Good morning, ladies and gentlemen. Welcome to the CGI Second Quarter 2012 Results Conference Call. I would now like to turn the meeting over to Mr. Lorne Gorber, Senior Vice President, Global Communications and Investor Relations. Please go ahead.

Thank you, Jesse, and good morning. With me to discuss CGI's second quarter fiscal 2012 results are Michael Roach, our President and CEO; and David Anderson, Executive Vice President and CFO. This call is being broadcast on cgi.com and recorded live at 9 a.m. on Wednesday, April 25, 2012. Supplemental slides, as well as the press release we issued earlier this morning, are available for download along with our Q2 MD&A, financial statements and accompanying notes, all of which are being filed with both SEDAR and EDGAR. Please note that some statements made on the call may be forward-looking. Actual events or results may differ materially from those expressed or implied, and CGI disclaims any intent or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The complete Safe Harbor statement is available in both our MD&A and press release, as well as on cgi.com. We encourage investors to read it in its entirety. We are reporting our financial results in accordance with the International Financial Reporting Standards or IFRS. As before, we will also discuss non-GAAP performance measures, which should be viewed as supplemental. The MD&A contains definitions of each one used in our reporting. All of the dollar figures expressed in this call are in Canadian dollars unless otherwise noted. I'll turn the call over to David first to review the financial results for the second quarter, and then he'll pass it over to Mike, who will discuss operations and segment highlights before going to Q&A. David?

Thank you, Lorne, and good morning. I'm pleased to share the financial details of another good quarter. I'd like to remind you that this is our second quarter reporting under IFRS. Other than the adoption of the equity method of accounting for joint ventures, which I described last quarter, there were no other significant adjustments related to IFRS. In the second quarter, revenue was $1.07 billion, up 3.3% from Q1, the second sequential quarterly revenue increase this fiscal year. On a year-over-year basis, revenue was 4.1% or $45.9 million lower due to the previously disclosed items included in the year ago period. These are, again, detailed in the MD&A. On a comparable basis, excluding these items, the year-over-year revenue growth was 3.4% or 2.6% on a constant currency basis. Adjusted EBIT was $156.4 million, and our EBIT margin improved by 110 basis points sequentially to 14.7%. Net earnings were $105.7 million, representing a net margin of 9.9% and diluted earnings per share of $0.40. For year-over-year comparison purposes, a favorable tax adjustment as well as other previously disclosed items have been removed from Q2 F2011. As a result, Q2 F2012 net earnings compares to $111.8 million or 10.1% in the year ago period, and diluted earnings per share was $0.40. Looking at the balance sheet, our DSO was 53 days in Q2 compared to the 43 days we posted for the year ago quarter. The increase is due mainly to the impact and timing of milestone-based payments on some government projects. We generated $104.2 million of cash from operating activities compared with $192.4 million in the same period last year. Over the last 12 months, we have generated $533 million or $1.97 in cash per diluted share. During the quarter, we booked $787 million in new contract wins, bringing the total bookings over the last 12 months to $5.1 billion for a book-to-bill of 124%. As usual, we continue to stress the importance of considering our performance on cash and bookings trends over a 12 -- sorry, over a trailing 12-month period. Including our current line of credit in place through fiscal 2016, we have approximately $1.3 billion in available liquidity plus an accordion feature of up to $750 million. Our debt was reduced in the quarter by $77.3 million to a net debt of $795.3 million, representing a net debt-to-capitalization ratio of 24%. This compares to a peak of 31% following the Stanley acquisition in August 2010. In the quarter, we acquired 1.6 million shares for $30 million at an average price of $19.30. Under the current NCIB program, which expires in February 2013, we can still purchase more than 21 million shares. At the end of Q2, our return on equity was 17.4%, while our return on invested capital was 12.5%. Now I'll turn the call over to Mike.

