Richard Clark - Managing Director, IR Bill Green - Chairman and CEO Pam Craig - CFO Steve Rohleder - COO

Tien-Tsin Huang - J.P. Morgan Jason Kupferberg - UBS Rod Bourgeois – Bernstein Tim Fox - Deutsche Bank George Price - Stifel Nicolaus Bryan Keane - Credit Suisse Julio Quinteros - Goldman Sachs Ian Sawyer - Wachovia

Ladies and gentlemen, thank you for standing by. Welcome to Accenture's Second Quarter Fiscal 2009 Earnings Conference Call. At this time all participants are in a listen-only mode. You will have an opportunity to ask questions after the presentation. (Operator Instructions). As a reminder this call is being recorded. I would now like to turn the conference over to our host, the Managing Director of Investor Relations, Mr. Richard Clark; please go ahead.

Thank you operator and thanks everyone for joining us today on our second quarter fiscal 2009 earnings announcement. As the operator just mentioned I am Richard Clark, Managing Director of Investor Relations. With me this afternoon are Bill Green, our Chairman, and Chief Executive Officer; Pamela Craig, our Chief Financial Officer; and Steve Rohleder, our Chief Operating Officer. We hope you have had an opportunity to review the news release we issued a short time ago. Let me quickly outline the agenda for today’s call. Bill will begin with an overview of our results, Pam will take you through the financial details including the income statement and balance sheet, and Steve will add some operational perspective. Pam will then provide our business outlook for the third quarter and full fiscal year 2009 and Bill will close the presentation before we take questions. As a reminder, when we discuss revenues during today’s call, we are talking about revenues before reimbursements or net revenues. Some of the matters we will discuss in this call are forward-looking and you should keep in mind that these forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to general economic conditions and those factors set forth in today’s news release and disclosed under the Risk Factors section of our Annual Report on Form 10-K and other SEC filings. During our call today we will reference certain non-GAAP financial measures, which we believe provide useful information for investors. You can find reconciliation of those measures to GAAP on the Investor Relations section of our website at accenture.com. As always, Accenture assumes no obligation to update the information presented on this conference call. Now, let me turn the call over to, Bill.

Thank you Richard and thanks everyone for joining us today. Let me start by stating the obvious I think you would all agree that the economic environment around the world has become even more complex and uncertain over the past few months. We are going to discuss our results today in that context. We want to share with you what we are seeing how we are acting and reacting in the face of it. With that backdrop Accenture's second quarter was a solid one. We grew revenues in local currency expanded operating margin and gain market share. Given the global economic environment its impact on business in general, and its devastating impact on some of our clients, we performed well. We have done this by getting and staying closer than ever to our clients helping them adapt to very challenging circumstances and by quickly aligning Accenture to the new business realities. We remain confident in our business our intense focus and discipline in managing Accenture has enabled us to execute well and to delivered solid profitability and strong flow. And while our revenue growth has slowed, we gained profitable market share, which we believe is a true indicator of our success. Here are few highlights from the quarter. Revenues were $5.3 billion, an increase of 3% in local currency. This was slightly below our guided range that we believe is very respectable given the dramatic changes in the market and challenges for business that began in January. We grew operating income 6% and expanded operating margin by 150 basis points, reflecting the close management of our operations and a keen focus on costs. We delivered solid earnings per share of $0.63. We delivered new bookings of nearly $6 billion, also a good result. And finally, we maintained our extremely strong financial position, we continue to generate significant amounts of cash, and we have a very strong balance sheet with no debt. We have moved quickly. As we told you, we would with targeted actions to adjust to and get ahead of the rapidly changing market and the changing needs of our buyers. At the same time, we continued to invest in our business to reinforce our strong competitive position. In this environment, we have benefited from our flexible and diverse business model. We have been able to quickly respond to client needs for immediate cost savings through operational improvements and for swift and efficient functional restructuring across the industries we serve. We are also seeing many new opportunities in the marketplace to grow our business with both, new and existing clients. We are pursuing those opportunities vigorously. Change is a challenge for any organization, where we don't know exactly when the economic climate will improve, we are confident that we are doing the right things to weather the storm and to position ourselves for accelerated profitable growth as conditions do improve. With that, let me turn the call over to Pam who will provide some more detail on the numbers.

