埃森哲 (ACN) 2002 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by.

Welcome to Accenture fourth quarter fiscal year 2002 earnings call.

At this time, all participant lines are in a listen-only mode.

Later, there will be an opportunity for questions.

If at that time you do wish to ask a question, please remember to touch the number one on your touch-tone phone.

If you should require assistance from an operator, just press zero, then star.

As a reminder, the call is being recorded.

I would now like to turn the conference over to Director of Investor Relations Carroll Meyer.

Please go ahead.

Thank you, operator, and thank you, everyone, for joining us today.

With me are Joe Forehand, Accenture's Chairman and Chief Executive Officer and Harry You, our CFO.

We're pleased that all of you are joining us today for our Q4 and QC '02 quarterly and earnings announcements.

We also appreciate you joining us an hour earlier.

We picked this time so that those of you who follow first data can participate in their call later on this morning.

By now, I hope that you've had an opportunity to review the news release that we issued earlier this morning.

First, Joe will provide you with his comments on the current market conditions, our overall results and key priorities, and then Harry will speak to the detailed numbers and we'll have some time at the end for questions and answers.

As a reminder, when we discuss revenues during today's call, we are talking about revenues before reimbursements, or net revenues.

Some of the matters we will discuss on this call are forward-looking, and I'd like to advise you that these forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.

Such risks and uncertainties include, but are not limited to, general economic conditions, and those factors set forth in today's press release and discussed under the heading "risk factors" in our registration statement on form S-1 filed with the SEC.

Accenture assumes no obligation to update the information presented on this conference call.

So now, I'm pleased to turn it over to Joe Forehand.

Thank you, Carroll, and good morning to all of you, and thanks for joining us.

On August 31, we ended our 2002 fiscal year and fourth quarter.

The fourth quarter was challenging, certainly, as we'll discuss, but we did meet our bottom-line expectations, and generated very strong cash flow.

Revenues for the fiscal year were $11.57 billion, an increase of 1% in U.S. dollars, 2% in local currency.

In the fourth quarter, revenues were $2.69 billion, a decrease of 3% in U.S. dollars and 6% in local currency from the fourth quarter last year.

Despite the economic challenges, we continued to outperform our industry at large.

We're proud of our continued ability to provide our clients with the highest level of service.

Diluted earnings per share for the fiscal year, excluding investment write-downs and a real estate consolidation charge that Harry will discuss, were 91 cents compared to 85 cents the prior fiscal year.

Diluted earnings per share on the same basis for the fourth quarter were 16 cents compared to 15 cents for the fourth quarter last year.

Operating income for the fiscal year, excluding the real estate consolidation charge, was $1.5 billion, or 12.9% of net revenues.

Operating income for the fourth quarter on the same basis was $258 million or 9.6% of net revenues.

Looking geographically, our business in Europe, the Middle East and Africa, had a strong year, with revenue growth of 11% in U.S. dollars and 9% in local currency.

Revenues in the Americas declined 5% in U.S. dollars, and 3% in local currency over the prior year.

The Asia-Pacific region faced continued challenges this fiscal year, with revenues declining 8% in U.S. dollars and 4% in local currency.

Let me now turn to our operating group results.

For the second quarter in a row, communications and high-tech grew revenues at 8%, though for the year it had a 2% decline.

This decline was primarily due to the global economic weakening in the electronics and high-tech industries.

The communications industry led the growth in the fourth quarter, due to several long transformal outsourcing contracts.

Financial services felt the greatest impact this fiscal year with revenues declining 9% for the year and 10% for the fourth quarter.

This decline was due largely to ongoing pressure in capital markets.

That industry has reduced or delayed spending on IT services in all three of our major geographic areas.

Resources grew revenue for the year by 4% as the result of strong growth in our chemicals and utilities industries.

Revenues declined 14%, however, in the fourth quarter, which is the first decline for resources this fiscal year, due to the impact of the economic challenges experienced in the energy trading industry and a slowdown in chemical industry revenues in North America from earlier in the year.

Products also grew 4% for the fiscal year, reflecting continued growth in consulting and outsourcing in Europe, particularly in the retail industry and the travel and transportation industry.

In the fourth quarter, products revenues declined 9%, its first quarterly decline this fiscal year, as the result of softness in most industries served by products, particularly in the Americas.

Finally, government had an exceptional year, growing revenues 31% for the fiscal year and 19% for the fourth quarter.

The increase was driven by strong growth in North America and Europe, including work from some very large sales in the second half of the year.

Government also achieved significant milestones related to some large value-based contracts.

Growth in the fourth quarter came primarily from work with national governments in the U.K., U.S., France, Canada, and Spain, as well as Australia, as well as state and local governments in California, New York, Texas, and Florida.

So that gives you a feel of how each operating group performed.

I also want to let you know that effective September 1, we moved our health services practice from financial services to products, and within the U.S. we combined health services with the pharmaceutical and medical products industry group into a new unit called health and life sciences.

We see some significant opportunity ahead in having an integrated team focused on the growing health economy.

Let me make a few additional comments on our overall financial results.

First, our contingent emphasis on transformational outsourcing is one key element of our growth strategy.

It helped us achieve a 33% growth in outsourcing for the fiscal year, while at the same time we had a 7% decline in consulting revenue.

I will talk more about our view of our industry in a moment.

Although outsourcing this year was 23% of our total revenue, and that is up from 17% from last fiscal year.

Secondly, our balance sheet is very strong.

We ended the year with $1.3 billion of cash.

That's up $203 million from the third quarter.

We paid down $32 million of debt, so total debt at August 31 was only $67 million.

Third, the new bookings for the fourth quarter were $2.8 billion.

We finished the fiscal year with an all-time record of $16 billion in new bookings.

That is an increase of 23% over the prior fiscal year.

As I travel and meet with client CEOs, they continue to tell me we're unique in bringing them creative value propositions and delivering innovation, and from what I see, you know, much of the work we're getting is not in IT budgets, and I believe that our ability to proactively take new ideas to clients, which is a core element of our strategy, has contributed to our record new bookings this year.

While we're on the topic of accomplishments, let me highlight a few others, since fiscal year '02 was our first full fiscal year as a public company.

We won 19 deals that were over $100 million each.

Our return on invested capital was about 90% at the end of the fiscal year, a significant increase over last year despite a larger capital base.

Since our July 2001 I.P.O.

And interestingly, comparing some of our key financial metrics against the S&P 100, Accenture would rank first on return on invested capital, second on return on assets, third on return on equity, 11th on revenue growth, and 43rd on 5 earnings growth.

