Good morning ladies and gentlemen and welcome to Kelly Services first quarter earnings conference call. All parties will be on listen only mode until the question and answer portion of the presentation. Today’s call is being recorded at the request of Kelly Services. If anyone has any objection you may disconnect at this time. I would now like to turn the meeting over to your host Mr. Carl Camden, President and CEO. Please go ahead sir.

Good morning and welcome to Kelly Services’ 2008 first quarter conference call. Mike Debs, our acting CEO is with me this morning to review our results. I’ll start with a few brief comments on the current economic climate before updating you on our earnings. Then, we’ll take a look at where we are on implementing our strategic plan and then we’ll go on through our first quarter operating results by segment. Following that Michael will provide additional financial commentary as well as guidance for the second quarter. Afterwards, I’ll update you on our 2008 outlook and then we’ll open the call for questions. Before we start, let me remind you that any comments made during this call including the Q&A may include forward-looking statements about our expectations for future performance. Actual results could differ materially from those suggested by our comments. Please refer to our 2007 10K for a description of the risk factors that could influence the company’s actual future performance. In addition, we’ll also make reference to non-GAAP performance measures. Please refer to the schedules attached to our press release for information on those performance measures and a comparison to our reported financial results. As we all know the first quarter has been quite tumultuous. Everyday brought conflicting opinions as to whether the United States is entering a recession in the midst of an extending decline or may be exiting the shallow downturn. This economic uncertainty fueled by shaking credit markets, rising oil prices, stagnant employment, a growing deficit and assorted other problems is taking a toll on the early every industry including staffing. Add to that, for our business in particular Easter fell early resulted in fewer contributing work days. The employment picture has failed to show any signs of improvement during the quarter. The weaker than…

Good morning. Before I get in to the details, you may recall that we sold our Kelly Homecare unit in the first quarter of 2007. We also reported a restructuring charge in the UK of $2.6 million or $0.07 per share. All of the comparisons we’ve referenced this morning are from continuing operations excluding restructuring charge. For the quarter total company revenue totaled $1.4 billion an increase of 3% compared to last year. That’s down slightly from the 4% growth reported in the fourth quarter. As Carl mentioned, Easter fell in the first quarter this year and in the second quarter in 2007 which impacted revenue growth by slightly less than 1%. On a constant currency basis revenue decreased by 1% compared to last year. That’s also down slightly from the fourth quarter when revenue was essentially flat on a constant currency basis. Our gross profit rate was 18%, an increase of 100 basis points compared to last year primarily due to strong growth in fee based income and lower workers’ compensation costs. Selling, general and Administrative expenses totaled $237 million, an increase of 10% year-over-year. Most of the growth in SG&A expense has come from our EMEA, APAC and OCG segments where we continue to make strategic investments. SG&A expense decreased by 4% in our America’s commercial segment. The growth in SG&A expense was also impacted by currency rates. On a constant currency basis SG&A expenses grew by 5%. Earnings from operations totaled $12.9 million and were down slightly compared to last year. We were pleased with our ability to hold earnings from operations essentially flat in a quarter when our largest segment, America’s commercial experienced a 6% decline in revenue. Other expenses totaled $51,000 compared to income of $673,000 last year. The decrease is due primarily to increased…

That’s wrap by talking about our outlook for the remainder of 2008. When we last talked to you all in January we acknowledged then that predicting the economic future was akin to reading tea leaves and it still is. There is no historic precedent for what is happening and that is what makes this time so perplexing. GDP growth was about flat in the fourth quarter. US employment in the first quarter is down and temporary employment penetration is still dropping. But, on the other hand when you look at college graduates and other college decree professionals there was a very low 2.1% unemployment rate. In January, I said the US appeared to be teetering on the edge of recession, many economists now believe we’re in one but at some point the semantics of that argument become meaningless. You can call it what you want but the important question today is now whether we’re in a recession but rather do we anticipate a sharp downturn in the near term? Or, do we see any signs of an upturn on the horizon. Interestingly, the answer to both questions is no. Over the past 15 months or so we have learned that we cannot predict the duration or severity of this current economic downturn and we can’t control the economy but we can control our own actions. What we can say for certain is that opportunities are still out there and how we go after them will determine our future success. We anticipate a shortage of professional and technical workers in North America, Western Europe and Japan for at least the next decade. Kelly’s focus will be on helping companies meet that need through expanded professional and technical staffing and throughout outsourcing and consulting services. We also continue to build new customer…

(Operator Instructions) We’ll first go to the line of Ashwin Shirvaikar with Citigroup. Please go ahead. Ashwin Skirvaikar – Citigroup: The question I have is can you talk to at least for the next quarter forward expectations by unit in the new classification? [Inaudible] is fine, just because the classification is new.