Thank you, Bill and thanks to all of you for listening today. We had overall solid results in the second quarter of fiscal 2009. Despite the challenging macro environment, we continue to manage the business we have and to drive growth where we can. And we demonstrated our commitment to drive, to drive strong margin, cash flow and earnings across the enterprise. Let me take you through some detail behind the numbers in our income statement, balance sheet, and cash flow. Unless I state otherwise, all figures are GAAP, except the items that are not part of the financial statements or that are calculations. Net revenues for the second quarter were $5.27 billion, a decrease of 6% in US dollars and an increase of 3% in local currency over the same period last year. Q2 revenues were below our guided range of $5.45 billion to $5.65 billion. These revenues also reflect the foreign exchange impact of negative 9%. Consulting revenues were $3.03 billion, a decrease of 10% in US dollars and 1% in local currency. Outsourcing revenues were $2.24 billion, a decrease of 1% in US dollars and an increase of 9% in local currency. While our outsourcing revenues were in line with our expectations, we did see an overall 1% local currency decline in consulting revenues for the quarter. We saw the softening in consulting starting in January, primarily driven by systems integration work in three of our operating group. There has been a noticeable change in the demand environment, as clients grapple and how a macro environment full of continuing economic challenges impacts their priority. Steve will provide more detail on revenues shortly. Moving down the income statement, gross margin was 30.8% compared with 29.5% for the same period last year reflecting a 130 basis point improvement. We drove continued gross margin expansion this quarter with improvements in contract profitability that were very strong in outsourcing and reflected good execution in consulting as well. SG&A cost for the second quarter were $958 million or 18.2% of revenues, compared with $1 billion or 18% of revenues for the second quarter last year. Sales and marketing cost increased 30 basis points, which were offset by a decrease in general and administrative costs of 10 basis points compared to 2Q last year. And also included in operating income, we received a net benefit of 13 million resulting from a reduction in our reorganization liabilities which were established at the time of our incorporation. The impact of this line item compared to last year second quarter was a 40 basis point left. Operating income for the quarter increased 6% to $677 million, reflecting a 12.9% operating margin. This compares with $638 million or 11.4% operating margin in the second quarter last year. The year-over-year expansion in operating margin was 150 basis points. We continue to be focused and our people really deserve the credit for this, on executing our work well and managing our cost in this highly uncertain time. Our second quarter effective tax rate was 28.1% compared to 17.8% for the same period last year. The second quarter and fiscal 2008 included some final determinations and the effective R&D credits outside the US which reduced the rate in that quarter. This quarter's rate of 28.1% which also included some final determinations was slightly below our guided annual range of 29% to 31%. Income before minority interest for the quarter was $502 million, compared with $534 million for the second quarter last year a decrease of 6% in US dollars. Diluted earnings per share was $0.63 a decrease of $0.01 or 1% from diluted EPS of $0.64 in the second quarter last year. Here is how that breaks down. We delivered an increase of $0.12 or 19% growth from strong operating performance. Including $0.09 from revenue and operating income growth in local currency and $0.03 from a lower share count. Additionally, we had a benefit of $0.01 from a release of reorganization liabilities and $0.01 from lower non-operating items. All of these totaled to $0.14. This was offset by $0.09 from a higher effective income tax rate this quarter which I previously mentioned and $0.06 from the unfavorable FX impact in our Q2 operating results compared to last year. The tax rate change and the impact of foreign exchange created a $0.15 drag on EPS for a net decrease of $0.01. I am pleased with our strong earnings performance given last years unusually low tax rate and a significant FX headwind this year. Now let's turn to some key parts of our cash flow and balance sheet. Free cash flow for the quarter was $578 million resulting from cash from operating activities of $631 million net of property and equipment additions to $53 million. Turning to DSOs, our day services outstanding were 33 days, down from 36 days in the first quarter and 37 days at the end of last fiscal year. We continue to manage DSOs at a level that is exceptional and industry leading especially in this environment. Our total cash balance at February 28th was $2.98 billion compared with $3.60 billion at August 31st. This reflects $383 million reduction due to foreign exchange translation on the cash balances we hold around the world. Our balance sheet metrics remains strong. For the second quarter, our return on invested capital was 79%, our return on equity was [88%], and our return on assets was 21%. Before I turn things over to Steve, I will comment on our ongoing objective to return cash to shareholders through share repurchases. During the quarter, we repurchased or redeemed $11 million shares for $357 million, primarily from founders. The average price of shares repurchased or redeemed in the quarter was $32.45 a share. At February 28 we had $1.5 billion of share repurchase authority remaining. Finally, let me comment on the on the size of our public flow. Using what we believe to be the most conservative method of calculation, our public [float] at the end of quarter was approximately 77%, which excludes all outstanding founder shares. Overall we delivered a strong profitability and cash flow while navigating through uncertain and challenging times. Now, Steve will give you some more detail on our operations.

Thanks Pam. Hello everyone and thanks for joining us today. Our second quarter results demonstrate that we are proactively managing our business. Let me start with a few observations about the current environment and its impact on our revenues. Clearly the global marketplace has shifted dramatically over the past few months. Beginning in January we saw heightened marketplace uncertainty which led to a systemic pause in certain segments of the market. This resulted in three factors affecting our consulting business. First, clients have started differing decisions about new work which has resulted in a slow down in converting our pipeline to revenue in the quarter. Second, the small extensions and add-ons that normally come through each quarter did not come through at the rate we have seen historically in fact some clients are still operating without approved annual budgets. And third, in some cases clients have asked us to work with them on reducing the run rate on existing consulting projects. In this environment companies are rethinking their priorities, looking at projects that will provide an immediate return on investment, differing large new transformational IT projects and turning to outsourcing to lower their cost structures. The shifting priorities are affecting each of our growth platforms in different ways. So before I discuss the results of our operating groups I am going to provide some context about the effects on our growth platforms. In management consulting, clients are focused on sustained cost reduction and operational improvement. We are seeing an increase in CEO sponsored efforts in areas such as customer retention, supply chain optimization, and M&A integration. We continue to invest in this part of our business especially in solution design to help client tackle these imperatives. In systems integration and technology we are experiencing changes in demand patterns especially in systems integration. But we are seeing a reduction in large scale custom projects. There is continuing demand for SAP and Oracle-based services and we have a number of targeted new investments including new alliances and industry solutions. Of course our global delivery network continues to be a competitive differentiator. We have more than 50 delivery centers across five continents in end of the quarter with 80,000 people in our network. Technology consulting continues to grow with increased demand for services related to IT infrastructure cost reduction, compliance, data security and data privacy. In outsourcing, demand for application outsourcing remained strong as clients are seeking opportunities for near term cost reductions. We are also seeing demand in BPO particularly in finance and accounting and procurement. This demand coupled with the increased activity we are seeing in the pipeline clearly supports our view that there is an acceleration in outsourcing opportunities. Our focus is on accelerating the conversion of the opportunities in our pipeline to bookings and revenue. Now that I have provided some context for the overall market and its effect on our growth platforms, let me take you through some of the highlights for the operating groups. In Communications & High Tech, revenues declined 3% in local currency, largely reflecting a decrease in communications industry work in the Americas and EMEA. We saw strong growth in Asia-Pacific across all industry groups in both consulting and outsourcing. In Financial Services, revenues dropped 5% in local currency primarily due to a decline in banking in EMEA. Given the challenges our financial services clients are facing, we saw some impact in the quarter due to industry consolidation and some clients are delaying decisions about starting new work, especially in consulting. Revenues in our products operating group increased 5% in local currency. On an industry level we saw relative strength in consumer goods and services and in our pharmaceutical practice. While retail and automotive faced challenges related to the economy’s impact on clients in those sectors. Public service grew revenues 12% in local currency driven by our business in North America. Clients in state and local governments in the US are seeking help with cost containment through shared services, IT consolidation and process improvement. Resources achieved 14% local currency growth. It was strong growth in natural resources across all geographic regions and in utilities in EMEA. Clients in chemicals, natural resources and energy are under pressure to cut cost and minimize debt, which is creating demand for outsourcing. Looking at the quarter from a geographic perspective, in the Americas, revenues declined 1% in US dollars, but grew 4% in local currency. Local currency growth in Brazil and the United States was partially offset by a decline in Canada. In EMEA, revenues decreased 13% in US dollars and grew 1% in local currency. We saw a strong local currency growth in Germany, the Netherlands and Denmark and declines in Spain, Ireland, France and Switzerland. In Asia-Pacific, revenues grew 10% in US dollars and 13% in local currency, reflecting continued expansion in Japan, Singapore and Australia. Finally, let me turn to a few operational items. New bookings for the quarter were $5.98 billion. This included consulting bookings of 3.14 billion and outsourcing bookings of 2.84 billion. Seven of our top-ten outsourcing bookings in the quarter were with existing clients, demonstrating the importance and strength of our deep client relationships. In terms of demand, our pipeline in consulting is currently holding steady despite the three factors affecting our consulting business, I mentioned at the outset. In outsourcing, market activity is as high as we have seen in the last six quarters and our pipeline has expanded. Turning to people management; managing supply and demand of our resources continues to be a top priority. As I have said many times, we have our hands on the operating levers of our business, including utilization, attrition and recruiting, giving us the flexibility to adjust quickly to changing conditions. We kept our utilization at 83% in Q2 and attrition dropped to 9%. We ended the quarter with global headcount of 181,000 people, and we continue to ensure that we have the right number of people and the right mix of skills in each of our markets. In closing, we were challenged at the top line, but had strong bottom line results in a very difficult economic environment. We have an ongoing scenario planning process and we continue to refine our scenarios and aggressively manage our business to be responsive to the market and to our clients needs. We remain focused on maximizing operational excellence and balancing profitable growth with investments for the future. With that let me turn the call back to Pam for our business outlook.

