Good morning, ladies and gentlemen. Welcome to the CGI First Quarter 2013 Results Conference Call. I would now like to turn the meeting over to Mr. Lorne Gorber, Senior Vice President, Global Communications and Investor Relations. Please go ahead, Mr. Gorber.

Thank you, Melanie, and good morning, everyone. With me to discuss CGI's first quarter fiscal 2013 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 a.m. on Wednesday, January 30, 2013. Supplemental slides, as well as the press release we issued earlier this morning are available for download along with our Q1 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 may be 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 statement, whether as a result of new information, future events or otherwise. The complete Safe Harbor statement is available in both our MD&A, as well as our press release, and on cgi.com. We encourage our investors to read it in its entirety. We are reporting our financial results in accordance with International Financial Reporting Standards or IFRS. As before, we will also discuss non-GAAP performance measures, which should be viewed as supplemental. The MD&A contains definitions of each one used in our reporting. All of the dollar figures expressed on this call are Canadian, unless otherwise noted. As many of you know, we're hosting our AGM this morning, so we will keep our scripted comments brief in order to take as many questions as we can within the hour. I'll turn it over to David first to review our Q1 results and then Mike will comment on our strategic highlights, including an update of the Logica integration. So with that, David?

Thank you, Lorne, and good morning. I'm pleased to share the financial details of another good quarter, which is the first full quarter of results on a consolidated basis. Q1 revenue was $2.53 billion, representing a year-over-year increase of $1.5 billion or 148% on constant currency basis. Foreign exchange fluctuations negatively impacted our revenue by $22.0 million. Adjusted EBIT was $209.5 million, up 50% versus last year, while our EBIT margin was 8.3%. Our net earnings before the impact of integration costs was $137.8 million or $0.44 per diluted share compared with $106.5 million or $0.40 in the year-ago period. This represents an increase of $31.3 million or 29.4% when compared to Q1 of 2012. In the quarter, we recorded $153.4 million of integration costs. These are the costs related to the transformation of Logica's operation to the CGI operating model. Since the acquisition of Logica, we have incurred integration costs totaling $263.1 million against our estimated cost of $400 million over 3 years. Our effective tax rate for the quarter was 26.5%, relatively unchanged from the 26.4% when compared with the rate for the previous year. As we have highlighted in the past, the tax rate varies depending on the mix of the profit in each of the various countries and our ability to utilize past tax losses. We expect that our tax rate for the subsequent periods will be in the range of 24% to 27%. Net earnings, including this quarter's integration cost of $153.4 million, were $22.4 million or $0.07 in diluted earnings per share. I would like to remind you that in addition to taking on an incremental $2.5 billion of debt to finance the acquisition of Logica, we issued from treasury nearly 47 million shares of CGI. Accordingly, this quarter's earnings per share were based…

Thank you, David, and good morning, everyone. I am very pleased with our overall performance in the quarter and the progress we've achieved with respect to integrating and transforming Logica operations into our performance-based operating model. As this is the first full quarter of consolidated results and the first time we have segmented our results for our new operating entities, direct comparisons to other results periods are limited for 5 of our 7 entities. Accordingly, I'll focus my comments on the company results referring to individual SBU performance where pertinent. As David did a good job of explaining our strong first quarter performance, I will keep my comments very brief ahead of our AGM this morning. At $2.5 billion, revenue was 2.5x greater than first quarter last year. This includes a full quarter of consolidated Logica revenue and was further powered by a 20% year-over-year revenue increase in our U.S. operations. The strong U.S. growth rate reflects previously booked revenue coming online and a pickup in our commercial and state business. We continue to aggressively meet with existing and prospective clients, making them aware of our added scale and scope, pinpointing those areas where we can help them realize their business objectives. Response from clients continues to be very positive as we booked $2.8 billion in contracts for a book-to-bill ratio of 112% on the quarter and 106% on a trailing 12-month basis. Bookings were relatively balanced across all strategic business units and segments. Our sales funnels have been fully integrated, and we now have a very good visibility on billions of dollars of opportunities across our key offerings and the expanded markets we now cover. Our backlog at the end of the quarter was $18.3 billion, up from $13.6 billion in the year-ago period. As we did with previous…

Just a reminder that a replay of this call will be available either via our website or by dialing 1 (800) 408-3053 and using the passcode 5472463 until February 13. As well, a podcast of this call will be available for download at either cgi.com or through iTunes within a few hours. Follow-up questions, as usual, can be directed to me at (514) 841-3355. Melanie, if we can poll for questions, please.