What Mike said was is that we expected the US to perform, US commercial, America’s commercial to perform at roughly the same pace as it has been now for about four quarters in a row. Sitting between -5 to -6%, kind of controlling for the Easter shift in there and we expect mild improvement over the rest of the business unit. Ashwin Skirvaikar – Citigroup: Okay. The lower workers’ comp, are we in the process of bottoming that out? Given past historical trends that typically starts increasing in a downturn, doesn’t it?

I think we’ve probably come pretty close to bottoming out. I’m not sure that I expect it to increase significantly but we continue to see very good news as we adjust our prior year’s claims and I don’t expect that to continue at that rate.

What’s uncertain at the moment is there’s been a lot of structural changes to workers’ compensation particularly in states like California where there were significant reform efforts. Those seem to be holding even in the midst of increased unemployment and what the states are not reporting are significant increases in claim activity, duration or severity of claims like you’ve seen in past employment downturns. Again, we’ll see how it all unfolds as the year happens but there have been important legislative changes in a lot of states in this country.

Our next question is from Tobey Sommer with Suntrust Robinson. Please go ahead. Tobey Sommer – Sunrust Robinson Humphrey: I had a question, I think when you were talking about the EMEA region and you gave your monthly breakdown of fee growth, the fee growth for March you said was just $0.01 because of people pushing back start dates. Does that imply that in April you did see those start dates occur and perm fee trends within the EMEA region remain more similar to January/February levels?

If we had seen a significant downturn we would not have said that start dates had been shifted out. What we’ve seen in April reflects the start dates having been shifted out. Tobey Sommer – Sunrust Robinson Humphrey: I’ll ask one follow up kind of on the first couple of questions that were asked, regarding the kind of slight improvement in growth rates that maybe you’re looking at outside of US commercial in 2Q, is that only a function of the shift in the Easter holiday? Or, is there some sort of more fundamental improvement in demand that you might see?

You have a fair number of branch openings that we have continued to highlight through the quarters and as those branches mature you would expect to see revenue growth in those areas. So, we’re not talking about a fundamental pickup in the GDP of world economies or demand for labor but Kelly itself has been investing well in branch openings and that’s reflected in our numbers.

I would slightly better than the Easter shift.

We’ll go to the line of Michel Morin of Merrill Lynch. Please go ahead. Michel Morin – Merrill Lynch: I was just focusing a little bit on the UK where we had seen some pretty decent results I guess in the last quarter now, a bit of a surprise to see its fallen off. Is there room to do yet more restructuring, more cost cutting there? Or, what specifically might have happened this quarter?

We, like everyone else are evaluating our large accounts, their profitability and choosing whether to retain or not retain. In addition, you do see some revenue falling off from the branches that we’ve closed as that anniversaries on out. What growth we’re seeing in the UK, for us is coming out of the professional and technical side, it’s not coming out of the commercial side. We always take a look at all operations to see whether the branch network is over built and we’ll continue to do so. Michel Morin – Merrill Lynch: Great. Then just focusing on the EMEA commercial segment for a second, I think in constant currency terms the growth was 8.2, I was wondering how that compares to 07? And, I don’t know if you’re going to be providing us with some historical growth rates?

The historical information is out on the web now. Michel Morin – Merrill Lynch: It is? Okay.

And available, in fact, for 07 and 06 by quarter so you’ll have eight months to work backwards from Michele.

Your next question is from David Feinberg with Goldman Sachs. Please go ahead. David Feinberg – Goldman Sachs: Questions regarding your US perm business, you gave us some numbers around the commercial side, can you give us a similar sense in terms of the Americas professional and technical? What occurred in perm on a monthly basis? And also by verticals what’s going on within each? Are certain verticals outperforming others?

If I had it here in front of me I would give it to you. I don’t have it here in front of me, let me find out how we get that for you. David Feinberg – Goldman Sachs: Okay. Then, I’ll take advantage and I’ll ask a follow up question, as it relates to your comments in Europe about a push out in start dates from March in to April was there a similar dynamic in the America’s? Or, are you just seeing overall general weakness as it relates to perm?