Thank you, David, and good morning, everyone. I'll spend a few minutes providing some color on each of our reporting segments and wrap up with some brief comments on the company as a whole. Starting with the U.S., our revenue grew by 7.9% at constant currency, up $37.8 million year-over-year as previously announced bookings came onstream across all of our key industries, especially in the health and government verticals. Our EBIT was up 54%, while EBIT margin improved significantly from 9.1% to 12.7% as a result of previously announced restructuring activities, a healthier mix of profitable revenue and the ongoing implementation of margin improvement initiatives. Specifically on the government side, CGI Federal continues to show positive trends and strong performance. Bookings were 30% higher than they were in quarter 2 of fiscal 2011, and for the first 6 months of fiscal 2012, Federal bookings were 23% higher year-over-year and continued to exceed the company's book-to-bill average on a trailing 12-month basis. In the U.S. Federal Government market, as you know, contract vehicles drive future revenue opportunities. I'm pleased to report we have successfully qualified for 12 new vehicle -- new contract vehicles with a potential value of $5.6 billion, giving us increasing access to new business across several departments and agencies. On the Defense side, we continue to see a trend where there are more extensions and ceiling increases on existing contracts. As a result, nearly $170 million in opportunities slipped out of quarter 2 and into the second half of the year. Across the U.S. state and local markets, new and existing clients continue to turn to CGI for help in addressing continued budget pressures while they look to increase operating efficiencies without impacting major citizen services. Our tax and revenue collection business continues to grow while we see…

Just a reminder that a replay of the call will be available either via our website or by dialing 1 (800) 408-3053 and using the passcode 4236308 until May 9. As well, a podcast of this call will be available for download at either cgi.com or through iTunes within a few hours. Any follow-up questions can be directed to me at (514) 841-3355. Let's see if we can poll for questions.

[Operator Instructions] The first question is from Tom Liston from Versant Partners.

Michael, just on the 12 new vehicles, obviously, because they're vehicles, none of that's in backlog. And can you describe the sort of opportunity set as you see it of which you think you can capture that $5.6 billion?

Thank you for the question, Tom, and again, it's a good point. We -- whenever we qualify for vehicle, we book only $1 in the backlog just so that we keep track of it. So there's nothing have been added to the backlog. So about 92% of the vehicles that I mentioned represents inroads to new business with either new or existing clients. Only one of the vehicles was actually a renewal. So we see this as a real important place-maker, especially given the current situation there. It means that we have more opportunities to grow the business, more opportunities to fire in task orders. So from a strategic and a tactical perspective, it's a very important key indicator for our Federal business, Tom.

And it appears that they're publicly -- but do you have a weighted, a rough weighted average time line for those vehicles?

They normally range from 3 to 5 years, I would think. Some of them can go longer if they have 1- or 2-year extensions on the back of them.

Okay. And just you described a bit of transition in the environment for more of a mix of nearshore, offshore, et cetera. Certainly, info system Wipro had fairly tough quarters. Tyco, maybe a little better but, and some of the North American companies maybe a little bit better. So could you just describe, maybe add some depth into that comment and what you're seeing?

Yes, so what we're hearing from our U.S. customers, in particular, is that in many cases, we're hearing, "I've reached my quota. I've worked and I'm prepared to give to the Indian suppliers, and I'm looking at alternatives,” and CGI has the only real true home-shore facilities. And again, when I say the only real true, I'm talking about a structured offering that is located in low-cost jurisdictions with proper methodologies to support productive delivery, quality delivery. And we're also hearing and seeing a pressure building on a lot of U.S.-based companies that are international to bring some of that work home. And again, we're targeting our competitors who are in some of those accounts and making sure that the clients realize, first and foremost, they have a choice and that, again, they can move from out-tasking to outsourcing. We're selling an output that has not only a very good price but excellent quality, and we also address the question of operational risk in our operations. So we're starting to see that. We're picking up on that. We're targeting -- have a campaign to target some of that business, and we expect to see some of those wins in the back end of the year.

Okay. And just one quick one, on what changed in segmentation, I don't think you have changed it materially. But it looks to me if I back it out, margins went from about 10.3% last quarter to 12.7% this quarter. Can you confirm if that's right and certainly walk through on how you achieved that margin improvement?