[Operator Instructions] The first question is from Thanos Moschopoulos of BMO Capital Markets.

Mike, it looks like the book-to-bill at Logica was greater than 1:1 in the quarter, which is certainly positive to see. And so can you talk about what's driving the bookings at Logica in terms of how much of that is contract extensions versus new business and also whether there's any other discernible trends you'd point to in terms of where those bookings are coming from?

Well, thank you for the question. I think the first thing to say, that I was very pleased with the overall bookings. I was also pleased that they were so balanced across the geographies. Essentially, virtually, all of the SBUs had a book-to-bill greater than 1. We also saw very good balance across the vertical markets, 24% came from government; 23%, financial services; 31% from manufacturing, retail, distribution. So much better balance across the various verticals that we now operate. In terms of the contract type, about 41% was new business; 59%, extensions and renewals. I think when it pertains to our new operating SBUs, what we're seeing is that customers are embracing the value that's created by the new company. We're rolling over existing deals, but we're also winning new ones. Hence, when I look at it, the relationships that Logica had built with their customers are very deep, and it really does position us to now accelerate the bit of the conversation around managed services that I mentioned earlier on driving up the recurring revenue. So again, a very positive outcome on the bookings. And I think it does demonstrate that customers are, in fact, seeing, embracing the benefits of the merger.

Okay. And how would you describe the business environment in Europe? Are you seeing any signs of improvement there? Or is it more a situation where you're confident about being able to grow despite what might be a tough environment in the coming months?

Well, again, I think it's very uneven. I think, as I said before, Europe is really a series of countries. I did a trip through the Nordics right after Christmas. I had an opportunity to speak to 800 clients in Finland and spoke to many of the CEOs on a one-to-one basis. And again, when I go around the world, companies are really looking to get access to growth outside their domestic markets. In some cases, they're using technology like the Internet to reach out and sell their services to other markets. In many cases, they're actually expanding through M&A and what I'm hearing from them is they're looking for somebody to help them both locally and globally. And it's very much case by case. So again, I worry less about the macro economy and our strategy has always been to focus client by client. And at that level, we see some good opportunities here to continue to win new business. I should say though, and I have before, remember, we're also focused on the quality of the revenue. So as we're selling new engagements, we're selling them on what we consider much more balanced business terms for us and the customer. But we're also running off low-margin, no-margin business, and we're also working very diligently to complete projects where the financials are not favorable to CGI. So that kind of churn in the revenue line should continue here for a number of quarters.

The following question is from Tom Liston of Cantor Fitzgerald.

Good segue, Michael, but the adjusted EBIT for Logica is probably hard to tease out, but it seems like it's maybe low 4 or maybe up to mid-4 as a percentage. You hinted at some of the opportunities, but where do you think that number eventually trends? Is it more of just letting the contracts run off? Is it more about bringing IP to the contracts? Or is it more synergy -- revenue synergy gain, which you hinted at as well. What do you think drives that margin higher? And where do you think that ultimately ends up at?

