brands but as per follow-on business opportunities there, which bodes well for future bookings and revenue.

Thank you, our next question is from Steven Li from Raymond James. Please go ahead.

Thank you. I might just want to drill down a bit more on your bottoming comments. The relative weakness in financial services booking through this quarter, was that just lumpiness and have you seen some recovery since quarter end.

I keep reminding, you shouldn’t look at bookings by quarter. I mean, bookings are a 12 months phenomenon. So, I don't really have a comment quarter-to-quarter on bookings. I would tell you that the financial services business still represents a significant opportunity for us. We have a lot of opportunities in our funnel that relate to financial services. Either directly in terms of financial service, bank insurance company or in some cases where the client has a financial services arm, there is also opportunities in there. So no I wouldn't read a lot in to that Steven it's bookings by their nature and our business are lumpy.

Right. One of the headwinds in Canada has obviously been BCE. Now the deferred projects that you talk about in your MD&A, have these started to come back or is it to early to tell?

I don't comment on individual clients. But as I said in Canada, if I look at quarter-to-quarter, we are seeing signs that the March quarter was the bottom and that were up a little bit in Canada from quarter-to-quarter. I think it was 1.7% sequentially, so some of that obviously is coming from the starting of these SI&C projects.

Okay, great and then just one question for Dave. Just want to make sure I'm not missing any of the one-time items. So you did expense during the quarter $2.8 million in severance and $1.5 million in real estate, but when you had a gain 2.1 from FX is that it?

That's correct.

Our next question is from Richard Tse - National Bank Financial. Please go ahead.

Hey Mike, just I had question on to the recent strength in bookings. You guys have obviously done a good job of maintaining a hand on the cost side. So if you look at the bookings last quarter and this quarter, you're getting a higher percentage of that booking is coming from new deals, typically what are the time frame from the booking to when you're recognizing that in terms of revenue?

Again it very much depends on the nature of the deal. If you talk about the one where we're we are looking at collections, you've to stand up those systems, you've to configure them so that's a matter, could be a matter of quarters. If it's an infrastructure deal, it also takes a long time, where its projects work it ramps up. So I would say, obviously the range could be from anywhere from a quarter to three quarters depending on the nature of the engagement in terms of how long it takes to ramp up to kind of a level that you would actually see on the top-line, Richard.

Could you give us maybe some more color in terms of what you think of the current bookings, when that would come on stream, would that be sort of a back half calendar 2009 phenomenon we're looking at?

I don't think this is unique to CGI. I think if in fact last quarter was the bottom, you're going to see a gradual improvement. I'd said that lot of the work programs in large clients would be pushed out to a number of quarters, and if you look at most of our clients they end their fiscal year in December, which is our first quarter to 2010, so the combination of that with the booking coming on, it is for us from a fiscal standpoint to see the combination of some of these bookings coming on stream and the gradual increase from the bottom on the SI&C business hitting as evidently in the early quarters of F 2010.

Okay. Obviously again have done a good job in toeing the line on the cost side. Obviously it seems like government and financial services continues to be point of strength, but in the US is that sort of your vision here in terms of verticals that you are going to be focusing on going forward sort of solidifying that government base or do you have some intentions of branching out to other verticals?

For sure, I mean we have five verticals. We intend to continue to operate and grow them all. I think what you are seeing here is just a market shift where the opportunities happen to be the greatest right now, and fortunately for us there are two verticals where we're very well positioned because of our relationships, experience and solution set. So we are focusing obviously very aggressively to be as opportunistic as we can. We capture as much business while that window is open.

Right, and on to the point of government side with the sort of stimulus spending, I guess depending on who do you talk to sort of stalled in some respect, would you expect that government bookings to actually sort of ramp in terms of the opportunities in the back half of the year.

Well, again we do have some very significant opportunities in the government space. Obviously, given the size of the US government and the size of the stimulus there, they are heavily weighted in to the U.S. So again, I think you are right depending on who you believe to there is a not a lot of the stimulus that has been that actually put through the system yet. So I think the opportunities going forward there are still fairly very interesting and exciting, and we feel that we're pretty well positioned.

Thank you. Our next question is from Scott Penner from TD Newcrest. Please go ahead.

Thanks. Just wanted to get a sense of the margin upside for the quarter, specifically I guess in Canada where it's most notable. Is that mainly David, a function of the staff adjustment, and I guess if so was that consistent with a slower return for some of the project work then you may have expected last quarter?