Well, again, I think we're very, very pleased with the margin improvement in the U.S. I had predicted that this was an area of focus for us this year, and we did some restructuring last year that really centered on continuing to drive up our utilization of real estate, our utilization of force, constantly looking at balancing the utilization rates. And as the growth comes on, of course, the utilization rates rise. So again, the EBIT was up in the U.S. 54%, went from about 9.1% to 12.7%. And again, also a good mix of revenue. We had some more IP business come through in the quarter, much like what we have in Canada. We're evolving mix in the U.S. to have more of the high-end IP-based services and solutions embedded in the business. Our commercial business was also strong in the quarter in the U.S., and that, obviously, is accretive to the EBIT margins. I'll just remind, again, investors that you have to add about 2 points to that EBIT number due to the intangibles that we're carrying as a result of the Stanley and AMS acquisitions.

The next question is from Thanos Moschopoulos with BMO Capital Markets.

Mike, can you provide some color on how the upcoming election cycle and the threat of defense sequestration cuts in the U.S. may or may not affect the Federal business in the coming months? Is it business as usual for now, or does it mean that as we head into the second half, we might see more of the bookings come in the form of task orders rather than long-term contracts?

Well, again, our expectation is -- and again, I know in some areas, we may be somewhat contrarian there, but again, the area that we are focusing on, we believe that we will not be materially impacted. So we have already lined up a lot of bookings. We're expanding the contract vehicles. And the type of work we're doing is also very tight. We’re keeping the government running in terms of maintaining systems, operating systems, running systems, hosting systems, helping them reduce costs, doing Medicaid and Medicare audits, setting up these HIX exchanges, the Rack [ph] programs. So we're very much, I believe, in the area where investments will continue. They may well do more task orders. As I mentioned, in the Defense side, we're seeing some movement towards really increasing the ceilings or taking advantage of short-term extension options to push some of this work out and stay within the existing vehicle and existing provider. But again, we think that's a short-term measure that will actually time out. And those contracts will be out for bid and renewal in the back end of the year.

Okay, great. And just maybe to extend a little bit on the health care side, obviously, a bright spot in the quarter. Can you provide some more color in terms of the type of work you're doing there? And there's talk of the Health Care Act potentially being repealed. Would that have an impact on the business, or is a lot more of it tied to areas like the Medicare and Medicaid claims processing that would be unaffected by that?

Well, again, I don't want to predict what will happen at the Supreme Court of the U.S., but I would tell you that my sense is that the bigger issue that the health care industry and governments are facing is really the cost of health care. And so regardless of what happens there, the cost of health care continues to rise, and information technology is part of the solution. We're active on a lot of fronts. It's not only on the government side but also the commercial side. And I think you can see, as you mentioned, the growth that we're experiencing. We broke out the health vertical a couple of quarters ago, and we continue to see -- I think it now represents about 11% of our revenue and it’s growing at a double-digit rate. We're active, as I say, with health exchanges, with automating health records, auditing, as I say, Medicare and Medicaid claims. We're very active in setting up these and bidding on these HIX exchanges, health information exchanges, across the U.S. and expect to continue to win the business in there. So the outlook for health globally for us is very, very positive and hence, the reason we broke it out so that investors would have more visibility into what I consider to be a long-term, high-growth vertical.

The next question is from Julio Quinteros with Goldman Sachs.

So a couple of quick ones here. When we think about the path of the reported revenues, obviously, it's important to sort of get to that point. I mean, is there anything in the results this time around on how you guys are trending as you begin to anniversary some of the drags for growth that we shouldn't expect to see the acceleration in the reported revenues into the back half of the current fiscal year?

No. I would say on that -- against that measure, we're on track. The CIA and the low body shop business, their contract in Canada have run off now effective the 1st of April. The larger financial contract on the GIS for infrastructure business runs off early May. So when we look at those coming out of our comparables, and I think you see that when I look at the sequential growth. And I also pull them out that we're actually experiencing real year-over-year growth with the existing results. And we expect that to continue in the balance of the year.

Okay. One of the guys commented on all of the results that we've seen from some of your peers both within India and in the U.S., and I think the one area in particular that I wanted to sort of focus on was the financial services vertical, in particular, where there seems to be a lot of weakness in terms of discretionary spending, in terms of pushing out work or delays. What's sort of your specific experience in terms of financial services? I know you sort of neutralize out some of the noise in that vertical. What are you seeing and hearing on the ground from clients, and what's your expectation going forward for that vertical?