Again, compared to the S&P 100.

So, looking back, we're pleased once again with our ability to deliver solid results in a very difficult economic environment.

I certainly want to acknowledge our people and their commitment to serving our clients and helping to manage our business during this tough time.

Our fundamentals are sound.

We have a strong balance sheet, a commitment to controlling cost, we have solid business prospects, and the right people.

So we're counting on these factors, as well as our experience in helping clients improve their business performance, to fuel continued gains in market share.

Let me turn to the road ahead.

We're in for a continued bumpy ride, given the ongoing uncertainty and volatility in world equity markets and, quite frankly, the instability of the world's geo political situation.

As I look at the consulting and systems integration marketplace overall, I see no new technology wave on the near-term horizon that will stimulate technology spending and drive industry growth beyond those of the early adopters.

Companies just don't seem to have the business confidence needed to initiate new programs.

They clearly are more focused on short-term payback projects.

So given that, we believe consulting and systems integration project work will have no growth for the remainder of calendar year '02 and frankly limited prospects for any growth in calendar '03.

Turning to the outsourcing market, we still see some very strong opportunity in this area.

Growth here is unpredictable, though, given the long lead times in closing deals.

As we look at our own business, our probability-adjusted pipeline related to outsourcing is up 69% since the last quarter, with a mix of about 50-50 business process outsourcing and IT outsourcing.

We're particularly excited about the growth in the B.P.O. market, which we believe we're well positioned to lead, with our value-based offerings in such areas as finance, learning management, customer contact transformation, as well as human resources.

So that's a brief view of how we see our industry.

I want to give you my view of now what we've been doing to ensure that we're prepared to continue leading the market during what appears to be a critical inflection point.

As we discussed on our last earnings call, we've taken a number of actions to ensure we start fiscal year '03 with a lower cost base and get fit for a slower growth environment ahead, and Harry will describe the results of these cost savings soon.

I will tell you also the economic downturn has confirmed the importance of how we manage our business.

Very simply, our people deliver quality client service and value-based outcomes, and we follow our historical strategy of keeping fixed costs very low, with a variable cost structure that generates earnings growth when revenue growth is difficult.

We've been using the downturn to get our organization galvanized around our strategy.

In fact, we held our annual partners meeting six weeks ago to get our 2600 strong partner team mobilized to bring our newest value propositions and capabilities to our clients.

We do believe we have a differentiating strategy as we continue to transform our business model.

That strategy combines our industry value creation capabilities with our unique solutions to deliver real business outcomes to clients.

It's a strategy that goes beyond projects and programs.

We believe our strategy has allowed us to hold onto our valuable consulting clients, even when they've reduced spending, while also allowing us to build a strong V.P.O. business and overall pipeline.

And finally, we're using our resources to invest in tomorrow's growth.

We have continued to focus on innovation through our Accenture technology labs and our business consulting service lines.

We simply must stay ahead on the innovation cycle to differentiate ourselves and command the margins we desire.

Also, we will be rolling out a new core training curriculum for our consulting workforce this year, and as we've mentioned before, we're building a solutions workforce to provide a lower-cost technology delivery capability to client projects around the world.

So in spite of the economic challenges, these actions position us well, and we're starting the fiscal year in a good position.

It's certainly early in the year, but we had a very solid September, and although we certainly can't declare an upturn, we are entering this new fiscal year with a pristine balance sheet and solid results.

Let me pause here and turn the call over to Harry, to give you more details behind our results.

Thank you, Joe.

I will go through a lot here, so I thank you in advance for your patience.

Let me first go through our results for the fiscal year '02 and then I will go through our results for the fourth quarter.

Our first full year as a public company was a financially solid one, especially in the face of some of the most difficult economic conditions our firm has seen in the last 30 years.

Pro forma diluted EPS for the full year was 91 cents.

This compares to the analysts consensus estimate at the time of the I.P.O. of 85 cents, and pro forma EPS for last fiscal year 2001 of 85 cents per share.

G.A.A.P. diluted EPS for the full year was 56 cents because of our conversion from a partnership to a public company last year.

There is no comparable G.A.A.P. number.

Revenue growth for the full year, including the results of awful avanon [phonetic] and E-people serve, which were first consolidated in the second and third quarters, respectively, was 1%.

The quarterly revenues know after avanon one were 7 million in the second quarter, 17 million in the third quarter, 8 and 18 million in the fourth quarter.

The quarterly revenues for E-people serve, which is now called Accenture HR services, were 30 million in the third quarter and 27 million in the fourth quarter.

Excluding these two acquisitions, we had flat revenue growth, which we believe met our objective of outgrowing our competitors, although this revenue growth was far less than our partners and employees desire.

Pro forma operating income for the full year, absent the real estate consolidation charge, was 1.496 billion, or 12.9% of revenue, which compares favorably to fiscal year '01 pro forma operating margin of 1.452 billion or 12.7% of revenue, although slightly short of our goal of 50 basis points of margin expansion.

We experienced significant pricing pressure from weaker competitors struggling to retain market share.

Despite some significant reductions in certain line items and SG&A, we experienced an increase in selling costs related to transformational outsourcing proposals and some moderate bad debt expense which in prior years had been close to zero.

We believe that some of our investment in additional selling expense will carry through in outsourcing contracts we hope to sign and announce in the first half of the new fiscal year.

We are increasingly looking at selling expense as a percentage of new booking to look at our true sales efficiency in garnering multi-year outsourcing contracts that create long-term recurring revenue and backlog.

Our government operating group performed best in fiscal '02 with growth of 31%.

Resources and products are next, both growing 4% over last year.

Communications and high-tech rallied significantly in the second half of the year to finish with a 2% decline, which is significantly better than most, if not all, our competitors.

Financial services finished the year with a 9% decline.

Our outsourcing business, including business transformation outsourcing, grew at 33% for the year, whereas consulting and systems integration declined by 7%.

Communications and high-tech led the way with 75% growth in outsourcing, along with government at 76%.

Financial services, products, and resources saw outsourcing grow at 11%, 9%, and 7%, respectively.

Europe led the way in fiscal year '02 as it did the previous year with 11% growth in U.S. dollars and 9% growth in local currency.

The Americas declined 5% in U.S. dollars and 3% in local currency.

Asia-Pacific declined by 8% in U.S. dollars and 4% in local currency.

Growth in Europe in fiscal 2002 was due, in part, to strong performance in our government operating group, driven by significant work with the national governments of the U.K., France, and Spain, and by strong performance in most industry groups within our product operating group.

Let me explain the footnote on our income statement.