Well personally it's not related to the adjustment, but Mike also knows, past call has gone through some of the various initiatives that we have been focused on. Whether it be looking at the lower performing businesses, looking at where there is profitably [piece] we have within the operations. Just looking at all of the fundamentals and just making sure that we have got the business tuned and not making any home runs on any particular point, just a lot of base hits, we just continue to work on little items on the treasury side, continue to work things like the interest expense and the interest income, operations. They are looking at the productivity, they are looking at the pricing, making sure that they are competitive and that they are in the game for each of the deals in the infrastructure. We're looking at the cost and continue to go back and seeing if there's anyway that we can grind down cost, we work with their clients, as they are under the pressures to try to reduce their cost. We're looking to see if there are things that we can bring to the table in the way of value that we can reduce our cost, so we can pass on savings to them. It's a combination of many different items and every day, we feel like we are in a restructuring, because they continue to look at the cost that we incurre and look at opportunities for us to be able to bring better value for our clients as well as for our shareholders.

Okay that's good to know. Just again David, the contract cost and investment over the last couple of quarters has kicked up a little bit and the numbers are still small, but as you bring some of the new bookings on line over the next couple of quarters, is that investment going to continue to increase?

I would expect to see that there should be some continuous activity there, because with those bookings, what we will see is that new transition cost will come on, but some of the ones that we've already started, will start to be moving into production therefore those costs will be coming down. So, rightat this stage, I don't see that number changing a whole lot from quarter-by-quarter but it will consistently continue to go forward.

Okay, and then Mike, in the past couple of quarters you've mentioned some large opportunities that you’re tracking in specifically in Canada I think, now are those deals still on the table and do you consider that they are moving forward?

Well, obviously we continue to attempt to advance all the deals we have. I think the number that we are looking at – of course they move with the pace that both parties can move them across the line Scott, but we're still obviously guardedly optimistic that we're going to be able to continue to book sales at a greater pace than we consume the revenue. So, we are still optimistic that we can get in the game on a numbers of the deals that we have in the funnel.

Thank you. Our next question is from a Mike Abramsky from RBC Capital Market. Please go ahead.

I think if you added the adjutative cautiously, I mean I don't read tea leaves, but from the ground, Mike, when I talked to the account manager, talked to clients, I think people are starting to reinvest now. It does take a while the ramp up, so that's relative to SI&C. On the outsourcing, I think as I said you know, the funnel has been growing and it's not surprising. I don't think we are the only company reporting that that the funnels are up because the outsourcing business is counter cyclical in many respects. So this is kind of why Mike, I actually review the nine months, because again I don't think you can judge a company or the market on quarter. And, when I look at the nine months, my view is we're performing exceptionally well given the economic conditions and the general landscape that's out there. So we remain cautiously optimistic that the March quarter could have been the bottom and that we're seeing some nice signs this quarter that would tell us that in the out quarters if all things remain directionally the same that looking back two, three quarters from now we may well have seen the March quarter as the bottom.

When you look forward six months from now, if the economy as I think is sort of the general you slowly recovers, how does that change or add to some of the opportunities that are ahead of you, is there any specific opportunities or growth drivers that may firm up a little bit more, because of a slowly recovering economy for you.

Well again, I think you got to watch always, always it look a little different between macro indicators and micro indicators. Of course, we sell on the micro level customer-to-customer, but obviously I think that the general tone of business and government when things pick-up is to be more optimistic to be less cautious about making long-term investments. On the flip side, I'll tell you that when things get too well, Mike it's very difficult to get folks to the table to do an outsourcing deal, because they feel that everything is running well and why disrupt. I think we are ways from that day. I think a lot of people are still looking at realigning their cost structures going forward here. I don't think people will return to kind of pre meltdown cost structures. I think folks are going to take this opportunity to restructure their operations, look at taking on partners for their back room and look at changing their cost curves going forward. So from that perspective, I think the outlook is much brighter now than it was two quarters ago.

There is obviously seen some high profile headlines regarding how challenged the states are to paying the bills in the U.S. typically California and New York et cetera. Can you reconcile for us why that hasn't or why the risk may not be there in your receivables given some of those stories?

Well again I think, if you look at where we operate in the various states, we operate in areas that are very much tide to what I call mission critical areas. So we do work in ERP, which is really brining better financial reporting, financial integrity to the states, and these areas are, if there is such a thing as being recession proof, they are essentially recession proof. We work in the child welfare area that thankfully continues on regardless of economic conditions. If you look at eVA, these are things that gain more profile and bring more value in times like this. We work in areas of receivables, which again are very timely and you're quite correct. I mean, we do not have this point any exposure to payment issues relating to states. We're very careful in terms of how we structure our contracts and do business to ensure that we're looking at all aspects of the business deal, including our ability to get paid.

