Good day and welcome to the ICON Quarter 1 2012 Results Presentation Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Sam Farthing, Vice President of Investor Relations. Please go ahead, sir.

Thanks, Gwen. Good morning, good afternoon, ladies and gentlemen. Thank you for joining us on this call covering the quarter ended 31st of March 2012. Also on the call today, we have our CEO, Ciaran Murray; and our CFO, Brendan Brennan. I would just like to note that this call is webcast and that there are slides available to download on our website to accompany today's call. I will now make the customary statements in relation to forward-looking statements. Certain statements in today's call are or may constitute forward-looking statements concerning the group's operations, performance, financial condition and prospects. Because such statements involve known and unknown risks and uncertainties and depend on circumstances and events that may or may not occur in the future, actual results may differ materially from those expressed or implied by such forward-looking statements. Given these uncertainties, and as forward-looking statements are not guarantees of future performance, investors and prospective investors are cautioned not to place undue reliance on such forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statement, whether as result of new information, future events or otherwise. In addition, the following commentary specifically includes restructuring charges taken in quarter 1 2011, amounting to $5 million. These charges relate to lease write-offs and headcount reduction costs. As noted, this presentation includes selected non-GAAP financial measures. For a presentation of the most directly comparable GAAP financial measures, please refer to the press release statement headed, Consolidated Income Statements Unaudited U.S. GAAP. Our non-GAAP financial measures are not superior to or a substitute for the comparable GAAP measures we believe certain non-GAAP information is more useful to investors for historical comparison purposes. [Operator Instructions] I will now hand over the call to Brendan.

Thank you, Sam. Good day, ladies and gentlemen. In quarter 1 2012, net revenue was $252.3 million compared with $229.3 million in the same period last year, which represents an increase of 10% year-on-year. Organic constant currency growth was $21 million or 9%. FX had a negative impact of $4.2 million, so constant dollar revenue was $256.5 million. In quarter 1 2012, our top client represented 13% of revenue, in line with 2011. Our top 5 clients represented 43% of revenue, up from 37% last year. Our top 10 clients represented 59% of revenue compared to 52% last year, while our top 25 accounted for 77% of revenue compared to 69% last year. We continue to expect client concentration levels to increase in the short to medium term, given the shift towards deeper partnerships with our clients. In quarter 1, 57.3% of our revenue was generated from outside the U.S., broadly in line with last year. Our Asia-Pac and Latin America regions' revenue was 11.7% of group revenue compared with 12.1% for 2011. This modest shift back to the U.S. was predominantly driven by acquisitions during 2011. The absolute dollar amount of revenue from our Asia-Pac and Latin America territories continues to increase quarter-on-quarter. Our staff levels reached approximately 8,670 by the end of quarter 1, up 205 from the levels reported at the end of Q4 2011. A large proportion of this increase related to the 2 acquisitions announced in quarter 1, Beijing Wits and PriceSpective. We continue to see leverage on the investments and staff we made in the middle of 2011. Gross margins increased to 35.7% in the current quarter, up from 34.8% in Q4. SG&A amounted to $67.5 million in the quarter or 26.8% of revenue. This compares to $67 million in Q4 2011 or 27.6%…

Okay. Thank you, Brendan, and good day, everyone. I'm very pleased to report that our growth business wins from quarter 1 is USD $485 million, and that's a record number of business wins in a quarter for ICON. Particularly satisfying is that these awards included 2 significant awards from outside our strategic partnerships. And I believe they rose from our successful differentiation strategy and our enhanced services and informatics offering. As you know, we acquired Firecrest midway through last year, and combined with our internally developed ICONIK system, we think we've constructed a differentiated service offering that can drive faster equipment, better quality and more efficient monitoring of clinical trials. Cancellations in the quarter were $100 million, within the 3% to 5% range of opening backlog that we target, net book-to-bill was just over 1.5 and the backlog at the end of the quarter was $2.4 billion. In terms of the business environment, we continue to see satisfactory demand across our client base. RFP value in quarter 1 was up 8% compared to the same quarter last year, and up 9% on a sequential basis. We also continue to see engagement by senior executives from a broad spectrum of biopharma companies, exploring how they can work with ICON across our services to transform their development model. There continues to be a number of significant discussions in this regard. While we were achieving significant levels of new business awards, we do remain focused on driving leverage from a cost base and efficiency across the service offerings. We saw a sequential improvement in both gross margin percentage and SG&A leverage in quarter 1 and see this as a step towards reaching our normal levels of profitability. I'm pleased to note improvement across all of our divisions in this regard. As Brendan said,…