You will see that we report reimbursements and reimbursable expenses as an in and out on our financial statements.

We recently identified a calculation error in the reporting of reimbursements.

As all of you who follow us closely understand, net revenue or revenues before reimbursements is our key revenue metric and we do not consider reimbursements, which are expenses we incur for which we are reimbursed by our clients, to be a significant measure of economic reality, but we report them as required by G.A.A.P. as components of revenues and cost of services.

We are revising down our reported reimbursements as a result of recent analysis that highlighted a calculation error outside our core financial and client billing systems.

These amounts are still subject to final review and audit.

The correction had no impact on revenue before reimbursements, operating income, earnings per share, or the economics of our business.

Our cash flow and credit ratios generally showed strong improvement last fiscal year.

As Joe described, ROIC increased from 50% to 90% for the fiscal year, reflecting the introduction of a formal capital committee process for transactions using capital, and our partners working together to use capital efficiently and effectively.

The capital committee approved 42 such transactions last year, with an aggregate fiscal year '02 planned margin above our corporate EBIT margin and an aggregate average ROIC of 80%.

These transactions have total contract value of 8.2 billion.

Operating cash flow for the year was 1.063 billion.

Free cash flow for the year, net of capital expenditures, was 800 million, as we were very parsimonious on P.P.& E. expenditures and in using capital for transformational outsourcing deals as I explained earlier.

In fact, we ended fiscal year '02 with 265 million of client capital on our balance sheet, up only 82 million from the 183 million figure at August 31, 2001.

I cannot think of more conclusive evidence of the difference of our transformational outsourcing model of V.P.O. compared to infrastructure outsourcing.

We signed over 16 billion renewed bookings this past year, with 44% of them coming from outsourcing. 38% of our new bookings were in the communications and high-tech sector, contributing to the turnaround that we started to see in the second half of fiscal year '02.

We are not buying assets from our clients, which is in stark contrast to the traditional infrastructure outsourcing model.

Un-billed services ended the year at 774 million, which is only 42 million above last year.

While we expect un-billed services to increase over time as we expand our transformational outsourcing business, early indications of the trend line in the past year are favorable.

Deferred revenues finished the year at 544 million, decreasing by 266 million, also because of the stress on our clients emanating from the global economy, but with a significant fourth quarter improvement which I will detail later.

Given the pressures on our clients, it will continue to be a challenge to be efficient on working capital, but our partners will push for the best possible results for you, our partners and shareholders in the investment community.

Days services outstanding finished the year at 44 days, which increased by 3 days during the year because of tougher economic conditions, but decreased by 4 days in the fourth quarter.

As all of you know, our DSOs are still several orders of magnitude ahead of many of our competitors, because of our partners' financial discipline and alignment of public shareholder values.

We ended up with 1.4 billion in cash and restricted cash balances for the year, even with market repurchases of 250 million of stock for general corporate purposes and $220 million of stock bought by our share employee compensation trust for new partners.

Total debt at year end stands at 67 million, and we have committed bank credit facilities of 1.075 billion.

We have no off balance sheet financing entities whatsoever.

Finally, Q4 weighted average diluted shares outstanding is 1.006 billion, compared to 1.008 billion the year prior, reflecting our commitment to our public shareholders and partners not to be significantly dilutive if our financial performance does not warrant it.

Total shares, restricted share units and options outstanding, both vested and un-vested, actually decreased by 23 million shares or share equivalents for the year.

Our management chose not to issue any performance options to our partners in fiscal year '02, even though 15 million were authorized.

We limited option grants totaling 2.3 million to our non-partner employees who were promoted last year.

Our pipeline, which is probability adjusted to reflect opportunities with an equal to or greater than 70% win probability, is up by 60% over last year, although the average days to close stands at 168 days versus 136 days to close at the time of our initial public offering.

There has been improvement since Q3's close period of 231 days and Q2's close period of 248 days.

We are also working to be more efficient at ramping up outsourcing contracts to their full run rate as quickly as possible.

Our current head count at August 31, 2002, stands 12 at approximately 76,900, of which 65,700 are billable and 11,200 are support personnel.

The billable head count breaks down across our different workforces as follows: Consulting and solutions head count at 47,500; outsourcing head count at 15,000; and consolidated affiliates at 3,200.

We finished the year at over 76% chargeability.

All in all, in our corporate culture that emphasizes stewardship, we believe that we have delivered financial results that have strengthened Accenture's shareholder value even over a period of unusual economic duress and technology challenge.

Let me now turn to the fourth quarter.

Q4 was a challenging quarter for us but we are pleased that for the fifth quarter in a row since becoming a public company, we have achieved analyst consensus EPS estimates.

Net revenues for the quarter were at 2.69 billion, which represents a 3% decline year over year.

Excluding revenues consolidated from avanon and Accenture HR services, the decline would have been 4.7%.

For the quarter, revenues in the Americas declined 5% in U.S. dollars and 3% in local currency.

Revenues in Europe grew 2% in U.S. dollars and declined 7% in local currency.

European revenues were held back by 17% decline in Germany.

All other major countries grew from the U.K. and France at 1%, Italy at 15%, Sweden at 16%, Spain at 18%, and Belgium at 30%.

Revenues in Asia-Pacific declined 16% in U.S. dollars, and 19% in local currency.

Asia-Pacific results reflect soft market conditions in the Asia-Pacific region overall.

The markets are experiencing an increase in competitive activity, and adverse economic conditions.

This is particularly the case in the fourth quarter, where we saw increased competitive pressures in Australia and Singapore.

Our Japanese partners, however, grew their business in the fourth quarter.

For the quarter, consulting and systems integration revenues declined by 15% year over year, while outsourcing had its second straight quarter of 38% year over year growth.

The consulting and systems integration decline was exacerbated by tough comparison in Europe, where we experienced 32% growth in local currency in the fourth quarter of last year, with our people in Europe working significant overtime.

New bookings for the quarter were 2.8 billion, representing 23% growth over the fourth quarter of last year.

In the fourth quarter, we took a restructuring charge of 111 million related to consolidation of excess real estate space.

As we mentioned to you last year, we are continuing to consolidate our usage of real estate through hoteling and through continued changes in travel and office usage patterns.

We want to strategically minimize our fixed cost base.

We have taken a onetime non-cash charge, which represents the net present value expectation of the cost of abandoning and then subleasing properties in over 50 of our office locations in 11 countries around the world.

We abandoned approximately 1 million square feet of real estate, which represents 15% of our total square footage globally.

We will give you quarter-by-quarter detail of how operating expenses relative to the restructured real estate declined so that you can separate the impact from our financial targets for the coming fiscal year.