Yes, some but not as intense. David Feinberg – Goldman Sachs: Some push outs but, not as intense?

Right.

We have a question from the line of TC Robillard with Banc of America Securities. Please go head. Thomas C. Robillard – Banc of America Securities: Just a quick question on the America’s commercial, the operating margin, you continue to see some great cost controls there. When do we start to anniversary some of the restructuring there? Or, is there something else going on? Because, you were able to show a 10 basis point roughly year-on-year increase in your margin there despite the decline on the revenue side. When do we get to a deleverage point I guess is what I’m trying to look at? Or, is this a consistent kind of cutting of costs as the year unfolds and you guys are mapping out your revenues?

The two biggest changes in our GP rate year-over-year were favorable workers’ comp and unemployment taxes in America’s commercial. Unemployment taxes will continue through this year and in terms of 09 it’s hard to say what’s going to happen but I suspect we’ve probably bottomed out in unemployment taxes. Workers’ comp I think we’ll continue to see, as we said earlier, good performance on our current year but I don’t expect to continue to see favorable adjustments to prior years like we’ve seen through the first quarter of this year.

On the expense basis itself and we anniversary the restructuring charges in Q3 and 4 so you’ll still see some year-over-year improvements from that. And, we continue to look at - as you see the revenue declines we’re always are looking at the cost behind those and are continuing to see what we can do to bring those costs down. You can’t show year-over-year revenue declines in a segment, and we’ve now seen this for almost 15 or 16 months, if it continues on at some point we’ll hit a deleveraging point but we’re battling hard to stave that off. Thomas C. Robillard – Banc of America Securities: Okay. Then, just to follow up on what’s been talked about on our last couple of questions in terms of the push out of start dates in Europe, have you seen some of that pick up in the first few weeks of April? Or, was this more of just kind of a broader based push out not necessarily a one month push out?

No. What we’ve said is that we’ve seen the push out and you’ve seen some corresponding pick up in those start dates. It was not a slowdown or push out of activity, it was the same level of recruiting activity just start dates were moved beyond Easter which we well understand and, you don’t recognize any revenue until people have started on the job. Thomas C. Robillard – Banc of America Securities: So is it far to assume that you’ve seen a pretty healthy pickup in terms of that growth rate if we were comparing April to March?

I won’t comment on the Q2 performance, must simply noting that we wouldn’t have said that there was a delay in start dates if we didn’t see the corresponding starting in the second quarter.

(Operator Instructions) We do have a follow up from Ashwin Skirvaikar. Please go ahead. Ashwin Skirvaikar – Citigroup: The question I have is on OCG which was a significant profit contributor much more so than on the revenue side and I know you did have some comments on it but could you go through what exactly happened in the quarter and do you expect that continue especially as some of these businesses are recession resistant? In the next few quarters do you expect the higher degree of profit contribution to stay the same?

Without speaking of any specific quarter, as OCG continues to grow and gain scale, yes we expect to see nice profit growth from the segment. We’ve been putting lots of investments in to it, there’s very significant revenue growth as you were commenting from new account wins. There’s always heavy implementation costs on a lot of those new wins and then the profit comes following that. As we talked about on EMEA and in APAC we’ve been investing heavily in front of the revenue stream that will come and we expect OCG over the next quarters to be a nice contributor to profit growth in the company. Ashwin Skirvaikar – Citigroup: Okay. I guess you would have mentioned it if there was an impact but in your VMS business, any impact?

There was no important impact.

It all impacted the fourth quarter last year.

What impact there was already happened in Q4. Ashwin Skirvaikar – Citigroup: And in spite of that the VMS market itself do you see that sort of returning to normal?

The VMS market never slowed down even during the times debacle, that was just a hiccup in revenue from that business divested into a variety of VMS suppliers and managers. That is a fast growing business for us and for the industry.

We have a follow up from Tobey Sommer. Please go ahead. Tobey Sommer – Sunrust Robinson Humphrey: Carl, I wanted to ask you just stepping back and thinking longer term with the decline in value of the dollar and potential long term valuation in this range, do you think that there’s an opportunity over time for the lid and other manufacturing industries and perhaps staffing demand to rebound if indeed kind of production within the US and kind of North America is more competitive on a global basis?