Thank you, Steve. As a reminder, each quarter we provide an outlook for the next quarter's revenue and an update on our annual outlook for the full fiscal year. And despite the very dynamic macro environment, we will continue to do so. For the third quarter, we expect revenues to be in a range of $5.1 billion to $5.3 billion, which assumes a foreign currency drag of approximately 12%. As you all are well aware, currency movement continue to be quite volatile. This range reflects the March assumed rate of approximately negative 14%, and our latest assumption for currency movement for the quarter given that the US dollar is currently weakening. Now, turning to the full fiscal year. Before I get in to it, let me first state again how we are thinking about the impact of foreign exchange on our fiscal year results. When I spoke last quarter about the impact FX would have on our fiscal 2009 outlook, we assumed the negative 8% to negative 10% headwinds for the year based on exchange rates experienced during the month of December. At this time we have reset our annual outlook given the actual first half results, and our new assumption based on exchange rates experienced during the month of March so far. So, we therefore now assume the FX impact for the remaining two quarters of FY'09 to be negative 12%. This would result in a negative 9% drag for the full fiscal year, which has been factored into our annual outlook for bookings, earnings per share and cash flow. So, let me turn first to revenue. Although we have 6% local currency revenue growth year-to-date and our bookings have come through reasonably well, the wide spread global economic downturn is creating a general caution right now that is impacting our revenue growth. Based on what we see now, we are updating our fiscal year 2009 revenue growth outlook to zero to positive 4% in local currency. Let me next cover operating margin. We continue to expect operating margin in this fiscal year to be in a range of 13.4% to 13.7%. Taking into account the updated revenue growth outlook, we now expect new bookings to be in range of $23 billion to $25 billion, EPS to be in a range of $2.60 to $2.67 and operating cash flow to be in the range of $2.57 billion to $2.77 billion, property and equipment additions to be $315 million; and free cash flow to be in the range of $2.25 billion to $2.45 billion. Finally we continue to expect our annual effective tax rate to be in the range of 29% to 31%. Our second quarter and year-to-date results reflect those of a well managed business in an environment that continues to become, our clients are dealing with challenges they have never seen before and we continue to be well positioned to help them successfully take on some of those challenges. Although the market conditions have impacted our projections for revenue growth, we are a global durable business to generate strong earnings and cash flow. So, here is Bill to close, before we take your questions.

Thank you, Pam and let me recap quickly before we go to your questions. Our second quarter results reflect our focus on operating discipline and rigorous execution. Despite very tough economic conditions worldwide we grew revenues in local currency, increased operating income and achieved a significant expansion in operating margin. We delivered solid EPS of $0.63, we generated strong cash flow and our balance sheet remains rock solid. We continue to win new clients, expand relationships with existing clients and gain market share. We remain committed to investing in our business and taking steps to put more distance between ourselves and our competitors. And we believe we are successfully navigating the economic downturn and that this will position us well, as conditions improve. Now, let’s go ahead and open it up for your questions.

Thanks Bill. Now we will go to your questions, operator would you provide instructions for those on the call.

I will be glad to. (Operator Instructions). And one moment for the first question it is from Tien-Tsin Huang. Please go ahead. Tien-Tsin Huang - J.P. Morgan: Hi, can you hear me?

Yes, Tien-Tsin, hello. Tien-Tsin Huang - J.P. Morgan: Hi. I have a bunch of questions, I guess I will start with the impact that pricing might be having on revenues and bookings as well. I have been hearing a lot about pricing, it sounds like conversion of the pipeline and bookings having some influence on organic growth, but just curious if pricing is also having any impact as well?

: Tien-Tsin Huang - J.P. Morgan: Any way to quantify some of the impact?