We expect at least 32 million of cash flow benefits over the next five years from taking this charge, and subleasing the space.

It made sense for us to take the charge because the benefits of this onetime non-cash charge will extend several years.

Also, noteworthy in the fourth quarter are the costs of severance.

We have readjusted our personnel levels at different seniority levels.

In particular, at our manager and senior manager levels, we have experienced abnormally low attrition in the past year.

As an aside, our attrition for the fourth quarter, on an annualized basis, was 12%.

Because of the low attrition in the mid-and upper levels of our pyramid, we did not have the optimal workforce mix relative to maximizing the job content for our people and optimizing margin.

As a result, we have incurred severance costs of 93 million in the fourth quarter.

We expect some additional 25 million in severance costs to spill over into the first 14 quarter.

I want to emphasize, however, that our severance actions are financially similar to last year, and do not reflect underlying demand conditions as much as they reflect our desire to go into a new year with the proper workforce pyramid of seniority and with counseling out of low performers.

As we detailed in our first investor meeting, we expect to increase our head count this fiscal year in the range of 2,000 to 8,000 people.

Joe and I have committed to you not to take charges on severance or any other line items that are not truly extraordinary.

I'm very proud that our partners and associate partners have, in effect, funded the severance costs by the reversal of annual bonus and accumulated quarterly variable compensation.

In addition to our commitment to you, our public partners, this commitment is a signal in our confidence in how we run our business and the relatively short-term cash on cash returns we get from prudent reshaping of our workforce.

Moreover, with the payroll profile for the new fiscal year, which is generally flat with some declines in certain segments of our workforce, our partners and associate partners have also funded 32 million in retention payments for our highest non-partner performers in geographies where we froze base salaries.

Looking at our financial results for the fourth quarter, operating income stood at 148 million, or 258 million absent the real estate consolidation charge, which compares to 257 million in the fourth quarter of last year.

The net effect of workforce actions and the reduction of variable compensation was of benefit to operating income of 15 million.

Operating margin for the fourth quarter was 5.5%, or 9.6% absent the real estate consolidation charge.

Operating cash flow for the quarter was an impressive 517 million, with un-billed services decreasing by 124 million and deferred revenue increasing by 72 million.

As I described earlier, DSOs declined by 4 days in the quarter.

Joe and I owe a lot to our partners for hitting the Finish Line in fiscal year '02 hard and fast.

Let me give you some other important updates on our business and financials.

As you have probably seen, we are in the process of selling a substantial portion of our venture and investment portfolio.

The 212 million write-off we took in the second quarter turned out to be quite accurate and we are executing the sale of a 95% interest in the portfolio with no material investment gain or loss.

As we announced in early August, we've reached an agreement to sell the 95% interest in our venture and investment portfolio to CIBC World Markets, the investment and merchant banking arm of Toronto's [inaudible] Financial Services Company CIBC.

Accenture will retain a 5% stake in the portfolio, which is comprised of approximately 80 early and mid-stage technology companies primarily in the software area.

Accenture will continue its existing alliances and client relationships with companies in the portfolio.

In addition, Accenture and CIBC World Markets plan to enter into an alliance intend to provide CIBC World Markets with access to Accenture's expertise and knowledge of the technology sector, while enabling Accenture to continue to build on its relationships with the portfolio companies.

The terms of the transaction, which is expected to close by the end of this calendar year, are not public.

At year end, we also wrote down some of the remaining equity positions not included in the investment portfolio sale.

Because we came into possession of material insider information about two of these companies, we could not sell or hedge our position.

With these two actions, our total corporate investments, excluding the pension plan investments, are slightly below $12 million.

As we have committed to you, part of the $1.05 EPS target and the growth over fiscal year '02 EPS of 91 cents comes from our partners' reduction of budgeted cash compensation to ensure that we have complete alignment and symmetry with our public shareholders.

Our fiscal year '03 budgets include a 6 to 8% reduction in partner compensation.

Once again, we take full responsibility for the results of our pre-I.P.O. investments and their impact on 16 our public shareholders.

You may have seen that the non-U.S.

Andersen firms and Andersen worldwide have settled the Enron claims against them and Accenture will be released as part of that settlement once it is finalized in the next several months.

We did not contribute to the settlement.

We believe this result validates our prior statement that any action of this nature against us would be misdirected and without merit.

We also previously told you that we had settled the Fox Meyer lawsuit and the court has now approved that settlement which was covered by insurance and previously established reserves.

In connection with our incorporation in Bermuda, we continue to monitor legislative activities.

To date, there has been no legislation enacted that affects our business.

As we told you in July, we also have been working on contingency plans to be prepared for any outcome.

We are certainly heartened by the U.S. general accounting office report last week on this issue.

I would also note that Bermuda has never been on the OECD list of abusive tax havens.

We have always paid our fair share of taxes in each of the countries in which we generate income, including the U.S., and our disclosed G.A.A.P. effective tax rate is comparable to our higher than large U.S. companies although we are not a U.S. corporation.

We have not experienced any loss of business, as far as we are aware, because of this issue.

As I described in our investor meeting, we are making continued progress in our new SAP-based financial system and expect to have it in place by fiscal year '04.

Joe and I believe this is critically important to ensure that we have the right realtime data to monitor our business and, in particular, our large complex outsourcing contracts.

We believe that the new system will be a quantum leap ahead of the rest of the industry, and we are told by SAP that it will be among one of the most sophisticated SAP-based financial systems in the world.

Let me also comment on some of the ongoing discussion on percentage of completion accounting.

We use percent of completion accounting for the majority of our consulting revenues in compliance with long-established G.A.A.P.

We have a several-year track record of having regularly updated and accurate estimates to complete, which show a consistent pattern of modest net upward revenue in margin adjustments.

We also follow established G.A.A.P. for outsourcing contracts and are monitoring developments in that arena.

Outsourcing contracts are recognized as services are performed or as transactions are processed, in accordance with G.A.A.P.

As you've seen in our financials as a public company, we have a strong correlation between earnings and cash flow, and we tightly manage client financing, which amounts to 265 million at August 31, '02, on our balance sheet.

Our controllership, internal audit, and our external auditors, regularly audit our largest engagements.

In the most recent annual period, KPMG completed audit procedures on engagements covering 27% of total revenues.

The engagements covered 42 of our top 100 clients, and of the remaining 58 clients, 10 were covered by our internal audit group and an additional 17 were covered by PWC, our former auditor, and our internal audit group, during fiscal year '01.

We are very comfortable with our revenue recognition.