Yes, again, it's a good question. I would remind investors, of course, we have the advantage of having a lot of opportunity and work with the Canadian banks who continue to invest in terms of cost reduction, releasing new products and, in some cases, actually expanding their businesses outside of Canada. But we've got a very strong foundation upon which to build. We're also seeing more globally, though, interest in our IP software, where financial institutions are looking to upgrade their capabilities, who are, in some cases, go to our SaaS model, on things like Trade360. I also expect to see some of the banks participating in that rebalancing that I spoke about earlier, where they may well have quota out their appetite for offshore and be looking to rebalance some work, either existing or more likely new work in North America. So we also have a very strong P&C segment that is very healthy for us that we include in the financial sector, and we continue to see good opportunities in that area. Some of these companies are actually looking at de-neutralizing. And this is a good opportunity to help them bring down their cost before they do that.

And just lastly, kind of hearing you talk about the increased efforts around home-shore, nearshore relative to offshore, this almost gets back to probably one of the first conversations that we had about where the headcount growth is in your business. And just looking at the sets you provided, it never seems to change in terms of headcount growth. Do you think that that metric from a headcount growth perspective needs to actually move higher from here, especially as you continue to sort of tap into some of these opportunities where folks actually do want to bring some work more towards the nearshore side? So should there be more headcount expansion in the model or not?

Yes, it's a good observation. Of course, one thing that actually helped hold our headcount last year was that we increased the working hours in Canada to 40 hours from 37.5, so we picked up about 6% capacity in terms of hours without adding any headcount. That has worked through the system now, and we certainly have pockets in Canada and in the United States, especially in the United States, as we bring on these bookings into revenue that we're actually hiring. We're also growing our Indian operations at a double-digit rate. But again, in that case, as I said I think earlier in the year, or late last year, we set that capacity up, so we're essentially filling it out now. We will see some pressure on the headcount. But again, I think investors ought to expect that CGI's headcount-to-revenue ratio will remain fairly stable because again, a lot of our work is fixed price or outcome-based. And against that measure, we're driving high productivity, and as a result, we're able to do more work with the same or less people.

The next question is from Richard Tse with Cormark Securities.

Mike, just to -- I wanted to sort of touch on that question about the back half of this year. So as you look forward to the next, call it, 12 months, do you see any sort of potential contracts that could be, I guess, up for renewal or at risk, or are we pretty much clear of that and pretty much at the base level or sort of start to accelerating that revenue again?

No, I don't think we have anything material. The Bell one is out until 2016. That's probably the more material one that you'd be interested in, Richard, but we continue to do good business there and have a very satisfied client. So National Bank was the large one that was coming due, but we've rolled that one over and extended it. So no, we don't have anything of significance that comes to mind here over the next 12 to 24 months.

Okay. And then in regards to just some of the trends in the market, can you sort of talk on sort of pricing? And there are some data points out there that would suggest that the market’s become a little bit more price-sensitive. And I guess in a related question, clearly, you guys have done a great job in terms of the margins. How do you look at balancing margins and productivity improvement with winning new business in light of -- if the price-sensitivity is a factor these days?

Well, again, I think unfortunately, in our industry, a lot of time a project win is not really a win because the project doesn't get delivered on time and on budget. The customer is unhappy. The employees are unhappy, and the supplier gets burnt. So we continue to hold to know our criteria. First thing we want to do is make sure we're bringing on quality work that brings value to the customer in terms of price, quality and risk and then delivers a fair return to our shareholders. So again, I would say that we feel that we're very price-competitive when you consider all 3 stakeholders, including the need to give a return to our shareholders. And we're going to continue to stick to that philosophy. I think, as I said numerous times, one can bring on low or no margin revenue rather readily in our business, but it's not accretive and it's a cancer, really, in the industry. So we don't think that we're disadvantaged with our pricing. In fact, I would tell you we probably have some of the lowest overheads in the business. What we like to do is get fixed-price work where the customer has no or 0 risk. We take on the risk but for higher returns, and you're seeing that in our business and our business model. But when I look -- and I do benchmarks of our pricing, our offshore pricing, our nearshore pricing, the kind of client intimacy work we do, we're very competitive, especially when you compare us to some of the larger firms.

And I guess if you look at some of your competitors who have been getting hit as a result of not being as focused on profitability, do you think that sort of increase the opportunities for M&A for you right now?