Well, again, I think, ultimately, the goal that I've set and shared with the stakeholders is that I think, when we're done, our transformation here at the end of the 3-year period, our EBIT margin should be in the leadership position in Europe, which I think can range between 8% and 9% EBIT. Going beyond that will mean us really changing the mix dramatically with much more IP into our European operations. So if you look at the levers that will drive up the margins as we go forward, coming out of the integration investment, the first thing, as I said before, we're less about restructuring the business and more about transforming. So the first thing that will drive this is we now have peer accountability. We've seen that at our first global ops meeting where every business unit around the world presents. They now have very clear understanding and accountability for the total operation within their geography, including bottom line financial performance. So I think that's the first thing. The accountability is now clear. That hand-off has been completed. We are obviously trying to find a better balance in terms of utilization. So we are addressing cases where we have excess bench or low utilization. We're also moving the SG&A levels to our CGI management ratios. We're also addressing those projects that are challenged in terms of financial performance, either renegotiating, running them down or opening a dialogue with the customer to come up with a more balanced business arrangement. And we continue to look at streamlining overheads to make sure that we have the right levels of management and layers of management relative to the operations as they now exist. So I think all those things are part of transformation. It's underway. As I say, the -- we now got a kind of a baseline by the new SBUs at which we can see a gradual improvement here as the impact of the restructuring and transformation takes place over the future quarters.

And just a quick one on the U.S. Your print was quite, quite strong at somewhere around 50% organic, if you look at constant currency and, obviously, Logica on top of that. The U.S. GDP print just this morning talked about government outlays being down 6.6% in the same quarter. So obviously, this health care, intention [ph] there, that's driving some of that, but can you talk specifically about some of the government spending? They talk about defense being cut the current quarter and a bit of the outlook on that side.

Yes, so I had a review with my federal team just last week on the outlook. And again, we're seeing a bit of a similar pattern than we saw probably 1.5 years or 2 years ago where some procurements are sliding to the right. As you know, at that time, our strategy was to continue to aggressively bid, get on as many vehicles as we can, bid as many caps orders as we can and wait it out in terms of seeing whether those awards were eventually going to be made. Again, it's hard to see whether this is a pattern that is going to play out this time. So the -- from our strategy, it's somewhat the same. We're going to continue to bid. We're going to continue to get more vehicles, so we have more opportunities to expand our service to other customers. We also are focused heavily on the areas where government is implementing new programs like health care, HIX. We announced, again, today, either our sixth or seventh state, Hawaii, where we're working with the state to implement the HIX exchange. We're also doing the federal government, as you know. So we think we're in, relative to the competitors, we're in good shape. We're still carrying a book-to-bill of 119% in our federal business. And as I say, we're on some of vehicles that the government is committed on proceeding with. So we're prepared for virtually any outcome there. We wouldn't be able to control what the government does, but we're nimble, we're flexible and we're focused. And so far, that has put us in good stead and that's the strategy that we're taking go forward. Just on the other side though, as I mentioned, we are seeing an uptick in the commercial stateside. We had a very strong quarter there, well over 20% in terms of organic growth on the commercial side. So we are seeing a pickup there in the U.S., which I think is very promising, especially if we were to see any softening in the government side.

The following question is from Maher Yaghi of Desjardins.

Mike, you mentioned in your prepared comments that you're ahead of plan and you're restructuring or -- the integration of Logica. Can you elaborate a little bit on that? And when you look at your organization, as it stands right now, don't you think -- I mean, you -- it's big enough now that we should start to see maybe you guys bidding on some of the -- those large contracts out there that come for renewal from time to time, billion dollar contracts? Are you guys big enough? I mean, do you feel we could see some of these contracts maybe booked in sometime in the future?

Well, I think it's a good question. It's exactly why I restructured the organization to put Doug McCuaig in front of that, so that we could be in better position to shape and actually be at the table for those deals. I do believe we have enough scale and scope to bid for the right types of those deals because not everyone that's big is necessarily good from a shareholder standpoint. So again, we've always been very selective there in terms of what we bid on to ensure that we're creating maximum value for the customer and also for our shareholders. So I think that's exactly why the organization adjustment, and we're clearly accelerating from our normal course and in integration more to the large outsourcing opportunities while continuing to execute on the cost side. So I think that's exactly where we're focused. But again, we're very particular in terms of where we bid to make sure that we find that right balance between the stakeholders. And your second question was?