Another legitimate point of investor concern in our sector has been customer credit quality, particularly for outsourcing clients.

As of August 31st, our total non-investment grade inventory and receivables balances from our top 200 clients stands at only 63 million.

Of these receivables, only 28 million are over 1 month in age.

Finally, on the cost-cutting front, we have made significant progress, which I will detail later.

As Steve James, our C.O.O. described, in our investor meeting this past July, we have a comprehensive program for reducing our short-term costs and for creating an efficient long-term consulting systems integration and V.P.O. business model.

As we have entered into fiscal year '03 this past September, we have focused on the actions that Steve described in our investor meeting in July to reduce our costs by 5 to 6% against our FY '02 cost base.

Let me reinforce the actions that we are taking.

Related to consulting solutions, enterprise professionals and their payroll, we estimate a net savings of roughly 500 to 600 million as follows: As it relates to labor costs, we expect to see, as described earlier, about a 200 million savings in partner payroll.

It is also a result of having a net reduction in the number of partners.

As it relates to our consulting workforce, we also expect to see around 350 million in savings from this workforce.

The third piece related to payroll savings that we are focused on in fiscal year '03 is $100 million in additional savings within our administrative support area.

In addition, as a slight offset to these savings, as we expand our solutions workforce, there will be an additional $100 million of payroll that will be additive against these above savings.

Related to non-payroll actions during fiscal year '02, we did, in fact, cut back on training for about a 7 to 8-month period.

We did pick back up on training during the summer, and started the fall in '02.

We are committed to investing an additional 90 million this fiscal year over what we spent in '02 on training.

As a contingency, we have also recently identified 150 to $250 million of contingencies that could be leveraged that do not impact our short-term or long-term business profile.

In this volatile economic environment, we believe we must have several layers of cost contingency and flexibility.

Let me now give you an update on our partner share management plan.

We have now introduced our family and charitable trust program to our partners.

We are pleased because it offers our partners estate planning benefits while maintaining existing restrictions on further sale or transfers of their stock.

We are going to roll out other financial instruments for our partners.

I want to remind you that six months ago, we surveyed our partners and they expressed their long-term desire to hold roughly 45 to 50% of their I.P.O. shares rather than the 25% minimum required as an active Accenture partner.

I also want to clear up some confusion on the shelf registration for 2.9 million shares filed on behalf of our Japanese partners.

The Japanese partners did not, for personal tax reasons, participate in the secondary offering last May and could not efficiently liquidate their shares before now.

We have filed the shelf covering all shares these partners could have sold in the prior secondary.

Only a portion of these shares will likely be sold prior to the end of December.

In a few weeks, we will execute our first quarterly partner liquidity opportunity that we previously described in the prospectus for our secondary offering.

Our final design for this plan consists of a combination of organized broker sales by our partners who hold limited shares and redemptions and repurchases from partners holding S.C.A. shares.

The two metrics we will use to size these partner liquidity opportunities are that no more than approximately 1% of limited shares held by partners will be entering the market in any quarter per Rule 144 and S.C.A. shares will be repurchased from operating cash flow after first taking into consideration the cash needs of our business.

Workpaper we have no intention of filing further shelf registrations to facilitate future quarterly partner share transactions.

To refresh your memory, our partners amended their I.P.O. agreements to only sell unrestricted shares through the company.

Our senior management team is committed to maintaining an orderly market for Accenture's shares that can give our stock the ability to track our business and financial performance.

Most important, our partners are indicating only a small interest in selling stock at these price levels.

In July, our board of directors authorized the use of up to 600 million for redemptions and repurchases of partners' shares over the next several years of our plan.

Our share management plan is buttressed by a shift in our compensation policy away from options.

Our new partners admitted last month are receiving restricted stock units which cliff vest and have sales restrictions that go out beyond any of the I.P.O. shares.

These R.S.U.s are experienced through our P&L and give our new partners a feeling of true equity ownership.

We are also applying our traditional models of partner affordability to ensure that stock is granted to new partners in a paradigm that is accretive to all shareholders based on the demonstrated margin-generating capability of any new partner.

On free cash flow, we are targeting $1 billion for the coming fiscal year before partner or public stock repurchases.

We do not expect significant increases in capital expenditures, client capital or working capital.

We will continue to repurchase stock through effect to be available for future generations of Accenture partners as well as to minimize any dilute impact of any new options or RSU grants which we expect will be modest given the soft economic environment and our commitment to minimal dilution.

Our [inaudible] activity will continue to offset, to some extent, unrestricted active and retired partner stock sales which can only be affected with Accenture's consent.

Joe and I are committed to balance sheet quality, and we relish being in a position of industry leadership with strong cash flow, cash balances, and no net debt when our industry is in a major strategic inflexion point.

Our industry leadership on credit and cash flow ratios has widened in the past year.

We have reduced our investments exposure to de minimus levels and we engage in virtually no derivative transactions except to hedge for certain expected inter-country transactions.

The fair value of foreign exchange derivative contracts at August 31st was less than $2 million.

Joe and I are also excited about rolling out EVA metrics to our partners this fiscal year.

Working with Stearns Stuart, we are going to base a significant portion of our partners' performance evaluation on EVA contribution.

We hope this will keep our ROIC at high levels and our current EVA as a percentage of revenue stands at 9%, similar to fiscal year '01, and is near the top 10% of the global 1,000 and is at the top of the IT services industry.

As we stated in our investor meeting, our zero to 2% top-line guidance is based on outsourcing growth being comfortably in the 20 to 40% range.

There is serial correlation in outsourcing growth as the last two quarters of 38% growth positively indicate.

We believe this growth offsets the downside case of consulting, experiencing double-digit declines for the year.

We continue to be comfortable with $1.05 earnings per share as our target.

We believe this is an appropriate target, even in this tough environment, because of the improvements we believe we can continue to make to improve our cost efficiency of delivering services and in our SG&A.

As Joe described, we are transforming our business, and are making fundamental changes in how we deliver our work.

As a new public company, there are also improvements we can make in making our business model more efficient.

Relative to our earnings target, while there is some flexibility below the zero to 2% revenue goal, there is not an unlimited ability to cut costs in the face of a significant demand shortfall or unusual pricing pressures.

Because of this, Joe and I wanted to make sure that you were aware that an outbreak of prolonged hostilities in the Middle East could jeopardize our top and bottom-line targets, as well as a pronounced second dip in a global double-dip recession.

We believe that a downside case for '03 EPS is 91 cents per share, which is where we finished fiscal year '02.