Mike, if I could add. A number of the program that we have especially some of the US states are what we call benefit funded. The advantage with those is that the state regulators or legislators do not have to go back and try to go on budget moneys to able to get the funds for those programs. Those programs are actually self funding. They are generating their own savings, and we're being paid out of those savings as we go forward. So it's one of the major reasons here, we haven't seen a big issue with some of the, especially in the Western states in any of the work that we are doing there.

Thank you. Our next question from Paul Steep from Scotia Capital. Please go ahead.

Mike, maybe you could just talk little bit about what the average life has been within that backlog or maybe the trend in the bookings we've talked all around it here, as to what happen recently as the length of the contract shrink or grown and what the capital intensities are looks like over the last quarter or so?

So, I would say that the tendency is still very much in terms of an average still seven years plus when I look at what's in the pipeline and what we've been booking here. So, I would say that the tendency is still very much in terms of an average still seven years plus when I look at what's in the pipeline and what we've been booking here.

Great. David just one housekeeping item on the OpEx hedges, what's the timing of those hedges sort of rolling off and I guess the view with the dollar moving up here.

Yeah, its three to five years is for most of those.

Okay. Thanks guys.

Thank you. Our next question is from Paul Lechem from CIBC. Please go ahead.

Just wondering on the profitability of the business you're saying. Now especially is there any difference, well first of all between the deals today versus before the economic blow up, and secondly if there is any difference by vertical. So if the government vertical in particular has any different profitability expectations then private sector.

No, I wouldn't say so far. I mean, I think when we get to ask the question why our margins are so high, as Dave said I've gone through a series of actions that we take. It always starts with qualifying the revenue you are bringing on. Again, when we do deal, we're trying to find the right balance between bringing the savings and commitments to the clients and preserving appropriate margins in cash for CGI. We also balance the margin against the risk associated with the project work in the contract we are engaging. So, no I mean we are constantly trying to ensure that we are managing the dynamics of those considerations client by client. So no, we're not seeing any kind of a different profile. We're careful not to back in the deals that we are walking the deals that we're not satisfied that we sought a good balance. Again I want to reinforce, we still believe we're very competitive on these deals. So it's not a matter of not meeting the client's expectation, it's finding the right balance.

Just on that last point, has the bidding process changed or the competitive nature of the deals changed in the last six to nine months, has pricing come down at all?

There's always pricing pressures here, but for every pricing pressure, Paul, there's also war stories out there, where some of the folks haven't delivered on the other side of the deal, which is actually delivering the project on time and on budget. Again, when one looks at our industry, it's not only the price that's quoted, it's the price that paid by the client. Unfortunately they are not the same thing because when a project runs over or you know you have a scope creep going on, then clients see this. We live through this. I mean, in a case where we would lose a deal, some cases I call the senior guy over there and tell them in my view, the competitor will not deliver that for the price that they've stated. I follow up six months or year later and find out that's exactly what happened. In that case, the client has kicked the competitor out and we come back to the table. So there is credibility here that one wants to build overtime, and sometimes that means in the short term you don't get a deal, but in the long term you strengthen your reputation, and you end up building more business. So there is a bit of that in the market. I think clearly some folks are trying to find a balance of what they believe is pumping their front or the top line, but they also got a lot of pressures in terms of their bottom line and the cash. If you look at our situation, we are starting with a very strong balance sheet, very good cash generation, as I mentioned client and member satisfaction is solid and that gives us a lot of room here to look at every deal on an individual basis.

Thank you. That's helpful. Just quick question for Dave if I may, I wonder if you can give us an update on the tax credit situation for your employees Quebec?

I am not quite sure what you are trying to address there, Paul.

My understanding is that there are various tax credits specifically for your employees in Montreal, and I am just wondering if those programs are coming to an end, if there is some negotiation on going that what the timeline is and what we can expect to see in terms of tax credit situation.

Okay. Those programs have been renewed and they are going up to 2016, so I don't think there should be any issue or concerns with those in the short term.

Have they been renewed on the same terms?

Actually they were enriched a little bit, because they're looking to try to broaden the scope to encourage more work to be brought to the provinces.

How many employees do you have which will benefit from these programs right now?

I think they fluctuate, Paul. Again I'd point out we are not the only guys participating in theses programs and we are in other programs as well. So I think relative to the Quebec program, we are obviously pleased that the program has been extended. Quebec is a great place to build a technology firm, we opened another center as you know up in Sherbrooke and we're going to continue to leverage our presence here and in other jurisdictions where they have this programs. But, today's point there hasn't been any kind of material change in the program that would move our numbers in any significant way.