[Operator Instructions] We'll take our first question from John Kreger from William Blair.

Ciaran, if you think about your current business mix, where do you think your EBIT margin can get back to? Do you still think you can get back to the sort of 12% to 14% range? And if that's feasible, how long do you think it'll take to get there?

I do think we can get back to that range, John. It's about continuing to drive increases in the top line and get leverage from the staff investments we've been making. And at the gross margin line, it's about leveraging -- the leverage and the cost base for SG&A off our global business services model. So I do believe we can that get back there. That's what we've been saying very publicly for some time. And on timing, I haven't changed my estimate of when we get there. The targets for this year is to get to the range of 8% to 9% and then to increase gradually to 2013. I would expect at some point 2013 to approach the bottom end of that target range. And then beyond that, we'll just continue to build on the business, to tweak the enhanced service offerings we have, to use informatics to drive more efficiency. So we haven't really changed our outlook on that, that we would've articulated since, I suppose, the back end of last year.

Great. And then a quick follow-up, what do you think a steady state operating margin can be for your Central Lab and Clinical Pharmacology businesses, assuming they continue to grow?

The Central Lab, I think, will move towards double digits during the quarter of this year, really by increasing revenues through the fixed cost base and the incremental contribution from last. I think at the scale that our lab is at, if I look forward, somewhere around that low double-digit margin is probably a realistic expectation. We will continue to invest in that business. It's become an important part of our strategic account offering in our range of services. And I think as we see the market grow over the next couple of years in territories where our footprint isn't as strong in the lab, I think we will see the need to invest in there. Particularly, I'm thinking of Asia-Pac to add to our capacity there, in line with growth in the markets. So I think double-digit, low double-digit margin, while investing in the long-term health of the Central Lab business is what we would expect to do and what we would try to achieve. On the Early Phase Clin Pharm business, it broke even in Q1, which was a tremendous milestone after some of the difficulties at the start of the last few years. It has grown its revenue base. It's found a number of significant strategic accounts, which give some consistency to the flow of business. However, I think it's fair to say all of us who've worked in this business for long enough are wary of the level of volatility that you can get in the Clin Pharm business. It's like running a hotel business, we have a large fixed cost there, we provide facilities. But it's not like the Late Phase business with a big, long duration backlog, business tends to come in and start up more quickly. It is more subject to the inherent nature of some of the medical research and the first in human and drug availability and regulatory and ethical matters. It can be more volatile. So I think it will continue to grow. It will move in this year towards profitability, but at modest levels. And it will still hold a little bit more volatility risk than some of our other businesses.

We'll take our next question from Tim Evans from Wells Fargo Services.

Could you maybe just talk about what is causing the geographic shifts that are impacting your tax rate and why you expect them to go back to normalize?

Yes, of course, Tim. I mean, really, the function of tax rate is the function of where you were and your revenues, and the more revenues that we earned given the tax model we have in place, the greater element of that, that comes into lower taxed regions. And so, effectively, as the profits go back up to what we say would be historical levels, what Ciaran was talking about there, into the 8% to 9% range that we talked about, we would expect that it would've been no more an even normalized structure in terms of how we would generate operating income. So the operating income would then go fall -- or the additional or excess operating income would then fall into the lower taxed base countries. And hence, you see where our margins are low, we're paying more taxes in the high taxed regions, the probability comes back. What effectively happens is you're paying actually more of your profits in the lower taxed regions, then hence, the overall effective tax rate comes down.