Well, again, first and foremost, I think it provides us with an opportunity for organic growth because I think clients are tired. I was on a call with a large client who had chosen another supplier and had come back and reinforced the point that I'd been making. In the IT services business, the biggest isn't the best. Simply put, the best is the best. When it comes to delivery, your scale doesn't guarantee that you're going to deliver on time and on budget. So I think it does afford us opportunities. We do get callbacks. We do get called in, actually, much like a fireman sometimes, when a project’s on fire, and they ask us to come in and see if we can fix it and bring it around. So we do get opportunities there. On the M&A side, obviously, valuations are low, but they're low for a reason. They're reflecting the performance of some of the competitors, and they're reflecting the markets in which they operate. So we continue to look there. But again, we'd have to be satisfied that it was something that could significantly advance our overall strategy here. And again, we're very much focused on the quality of the revenue and what we can deliver in terms of consistent performance for shareholders. But we continue to look. We have a funnel. But you need to find the right target, the right price and the right time, and you also have to get a willing seller.

The next question is from Scott Penner with TD Securities.

Mike, I just wanted to ask about the cloud, actually. The $2 billion in identified opportunities that you've talked about, what is the timing of these awards, 12, 24 months or so? And then just secondly, on the drive to move your own applications advantage and such into the cloud, just any update on the level of progress there and the interest from clients?

Okay. So again, that backlog is in the U.S. Federal Government. Again, just to remind investors that the outgoing CIO of the Federal Government had set some aspirations and targets that 25% of their applications would actually ride on the cloud. So there's certainly a driver that's impacting behavior, hence, more and more of the departments are looking to stand their environments up in the cloud. We're one of the few certified cloud providers to the U.S. government. And as I said before, we made a bet, a big bet, by really standing up sufficient capacity in there so that we wouldn't be taken out by not being able to absorb. What we saw was really a significant opportunity and has turned out to be that way. As I said, we've already booked $100 million of cloud work that's really future revenue to us, and we're pursuing the $2 billion that we've identified. Normally, that would take 12 months, maybe even slightly longer out to 24 months by the time they go through the entire process to an award. And on our own front, we have advantage on the cloud. We're working that. It'll take a little time because you're dealing with smaller jurisdictions. And Momentum is also on the cloud. And again, we're working opportunities with agencies who will look at not only Momentum on the cloud but maybe Momentum under a more traditional model as well.

And could you just, Mike, maybe talk about qualitatively the availability of some of your IP solutions in the U.S.? Do you have -- in Canada, the type of solutions that are in part driving those sort of margins, are they fully available in the U.S.? And assuming that's not the case, what is the time line for that?

Yes, there are some that are -- we have, I guess, we have IP solutions by vertical, and then we have some that are horizontal. Things like CACS, which is our collection platform, is horizontal. Things like Trade360 are horizontal that can cross geographies. We have some solutions in the wealth management space in Canada that, up until recently, have not been available in the U.S. We have identified those. We're making the investments to make them U.S.-ready. And in fact, MVest, which is our big portfolio management system for funds, is now available in the U.S., and we've already identified the first client there. We're staffing up the marketing communication strategy. So that's an example, Scott, where you'd see some of that migrate into the bigger U.S. market. Now on a broader scale, we're also looking at all our IP in terms of identifying more of it, creating more of it, partnering for more of it, buying more of it and making it more global so that we can contribute to our internal goal here of attempting to increase our IP from 20% of revenue to 40% over the next 5 years.

Great. Just one for David, if somebody could elbow him and wake him up. The interest expense was higher than I had thought it would be, and I guess that stems from the activities late in the December quarter. But if you could just talk about whether, I guess, that's, in fact, the case and whether this is a good level going forward.

At this particular point in time, it is a good level going forward. We're watching Europe very closely because when we had taken out the notes in December, when we glued down about $470 million, at that particular point in time, we had the intention to go into a swap program. But coming out of the summer with the issues that we saw in Europe, the rates were at such a level that it really didn't make a lot of sense for us to lock in over the 10 years under that vehicle. So every day, we're watching the rates to see if they do come down, if it's the right time for us to move forward.

So it is your intention to kind of look at those swaps at the right time?