Thank you, very much.

Thanks, Paul. Valerie I think we'll have time for one last question.

Thank you certainly. Our last question is from Eric Bernofsky from Desjardins Securities. Please go ahead.

Just a couple of questions here. Going to back to bookings, what can you say about the alliance pipeline down in the U.S. has any work order has been issued under that or when do you expect some more orders to ramp up there.

No, we haven't seen a lot in that vehicle yet, Eric. I think we did a little review that the another day, it will take some time to bring that on as you know. That's a massive vehicle. So we haven't bid anything under that vehicle at this point. So that represents future opportunity.

Okay. Then, just looking at the Canadian business, obviously, you outlined your book-to-bill for the consolidated business. Canada this quarter looks like it is around 25 times, what's your outlook there, without giving sort of guidance that's obviously an area of weakness for you, if we drill down for Canadian business. What's your outlook there in terms of the pipeline, in terms of getting that number back to for the one time range.

I look at, just obviously to reinforce. I look at bookings corporate wide, I look them trailing 12 months, don't look at them by quarter. Having said that, we obviously have a very strong position in Canada. We see and are working on in number of opportunities in Canada that we feel good about. And, bookings in our business are lumpy, and so it can change very rapidly. So as I said, I you're at 0.6, 0.7 one quarter, the next quarter you could be two times depending on the deal. But Eric, we still feel good about the opportunities in Canada. And Canada I don't think has been hit as hard as some of the other jurisdictions, so you don't have quite the valley, and on the other hand you don't have the peaks. But, you still have a lot of opportunities here. There is still lot of clients that we look to penetrate. Western Canada is still a good opportunity for us, Toronto is a big market, there are still opportunities here in Quebec. So we're still pursuing a healthy funnel in Canada, and we intend to win our fair share of those opportunities. We're also shaping, I would say probably more opportunities in Canada just because of our presence here and our track record.

Then just lastly, I wanted to push further, once again, into margins. Obviously, doing a great job, keeping margins up and improving, considering the demand environment out there, just want to get a sense of where you think margins could go, what kind of levers you have at your disposal with moving some work around between some of your cost centers? Then, I guess how do you offset that with some of the projects that are going to come on stream over the next few quarters? Just trying to get an indication of how much more upside there could be to margins or whether you think you're sort of in the mid 11% range over the next couple of quarters?

Well, as I said Eric, I mean I guess it's all depends how you look at life. Margins in a business in my belief are primarily driven about your ability to execute against series of levers. So the way we think about business, we are constantly restructuring how we do business, where we do business, and attempting to execute better against those things that impact margins. So as I said before it starts with making sure that the deal that you are signing is an accretive deal, because if you sign a bad deal on day one and it's a five year deal it will be a bad deal for five years, so it starts there. It starts with making sure you deliver your projects on time, on budget, if you don't, the overruns in many cases are eaten by the shareholders. It's a matter of looking at SG&A, taxes, procurement. As Dave says it's not a home run, once you get your margins up to the levels we are at, it's a series of executing against series of levers, including looking at where works done, but again I think you know over the last three or four years I've constantly said that I don't see that as a transformational lever to drive margins. I mean I think it's where you put the work, depends on the type of work, and the original deal and risk profile. So we have a series of lever utilization rates that are big one in an industry in a company like ours, so all of these things we are working on a basis. So I don't like to put on ceilings, because I think it doesn't send the right message internally, it doesn't send the right message to investors. I think our goal here is to find ways to continuously improve our business, top-line, bottom-line, balance sheet, cash generation, all the things that are fundamental to building a healthy strong business overtime. Having said that we don't operate by quarter because and to your point in some cases we have to make some investments here that have returns over time. So in those areas, we're going to make those investments. We're going to explain where we made the investments and based on our track record one would hopefully see that our ability to harvest and get ROI of those investments will pay off in future quarters. The other area obviously and that's why we're constantly looking at acquisitions to the extent that we can grow the company organically and through acquisitions, the right acquisitions we are going to take and change the ratio between variable or between revenue and fixed cost and bring on more scale here which in many cases should bring on incremental margin. So we're looking at all those things, and trying to execute daily against those levers.

Thank you Eric and thank you everybody for joining us. We will see you on November 9th for our fourth quarter and fiscal 2009 results. Thank you.

Thank you. The conference now has ended. Please disconnect your lines at this time. Thank you for your participation.

: THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS. If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you! Our recurring revenue was probably less than 5%, today it’s over 50 which makes us a very defensive play in choppy market conditions. So I tend to look at it more holistic. But again, I still feel good about what we are in United States. As I said, if you look at our growth, certainly I wonder the few companies that are continuing to have positive growth in North America.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS. If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you! Our recurring revenue was probably less than 5%, today it’s over 50 which makes us a very defensive play in choppy market conditions. So I tend to look at it more holistic. But again, I still feel good about what we are in United States. As I said, if you look at our growth, certainly I wonder the few companies that are continuing to have positive growth in North America.

Okay if we turn to Canadian revenue for a minute, last quarter you said that you expected a gradual ramp throughout the bounce of the year, seems a little surprising when Canadian revenue growth is flat quarter to quarter end. Also you’ve got [Daiser den] coming off which is about 30 million a quarter or 120 million a year which is about 5% of credit Canadian revenue that is going to be up since mid 2011. So just wondered if you think that we’ll see Canadian growth stay above zero or could it potentially go negative going forward?

Well I don’t give revenue guidance mike you know that. I am not going to comment on [daiser den] instead I will have more comments in April of 2011.

Okay, what about your comment last quarter about you did say about of our gradual ramp relative to how your Canadian revenue growth performed this quarter?

Well again I’ve got --

You still expect a gradual ramp?

Yes, I guess Mike, are you on a speaker phone because we are getting an echo back here. Can you pick up your handset?

Sorry about that. I am sorry I can’t but all I was asking was if you’re still expecting a gradual ramp in Canadian revenue as you said last quarter.

Yeah what I said to an earlier question I expect stronger in October, December period as a lot of my Canadian clients’ fiscal year aligns to a calendar year and therefore the investments are heavier in that period..I’m in the summer period right now and as you know in the CINC services business with occasions you normally have an impact sequentially relating to that and Dave highlighted that in his comments.

Okay, alright, thanks.

Thanks Mike

Thank you. The next question will be from Paul Steep from Scotia Capital. Please go ahead

Yeah morning, hey Mike?

Hey Paul

Maybe you could talk just a little bit about the long term here and go away from the quarterly. You guys have been investing heavily over the last couple of years, maybe some of the initiatives in terms of the diversifying at the business. How are you feeling about mix between the government and the other vertical spin -- balanced portfolio is going to skew a little bit. What else have you been doing in the business to sort of bring up these other vertical -- size wise, the others will bump up pretty big with Stanley?

I think that’s a good comment I mean as we’ve seen and positioned ourselves to go through probably the last 12 to 24 months of rough seas, we focused heavily on government and financial services and obviously -- and our strategy was we wanted to make sure that we were very focused on those verticals that were more recessionrecession proof than the other verticals. And in those areas we’ve made investments both organically into our IP in the financial services base in particular where we are looking to push more revenue to be recurring or [serve] as a service. In government, again, we push heavily in positioning our ERP Advantage momentum and try to move those and continue to do that to move those into manage service environment hence further recession proofing us going forward and building up our backlog and recurring revenue in those space. Now to your point, what we’ve been doing in the interim of course are in parallel. We’ve been looking at the other verticals and again, some of the things that we are investing in is the health care area. We believe that it is also recession proof and you will continue to see us announcing deals and opportunities in health care space both in United States and in Canada. We’ve also been sharpening our strategy around the oil and gas industry. We believe that there are opportunities there as that sector picks up; and again, the general commercial areas in terms of focusing on healthy businesses that are in other sectors. Good franchise businesses that are also recession proof, things like the Atlantic Lottery is a good example. Other deals where businesses and companies are looking to improve their competitive advantage and where we have competitive advantage which is both to our proximity model,…

Well again, I don’t feel we are constrained that way. We have the financial capability as you mentioned. If you look at the quarter, we bought back 7 million shares, we actually didn’t buy back for about a 2 week period around the Stanley announcement just to be prudent. And as Dave mentioned, we are tracking well to the ability to pick up full allotment. We have enough time and we certainly have enough financial resources to do that. We believe our stock is still not fully valued relative to the peer group and relative to our performance. But on the other hand, we continue to invest in solutions, we continue -- we have an investment committee, we’ve looked at next year there is a lot of good opportunities that have been brought forward by the operations in terms of investments that we’ve made, so we have those investments covered. We have the cash flow to continue to buy back our shares and we continue to look for other creed of acquisitions. So we don’t feel that we are constrained here, of course against that back drop we have a line of credit that is established August 2012. So we believe we are in a great position, we have a lot of operating flexibility supported by a very strong balance sheet and a very strong cash generation ability so we think we can continue to be very strategic but also very opportunistic. We can move fast if we see something that will add long term value to our stakeholders. Paul Steep – Scotia Capital: Great, thanks guys.