Quantify in terms of what? Tien-Tsin Huang - J.P. Morgan: In terms of just revenue impact or just percent of change from what you have been seeing?

No, not from a revenue standpoint Tien-Tsin, but from a profitability standpoint I would tell you that we are actually slightly ahead of the contract controllable income targets we set which obviously pricing impact. So slightly ahead through Q2. Tien-Tsin Huang - J.P. Morgan: Okay good, I will just sneak in one more quick one, just GDN headcount, it sounded like it was down, what's driving that I guess the overall was down as well.

Yes, we have had some personnel actions and in parts of the GDN it's spread out across most of the nodes of the network, but it basically mirrors what we are seeing in terms of the demand for offshore services. Tien-Tsin Huang - J.P. Morgan: Got it. Thank you. I will jump back in the queue.

Okay.

Thank you. And our next question is from Jason Kupferberg with UBS. Please go ahead. Jason Kupferberg - UBS: Thanks and good afternoon. So the year is half over now you guys still have a 4.0 range here in your revenue growth outlook for the year. So I wanted to get a sense from a visibility standpoint. Has the decline been more in terms of the pace of contract ramps or is it on the potential for new wins or is this more reflective of project cancellations that you are seeing on a year-to-date basis of the bookings as was pointed out has held us reasonably well. So, maybe if you can kind of parse out where the visibility has declined resulting in a still fairly wide range with two quarters left of the outcome.

Yes, this is Bill. We talked about this in length for last few days, and yes at the end of the day our visibility isn’t any different than it's been but our predictability is not as good as it used to be. And I think this thing that Steve mentioned in his remarks about sort of three things that impacted the operations. The difference between December and January was profound. When people came back to work after the holiday in January and things just slowed down. If you would look at what happened from mid-December through the beginning of January as it relates to the economy it was very profound and there is a whole life going on this, people came back to work, people just took a pause and the pause that had been I think what we described last time was during the headlights became sort of an institutional thing as everybody said they are uncertain about what direction the economy was going to go in. And one of the comments Steve made is, some of our clients they don’t even have their '09 budgets finalized yet. So, if you think about that, really what we are trying to account for here is that, that just the plain uncertainty. The work has not gone anywhere. There is a lot of things to do there, there some people have laundry list of things they have to get at. But people are just very uncertain out there it was really a January, February phenomena and it's uncertain sitting here right now to know how that's going to fall and play out and that's really the reason for the range that we put in there just because the client environment is just so unpredictable on a global and on a industry-by-industry basis. And we do not want to be surprised again. Jason Kupferberg - UBS: Okay. So just interpreting that, does that mean that since March started I mean the financial market obviously it's about to get a bit better in recent week arguably since macro economic data points maybe been less bad if you will. But it sounds like that has not translated into any kind of hiccup in decision making or spending at all?

Well, no I mean frankly if you sit back from it every industry is different as people look at the effects. And whether their leaders are laggards and how it works and all the little signals that we see that may be positive. People have not taken them to the bank yet. And so I think that's a reason that we are cautious, but let me let Pam add in a little to your original question.

I will just add that, Jason that the contracted revenue that we have i.e. in our backlog vis-à-vis our outlook that's very comfortable to what we have in the past. The pipeline is also good. This predictability word really refers to the part that's not yet contracted and that's part is different now based on the historical patterns we had due to this pause that is still in effect. Jason Kupferberg - UBS: Okay and just one last question on the balance sheet, obviously historically you guys have been pretty averse to any acquisition to start. And there is no debt here and you guys already do a fair amount of buybacks, obviously in ultimately low rate interest rate environment as well. So is it reasonable to believe that the board might consider a dividend increase this summer that might be more sizable than what we have seen in the past as another avenue to try and enhance shareholder returns here?

We will be talking to the board as we always do. And as you know we have been granting an annual dividend. And so we will be doing that in the spring in the summer with the board. And stay tuned. Jason Kupferberg - UBS: Okay we will do that. Thank you.

And the next question is from Rod Bourgeois with Bernstein. Please go ahead. Rod Bourgeois – Bernstein: Hey guys I guess, Bill my main question is what was the real surprise here and I guess the last quarter the revenue guidance range was dropped by three points. And I think the impression that most investors had was that the low end of that range was buffered at some level because of risks related to the macro environment. Clearly things have gotten worse since the last time you guys gave guidance. But I think a lot of people were under the impression that, that was somewhat accounted for. And so clearly there was a surprise, was it cancellations that was the big surprise or was it just delays on starting new things. Can you pinpoint what the main surprise was relative to what you guys had in your last forecast?

Yeah, I guess I would break it up this way and then try to fill in all the holes, Steve can fill in some of them. I think if you go back and I would tell you, just to be perfectly blunt about it, I was shocked at the difference between January and December. December was a very good month, frankly. The difference between, you know, December and January, and if you have talked to companies across industries, you will find this out by talking to everybody. It was profound. And then in our space, one of the things that this whole notion of small extensions and add-ons, they just normally come through, 3, 4 or $500 million a quarter. They are just kind of just natural byproduct of the work that we do. As we crossed over the line into the New Year, just those natural things that come every quarter consistently and which are, you know, in some ways below the radar, I mean, it just happens. Those things just stop, right? And if you think about the fact that some people have not finalized their '09 budget, you could understand why those things just stopped. We did have some impact on cancellations. Our cancellations were really related to industry consolidations in one industry. And that's self evident. You guys know the industry, you guys know who the clients are, and you know some of the clients that we had last year do not exist anymore. And so, the only cancellations we had were really focused on those. But they were not an insignificant amount if you stand back and look at it. And then, I just think, you know, the other thing that we look at is, people are looking for help, right? This whole notion of can-you-help-me reduce the run-rate on this project. So, I can, stretch and see like how my year is going to turn out. You know, it became the '09 phenomena, and the all that stuff just happened, I think, it was people's memo model study. We get '08 behind us and as soon as people got into '09, I think they said, we do not see '09 being much better and in fact, it may be worse. : And as we crossed into '09, everyone decided, you don't get any points for initiating any new project in the middle of challenging economic times, so there has been slowdown in converting pipeline to revenue, particularly in the consulting type of work which is the stuff that converts within a month from pipeline to revenue, so those are the things that happened that frankly were surprise to me. Rod Bourgeois - Bernstein: All right, I guess the question is to follow on with that. Your quarter ended in February; a lot of other companies are ending in March. Clearly, January and February had a lot of issues a lot of your clients were laying people off and so on. As things started to improve a bit in terms of the decision, speed and so on in the month of March or it really too early to make a call on that?