Yes, the question was, you mentioned in your prepared remarks that you're ahead of plan on Logica integration. Can you maybe elaborate on what's ahead of plan? And does that mean a quicker runaround in terms of accretion than we expect -- I mean, we should expect?

Well, again, I think what I was really highlighting, I think our teams have done an excellent job and I want to thank them and I want to also thank our members across Europe for being so engaged and cooperative as we work through what is a very difficult time when you're transforming and restructuring a people-based business. What I was saying, I think, we're further along in identifying and exiting those members who aren't going forward with us. As far as the financial impact, as Dave mentioned and I reinforced, you'll only see that gradually. A lot of this happened in December. And will carry on into January here. And although we booked the expense, in many cases, they continue on payroll until 2 or, in some cases a longer, 3 months, where we continue to pay them the lead prior to exiting. So there will be a lag between the 2. But I'm pleased at the fact that we've got the organization model, the design. We've identified those functions that are not aligned to our model. And we've spoken to, identified or exited a number of people that are in line with our ultimate model here. So I think that's what I was referring to. I think the other thing that I'm pointing out is that's an enormous amount of effort and coordination after essentially 4 or 5 months of operation, that we're so far along in our first integrated quarter.

The following question is from Julio Quinteros of Goldman Sachs.

Can you give as the Logica revenues on a stand-alone basis to be able to back into the organic revenue growth rate?

No. We've intermingled our existing operations into Logica. We've also adjusted some interco transfers between their various operating units, to give you just one example. Julio, their offshore sites were actually being subsidized by their domestic business units. We've changed that so that they're now profit centers. So we've made a number of changes. I don't know if there's any others, Dave, you want to highlight. But we've made other changes that wouldn't give a good apples-to-apples comparison across there. That's why I'm saying I think that, frankly, this quarter, we've established a base in terms of the key metrics, revenue, EBIT, cash by these units and we'll have a better comparable look going forward.

I guess the point for us is, as we look at the sources of some of the puts and takes and the sources of the model, obviously, much stronger revenues but offset by lower EBIT in terms of what we were expecting. I know you guys were saying that you're on your plan, but it'd be helpful to understand, at least from a revenue perspective, where that source of strength was this quarter. Did Logica come in better relative to where we were on the kind of the stub value last quarter? Or was the U.S., Canadian part of your business better than expected? So just trying to get a handle on what actually drove the upside. Or was there even something like more product sales or license sales that would have helped because the revenue source was definitely a little bit of a surprise in terms of getting better overall results there?

Yes, well, again, the first comment, I was very clear after the BAR report in the last quarter issued, that the BAR report, 6 weeks of revenue, was not typical of what we ought to expect from Logica. As I pointed out at the time, it was the summer period and didn't typify the revenue pattern, nor did it typify what I saw in the month of October. So I think what you see here is a more steady state at a macro level of the revenue. Now in pluses and minuses, as I said earlier, Julio, we're continuing to sell and sign deals there that are more accretive to us on a go-forward basis. So that's an upward tick. On the other side, we're going through that revenue base and actually, as I say, focusing on improving the quality. In some cases, that means reducing the revenue in certain geographies and in certain customers in order to put it on better financial terms. So there's a lot of moving pieces in there. And I think we'll be in a better position. We get a second quarter to start giving you a better visibility into what's impacting the revenue movement quarter-to-quarter.

The following question is from Doug Taylor of TD Securities.

Doug Taylor on for Scott Penner. Building on some earlier questions, I wonder if you would be able to provide what your target is for total headcount reductions. Are you most of the way through headcount reductions at this point? Or do you still see -- expect to see a bunch in the remainder of the year?

Well, Doug, first off, I haven't released -- I don't normally release a headcount target. I think in the services business, frankly, it's very damaging in terms of the people's morale, and people tend to focus on that number and not on the actual customers and other important items. So we are not done our restructuring, as I mentioned, and there are more reductions to come. I did say, and I emphasize again, it's net headcount down 1,000 because, again, with the growth we're having in this U.S., for example, we're adding heads there. So the actual reduction relating to the restructuring was greater than 1,000. And -- but we still have more to do and you'll see more of that on a go-forward basis here.