Yes. Okay. Can we just sneak one in on the headcount? It was a little bit lower than I was expecting, given that most of those were acquisition oriented. Did you slow down hiring in the February, March timeframe? And is that something that we should expect to continue to stay low throughout the rest of the year?

No, Tim, we didn't particularly slow down hiring or do anything differently from our normal state of hiring. I think we all look back to last year when, in the first part of the year, we held excess levels of staff in anticipation of some on-boarding of significant strategic work, which we had expected, and then we hired very aggressively in Q3 for the ramp of that work due to the particular structure of it. But beyond those kind of unusual circumstances, we are in line with forecast revenue. So when we look at quarter 1, we can see that, that's the first place we start. We look at our staff, we look at the geographic mix of where people are, we look at where we can get productivity enhancements. And then in any quarter, some projects start up and some projects roll off. And we had a number of big-enough projects rolled off in Q1 and therefore made staff available that could be absorbed into working on the new projects. So it wasn't so much a conscious decision to slow off hiring, but we hired the right amount people for the revenue that we had in Q1 and for the increase in revenue that we expect to have in Q2. As we look through this year, we are expecting to grow our revenues fairly significantly quarter-on-quarter, in line with our forecast. And as we do that, we have to make sure that we continue to hire in line with that forecast. So it really be that linear function of growing revenue we'll need to growing headcount, but we are conscious of getting leverage on our cost base, of deploying new technology where we can to help our productivity, and those are the factors that drive headcount growth.

We'll take our next question from Steve Unger from Lazard Capital Markets.

Ciaran, you made a comment early in the presentation that I just wanted to elaborate on. It is the fact of the -- the IT platform with Firecrest is differentiating yourselves in the marketplace and allows you -- enables faster recruitment. I was wondering if you could just elaborate on that.

It's really -- I mean, the -- we're getting technical on this call, Steve. Firecrest platform automates a lot of the site works and the training. It lends for easier administration of the trial at site level, and therefore, it's a great incentive for investigators to work on the trials and improve in it, and analyze for smoother processing of data, as we bring it back into our data capture module. So it just improves the ease of use and the efficiency and the consistency and the quality across the site. And that combined with sort of back-end engines like ICONIK, which drives significant data on patient safety, on sites and on staff performance, allows us to just speed up, to some extent, the trials to improve the quality and consistency of the output. And that's an attractive value proposition to our customers.

Got it. And then as far as IT expenditures then going forward, are you pretty much where you want to be as far as the overall IT infrastructure and data management?

Yes is the answer. We've been investing pretty heavily in infrastructure over the last number of years. I mean, I go back to the -- my time in ICON, it was even 4 or 5 years ago. We -- what now looks like 4 sites that may have just been serendipitous good fortune, we invested about $8 million in our Oracle ERP platform that we've rolled out over the past number of years. And it gives us the ability to have good data, good systems right across all of our businesses. Last year and the year before, we probably have about $12 million to invest in our lab, our lens operating system in the lab, and we're seeing some of the benefits of that in the improved lab performance. We've been investing across the whole business ICONIK. We invested a good deal of money in, in the last few years. And of course, some of what we acquired is through the acquisition and Firecrest. So we've been at, sort of, in or around what I'd say is the run rate for our investment strategy, so I don't expect that in the nearer term, that it will increase significantly -- and by the nearer term, I mean in the next year. With that being said, information is always changing. It's advancing, I think, the role of big data and data in clinical trials and/or data needs. Medical science is going to be a significant driver in the future. And so we'll continue to stay abreast and ahead of the IT development. But there's no significant uptick forecast in the time horizon that we're looking at.

Excellent. And then just a follow-up, on just the impact of currency in the acquisitions that were completed in the quarter, I didn't get that in the opening comments.

Sure, Steve. What I said specifically on those points was that in organic constant dollar terms, we were up 9% year-on-year. In absolute constant currency terms, we would've been up 12% year-on-year. And then our actual, the real number, I suppose if you want, is up 10% year-on-year. So that gives you a lot of different percentages, so you can do the plus and minuses to get what the acquisition impact was.