Thanks Paul

Thank you. The next question will be from Ralph Garcea from Northern capital partners please go ahead Ralph –Garcea- Northern Capital Partners: Good morning Mike, how you are?

Hi Ralph Ralph Garcea – Northern Capital Partners : Just quickly; on the Canadian side, the revenues are holding in there, you’ve managed to bring the EBITDA margins back up to the high teens. What is keeping you from getting sort of those EBITDA margins from the US business? Are there leverage issues and as you grow that business, you’ll start seeing a higher EBIT margins or is there something structurally under US side that --?

No again, just to remind you that the US operations are carrying their intangibles from the AMS acquisition and it’s supposed to --

And IMR

And IMR so I think when you add that in, I think, Dave, what do we consider about a point and a half or two?

A point and a half

About a point and half on margins Ralph, that are in the intangibles

Yeah

Okay, so I think the US operation when you look at the margins aren’t that far off to the Canadians margins when you consider that and of course we have more scale in Canada and we still have more outsourcing opportunities here so on the utilization level, we can continue to drive better margins here. And then finally in Canada as I mentioned before, we continue to work through our transition to the 40 hour work week, which in over time will continue to pick up some margin gain there relative to actually increasing our billing of our people in Canada. So I think the two operations are very close and are really performing at best in class margins here. Ralph Garcea – Northern capital partners : Will you look for lower cost centers beyond [Trolley] and Virginia?

Yeah, we are going to continue to do that. I think South West Virginia is -- the original capacity of the building in fact we had the move to another location in South West Virginia, Trolley is ramping up and so we continue to look for other areas. That model has worked very well for us in terms of winning business, retaining business and also improving our margins. Ralph Garcea – Northland capita partners: Okay and then on the European side, I know you guys have continued to restructure there but are we six months away from seeing positive EBITDA or -- I mean what are the delays there other than specific country issues, I guess?

Yeah, we kind of got 2 or 3 head wins there, we are relatively small there so in a downturn, of course we got some fixed costs against a small top line so we are taking the opportunity as I mentioned to actually restructure and put ourselves in a position to come up the other side existing a lot stronger and then of course we got the currency head win here. The strength that Canadian dollar to the Euro is what -- an 8 or 9 year high. So we’ve got couple of head wins that way but on the other hand, what I like about that and you’ll continue to see that as some of those large European clients consolidated their vender lists, CGI showing up as 1 of 5 or 1 of 7 global venders to this large corporations so that, from a long term perspective, tells me that we are well positioned to grow our businesses in Europe and globally because a lot of these firms have operations in North America and in Europe and in other areas in which we operate. So on one hand we have a low exposure to Europe and a tough time on the other hand. We still believe Europe is a great place for us and we are actually, again, very much to our philosophy here. As you know, you followed for a long time, Ralph, we take opportunities like this to position ourselves better for the long haul.

Okay, thank you

Okay, thanks Ralph

Thank you. The next question will be from Steven Li of Raymond James; please go ahead Stephen Li – Raymond James: Thank you. Mike, we discussed Canada a little bit but can you make a comment on -- compare Canada and the US. Our market conditions in Canada better or worse compared to the US. Thanks

Yeah, it’s a good question. I guess up into this point I’ve been kind [lamping] North America together but I would -- as I mentioned I think in the US over the last quarter so there has been a little more uncertainty at the macro level. Canada seems to be more stable and more consistent over the last six months. We are seeing more deal flow in Canada relative to the last six months and as you’ve seen we have been to close a number of those deals last quarter and this quarter. I haven’t said that, I don’t want to leave the impression that I am not confident or optimistic in the US. I absolutely am. We’ve got a great franchise, a great team that has been performing well, they fought their way right through the biggest downturn in 67 years and been posting positive organic growth there right through it some excellent margins building backlog. So it’s just -- it’s really a point of reference view more a macro view on the ground. We like where we are and we are confident that we can continue to grow our business. Stephen Li – Raymond James: Okay then, just one question on the margins in Canada, the margin jumped to almost 20% and given your response here, so you can see that improving further Mike?