I think it's a little early. I think what has happened in March, as people are getting their minds around, how they are going to play the hand for '09, right? Because there have been personnel actions in most large companies. And so people are kind of recasting their '09 operating plans, their budget and where they think the year is going to come out. They are reexamining the priorities of their initiatives and the work. Some of this demand, some of this drive in activity around outsourcing has come out of, what are the actions they are going to take to get there, economic house in order for '09, and so I think what we see in March is really kind of okay, like now we have a sense for the hand, where we are going to need to play, let's figure out how we are going to operate our business and we are in there, side-by-side where these folks trying to help them work through that, but that's sort of how we see March. And I think, we will see in April and May if the things break loose in a more meaningful way or not. Rod Bourgeois - Bernstein: All right, and then final thing, I mean, just ends on a note, switching to cash flow. Given the magnitude of the down revision to your revenue outlook, it's interesting that your free cash flow outlook is still in that $2.4 billion range. Why the confidence in the cash flow range when the revenue outlook is changing a lot more, are you doing something with DSOs or other working capital items to be able to bolster the free cash flow in this kind of an environment?

Well, I'll let Pam give you the cash flow stuff, but let me just give you this context. We mentioned last quarter, and frankly we have for six quarters that we had done scenario planning around our business as it related to the uncertainty of the economic environment. And certainly we had quarters there, where we haven't seen any effect at it, but those scenarios have been in place and underway, we have been executing against them and those scenarios are designed to preserve the economic results of the company on behalf of the shareholders. And so what you see on EPS and what you see in cash flow is about those things having been undertaken and underway. And so when we stand back from it, we look at our business and we say, how are we going to solve for the best economic outcome that delivers the results, the best results we can today, and continues to position us for strength as the market improve and that's how we get to those results. :

Cash flow?

Cash flow.

Right, we did actually bring the cash flow outlook down, we had at last quarter 2.4, to 2.6, we brought it down to 2.25 to 2.45. It does reflect slightly lower CapEx. And if you apply that 9% currency drag for the year, it represents zero to 8% growth in local currency, so I think it's pretty inline with revenues with a little upside. Rod Bourgeois - Bernstein: Well, the reason I am asking that in this environment where client to scare to make decisions. They often ask for working capital help to get deal started, and competitors tend to get lured into that and it sounds like you guys are basically saying you are going to hold the line on your working capital discipline and that's not going to be a problem for you over the next few quarters and trying to sign deals.

That number reflects a little bit uptick in our DSOs is up 33 now, and so we do have factored in there that it could creep up a bit. But to your question, we are continuing a pretty rigors capital committee process and considering risk very carefully and we don't expect a big change in that, because that would not be good business generally speaking. Rod Bourgeois - Bernstein: All right, thanks guys.

Thanks, Rod.

And the next question is from Tim Fox with Deutsche Bank. Please go ahead. Tim Fox - Deutsche Bank: Hi, thank you. Good afternoon. First question is for Pam, around the consulting bookings and outsourcing booking outlook for the. Are you still expecting your mix to be in the 60, 40 area, or given the slightly is in consulting in our performance and in outsourcing if I going to see that shift a bit throughout the year?

Well, I mean it may shift temporarily I guess, based on the way things are going right now, but we don’t expect this to be something that would necessarily continue. And the book-to-bills in the quarter were within our expected range about 1 for consulting and 1.3 for outsourcing. So, there is this phenomenon going on right now, but nonetheless we don’t expect it to be a permanent change. Tim Fox - Deutsche Bank: Okay. And for Steve you mentioned in the systems integration bucket, there were some weaknesses around the large scale custom work. I was wondering if you could give a little bit more color as to exactly what the nature of that work is and is there any particular vertical or geographic region. And what's going to hopefully saw that particular side of the business going forward.

Well just to answer the last part first, I think if you had to narrow it down to the largest contributor, so would be the US and the UK, it would be financial services, CHT and products, all three hit about equally frankly with a dip in SI work. You didn't ask about the ERP stuff, but let me throw that on the pile, when I talked about the three items impacting the systems integration or consulting business, basically this de-scoping or reduction in the run rate has happened on some of our ERP things too, specifically in the SAP area. So, clients are less prone now to tackle a global SAP five-year program. They are breaking out into smaller chunks and they are looking at what they have got on the table right now and seeing how they can either de-scope a little bit of it temporarily or bring their people in to reduce some of the cost. So, all of that kind of is in the mix impacting SI. Tim Fox - Deutsche Bank: Okay, and just lastly on the UK and the financial services business there. When do you expect if you can say at this point in time when you will see some stabilization around that vertical in that region given some of the efforts you put in there with the past couple of quarters?

Well obviously some of that will depend on how the market and the business comes back in financial services in that area, but we have got a program in place. We have it now in place for roughly a quarter and a half. I think last quarter I alluded to the fact this was going to be a multi-quarter journey to reconnect to our clients, to reinvest in our business and grow the footprint that we have in the UK. It’s on-track. I like the progress we are making, but it is heavy lifting and we are going to continue to focus on it. We saw some progress this quarter Tim and we have got some specific outcomes and metrics tried to progress quarter-by -quarter but it is going to be a longer journey. Tim Fox - Deutsche Bank: Got it. Okay, thank you.

You bet.