We have enough layers of contingencies to at least keep earnings flat, even with all the negatives the market is expecting, and if the economy can stabilize at these levels to make $1.05 cents.

All that being said, September was a good month and though although one month does not a year make, we are on track towards $1.05.

September was ahead of plan on top-line and bottom-line, and we continue to see unique opportunities for Accenture to help our clients in innovative consulting and outsourcing engagements, which we hope to disclose to you in coming months.

Most significantly, our unaudited September results are showing tens of millions of cost improvements relative to prior months, revealing early signs of real traction for our cost reduction efforts.

For the first quarter, similar to what we said relative to the fourth quarter, we are expecting a 1 to 6% decline in revenues, centering around the analysts consensus estimate of $2.89 billion.

We expect earnings per share to be in the range of 23 to 26 cents per share.

This is consistent with the low end and midpoint of analysts estimates as we expect to process residual severance expense in the first quarter of about 25 million.

Also, as we indicated in our investor meeting, the first quarter has seven-tenths of one percent fewer workdays than the first quarter of last year.

Most importantly, we want to be properly conservative on first-quarter guidance by giving a range, because of the continuing multi-year lows currently being experienced in global equity markets.

Because of our cost reduction actions, we anticipate that earnings will be disproportionally higher as the fiscal year unfolds.

We are planning to have 52% of our earnings in the second half of this fiscal year.

As a housekeeping matter, I want to give you our earnings release dates for this fiscal year.

These dates are set to mesh with our board meetings and work around major holidays.

Our earnings release dates will be January 9th, April 15th, July 15th, and October 9th of 2003.

Finally, Joe and I believe that we have made exceptional progress, removing investment downside risk for you, apart from the economy or markets, and that we are poised to have strong operating leverage once economic growth returns.

Underestimating or selling short Accenture and its people is the real risky proposition.

All of our employees have put us in an unique and enviable position of having strong cash flow and earnings, lots of cash in the bank, potential for expanding margin, platforms for strong growth and V.P.O. and other emerging IT services areas, clean accounting and simple financials, no derivative exposure or pension issues, with a significantly receding profile of exogenous events or issues.

We have prudent and transparent executive compensation based on the partnership model.

While the environment, as Joe described, is undoubtedly tough, we at Accenture are prepared to continue to gain market share, enhance our fundamental financial soundness, while being sober about the impending economic and geo political risks in the environment.

We cannot be more pleased about our ability to deliver industry-leading financial results and our potential to deliver our financial metrics that will once again this year compare very favorably to the major indices.

Thank you, everyone, for your patience.

We had a lot to cover.

Operator, can you open it up for questions?

Thank you.

Once again, ladies and gentlemen, please queue up with your questions by pressing the number one.

Our first question is from the line of David [inaudible], Morgan Stanley.

Please go ahead.

Thank you.

Just two quick questions.

First, Joe, if you could provide your view on the impact of industry consolidations.

We've seen quite a bit in the last few months.

You know, what you see as the major risks and opportunities for Accenture.

And then just a quick second question.

On the pipeline, which you indicated includes a fair amount of IT outsourcing.

How do you plan to address that opportunity from a capital or a partnering perspective?

Thanks.

Thanks, David.

First, on industry consolidation, certainly.

This is something that, you know, even going back to some of our decisions when we decided that it would be important for us to move to the partnership model to a public company, we believe that they would be 2 to 3 key hub players in the industry, as it consolidated that would really have the type of client relationships, the global scale and scope, to be the leader, and I think we're certainly starting to see that.

I think, you know, if you look at the risk side, I think they're well known, and in terms of just being able to integrate different types of cultures, different types of operations in a very people-intensive business, we continue to look at the landscape to see where we are in this consolidation picture.

We have no immediate plans, but we're continuing to look at it and as we should, are continuing to assess what it means to us.

But I'm very confident we have the capabilities to drive our strategy we've outlined, and do that on an organic basis.

If you look at the pipeline, the second question if you look at the I.T. outsourcing, most of the I.T. outsourcing that we do is driven from a -- more of a transformative approach, where our clients see an opportunity to add value.

A lot of it is in transforming applications.

And so we have the capability to do that in a very non-asset intensive way through our abilities to improve productivity, and drive higher results and economic value to the business through better management of applications, and with the ability to be able to operate infrastructure but we are not in the broad business of being infrastructure led.

So we don't see that as a major drawback.

It's increasingly as we look at the importance of V.P.O. and our ability to be able to drive business process outsourcing.

Being able to manage the process and as we've done in a number of -- and shown with a number of contracts, that really is where a lot of the value can be added anyway.

And so we're comfortable with the balance that we've got between business process outsourcing and IT outsourcing at this time.

Next question, Adam Frisch with UBS Warburg.

Thanks, guys, for your comments.

Harry, just wanted to talk about September for a quick second.

A few points of clarification.

You said you were ahead of plan.

Does that mean you're growing top line faster than the guidance you gave?

And then also, are we correct to assume that EPS was double-digit in the month?

Adam, we can't comment on unaudited results, but I think that's a reasonable inference based on the cost savings that, as I mentioned before, we've shown some significant early signs of traction on. 25

Okay.

On the outsourcing pipeline, taking David's questions at a different angle, some deals are slipping, some are happening faster than you expected.

The deal cycles, as we all know, are kind of sketchy here.

Can you talk about how you incorporate revenues from potential deals in your guidance for-I guess, you know, the subject at hand here is for fiscal '03?

We're very conservative about that, Adam.

I think as we, you know, look at potential outsourcing deals, sign letters of intents, and then ultimately close on them, you know, we make sure that we are putting in sufficient time relative to being able to execute and set up these outsourcing deals properly.

While we're certainly, as I described before, working keenly here to get outsourcing contracts to ramp up faster relative to our properly recognizing revenues, we're being very, very conservative in terms of how we budget large outsourcing deals and when we expect to get revenues.

And I would just say -- and this is very, very qualitative and rough, but I think we try to make sure that we have a two-quarter budgeting lag in our operating groups, to make sure that we aren't counting any chickens before they hatch here.

Okay.

And then last question here and then I'll turn it over.

The 91 cents you said was kind of a disastrous scenario here.

What goes into that 91 cents and I guess what would have to happen in order for us to get there.

It seems you were pretty solid on the $1.05 but what gets us to 91?

I think 91, Adam, would be some really serious price deterioration, as well as revenue erosion from a geo political disturbance or, as I mentioned, you know, the second dip in a significant global double-dip recession.