We'll take our next question from Greg Bolan from Sterne Agee.

Can you give us an update on the, kind of, the plan for who will succeed Alan Morgan, now that he's going to be leaving here pretty soon?

Alan actually left back in October, Greg, and since then, Steve Cutler has been running the Clinical business for the last 6 months. And I'm happy to say he's running it very well, as we've seen by the performance tick up in both Q4 and Q1. So that succession has happened, and it's going to plan and we're very, very happy with it.

Got it. Related question on Clinical, just kind of backing into clinical operating margin, it looks like maybe 4% to 5%, is that the correct way to think about it, Brendan?

Yes, it's in that region. I mean, it's essentially a large part of the business, it's usually reflective of the overall percentage, Greg.

And just curious, just in terms of where that margin would be, excluding possibly a drag from your larger strategic partnership. I guess the question would be, is the larger strategic partnership a drag on that margin, and how much could that -- I guess, the biggest driver for you getting to 8% to 9% in the fourth quarter is that kind of the drag, I guess, loosening if you will throughout the year?

Yes, that's correct, Greg.

We'll take our next question from Sandy Draper from Raymond James.

I guess, Ciaran, maybe just any color you can give us on the 2 deals you said that were large that were outside of the strategic partnerships? I guess, are these things that you think down the road, could lead to strategic partnerships? Are these companies you've done a lot of business with, a little business with? Just any additional color on those deals and why you think you want them would be great.

I mean, the first thing is I'm really happy about those 2 deals. It's always good to win significant amounts of business outside of your kind of normal constituency. So one of them -- I can't say too much obviously for confidentiality reasons, but one of them is sort of a company we've worked with periodically and do some work with, but this is significant in terms of, not just the size and the particular therapy that it addresses. The other one sort of company that in clinical, we haven't done any significant worth within the past. So we have worked with them in some of our earlier service offerings, so it's sort of new territory for us. They're both substantial in size and duration. And I think our success was around the differentiation strategy. And we've done a lot of work since we kind of launched back in quarter 4 2010 and we launched our view of the world in our strategy. You guys might recall the Analyst Day down in Doylestown in Pennsylvania, and we've invested a lot in our range of services. We've made acquisitions in technology in Late Phase with Oxford Outcomes, with PSP. We've increased the footprint in China and Asia-Pac with KendleWits and organic investment. We've ponied up and put a lot of focus on our internal informatics capabilities around the ICONIK platform. And we've done a lot of work on underlining our organization structure to be efficient and to support our strategy, and as you know, the minimum amount of layers, the maximum amount of communication in the company, both internally and with our customers. So I think drawing all of those factors together and our current value proposition, building it on the legacy of a company that for 21 years, given the odd speed bump on the way, has been a successful company, and to see our sector and grow on from small beginnings to be one of the leading players in the world, and that sort of gut success and performance written into DNA. So you add that heritage and that legacy and that confidence and pride to the current value proposition, to the current market, which is benign due to the secular shift towards outsourcing. And I think we have a compelling value proposition there that we're articulating and that has been successful so far. But we're forward-looking like everybody. I'm very happy with the quarter, but we've plenty to do and we're going to keep doing it, we're going to keep differentiating ourselves and trying to deliver at the highest level and look forward and take it forward from here.

We'll take our next question from Todd Van Fleet from First Analysis.

On the Clin Pharm business, sounds like you hit a milestone this quarter, but because you've mentioned the businesses tends to be a bit more choppy. Are there any broad, I guess, developments in the marketplace that you think are going to impact you favorably or disfavorably moving forward? Or is it just kind of quarter in and quarter out, you kind of take it as it comes, like you're just kind of thinking about your -- want to get your kind of 12-month outlook, I guess, on the Clin Pharm biz.