Well again you know I believe and again I congratulate the operations leaders that they continue to work very hard on improving productivity, efficiency and effectiveness. Just to reiterate, these margins are not moving up on price. They are moving up on our ability to be more productive, more focused, delivering our projects on time, on budget. Working utilization rates hard, increasing hours of work. So again our people, our leaders are all contributing here to increasing our strengths and our ability to compete on a global basis. Having said that, as I mentioned before I don’t see us having a feeling on margins, even the work that we have been doing now for years to improve the quality and mix of our revenue by driving more business there to being IT based outsourcing deals, taking back up, all this thing contributes to a continuing improvement. A gradual improvement over time over margins and we are not looking to deteriorate our margins over time. Stephen Li – Raymond James: Okay and the last of these Desjardins, will that improve margins or was that corporate average?

Well again I want to comment on Desjardins other than to say that that work was in the infrastructure business which is as I’ve said numerous times are very capital intensive business. Stephen Li – Raymond James: Right.

And that the kind of the margins in that businesses are certainly more challenging than what you would see in the professional services high end business. Stephen Li – Raymond James: Okay, great thanks.

Thanks Steve.

Thank you, the next question will be from Chris Fidyk fromFindlay Park Partners. Please go ahead.

Hi good morning. There is nothing to be there to doubt but one more question on the margins, if we sort of go back to an environment of sort of 5, 6 , 7 or roughly higher top line growth, does it become more difficult for you to increase your margins in that type of -- in that sort of top line scenario?

No, my view is that it’s actually better for us because remember I have got fixed costs, and If I am a growing revenue, I am not going to add a lot of…a lot to those fixed costs. So over time, if it’s the right kind of revenue Chris in terms of not talking about path to revenue, real revenue, where we can apply our best practices, leverage our processes and tools, it should actually help drive margins. I think the flip of this thing is when you drive the kind of margins we are and have been in a macro environment that’s challenging, I think it bodes well for our ability to continue to drive margins when we get good profitable revenue opportunities coming back on the top line.

Okay and the second one, I guess for David, so…knowing that this deal may have closed sort of any day now, and may in fact close any day now, you still bought back $100 million of stock in the quarter. Can you give us any sorts of sense about presumably you are going to spend sort of $900 million; you will pay for that with your credit facility. If you do, would you want to pay that debt down or do you want to keep that sort of level of debt on the balance sheet?

Well when we take up that level of debt it’s still not going to be something that from a leverage perspective it’s going to put us in any range of uncomfort. If you take a look at our history you will see that if we went back to 2001 with the acquisition of IMR and we go through the [cotton case] acquisition, the buy back the shares from BCE towards the AMS. Whenever we picked up debt we very conservatively look at trying to pay it down, We will continue to pay it down but if there are opportunities for us to pick up more shares through the normal course issuer share bid and hope it makes enough sense for us to do so, we will do so.

Okay and…

If the latitude gives us lots of opportunities…

And do you have any sort of estimate for what the ammonization level might be if the deal were to close for a quarter per year and would that lineup be taxed at all?

We have not provided any guidance, any direction on that in the past and I don’t think this is the appropriate time to do so.

Okay thanks.

Thank you. The next question will be from Mayer Yaghi from Desjardins Securities, please go ahead.

Thank you for taking in my question; most of my questions have been asked. I may just want to turn back to some of the earlier comment you made about your share buyback. You mentioned that you believe the stock is trading at a discount to peer group, can you tell what you are looking at in terms of metrics to define the trading, the discount and what is the peer group you are using?

Well again I think that you should take that up with Lorne in terms of the peer group. I think candidly there aren’t that many peers left out there it’s the normal players including Accenture and these guys. I think certainly on PE and on a cash basis just to name two; I believe that we still have room to increase our valuation.

Okay and maybe just on the margins in Canada were very strong in the quarter, a lot of questions were asked about that, can you -- if you had to take one area where you saw the most efficiencies come out from in the Canadian operation, where would you target at in terms of services offered. And if you think it’s sustainable, could you do similar targeted cost efficiencies out in the U.S business? I know that you continue to look at driving down cost in the U.S but is there something in Canada particularly that you could take and apply in the U.S or it’s more Canadian centric and the margins you can translate that into lower cost than the U.S.