Fair enough. Another question, just to perhaps help us be able to make the results here more comparable with historical. Could you provide for us, remind us at least, what the GIS revenue -- how that was allocated geographically?

So most of that was in Canada, about 80%, and the balance is split between the U.S. and Europe. And again, it's more heavily in Canada, U.S. and in Europe.

The following question is from Michael Urlocker of GMP Securities.

I have 2 questions, Michael. The first one is going to look at, let's call it, qualitative assessment of management in place at Logica and then the second one is a more standard cash question. So when you look at the Logica team, as you've inherited it and have started to influence it in terms of how to operate, what's your observation in terms of the effectiveness of the management team in place in Logica across the various units and their ability to be fully accountable to the standards that CGI would want to see? And if you want to maybe offer a couple of anecdotes or observations to help us understand that, it would be helpful.

Sure. I think on that one, again, just to remind you, we actually interviewed those people that would run our SBUs. I did that personally. And we also interviewed a number of the BU leaders that are operating very large entities in Europe. And again, what we're looking for, to your point, Michael, was people who like to be accountable and like to win. And I would say that we're, at this point, very pleased with the team that we have out there. I think, if you look at the first quarter results, you can see that they've been working extremely hard to actually implement the model, making tough decisions, standing up in front of their customers and talking about achieving a better balance in terms of the business arrangement, talking to their members in terms of the need, why we need to transform the business to be more competitive. And then finally, I think the way our model works is that, every quarter, we get a very clear scorecard, much like I get mine with investors on calls like this. We have a global ops meeting where every SBU and BU leader presents to their peer group, their performance against the very same metrics that I'm reporting out here today. So I think my early assessment is, we've got extremely strong leaders. They're embracing the model and they all want to win. And so I'm very pleased with the team that we have.

Okay. So you think you've got the right material in place to shape them and groom them to your standards?

Yes. I think, again, they've all been trained now in the model. And again, they clearly understand what they're responsible and accountable for. And we have the accountability loop closed because we now report the results by SBU and by BU.

Okay, perfect. And then my second question, a more standard cash generation question. Certainly, the cash from operations in this quarter was very high. In fact, it's a record for the company. But it's early days of integrating Logica. So I wonder what your expectation is in terms of whether there's going to be some substantial cash outflows over the next little while or whether we are actually now in a phase where we can expect steady, improving cash from operations from the whole company?

Michael, that's a good observation around the ability to be able to generate the cash. And in my comments, I had tried to provide a little bit of color around how much in the way of integration provision that we've actually built up over the last quarter and a half in respect to the Logica acquisition. There's about $255 million -- sorry, $252 million of provisions that are sitting out there right now. That's where we booked the expense, but we haven't paid out the cash yet. A big portion of that is related to severance. And as Mike had said, that as we have notified some of these individuals, they're on garden leave. They're on -- they have different exit days, et cetera, and some of them may go through this quarter and maybe even into the next quarter. So there is some timing of when that $250 million is going to flow out of the company. There's also some compensation payments that we've seen within our company in the past, that get paid out in this quarter. And there's also compensation, some bonus payments, et cetera, for the Logica folks that would also have been earned by the end of December, which will then get paid out in this coming quarter. So I think we tried to be fairly transparent in both my comments, as well as in the MD&A, to provide some backdrop that we see this as being a fairly high quarter. We'd like this to be a kind of regular quarter as we go forward, but we have to get through all of this integration activity first before we get to steady state. And there's a couple of quarters that we're going to see where I think we're going to be almost net cash out as opposed to big cash coming in.

Okay. And in terms of the working capital accounts, I don't think you're signaling, if I'm hearing it correctly, that there's going to be any dramatic swings there in terms of cash requirements.