On the Clin Pharm biz, no I think we take each quarter as it comes. I think a significant thing for us in the Clin Pharm biz, and it's more ICON-specific than it is really in relative market, is that over the past number of years, the management team in that business did invest in it. We built up our bed capacity. I think a few years ago, it was as low as 80 beds, and we built it up into 200s now. So we've got a better service offerings. We've also added more scientific services around it. We've integrated it into division with our Biomarker and immunoassay labs and our Biomarker strategy. So we've come up with a fairly compelling service offering in Clin Pharm. And to the guy's credit, they've taken us to market over the last 12 months when a number of significant strategic accounts, which give them a more consistent revenue flow and little bit more visibility than they had in the past, notwithstanding the inherent volatility. They've also been very successful in realigning the cost base over that period and taking care of that cost, which of course helps the profitably equation. So it's really those factors. They've been the same factors that's probably have been in place for the last number of quarters since the middle of last year. And what we've seen is just the revenue is taking up on the back of the account wins and the account relationships, and we expect it to continue to tick up over the medium term.

Ciaran, do you have any appetite to expand your exposure to that area? Maybe there's -- are there any attractive assets in the marketplace that have been circulating, from your perspective?

No, I think we're all set, because if I had, Todd, I wouldn't tell you in this call anyway, but -- in the interest of not letting everybody know what I was doing. But as it so happens, I think the work that we've done in this biz gives us a service offering that we're comfortable with. I think as we take that forward strategically, it's about enhancing biomarker capabilities in our early phase. It's about looking at the impact of genomics and the sort of personalized, stratified medicine approach. So I think it's really about more laser-like approach to what we add in terms of service offering rather than any larger scale appetite for more fixed cost assets.

We'll take our next question from Jack Gorman from Davy.

Just wanted to explore the earlier comments you made on win rates in a little bit more detail, if I can. Obviously, you've flagged very strong win rates this quarter. And indeed, if you look backward last 3 or 4 quarters, your net book-to-bill has been steadily increasing a pretty decent 4 quarterly run rate. You've also mentioned, obviously, some of the internal work you've done on creating a point of difference. Can I just maybe turn on its head and just get a flavor from you what you see is the competitive dynamic out there? Has that changed much over the course of the last number of quarters? And has that, in a way, helped you outperform on the win rates? Or indeed, is outsourcing demand continuing to increase in helping you to do that too? So any color on that would be super.

I don't think there's been a significant change in the competitive landscape, Jack, notwithstanding that I suppose there was a good deal of acquisition and roll-up activity in the sector last year, so some companies may be going through their own integration challenges. But we haven't seen any significant impact of that change in the competitive dynamic. I mean, it's a factor with a number of the long-standing, high-quality companies that perform, and that our principal competitors are people whom we all respect and who, for many years, have been delivering good quality clinical research and good quality business wins and financial results, more or less every quarter, quarter-on-quarter. And they're still continuing to do that and we respect that and we always will. I think what we're seeing in our own specific situation is that the market has been driven by the increase in outsourcing by the more strategic nature of it. And we've always performed well in terms of having long-term, deep client relationships. It's something that was always a core value of ours. And I think we're just seeing that we've put together this service offering. It's really an enhancement of what we've always done. It's back to our basics and our core value and what we believe in. We've seen, I suppose, I think our trailing 12-month book-to-bill is about 1.48. We've seen the benefit of it. But I think it's a function of the outsourcing dynamic in the market, the concentration of that outsourcing to the top, to all of the -- between all of the top players, as people look for the financial model and the geographic reach and the range of services and the informatics capabilities to take clinical research forward. So I wouldn't point to a particular competitive dynamic.

Okay. And just as a follow-up and a kind of broader question, do you think the -- hardly accept obviously that the outsourcing market will continue to grow strongly, do you think the concentration level across the top players as you described, do think we're getting closer to steady state at that at the moment?

It's hard to tell, to be honest. I mean, I think we said about 3 or 4 calls ago, whenever I put it in my commentary, that given the way things look, we expected more concentration in the top customers just as the dynamic in the industry and the large strategic partnerships. I think Brendan has that commentary in today. And we continue to increase, that we know. Where the music stops, I'm not sure.

We'll take our next question from Tycho Peterson from JPMorgan.