And the next question is from Mr. George Price with Stifel Nicolaus. Please go ahead. George Price - Stifel Nicolaus: Hi. Thanks very much for taking my question. First thing, just financial services the only one to see margins go below 10% so pretty significant drop off. What was going on there, was that clearly the impact of some of the cancellations that you have referenced in terms of M&A, were there any project execution issues. Is there any impact coming from the political environment and then TARP and outsourcing, you can maybe give a little color there?

Just you can imagine the industry still is incredibly volatile, but that said I would tell you that the real challenge was around the revenue hold that was created through the consolidation of the industry. I mean that was the largest chunk of that drop. So, when your revenues dropped your corresponding profitability drops. We also have invested a little bit more aggressively in sales in the quarter and we did have a few not a lot but few delivery inefficiencies that all together impacted that number. George Price - Stifel Nicolaus: And just following-up on that, so you mentioned M&A, I mean in the past M&A has been actually a source of demand for your services not only on the business consulting side but on the SI side. Is that no longer the case, is that changing and why?

As it relates to financial services, we have 17 projects underway in the M&A space right now. So, was that your question George around that specific vertical? George Price - Stifel Nicolaus: No, I mean you are just unless I am mishearing you, misunderstanding you, you are saying M&A as something that contributed to revenue whole, right. And as I understand it, M&A broadly at least has been an area where you got more demand for your services. Right?

Let me give you a little color on that. You have one cancellation of long-term contract. That thing is bigger than 15 front end merger integration projects. So, when you just look at total revenue, right, that's the impact the thing has. So, the thing that impacted us in the quarter was somebody's big consolidations and some stuff going away that was upsize, long-term revenue stream relationships with companies that don’t exist anymore. Now we countered to that is we do all of these post-merger integration planning things and initiatives out there. Now those things will turn in from sort of vision and architect, trying to bring the companies together to designing and building how they are going to operate together to a series of long term revenue relationships and a bunch of new clients. But right now we have, the industry is in just a dramatic transition from where it was to where it is and the question for us is. Can you jump over that? And so what has happened in there, there is some stuff that's winding down because of the consolidation. And there is a bunch of things that are picking up, but it’s at the very front end and it will take time, six months before that’s meaningful design and build work in 12 months or more before its meaningful long term revenue relationships for the next five years. So that's kind of, what we are in the middle of in financial services. The merger and integration opportunities are like gold, they are just absolutely primal assignments. But we are suffering from historic consolidation of legacy companies and legacy relationships that hit us this quarter. George Price - Stifel Nicolaus: Okay fair enough. Just wanted to shift to outsourcing demand I think we have certainly picked up from a lot of different places and you have supported that demand to cut cost is definitely picked up, people are looking for outsourcing. Is the decision, is it intuitive to say that the decision making here is better than overall and are there certain areas in particular, certain types of outsourcing areas in particular that are moving, way the decision making is moving the quickest.

The faster you can deliver them savings the faster they will make decisions. I mean straight up. In consulting a few of '09 projects to deliver '09 benefits, you are good to go right put on the, strap on the tool belt and jump in. And in outsourcing, people are looking at the things that are going to get, not long-term journeys, right? Nobody wants to go on a journey. What people want to do is to get something that shows up in their economics this year. And so the things that certain BPO areas like finance and performance management, where you can really take 20% to 30%, 40% out of the cost, pretty short order. There is lots of activity around that, as well as the ability to sort of lift, you know, any all kind of work. And so, those things, there is a lot of buzz around because people can do the math and see that they get near-term benefits and they can build it into their economic models. George Price - Stifel Nicolaus: If I can just, ask one more around outsourcing. You mentioned that there is some activity, particularly, on the government side in US state and local. It is curious what you are seeing moving around there. Is it mainly in areas that are, you know, supported by stimulus spending or do you have any thoughts there? Thank you.

No, I do not think the stimulus money is going to flow down to the states for another 6 to 12 months. They have got to kind of sort their stocks and figure out where it is going to be spent. But the interest at the state and local level, George, is really around shared services and in an environment where a lot of state agencies have operated silos and are under incredible budgetary pressure. They have now started to look at how we share services and cut cost immediately to make the next budgetary cycle. So that is driving a lot of it. There is also some IT infrastructure consolidation that is happening to drive down cost. So, both of those are probably the primary areas. George Price - Stifel Nicolaus: Okay, great. Thanks very much.

And the next question is from Bryan Keane with Credit Suisse. Please go ahead. Bryan Keane - Credit Suisse: Yeah hi sounds like since this integration fell off the cliff, like management consulting held up pretty well, is that right? And why do you think or do you think that management consulting will continue to hold up?

But I think if you stand back, management consulting held in there, I think people always think it’s the most gradual but in many ways its not. It depends on what it is you are doing and we have these things that we have talked about last few quarters and Steve mentioned in his remarks about sweet initiatives and the imperatives to make change happen and these things are around how do you keep your customers when everyone is going at them. How do you optimize the supply chain and how do you drive better performance out of the core part of the business? And so those things how though the nature of the project is small and they were ultimately lead to longer term sort of projects around the structure and operating model. That’s where the demand comes from, but its all about business case proposition that make sense and an economic outcome that’s going to improve, improve the company. System integration is sort of just people keep turning the crank and keep doing more things and doing more enhancements and extending certain things. It’s a much easier thing to dial back, the speed on. And so that is what happened in system integration. So the story is very different in the two places. Consulting as long as you are relevant and you are on the mark in terms of something that’s zeroing right in. There is plenty of activity and plenty of people looking for help. You just got to have a great value proposition. Bryan Keane - Credit Suisse: Okay, and does the guidance take into consideration, any weakness in the management consulting business or expected to kind of hold along?