I always remind everybody my Ph.D. is not in economics or in labors but, there’s a fundamental shift taking place in manufacturing employment in the country so while the country is maintaining a good level of manufactured goods output we’re steadily declining and we’re projected to steadily decline for another decade the number of people directly employed and indirectly employed in manufacturing. That’s not going to change whether the dollar strengthens or weakens, that’s kind of a systemic trend in the country. We’ve shifted the type of manufacturing we do. So, to the extent the lid part of the industries business is tied to manufacturing it will face the same time of slow steady declines that you’ve also seen for a couple of decades in the office clerical side of the business as there’s been a shift away from a large number of secretaries and administrative assistants and more productivity and use of software, it’s going to take place and is taking place in the lid part of the business today. I think that its decline can be speed up or slowed down by what happens to exports which is what gets reflected by the changing strength of the US dollar but on a long period of time manufacturing related employment in this country has been declining for a decade and is going to continuing to decline for another decade.

We have a follow up from Michel Morin. Please go ahead. Michel Morin – Merrill Lynch: Carl, I was wondering was there any discernable trends between office clerical and light industrial in the US?

No, they were performing at about the same. Michel Morin – Merrill Lynch: Okay. Then, can you remind us what’s been the issue in the IT segment?

As we talked about three quarters ago when we highlighted the underperformance there, we had large projects that finished up, we didn’t have as many large projects in the pipeline and the non-project related part of the IT temporary staffing had been somewhat neglected while everybody was focusing on the project side. So we rebalanced what the IT offices were doing, we’ve now had two to three quarters of nice improvement in that business but we’re still underperforming segments of the industry there. Michel Morin – Merrill Lynch: But, at some point you’ll be anniversarying that, what in the second half?

Yes. Michel Morin – Merrill Lynch: Okay. And on the legal side you noted a little bit of weakness there in this quarter, is that also kind of projects rolling off?

Yeah. For us on the legal staffing side we have a very healthy core permanent staffing and placement business but there’s big revenue swings inside of the legal staffing business based on the large projects, document reviews and so on that are underway. If you all could generate a few more lawsuits which the investment industry seems to be capable of doing, we might then see a pick up here in that business shortly. Michel Morin – Merrill Lynch: We’ve done our part here at Merrill Lynch. Final question for me is PeopleSoft, how’s the implementation going with the status of that right now?

We will update on the PeopleSoft implementation within the next quarter. We don’t have an update for you right now.

We have a follow up from Tobey Sommer. Please go head. Tobey Sommer – Sunrust Robinson Humphrey: I wanted to ask you a question about OCG, the gross margins were very high and showed a lot of expansion. Overtime, where should we think that those margins can go and which particular segment, if there is one within that, or which particular businesses would be the driver of that expansion?

I don’t have yet a long term picture of where the GP rate ends up in OCG. It’s still a relatively small business. You have individual business units that are experiencing 50 to 100% growth rates some of which have 70 to 80% type GP margins. You have other businesses also growing quickly that have much lower GP rates. That business needs to settle out and mature before I get to a point of understanding where its long rate GP is. It will be higher obviously than staffing and it will produce and is already producing very nice operating margins and will continue to do so as it matures. Too early yet though to see where that’s going to settle down to. Tobey Sommer – Sunrust Robinson Humphrey: In terms of a direction though should we be looking for expansion there from current levels?

I really can’t tell you because I think it depends which unit grows faster within there. If one of the lower margin units happens to have a spectacular half of the year it could bring down the overall GP rate and I would still cheer them on. Tobey Sommer – Sunrust Robinson Humphrey: I guess maybe could you tell us which business units within that segment are the lower margin segments?

Not yet. We haven’t done so and I would like to prepare comments on that if we’re going to do so. But, I take that in as information we might look at doing on one of the future conferences. If I could quickly while there is a little pause here with the questions, I don’t have the month-by-month breakdown but there was placement fee growth of about 5 to 6% in the professional technical business, nice solid single digit growth in the America’s that somebody was asking for.

Mr. Camden no further questions in queue.

Great. Thank you all. We look forward to seeing you out and about.

Ladies and gentlemen this conference is available for replay. It starts today at 11:30 AM Eastern time, will last for one month until May 22nd at Midnight. You may access the replay at any time by dialing 800-475-6701 or 320-365-3844. The access code is 917255. Those numbers again, 800-475-6701, 320-365-3844 and the access code 917255. That does conclude your conference for today. Thank you for your participation. You may now disconnect.