We have been watching them daily.

The next question is from Kris Thompson with National Bank Financial.

Mike, just on the SI&C revenue, it looks like it was up very strong this quarter. Can you comment on your staff utilization in that segment and maybe how we should think about that figure over the next couple of quarters?

Well, I guess to quote some of my business unit leaders in the U.S., they're running red hot, their term, when it comes to utilization rates. So utilization rates have gone up a lot in the U.S., driven by previous bookings coming onstream. We still have room to grow the utilization in Canada and in Europe, but the big move here in the past quarter was really ramping up of our U.S. business. But on a corporation-wide, we still have some room to move up our utilization rates.

Okay. And on Stanley, it's been about a year and a half since closing that deal. If I recall, they had more cost-plus contracts than you traditionally had in the fixed cost area. Have you had any traction converting any contracts as they come up for renewal in Stanley? And should we think about that as an opportunity for you to increase your margins in the U.S. going forward?

I think it's a long-term opportunity, Kris. It's not going to be short term. I think what's happened in the year, a lot of things have changed there. And I think, to a large extent, how they’re procuring at the defense side is still more status quo than a marked change. And so we'll have to kind of see after all the budget work is done whether that drives the change there. As I mentioned, I think the opportunities for that are primarily on the infrastructure -- or on the IT side as opposed to the BPO side because a lot of times, these people on the BPO side are doing specific functions that are more orientated to time and material or cost-plus than they are to fixed price. But we've been able to move a couple of contracts to a prime from a sub, where we were before. But we haven't seen a marked change in terms of fixed-price work.

Okay. And earlier, you gave some good examples of what you're doing to boost your software footprint from 20% to 40%. Do you have any examples from your partnership with TEPCO, and are there any other kind of large infrastructure software vendor partnerships that we might think about going forward?

Well, there are. We're constantly relooking at the list. If we just use TEPCO, as you mentioned, we acquired their social networking software internally. We call it Synergy [ph], which is our internal name for it. We stood it up on the cloud, and we're reselling it and remarketing it in North America to other clients as a cloud offering, so a pay-per opportunity. So it does give you an opportunity -- an example, a good example of how we can still reach our objectives of driving up the utilization of our assets by partnering with good quality companies that have good offerings, putting it together and delivering a unique proposition to our clients. So that's just one example. But yes, we continue to identify partners and tend to look at them a couple ways. In some cases, they're the big, large companies that you would know. In other cases, they're emerging IP-based companies who have a lot of potential but need more firepower or in some cases, the access to our data center facilities and our services business, which is not their core business nor in their strategic plan.

Okay. And just the last one from me, you talked a bit about M&A opportunities. And specifically, in Europe, your revenue is still low. Is that a geographical area where you'd expect to do some M&A in the future, or is that just too risky right now?

Well, again, you're mixing the future and right now. In the future, yes, we do believe that increasing our local presence in Europe so that we can ensure that we can follow our clients around the world and actually capture a bigger wallet share of international clients is very, very important to us. So in the long-term strategic plan, when we look at doubling the company, clearly, Western Europe is in that plan. As far as immediate situation, I should say there's a lot of uncertainty over there. We would have to find, as I mentioned previously and I'm sure you're getting tired of it, the right target at the right price and the right time. And we're not looking for 2 out of 3. We need all 3. We're significant shareholders in the business here, and we want to make sure that whatever we do is something that we can actually execute to. And so again, we continue to look. Europe is definitely an area that we're committed to over the long haul as part of our strategic plan.

The next question is from Bryan Keane with Deutsche Bank.

I just wanted to talk about the Canadian business. I guess excluding IMs [ph], it was down 5.5%. I guess that was a little slower growth than we would have expected. What else was inside of Canada that caused the drop-off? And then what is the Canadian business look like going forward as we get past the CIA contract and the runoff with the government contract?