And I think when you add up the more than several hundreds of millions of potential reductions in our cost base, which are healthy for our business as well as the contingencies and flexibility that we have, you can see how, in a worst case we could also weather, you know, several hundred basis points of revenue decline or pricing-induced revenue decline, and still keep earnings flat.

And I think, frankly, a pretty good benchmark was this past year.

It was certainly one of the worst years we've experienced.

We were able to squeeze out some cost reductions.

We'll be better at it in the coming year.

But more importantly, we really set up a great base of recurring revenues.

The outsourcing base of recurring revenues is up over 50%, and the consulting base is up double digits, if you compare fiscal year end to year end.

So, you know, we feel like whatever we do, it's not only doing our utmost to get to that $1.05 with 91 cents as a disastrous scenario, but more important, for you, our shareholders, making sure we have a long-term base of a growing strong franchise.

Greg Gould, Goldman Sachs.

Thanks.

On the fourth quarter bookings, Harry, what was the mix of outsourcing versus consulting?

Greg, it was very similar to what it's been in the past.

I think we've been trending on the consulting side in sort of the 500 to 600 million per month range, with the rest in outsourcing.

There really wasn't any significant difference in the August quarter bookings, in terms of the mix.

Okay.

So with that kind of win rate, what kind of visibility does that give you going into the current quarter, the November quarter?

Is there a -- if we compare the visibility just on the consulting part of the business, entering the quarter versus prior quarters, is it in line, better, or a little bit worse?

It's actually -- we look at -- as you know, we call our visibility to fill, and actually we're at historic norms, if not a little bit better, in terms of visibility.

I think that being said, Greg, we're seeing visibility on what is going to be a double-digit decline in consulting.

So we feel very solid in terms of, you know, where the numbers are heading in consulting, but it's still a picture which is austere here.

Okay.

And when you mention that September was a little bit better, what is it about -- is it revenue and bookings?

You know, aside from the expense portion that you just discussed, what about the revenue and the bookings side of the equation?

What's different?

What's changed since August?

I think as I mentioned, top-line and bottom-line, I think we've told all of you we wouldn't comment explicitly on bookings unless it was materially positive or negative, and I think we'll have a very good bookings quarter in Q1 and September was notable because we had good top line and good bottom line.

And at the same time I want to make sure that all of you are aware, we don't want to rest on one month making the rest of the year.

I mean, we still have 11 challenging months to go, but it's great to get off to a good start.

We feel like we scored a touchdown on the opening drive of the game, and being ahead 7 to nothing is a lot better than being behind or being up only 3 to nothing in the football game here.

Right.

One last question.

Products and resources were weaker this time around.

Can you give us a sense for how fiscal '03 should shape up there?

Remember a year ago, financial services and telecom and communications were weak, but communications and high-tech really picked up with the outsourcing business.

Is there stuff in the pipeline that would help resources and products pick up later in the year?

Yeah, I think, Greg, on both of those, we're hoping that the August quarter was more an aberration.

The U.S. products business had some softness in the August quarter.

Also, there's some tougher comparisons relative to when we took on the large Sainsbury transformational deal in Europe which impacts our products comparison.

On the resources side, I think we're seeing a little bit of almost the J-curve impact because with the higher oil prices, the chemicals business as Joe described has been negatively impacted, as well as our U.S. utility business.

At the same time, if oil prices remain high, then, you know, we've historically had a pickup among the large oil companies.

I think really the most profound delta, as Joe mentioned, was the U.S.-based energy trading companies, which we did a decent amount of work with outside Enron.

That business clearly is a much smaller business now.

Okay.

Thanks.

Thank you.

Next question from the line of Karl Keirstead, Lehman Brothers.

Hi, good morning.

I've got a question about the bonus accrual reversals.

Harry, I guess that was 140 million in the August quarter.

Can you just touch on this, whether we'll see more of those bonus accrual reversals in '03 or is what we're going to see is just the salary and bonus levels reduced now to what you think is a fair level to make that $1.05 number?

Thanks.

Well, it's certainly the latter, Karl, because I think, you know, from a G.A.A.P. standpoint, you know, to have an accrual means that we clearly expect to meet the plan, if not to outperform the plan.

I think some of the pyramid changes that we've made should help us be more cost competitive and lower payroll costs as you've described, and certainly the partners are doing their utmost in terms of the budgeted compensation decrease I described to make sure that we have a more efficient cost base going forward.

Edward Caso, Wachovia Securities.

Hi.

Thank you.

I had a question on what you're seeing in pricing in the various markets.

In some of my conversations, I've heard of deep discounting by Accenture and others, including one scenario where the quote was Accenture gave the business away.

Can you sort of talk about sort of pricing environment?

This is Joe.

Obviously the pricing environment is challenging, but, we look 29 at every situation with the clients in terms of that we work at and we make the right prudent decisions on a one by one basis.

But I think overall, although in the volatile environment we're in, it's hard to understand where you're -- where you see a trend or not.

Our pricing has stabilized over the last two to three months.

We actually saw, just in September, just a brief uptick and improvement in pricing, so we have not seen any further deterioration, and we're going to -- we're continuing to watch it, but I think part of what we see and some of the uplift in September has been some modest improvement in pricing overall.

Great.

Can you talk a little bit about -- seems like the stretching out of the signing of outsourcing agreements, do you have any sense of sort of globally why that's happening?

Well, actually, for our, you know, pipeline, as I described it, we've actually had compression in the average days to close, so we were, you know, well over 200 at the time of our investor meeting.

Now we're down to 168.

So, look, we're also getting more Creative, just getting better at our market-making partners and our client partners getting these deals to closure, and I think ultimately it's a testament to the value propositions we're offering clients.

If the value proposition is longer-term or is uncertainty or murky, then clients no doubt will hesitate and take longer.

But the empirical data for us is that we're actually moving in a good direction, rather than in the lengthening direction that some others may be experiencing.

Great.

Thank you.

Our next question is from Dirk Godsey, J. P. Morgan.

Yeah, good morning, guys.

Just wondering if we could -- I couldn't quite get it down, Harry.

You went pretty fast on it, but can you revisit some of the trends you're seeing in the EMEA countries, both in terms of the quarterly year-over-year revenue growth and then also just a comment on, you know, just following up with a conversation here about pricing, but if you can kind of talk about pricing and utilization in each of the major markets in the EMEA?

Well, in terms of the fourth-quarter growth, I think really the head-line here is, but for Europe -- I mean, but for Germany, excuse me, we're in excellent shape in Europe.

We actually estimate our major competitors top-line growth in Europe, and I think we're about 900 basis points higher.

I think we're obviously not the only ones suffering in Germany.

As I mentioned, there's a 17% decline in Q4.