Other than that, I might notice that from a trending perspective. DSO may trend up a little bit just because we, I think, we had a little bit maybe $30 million, $40 million extra dollars that came in at the end of the quarter, more of a year-end effect. But outside of that, we hopefully would be able to maintain the position that we have in DSO.

Okay. And if you want to boast a little bit, I suppose, I think that performance in the U.S. seems to be very strong. How much of that would you associate with the Stanley acquisition from a few years ago and improvements that you've brought to Stanley?

No, I think the Stanley acquisition is already embedded in the history there. Clearly, it's given us a lot more critical mass, opened up a lot more opportunity on the defense intel side. But as I said, I think the big driver this quarter was actually on our commercial and stateside, which Stanley was not part of.

The following question is from Stephanie Price of CIBC.

So you said in the past that revenue synergies aren't included in your synergy targets. Can you talk a bit about the potential timelines for these revenue synergies and whether the pipeline is starting to see early signs of them?

Well, normally, first off, as I say, I don't normally build in and haven't built in revenues in the calculation of the accretion rate. And the reason for that, as I said earlier, that there's pluses and minuses on the revenue as we go through it, attempting to improve the overall quality of the revenue, which is, first and foremost, the goal that we're pursuing here. And the revenue synergies normally follow in the second, and in some cases, third year. I think you've seen some of that in the Stanley acquisition, that it takes a year or so to really get through the first part of that exercise. And certainly, on one as big as Logica, it’s going to take time. It'll be over a 3-year period, likely more in the back end of the 3-year period than in the front end.

Okay. And in terms of the U.S., can you talk a bit about the pricing environment that you're see in that region? Margins were a bit lower than they had been the last couple of quarters this quarter.

No, I think margins are actually up year-over-year. And again, I'll just remind you, in the U.S., you got to tack on, again, about another 2% for intangibles. So the U.S. operation itself is actually generating closer to 12% EBIT as opposed to 10% and a bit. So no, I'm very pleased. I think we're not only growing the top line, but we're growing the bottom line. And the one thing that we got to keep our eye on, our utilization rates are running red hot in the U.S. as we staff up for the revenue growth. So there's always a balance there between the 2. But deep down, they're doing an excellent job and I'm very pleased with top line, bottom line and bookings in the U.S.

Great. So you're not seeing any sort of impact in the pricing environment then?

Haven't seen a lot. I think, again, we are very competitive and much more nimble than our competitors. And again, we're financially stronger. So I think we've had good bidding criteria in our organization where some of our peers may actually be re-looking at their bidding processes given the situation they find themselves in. But we're not in that case.

The following question is from Bryan Keane of Deutsche Bank.

Wanted to ask about just Europe in general. We still get a lot of questions about Europe and now that you guys have a big stake in Europe. Can you just talk about the fundamentals there? Are things improving yet? Or have we yet to see bottom in the European IT market?

Thanks for the question, Bryan. And as I said, I really see Europe as a series of countries. If I take the Nordics, as I said, I just did a swing through there and frankly, I found the environment, the business environment, to be very positive. The businesses up there are expanding. I've met with Statoil, they're expanding around the world. There's other companies there that fall into that criteria that I said are really using technology to gain market share beyond their domestic markets. So I thought the Nordics companies -- countries were healthy. The U.K. is a bit of the wildcard here. I think, again, from our standpoint, we're executing very well to our model in the U.K. But again, there's still uncertainty in that market. We'd like to see it come back a little stronger. Germany, a good market. Netherlands is firming up for us, probably had the best performance that Logica has had in Netherlands in the last 4 years in the quarter. France is a very steady market. There's a lot of government influence in the French market, so that the spending and investment rates there continue to be fairly stable. We do not have a big exposure to French -- to France -- or to Portugal and Spain, but again, our organization, our new combined organization are actually doing quite well there, especially in the Portuguese part of the business. So it's very uneven, Bryan, but my sense is that we've come off the bottom there and that most of the indicators are positive. And when I talk to the individual customers, a number of them are actually increasing their investment in information technology in 2013.