This is Ramesh in for Tycho. I just wanted to ask you about Pfizer-associated bookings in the quarter, if that's been in line with your expectations, and if you see that sort of accelerating in the next 2 quarters from what we've seen in the last 3 or so.

Yes. I mean, it was in line with expectations this quarter, Ramesh, to answer your first question. Accelerating -- the flow of the work from accounts like this is never completely linear. And in some quarters, as certain assets move into our space in the development cycle, the award comes into us. So I think it's fair to say that we're onboarding with Pfizer, we're onboarding them, they're onboarding us. We're working through the first number of waves, we've talked about that at length in previous calls where we talked about size, sort of, start-up waves that began last October, and the onboarding of those will go and continue -- I think the last wave starts up in mid-summer. And on top of that then is the work that comes from new assets that are entering and to starting with partners like us, as well as the transitioning. So we're happy with how that account is going, we're happy with the relationship. Guys in Pfizer are working hard and are doing a good job, and we're working with them to onboard the work and that'll continue to flow in line with our expectations, albeit it's not going to be an amount that's linear every quarter. But I'm very happy to say that's going -- so far it's going according to plan.

Great. And just on -- to the cancellations on the $100 million, is there anything to read into that? Is that related to a specific or a couple of specific customers? It was just a little bit larger than maybe we've seen in prior quarters.

No, there's nothing to read into it. There were a couple of specific things, but nothing strange that's worth -- that's previously been scheduled and that was no longer going to be performed. I think if you look back to Q1 last year, it's probably a smaller dollar amount because we had smaller revenue. But I think the cancellation rate was in the early 20% of the quarter's revenue, the same this quarter. And if you look historically, 3% to 5% is our range of cancellations, so there was nothing there that was unusual or noteworthy. It was just a couple of things happening in the quarter on top of the normal run rate, small things that you're always tidying up rather to that number. So I wasn't concerned by it.

We'll take our next question from Robert Jones from Goldman Sachs.

It's Stefan [ph], calling in for Bob. Just a couple quick questions. First in Asia-Pacific, you guys have done a couple of acquisitions or partnerships there recently. How will you characterize your presence there relative to your competition? And as you think about your future geographic mix, is that an area where you guys will remain focused on, on the acquisition front?

Well, in future geographic mix -- I'll take that first. Yes, I mean, if you look at the pattern of activity and development and plans that our customers would have for specific development objectives with just the general growth of economies and drug sales in the developing markets in Asia-Pac, I think it's safe to say that it'll continue to be a growth area, and that we'd invest in it as we need to, to maintain our position there. I feel our position is good in relation to market. We have a very credible offering right across our range of services. We have good scale with some of the acquisitions. We have over 1,100, nearly 1,200 people in the Asia-Pac region there, in various parts of our business. And we have some good leadership and talent that have come on board with the Beijing Wits acquisition. So I'm happy that we're in a good place in Asia-Pac for where we are now. But I think it's fair to say that it is an important area that we'll focus in our growth plans and we'll continue to grow there as appropriate. And the way that we have is a combination of organic, and we have the scale now to grow significantly organic. Whether there are future acquisitions on that will depend on, opportunistically, on time or place of the market.

And just to touch on your biotech client -- you answered it quickly. Last quarter you mentioned meaningful increase in opportunities there. Can you provide a little bit of color this quarter? Are you still seeing improvements in that customer base?

We're seeing signs of activity, yes, in the biotech market. We've seen some of our customers and some potential customers have increase in funding and they're entering the market looking to spend money. So yes, it's certainly plenty to keep us occupied. We'd all just try and win business wherever we find it.

We'll take our next question from Douglas Tsao from Barclays Capital.

Ciaran, I was hoping you could provide a little color in terms of the performance of Central Lab and also Phase 1, which is obviously both have seen some improvement recently. In terms of the customer concentration of those respective businesses, I know you've won some strategic deals in those segments. And just trying to sort of understand how broad based the success of the turnaround has been and sort of how you see that going forward?