Yes. So again, good question, Bryan. First off, again, as I mentioned, if you look at second quarter 2011, we had the 2 things that we have mentioned, the divestiture of CIA, the runoff of the body shop contract. But last year, second quarter was a huge revenue quarter. In fact, it was about $30 million higher than quarter 1, and it was $40 million higher than quarter 3. So it was a bit of an anomaly in terms of the strength of the operation that quarter, so the year-over-year comparison was particularly difficult. The CIA and the body shop contract have run off now in terms of the comps. So when we look at the upcoming quarter and back half of the year, we're actually looking to see the organic growth in Canada pick up. The margins are exceedingly strong in Canada. We continue to look at opportunities even to improve those. So on balance, I'm very optimistic about the Canadian operation. The economy here is running still very strong. All the jobs lost during the recession have been more than recovered. Bank of Canada is even talking about maybe ticking up interest rates here. So the economy is much stronger here, and we're seeing it in Western Canada. The oil and gas business is booming. Our Québec market, particularly Montréal, is strong. And again, Toronto is just a big, big market where we're still underserved in terms of possibilities. So I don't think you should read much into the Canadian results in quarter 2. But the go-forward back end of the year, I think we should see some improvements there.

Okay. And that's helpful. And then switching to the U.S., obviously, very strong EBIT margins. Is that something that's sustainable, or were there some onetime items that propped up that margin?

Well, there's some onetime items, but, as I said, in the business, given our size, we're going to have onetime items hopefully every quarter. So I think what's more important there is directionally, we've targeted and focused the team on improving margins as we grow, and they've done an excellent job of that. So we do expect to see U.S. margins continue to be strong, whether they’d be that high as it was this quarter. But certainly, on a year-over-year basis, we expect EBIT and earnings to be up in the U.S.

Okay. And then just last, maybe a big picture question on the demand environment. Any change that you saw in clients' willingness to spend in any in the regions, both positive or negative, over the last 3 months, or has it been about the same?

Well, I think it's probably, Brian, been about the same. I would say that obviously, our bookings were a little light this quarter. A number of deals that we had in our sights have slipped to the back half. A lot of them have closed since the quarter closed. So I'm not sure that's a pattern yet because, as I say, they have, in fact, closed. They haven't disappeared, just slow closing. So no, I wouldn't say I've seen any big shift in demand. There's a lot of business out there, and customers are looking for help. And if the economy stabilizes, especially in the U.S., I think we could see some, finally, some help from the market in terms of demand, but I haven't seen a lot of that so far.

The next question is from Paul Treiber with RBC Capital Markets.

I just want to jump back to Q2 bookings again. Could you quantify the amount of deals that slipped and are now closed? And then also, did the formalization of the U.S. defense budget earlier this year have an impact to bookings in the quarter?

First, on the defense budget, no, that didn't have an impact on the quarter. The second quarter, our second quarter, is always a slow quarter. In the government space, it was last year, it is this year. Governments normally start to prepare and release their RFP for vehicles and for business. We spend the time answering them, and you start to see the bookings come in the next 2 to 3 quarters. On the first question, no, I wouldn't quantify that. I don't think it would be a material number after a week or so here. It's just a directional statement to say a number of deals that could have fallen in the second quarter have slipped into the first couple of weeks. And I think you'll see that in the bookings for the back end of the year. We're still very strong on our bookings. We booked $5.1 billion in the trailing 12 months. We should always look at bookings and cash on a last 12-month basis. And against both of those measures, we're still optimistic that we're hitting the targets that we've set for ourselves.

Okay. And then in regards to the new data center in Texas, should that have a material impact on CapEx next quarter or through the year? And then in addition to serving customers in the Texas area, do you see an opportunity to consolidate some of your other data centers into that new one?

Well, first, a clarification. It's not a data center. It's a Center of Excellence. These are people that are doing application development, application maintenance, so it's not a new data center. So there's no impact on CapEx. And it's not designed to do work only in Texas. In fact, we expect and are doing work from other points across the U.S. in all 3 of our existing Centers of Excellence, nearshore centers in the U.S.

The next question is from Maher Yaghi with Desjardins Capital Markets.

I wanted to ask you about your growth opportunities. When we look at other companies in your sector, they're noticing a very strong growth in developing countries, while some of the developed countries are trailing back. How do you view your positioning in the global market for outsourcing? Do you consider potentially getting into developing countries in terms of -- starting off from pockets of products you can offer to clients based in developing countries to maybe boost your growth opportunities or you're happy with what you have right now and you're focusing on gaining market share in the markets you're in?