I not, I guess I had say that there is a thousand moving parts in the consulting business. And I think it's about how do you make it hold the line and you make it hold the line by being very proactive. By being grateful for the long-term relationships you have, and how to bring new products and services to the clients you already have, and how do you get out there and make sure you are focusing on the things that are on the top of mind for the C-level executives, and that is all around costs and customers for the most part. So, that's where we thought. We think if we do that, then we have evidence that we can, it's hard work, I be perfectly honest about it, because people would prefer not to spend money, but they will spend money if they have a value proposition that pays back within their life expectantly, hopefully '09. Bryan Keane - Credit Suisse: Okay, and then just looking at the consulting line, the revenues overall with 9% constant currency last quarter, 1% this quarter. Looking at the third quarter guidance, it almost looks like it's going to be down double-digits negative in the third quarter. Is there any way to help us with the magnitude of how far consulting can go in the wrong direction?

The magnitude how far it will go in. Bryan Keane - Credit Suisse: Yeah.

Let me just pull. Bryan Keane - Credit Suisse: One of the problems is visibility and you guys are talking about visibility and predictability. But one of the things that people are struggling with there is, now there seems like, and I know people are going to say there is no visibility in the consulting business, so how do you have any idea, how do you even guide in the consulting and you even have guided correctly for this?

Well, what we have done with the consulting, if it is high-single to low-double negative next quarter is what we are expecting at this point, and we do have some visibility based on bookings and pipeline et, cetera, and so we have tried to tell you what is our best look at this moment. Bryan Keane - Credit Suisse: Okay. And then just last question, Pam on the operating margin guidance. Looks like you guys are still expecting the expansion of 50 to 80 basis points. Can you talk about some of the levers you are doing and, in particular are you cutting down on comp and bonuses in order to hit those targets?

Well, we started out the year with strong operating margin, as you know. And you look a year-to-date basis, we are about 110 basis point ahead of last year. So we are expecting some moderation in that as we go forward, but still have good expansion, which is really about managing the business we have, because a lot of the things that we put in place this year, we have been planning to deliver, particularly in the contract profitability. There is very little impact in comp when it comes to annual bonus, as you know we don't discuss it, but as you also know from the standpoint of, it's very aligned with shareholder interest, because when we deliver well against plan, we accrue it. And if we are less well against plan then we don't accrue as much.

Yeah, Bryan. Let me just give you a little bit more context to build on what Pam said about the levers there. And we did start and we talked about last quarter a journey on reducing our cost to serve. When Pam talked about contract profitability that really impacts it, we go contract-by-contract looking at how we can reduce the payroll cost and the overall cost to the contract to improve profitability quarter-by-quarter. We also have a number of actions underway in the G&A area, that we will continue the rest of the year in the procurement area, and we have gone back to all of our top suppliers, we got almost a 20% reduction in our internal contractor cost as a result of that. We've been putting in collaboration technology over the last 12 months, and we have seen about 16% decrease in our travel cost and we continue to move our corporate functions to lower cost locations and we have got specific targets that we have set there. We saw about 120 basis point improvement there, so they are very specific actions to build on what Pam said that we have got underway and we are going to continue to press. Bryan Keane - Credit Suisse: Okay. It sounds like you are committed to that operating margin, and I guess the question would be if things got even worse than what you are guiding to today, is there still leverage that you can use to keep the margins where they are at?

Yes. Bryan Keane - Credit Suisse: Perfect. Thanks very much.

And our next question is from Julio Quinteros with Goldman Sachs. Please go ahead. Julio Quinteros - Goldman Sachs: Okay. Hey, guys.

Hi, Julio. Julio Quinteros - Goldman Sachs: Hi. Sorry about that. Just to maybe setback a little bit and I want to ask Bill this question directly about, how is the model holding up kind of looking at last cycle versus this cycle, more outsourcing, more offshore the whole global delivery network, everything that you guys have done to reposition yourselves. How do you think you guys are holding up and as you guys go through this part of the cycle at this point, just your sense on what you guys are seeing so far and how things are holding up here?

Well, I think we are holding up exceptionally well. I mean we have gone deep in to the cycle without getting it [ding]. Now it's not just by doing the same old thing, I mean we have been working hard to do that, but if you stand back and look, we have gone deep in to this cycle without the thing impacting us. And what happened in the last several months it has just been profound. And so we have a series of impacts, we are lucky to have the outsourcing capability we have. We have got seasoning maturity team, we can put propositions under table. We've got, been there done that experience, we connect our client prospects in the US through video to our teams in India and Manila and all that and they can like touch it and feel it and see it. We didn't have any of that stuff before. The global delivery network continues to be an incredible weapon. I would tell you that our consulting skills, our offerings are much sharper than they were and frankly you know we are better warriors, in terms of the nature of the environment we are operating in. That said this is nothing like the last downturn and it's simply not because this effects every single. If you trace this how it impacts every industry and every company where as the last one we had industries that were just totally [unscathed by it]. So, it’s very different in that sense. I would tell you that with lot of the things that we have done in the last five years are serving us very well right now and they have and I think the other thing that we look at is as this things comes roaring back, because what I said this work doesn’t go anywhere, this is stuff that people have to do. And as a result it’s just about having the right propositions and us recognizing to an earlier question, we are not going to be a bank and we don’t need to be one. What we need to be is exceptionally good at what we do and have propositions that we put in front of the clients. And we still in the environment we were in sold $6 billion worth of stuff. So I mean if you just sort of step back from them and say there is a lot of people in our industry and certainly in other industries that would have only sold $3 billion worth of stuff. So, we think we are doing a pretty damn good job in this environment. We think the bookings number is good. It could have been better. We are going to continue to try to drive it better, but at the end of the day a lot of stuff is working. But what we have been through in the last several months it’s just something that frankly we have never seen before, and the question to us is simple, it’s how quickly we realign with the realities of the market that’s the stuff we do every single day around here.. Julio Quinteros - Goldman Sachs: Got it. That's great. And then maybe if I can pin on Pam back on the question, I think Brian was just asking about what was left, assuming you see the downside scenario of your new numbers here into fiscal '09. I mean what specifically could you do, would you have to do to hold that margin target that's the low end of that 13.4% or so?