Well again maybe a couple of comments just to reinforce remember I am saying the margins between Canada and the U.S are not that far off. When you adjust with the intangibles that are being carried uniquely in the United States, that’s point number one. You have to add a point and a half to those margins you are seeing in the U.S. Second thing is there is no silver bullet here in driving margins in a professional services company. It’s a combination of levers and the ability of the operations to work against all those levers over time and that is going on right across our company. Not only going on in Canada, going on the United States, it’s even going in Europe. Just in Europe we have a little more headwind driven by macro conditions there. The only thing I would point out as different at this point relative to the levers, our United States operation are already at 40 hours a week and continue to be at 40 hours week. Only change that I would say that’s different here is in Canada, we are moving through the process of a 40 hour work week and adjusting our operations to that. Other than that, it’s just strong fundamental approach to ensuring that the business we bring on is profitable business. That we are delivering our projects on time and on budget, that we continue to look at our mix of our revenue to ensure that our revenues of high quality that will hold up over time, if the use of our global delivery model, our utilization rates, its productivity, its areas of looking at fixed costs in the operations. Things like real estate, other areas and it’s also a commitment to having an ongoing restructuring mentality. So again virtually every quarter if we see an opportunity here to restructure the operations we take it and as a result over time, that restructuring that happens daily and quarterly and annually begins to show up in the margin. And if you look at our margins, they have been operating at a very good level very consistently now for 4 or 5 years, so it’s not a one-off one quarter phenomenon, and there is no silver bullet. If there was I would have found it by now and have implemented it a lot sooner.

Okay thank you.

Thanks Mayer. Gill we’ll have time for one more question.

Thank you the next question will be from Michael Urlacher from GMP Securities, please go ahead.

Thank you, glad to get in at the last minute. I will be brief, we can look at the trend the company has had on buying back shares, you’ve spent I think 387M in the past 9 months buying back shares. And we can also see a little bit of an increase in total debt during that period. So I wonder maybe as an executive team if you could just describe your priority and ambitions on those two accounts with regard to buying back equity or paying down debt.

Yeah again, first off I think just on the debt side, only the debt is related to the share buyback. As Dave will explain we’ve taken some hedges here against currency Michael for the most part. So it’s not really related to the share buyback. I think our view here is really quite simple, is that we tend to look at the cash that we have and what is the best way to deploy that cash to bring the most value to our shareholders. And as I mentioned a number of times we’ve run a financial model and what we found obviously investing in organic growth in things like IP or solutions or new global delivery centers that will grow the franchise and deliver more margins over time is the best use of our cash. So that’s our number one priority. We don’t starve that priority to buy shares, we fully fund that against some hurdle rates in terms of returns and commitments and strategic positioning. The next thing is we look at accretive acquisitions, one that will help us again increase our capability, our footprint, our IP, our hold, go to market strategy and again against hurdle rates there including a commitment that the acquisition will be accretive gap earnings in the first 12 months. After that we look at paying down debts or buying back shares. The cost of capital these days plus the fact that we’ve got a line of credit at a very favorable rate till august 2012 our view has been to continue to buy back our shares. I think when we started this journey in 2005 we had about 443M shares. I think today we stand at about 279…280. And it’s been a very accretive for shareholders and it’s also I think positioned us to really kind of rebalance our capital structure here. In the early days we used our shares to acquire businesses, I think frankly because we didn’t have the cash to do it. That’s not the situation we are in today and we think that the strategy to return that money to the shareholders through a buy back is a good strategy and the right thing to do in the short term and in the long term. So that’s kind of how we look at it, I think on the debt case Dave, do you want to make any other comments on that or…

Just one very small comment is in regards to when we look at investments that we make on projects. We actually build the financing that we require on projects, capital is required; there is a cost of capital that is actually built into the project, it’s included in the pricing. That is one of the ways that we can make sure that when we are looking at doing a longer term project that we are getting a fair return on all of the assets that are being employed for that. And just maybe a comment on an earlier question here around trying to pinpoint where we have opportunities. Part of the structure that we have here is that from a project accounting perspective we have very detailed P& L’s by project, by customer so that from a performance perspective we are evaluating on a monthly basis, performance at a very granular level; and if there is anything that is coming off the track, we are able to identify it early, the business units focusing on what is called profit leakage. We look at not only projects that are in trouble, we’re looking at projects that are not performing against the target that was approved when we approve the deal. So if they are off by one or two points, it ends up catching attention and people are starting to take a look at it. So we try to catch this stuff very early on in the process. So again a lot of project focus, making sure we have the right information to be able not only have the data but have actionable information, so business unit, leaders and teams can move forward and do what’s the right thing.

Thank you very much I appreciate that; it’s a very complete answer.

Thank you.

Thank you Michael and thank you everyone for a joining us today, look forward to chatting with you in November when we’ll discuss our fourth quarter and full year fiscal 2010 results. Have a nice day.

Thank you. The conference call has concluded, if you may disconnect your telephone line at this time and we thank you for your participation.