That's a good question. And again, the answer is really twofold. First, from a strategic standpoint, when we look down the road in our strategic plan, we do believe expanding into some of those developing nations is a very key part of our growth strategy. In the near term, though, we're focused in the parts of the world where 70% of the IT spend is. So our view would be to continue to focus in the near term here to gain bigger share, to expand our capability and reach in the existing geographies we're in. The second part of your comment, though, is a good one. We do, in fact, have some pockets in areas like Singapore, and that's where we follow our clients. We are committed to follow our clients. We even follow [indiscernible], for example, around the world into China and other spots, Japan, where they set up. But in the near term, we would focus on North America and Western Europe. We do sell some of our IP, though, into South America and into Asia, either directly or through resellers so that, in some cases, our IP is entering markets that we're not in.

Okay. And just a follow-up in terms of your -- maybe if you can give us an update on your buyback program and your priorities in terms of allocating cash. When we look at return on invested capital compared to last year, it was running in the 15%, 16%. Now it's in the 12%. Do you still prioritize buying back shares as your first use of cash? And would you consider keeping that cash on the side until you see potentially an acquisition opening up, or you're still really hard on the pedal here in terms of buyback?

Well, again, do you want to comment there?

No, go ahead.

No. I was just going to say I think our priorities for use of cash are fairly clear, reinvesting back in the business, and we are -- things like the cloud. We talked about our cybersecurity. We are investing -- or setting up nearshore centers like Belton, Texas. So we continue to invest our money back into the business. Secondly would be an accretive acquisition. The third thing is buy back shares or pay down debt. We were a little heavier on the debt repayment this quarter. As one of the questions was asked, our debt costs are much greater than they were this time last year. We haven't been able to find the right window to do the swap. So we took a little more down on the debt side this quarter, a little less on the share side. But we are still committed to the share buyback, and we'll continue to look at balancing our use of cash across both share buyback and debt repayment.

The last question is from Michael Urlocker with GMP Securities.

Mike, we had done a fair amount of work on kind of the industry perception of the FI$Cal project, and we had a sense that you were well positioned. It didn't work out. What's your analysis of that project, and is there any lesson to be learned here for your company?

Well, again, first off, I don't think the award has been totally finalized yet. There are still reviews underway. We eliminated a lot of global competition. I think it's public knowledge that the award was very, very close, something like -- I could have been wrong there. I don't know if you have it available, Lorne, but on 2,000 points, I think we were different by 30 points. So it's an extremely, extremely close award. And it's also, I think, public knowledge that against the technical criteria, in other words, the fit to what the customer was looking at, we won against every item on that technical list. We were beat on price, and so that's an interesting combination. So we'll see what happens there. I don't personally think that it's over totally. I think that there's a lot of questions being asked about the balance between cost and technical fit. And from an operator's standpoint, those type of questions are the right questions to be asked. So California, they continue to look at it. We obviously value California as an important client. We're doing a lot of business in California, and we obviously will respect their final decision.

Okay. And then if we look at broadly the industry, there's a lot of action in terms of business opportunities for data or big data or analytics. There's also a fair amount of consolidation going on of software companies. Do you feel like you've got the right competitive tool set in that arena?

Well, I do. I think, again, you're right. There is some combination of consolidation going on in software companies. But then again, there always has been. The issue really becomes the software needs to be connected to somewhere. The big data needs to be connected to somewhere, and this comes to services business. And we're, first and foremost, an IT services firm. And as I mentioned and used the example of TEPCO, we can partner with independent and other software firms to actually incorporate their software into our offering. We can also do the services arms of companies like Oracle. We were recognized again this year, the second year, I think, in 4, as the ATG, which is an Oracle product, as the integrator of the year. So there's lots of room there for us to grow our business. You'll always need services firms. And I think our model is unique that way. We have proximity to our clients. So we're right there in the locations where the decisions in the business is. And then we have a much more balanced global delivery offering that, as I mentioned, for years was considered contrarian and is now starting to, I think, demonstrate that, in fact, we may have got the model right there in terms of what customers are looking for as they attempt to balance all the elements of value, price, cost and risk.

Thank you, Michael, and thank you, everyone, for joining us. I look forward to seeing you all back here end of July for our third quarter results. Thank you.

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