Hi, Doug. I'm not sure I can add much more color to what I've said on Central Lab and Phase I. Phase I broke even in the quarter for the first time since quarter 1 2009, and that was in the back of increased revenue flows from strategic accounts that they won over the past year or so, and control of cost base and the result of some restructuring that was done last year. The Central Lab has had another good quarter of growth wins, up $32 million, so they had 1 cancellation which reduced the net win for this quarter to $16 million. They also did 8% operating margin and did over just -- under $19.5 million in revenue. So that's about the color in that. As for the customer concentration, I think that we win business where we find it. The trend in the market is, at the minute, is large ticket items around larger pharma strategic deals. We've been performing there. I think we've been saying for some time that we expect that the concentration metric to increase, that has come to pass. That's really all. Hey, you look like you've got something else?

Ciaran, I was trying to sort of get color in terms of the customer concentration in respect to the Central Lab and the Phase I business, and to the extent that those 2 -- the turnaround has been dependent on just a small number of clients or has the business been much more broad based?

Yes, sorry, in specific to those business, well, I mean, in the smaller businesses, we've always had higher concentration levels than in the more broadly based clinical business. So what we've seen been in both the Phase I business and in the Lab business over the last year is that they've been successful. And I think as part of our overall strategic offering, we see each element having more importance in cross-selling. I think they've on boarded some customers in that year that were traditionally have been related to our larger clinical business. So we've seen some significant volume strike through those businesses from larger customers. We've chosen the labs that they didn't work for them before. So there would be a higher level of concentration than you might see in the clinical business.

We'll take our next question from Dave Windley from Jefferies.

I was curious, when you talk about RFP values up, I believe you said 8%, how are you including in that business that is awarded to you outside of a competitive bidding process?

We don't include that, Dave.

Okay. So in cases where we have a strategic client that is directing business to you, not through a traditional RFP, if we add those in, would that compare look even better? Is that fair?

It would be a little bit better, I suppose, compared to last year, but we did have a number of key strategic accounts this time last year that we wouldn't have been including in those numbers. So it wouldn't be quite like-for-like, but it'd be close enough, it would be a little bit better, you're quite correct.

Okay, understood. I believe you're still viewing yourselves as on track and working toward a 12% operating margin over the next, I guess, 4 to 8 quarters. I'd love it if you -- correct me if I'm wrong on the timing, but also, help me to understand how you see segments progressing, kind of dovetailing off Doug's question. But just curious what you're thinking, the Central Lab and the Phase I business need to do or a range of what they need to do to support that trajectory. I assume it's not going to be all driven by Clinical.

Well, Clinical is such a large part of the business. I won't correct you. You're right on what I stated our margin targets to be 4 to 8 quarters. The 4 might be a little bit faster than what I thought I said move into the 12% some time in 2013. I'm already thinking mid-2013 and beyond. But the Clinical business is a big part of our business, the Phase II to Phase IV, so it's ultimately what it's going to decide the kind of the general parameters of the group margin. So a lot of it's contingent from the recovery, as they continue to grow top line revenue, continue to get leverage from the investments we've made in the business and the information technology and the staffing. And we've seen some of the benefits of that in the last couple of quarters. But specifically, as for the segments, our Imaging business and our Staffing business are performing well and we'll just continue at the margin levels that they're at. Our Phase IV business is growing with the growth of Oxford and PriceSpective, so that margin will grow as the rest of the Clinical business grows. The lab was at 8% this quarter. It will probably grow to low double digits, 10% or so during the course of this year. That will be fine. And margin -- and I spoke about the lab margin earlier, the margin will stay around that level next year as we continue to invest in geographic footprint. And we should see, as the Phase I business is now -- it's come a long way from losing sort of $2 million to $3 million a quarter to breakeven. It'll start to grow its profits modestly with a little bit of the inherent volatility. The guys, they have done a good job locking down the cost base on driving efficiency. But as we continue to grow, we'll also balance that with the need to invest in the long term. So ultimately, we see the early phase margins move towards 10%. But I don't -- they've made breakeven this quarter. They'll probably hold it at around that level for the next couple of quarters and then kick on from there later in the year.