I mean it's all the viewers that Steve talked about, I mean there is nothing like tricky in there right, it's just managing the business, but we went through yesterday and preparing for this call and I am confident that we have them. Julio Quinteros - Goldman Sachs: And just any example, I mean just to put some context on that? I mean what, is it utilization, is it recruiting, I mean is it all of the above, I am just trying to get a sense of where you would have the most effect on the business.

Well, those are right. Those are absolutely all the time things we were looking at in terms of managing supply and demand. So, those are all things we are doing and expect to continue to do. Julio Quinteros - Goldman Sachs: Okay. And then as we look at the July timeframe and we heard about this a couple of days ago and question came up already about the dividend as well. The thought process for how much cash you guys are going to need. Every year you guys are generating $2 billion plus even in this environment, you have lot of cash on the balance sheet. Why not take a much stronger position on that going forward to get the kind of returns I think investors are looking for here with something closer to 5% range or something along those lines. I mean that's equivalent to about $1.2 billion or so in spending for you guys?

We thank you for your opinion on that and we will be talking to the Board about that as I said. And it is notable that July '09 is our eight year anniversary of being a public company and all of the founders who have unrestricted shares at that point, so we expect to consider this issue very carefully? Julio Quinteros - Goldman Sachs: Okay. And just lastly on the connection between the bookings at trailing 12 months in the revenues, just to make sure, I know that we all kind of get caught up on reported versus cost of currency and all of that stuff. But as the revenues fall through and may be Steve, if you can just chime on this one. When you guys have trailing 12-months booking or you have an actual bookings announcement that you have for the quarter. The part that could actually get turned off, delayed, pushed out versus the stuff that's actually contracted and will come on. Is there a sense on how much of that would be in and out of kind of a quarter if you think about it over course of the year.

Yes, we have looked at it and we have looked at it from both an outsourcing and consulting standpoint, because I wanted to see who we are, there was a trend out there. And what we have seen is a slight increase in the amount of revenue that’s getting pushed out into the out years. I think that its still early days on that and I wouldn’t characterize that as a systemic thing. But it is something we are watching because to your point it has some impact in the current quarter revenues and it impacts our guidance as well. But we saw a slight movement to the right and by that I mean in the next fiscal year and beyond in terms of both consulting and outsourcing bookings as we put them in but nothing widespread yet. Julio Quinteros - Goldman Sachs: Okay, great. Alright guys thanks a lot, Congratulations. Good luck.

Operator, we have time for one more.

And that question will be from [Ian Sawyer] with Wachovia. Please go ahead. Ian Sawyer - Wachovia: Great thanks. Pam did you have any further additions to your bad debt reserve.

Very immaterial amount, so nothing significant at all, otherwise I would have told you about it. There has really been no change in the thing this quarter. Ian Sawyer - Wachovia: And Bill, I saw you at the Business Round Table event, where the President spoke and I was just wondering if you gained an insight into the administration's position on offshoring. And what that means to the industry and Accenture, especially since you keep hearing about anti-offshoring letter coming from Congress these days?

Well, there is plenty of read and written on just about every dimension. These guys don't like me I don't like you guys to let me talk politics here. So, may be, I will just admit to that straight up. No, I think, you know, there is a tough climate out there, right for business. I mean, just you guys know it, right? We know it. It is just a tough place to be. And everyone hooked in and every business is trying to sort through. If you are in healthcare, you are trying to sort through. What do you think is going to happen there? If you are in the infrastructure products and services, if you are making heavy equipment, you are trying to sort that through. You are trying to figure out the stimulus thing, you know, the whole deal. I think, at the end of the day, rational thinking is going to prevail. Globalization is here to stay. We might have some protectionist instincts and countries around the world might do that as they wrestle with the climate. But, globalization is here to stay People sourcing different services, products or services from around the world, is here to stay in the biggest companies, in every country in the world. And I think, at the end of the day, it is going to be about, how do you get the country's productivity back and how do we make sure companies here can compete on the global stage. And I think, once we get it done through the [red direct] and the showmanship and the all the fun down there, people are going to get back to what really matters which is, you know, a healthy country is because of healthy companies. And I think, you know, business needs to represent itself in terms of its role in the economy and we need to do that with a great deal of pride and make sure people do not lose sight of the thousands and thousands of businesses out there that give people good jobs and make this economy go. And many of them are clients of Accenture and so we work closely with them to make sure, we can do everything we can do to influence the economy getting back on its feet. It’s a just as easy as that. Ian Sawyer - Wachovia: But have you seen any delays or changes to where companies are looking to offshore, there are, they work through the weather?

No I, there is more activity around outsourcing and outsourcing whether that involves leveraging offshore or not there is more activity around in the sourcing things you used to do inside, outside regardless of the redirect because people have to solve for competitiveness, people have to solve for economic results. And there is proven ways to do that and leveraging capabilities from offshore happens to be one of them and I have not seen anyone, not one company look the other way from that over this period of time. Ian Sawyer - Wachovia: Great, thanks.

Let me just wrap it up then with a couple of things in closing. We had a very respectable quarter. I feel very strongly about that, I was pleased with our bookings, I was pleased with the profits we drove I am pleased with the cash we put there and we do that in pretty volatile economic environment. And we do that because we run the tight shift. Its just plain and simple and at the same time. We also focus and never loose side of our long leadership and growth because we know that the actions we take today are going to make a difference to make today happen, but they are also going make us the hell of a lot better in making tomorrow happen. We have updated our business outlook to reflect our very best insights and then we tune our business driving profitable results today and also build the strength and platform for the market recovery. We are grateful to have great client relationships, outstanding people, a powerful brand and confidence in our business. We are staying close to our clients working harder than ever to generate ideas and solutions that help them address the challenges they face. And while we do that we are managing our business with discipline and with diligence, in a word managing it for high performance. Thank you very much for joining us on the call today. We appreciate your continued support and we look forward to talking with you again in June.

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