But I think we were very heartened.

We've continued to be -- feel that way.

I think it's the last six, seven quarters, everyone has been wondering if our European business would precipitously fall off and it's a real testament to our European partners that their business, although it slowed, has continued to show decent growth, and more important, just a huge gap in market share.

In terms of some of the utilization trends, I think somewhat paradoxically, we're actually up recently in German utilization, so I think our partners are sizing the business there.

I think if you look at the U.K., Spain, and Italy, there's a slight amount of softening in utilization.

In France, we're generally holding steady.

So I don't think when looking at our utilization numbers, there's any real big changes, not only in Europe but really across the globe here, over the last three months.

I might add by industry, I happen to spend a couple of weeks in Europe just recently, and actually met with our U.K. leadership, which U.K. now represents about 15% of our business globally.

They were pretty bullish on the prospects looking forward.

If you look at CHT, communications and high-tech certainly had some slowdown and deceleration, but that appears to be, at this point, bottoming out.

Financial services has had a decline, but yet there's a whole host of pretty new big opportunities that are starting to emerge.

Government, we don't see any slowdown in EMEA.

Products continues to do very well.

And in Europe, a lot of that is driven with some good outsourcing opportunities looking forward.

Resources has some slowdown but not significant.

So that's more of the industry view in Europe.

Yeah, just some numbers, Dirk, on what Joe described.

I think -- I'll try to make this a positive.

I mean, it's a similar perspective globally, but in Europe in the August quarter, you know, really only financial services declined.

It declined by about 13%, but that's an improvement, actually, from the 18% decline for European financial services in the third quarter.

All other industry areas in Europe are growing.

So communications and high-tech, up 16%, government up 57%, products up 4%, resources up 21%.

So, we feel like we're in good shape in Europe.

Again, now, your comment about September and it's just a month as opposed to a year here, but is the improvement that you're seeing or the out-performance relative to plan, does it include your activity in Europe, and can you comment a little bit on which verticals might be participating in that better than expected performance?

Yeah.

I'd say, Dirk, the -- and this is as much qualitative as quantitative.

Europe is somewhat better than expected.

The Americas are about as expected.

And I think it's just too early to tell on the breakout by our operating groups.

Uh-huh.

Okay.

Great.

Thank you.

Thank you.

Our next question, Karl Keirstead, Salomon Smith Barney.

Hi.

And thank you, and congratulations on the quarter in the difficult environment.

From a strategic standpoint, I noticed the last couple deals, the Thames Waters and the Bank of America have included Indian offshore partners.

Could you talk a little bit about that in your strategy moving forward and then the second question, Harry, for you, is, you had a very 32 successful new bookings quarter a year ago in the first quarter.

Do you consider that tough comparisons as it relates to year-over-year growth this year?

Thanks.

I'll answer the first part of that question.

Part of our strategy has been to build a solutions workforce to basically drive a much lower cost of delivery in technology.

We have a network of solutions capabilities in a number of countries and are continuing to build those on a broader basis, and is a major source of where we see a good bit of our hiring this year.

Currently, if you look at our operations between India, Manilla, the Czech Republic, Spain, we have some 5,000 people as part of this network.

We also are building it aggressively in the U.S., the U.K., and some other countries, with a different career model than consulting to have a different price point.

We approached this from being able to blend on-site capabilities with our solutions network.

You know, we think that broader multi-location strategy gives us the chance to provide more steady and less risky types of propositions to our clients than just concentrating in one location, and that seems to be moving well, but we have a large initiative to continue to build that part of our workforce, both in the IT area as well as in the B.P.O. area, to be able to blend the right type of low-cost resources with our consulting capabilities as we help our clients transform our business to deliver them value.

Harry, you might --

Yeah.

Pat, on the bookings question, I think, you know, we should do fine relative to Q1 of last year.

You know, Q1 of last year was about 3.3 billion, and that's certainly in the range here.

I think, candidly, the tough comparison will be in Q2 where we had BellSouth, AT&T, cable and wireless, but rest assured, our partners are working on some big propositions and hopefully we'll get the timing right, but at least we have some good large prospects in our sights here.

Thank you.

Andrew Steinerman, Bear Stearns.

Hi, guys.

Thanks for squeezing me in.

Could you just remind us, and review seasonality?

How much do you think seasonality here and in Europe affected this quarter and will -- meaning the August quarter reported -- and will help the quarter we just started?

Well, typically, Andrew, our fourth quarter, which we just finished, is our weakest quarter with all the holidays.

As I mentioned, we had a really tough compare because fourth quarter of '01, Europe had 32% local currency growth, so when you think of people working overtime in that past year and then this year, sort of having a normalized holidays, then you can see how there could be a significant revenue delta above and beyond just the normal change that you'd expect.

You know, Q1 and Q3 are stronger quarters.

September and January are big bellwether months, especially for our European business, and we're, you know, cautiously optimistic going into October because October is a very strong workday month.

You know, the numbers I gave at our investor meeting, we also have to track just how holidays fall around the globe, and as I mentioned, Q1 of this fiscal year happens to have seven-tenths of one percent fewer workdays.

Q2 has 2.6% higher number of net work days.

Q3 is 1.2% lower.

And Q4 is 1.3% higher.

So we actually have someone who helps track how all the holidays fall in the 47 countries in which we operate, and we have a global net working days number so that we can help normalize not only the seasonality issues but also some of these holiday influences which are non-trivial when making business comparisons for us internally, period to period.

Right.

And Harry, the days you just gave us for the workday differentials, that's year-over-year, right?

Correct.

And so -- but if we were going to look at this 34 quarter, the first quarter versus the fourth quarter, do we pick up a notable amount of workdays this quarter?

So, I like to look at the business sequentially.

You know, are we helped out by workdays as we move sequentially into the current quarter?

Most definitely.

Okay.

Thanks for all the comments.

No.

Thank you.

Okay.

Let me close.

One, I thank you for your ongoing interest in Accenture.

While we're very cautious, as you detect, from our overall tone in terms of any broad-scale improvements in the industry and what we see, this past fiscal year has also been a rough ride for all of us, but we think we've managed our business extremely well.

As we look at the future, even though we're cautious on the fundamentals in the industry, we have made some significant changes in our cost structure.

We're operating lean and frugally.

We have a strong outsourcing pipeline and a very strong cash flow and balance sheet.

So with our focus, we believe, on execution, we're going to continue to work hard at delivering value to our clients and our shareholders.

We're going to emerge stronger from this downturn.

And I want to thank all of you for joining us.

Thank you, operator.

Thank you.

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