Okay. No, that's helpful. And then just had a question on the push for recurring revenue. I think the SI consulting business is now, what, 44% of the mix. Is that a business that can go more kind of recurring or -- because usually that tends to be more spotty time and materials?

Yes, our experience, and that's why I cited the AMS example, Bryan, because AMS was very similar. They were essentially a consulting-based company. But what you find behind those is a lot of their SI&C projects are part of a 15-, 20-, 25-year relationship with the client and therefore, the door is open in terms of meeting with the client and having a more broader discussion on how managed services can help bring down the cost of those SI&C projects and the maintenance and the total cost of ownership. One of the observations, and it's not a scientific sample, it's a sample that I've conducted just as I spoke to clients across Europe. My sense is that a lot of the European IT organizations have a higher percent of their budget spend on application maintenance and the run side of their business. So they're a higher percent on the run and operate versus what I see in North America. And part of that reason is, I believe, that they haven't fully embraced to the same extent the managed service offerings. So this opens up an opportunity for us, I think, in terms of introducing it and actually changing that mix a little bit over time and moving up the recurring revenue percent of our business, which is a goal for us. It's been very effective for CGI over the years because, in the downturn, it gives us a floor in terms of revenue and helps us continue to do things right over the long haul because we've got that recurring revenue stream.

Okay, great. Last question for me. Any thoughts about giving us the quarterly breakout of the new segments going back, only because it makes it easier for modeling purpose how to model the company going forward?

Okay. Well, again, I think, I've addressed that. They're not the same company, I guess, is another way of saying it. There is no more Logica. There's a CGI organization now in Europe, Asia-Pac, that's being transformed into our model. And it's very difficult to get any reasonable, meaningful comparisons. And again, we're trying to and are transforming how we look upon that business right through the metrics, from top line to cash management to headcount. So I understand why folks are asking for that. But again, I think our -- given the things that we've got underway in terms of consolidating this organization and transforming the financials into our operating model, that's where we're spending our attention.

Melanie, we'll have time for one last question.

The following question is from Julio Quinteros of Goldman Sachs.

I had a bit of a brain freeze earlier on the subsequent question, but literally, I think you already answered it so I'm not going to belabor with the issue around revenue synergies and expectations. But I just wanted to go back to the point on the U.S. strength because, clearly, the performance there, well ahead of a lot of expectations. Can you just go back and frame where that commercial strength -- was it health related? Or was it a financial vertical? Like, where was the surprise there in terms of the strength on the U.S. commercial side?

I think big -- continuing big boost on the health care side is the implementation of Obamacare, the HIX exchanges, changes in -- that are required for the Medicare, Medicaid are also very important. We're also -- the IP mix in the U.S. is increasing. So this is helping us not only drive up the top line, but the bottom line. So I think health is a big piece of that. And the work we're doing on the IP side is having a double impact, top and bottom line.

How about your performance on the RAC work that you guys are doing?

On the RAC work?

Yes.

We do pretty well on the RAC work in terms of not only meeting the client's requirements and on the recoveries wheel, but it's been a good business, very good business for us.

Anything there in terms of the recompete or renegotiation there? It sounded like they had moved up their decision-making cycle there in terms of the RAC structure. Have you guys got any color in terms of what they plan on doing there?

Don't have a lot. But if we look at our own benchmarks, we see ourselves as actually amongst the best performers in that -- in the RAC, and we continue to win contracts in that business. So I think we're very well positioned in the health care business, especially in the U.S. We continue to capture double-digit growth in that vertical. And just a reminder, we're also doing the federal HIX as well, the health exchange. And I think with the Hawaii announcement this morning, Julio, that's either our sixth or seventh state that we're implementing HIX. We have a good share there. I think we've got actually the best share amongst the competitors in terms of standing up these exchanges.

Thank you very much, Julio. Thank you, everyone, for joining us this morning. Hopefully, you'll be able to tune in to our AGM at 11 a.m. And we'll be back for the Q2 results at the end of April. Thanks very much.

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