That's very helpful. I believe you commented that -- or I believe you were thinking that your -- what you consider to be corporate overhead expense in the $150 million, $160 million range is a number that you can hold flat in 2012. Is that still your thinking? And is it a number that you can hold reasonably flat again in 2013?

Our plan this year holds flat, and we've seen some of that benefit come in out of the SG&A this quarter. For 2013, gosh, you're driving me way, way into the future. But yes, I mean, without saying too much, our thesis here is that we've made a lot of investment over the last couple of years. I mentioned earlier in the call the ERP platform, and Oracle, we've consolidated into shared services centers across a number of the support functions. I think we'll keep driving leverage into next year. Whether it stays completely flat, I don't know because we are in a good place and the backlog is up 23% year-on-year. We're going to see revenue growth. We're going to see increased activity. We're still going to invest in the long-term future of the business, which means enhanced intellectual capability, broadening our product ranges, making sure our geographic footprint stays relevant to the market. So at some point, we may need to spend more on SG&A. But I think what we do know is that if it doesn't stay flat, it'll be because our growth is very good and it certainly won't grow at anything near the top line.

And last question on client concentration and bookings, I believe you commented that a couple of the -- you had a couple of large wins that contributed to the higher bookings that were not with strategic clients. I'd be curious of maybe a little bit more precision on the size of those wins. And then how many of your top 5 or 10 are not kind of official strategic clients?

I won't get any more specific on the size of the wins other than to say that they were large and significant as we usually mean large and significant. And I'm not sure about your other question, how many of what?

Well, just so -- I guess what is interesting to me is that, that your wins are not exclusive to the strategic lines and including big wins such that your top 5 or top 10 concentration is not dependent on strategic clients.

No, it's not. And so it's fair to say these were 2 good wins to come in the same quarter and they're not the sort of thing we get every quarter. But our top -- our concentration isn't dependent on strategic clients alone, no.

We'll take our next question from Nick Juhle from Baird.

Quick question around your guidance. I understand you're maintaining it. I can appreciate, even with the strength of your bookings this quarter, the longer tail that's on those bookings, why that might not provide a reason to change the guidance at all. But considering that you've done a couple of acquisitions since that guidance was initially provided, Beijing Wits and PriceSpective, I think, would add about $20 million to the year. Are there other things at play here or other drivers at play that would sort of offset the upside that we might expect or might prevent the change in guidance to that?

No, there aren't. I mean, I think when we gave the original sort of preliminary guidance and indicative guidance back at the end of October, we were already a significant way through our acquisitions sort of targets and we kind of not specifically including them, we would've been aware of the arrangement. They're not large amounts in the overall scheme of the guidance range of $1.70 billion. So nothing has changed. What we're saying is that we did guidance at the start of the year, we did plan in the first quarter, we've delivered on it. It's early in the year, and there are a lot of projects there and there's a lot of backlog, a lot of revenues to be driven to. So we're just taking the view that it's too early to change that.

We'll take our last question from Garen Sarafian from Citigroup.

I'm going to take another stab at getting more information on the 2 deals that you won this quarter. I guess first, were these previously done in house that they are now outsourced to you? Or were these clearly done by other competitive vendors?

I wouldn't be able to talk about that in terms of customer confidentiality. What we're happy about is that we won them and we could show that it validates our performance and our strategies. So I'm very happy about that.

Of course. And then, these were -- from what I heard, they're longer in duration but of course not considered officially strategic or a partnership. So I'm wondering, was that ever on the table and just something that the clients were not interested -- either clients was not interested in, or could you elaborate on just what occurred there and what could occur?

I can't really elaborate on that, no. We won 2 large business deals for trials that customers wanted to do. People would look at their outsourcing strategy, and there are variety of models in play and some of them are combinations of other models, different people at different points in the cycle of deciding. Just because you're looking at reshaping your model to a strategic one doesn't mean that there are no developments in the intervening period. So they were good wins to get, but I really don't know what to say beyond that.

That will conclude today's conference call. Thank you, for your patience. Ladies and gentlemen, you may now disconnect.