Good morning ladies and gentlemen and welcome to the Team IRcall. At this time all participants arein a listen only mode. Later we willconduct a question and answer session. Iwill now turn your call over to Mr. Phil Hawk. Mr. Hawk you may begin

Good morning and happy New Year. Welcome to the Team, Inc. web conference callto discuss recent company performance. Myname is Phil Hawk and I’m the Chairman & CEO of Team. Joining me again today is Mr. Ted Owen thecompany’s Senior Vice President and Chief Financial Officer. The purpose of today’s conference call is to discuss ourrecently released financial results for the company’s second fiscal quarterending November 30, 2007. As with pastcalls our primary objective is to provide our shareholders and potentialshareholders with an enhanced understanding of our company’s performance andprospects. This discussion in intendedto supplement our quarter earnings releases, our 8K, 10Q and 10K filings to theSEC and our annual report. Ted will being with a review of the financial results. I will then follow Ted with a few remarks andobservations about our performance and prospects before opening it up toquestions. With that Ted, let me turn itover to you.

First I want to remind everyone that any forward-lookinginformation we discuss today is being provided in accordance with theprovisions of the Private Securities Reform Act of 1995. We have made reasonable efforts to ensurethat the information, assumptions and beliefs upon which this forward-lookinginformation is based are current, reasonable and complete. However, a variety of factors could causeactual results to differ materially from those anticipated in anyforward-looking information. Adescription of those factors is set forth in the last paragraph of our pressrelease and in the company’s SEC filings. Accordingly, there can be no assurance that any forward-lookinginformation discussed today will occur or that our objectives will beachieved. We assume no obligation topublicly update or revise any forward-looking statements made today or any otherforward-looking statements made by the company whether as a result of newinformation, future events or other wise. Now, to the financial results. Revenues for the second quarter were $112.3million compared to $83.2 million in the second quarter last year or anincrease of 47%. That revenue increasedincludes $15.9 million of revenues attributable to the Aitec acquisition thatwas effective on June 1st. So, therefore the organic second quarter growth rate was about 28%. Net income was $7.8 million in the currentquarter versus $5.5 million in last year’s second quarter an increase of23%. Earnings per diluted share was$0.40 in the current quarter versus $0.29 in last year’s second quarter. On a year-to-date basis our net income is$11.3 million and that is more than 60% ahead of last year and fully dilutedearnings per share is $0.58 on a year-to-date basis is up well over 50%. Now, let’s take a look at our industrial service business inmore depth. First, as a reminder, ourindustrial services includes an array of specialized services related to theconstruction and maintenance of pressurized piping and process systems as wellas specialized…

I would now like to share a few additional comments and prospectus. Obviously, we are very pleased with theoverall performance of our business. First, we are proud of our financial performance in the most recentquarter and year-to-date. As Tedreported overall earnings growth in the quarter and year-to-date exceeded 40%and 60% respectively. The driver of thisearnings growth continues to be strong broad based revenue growth. As described in the earnings release andtouched on by Ted in his remarks both divisions continue to achieve outstandingorganic growth that is broad based both geographically and across servicelines. In my view this growth is a result of a number offactors. There’s no question thatoverall market demand for our services remains robust driven by continuingrefinery turnaround and expansion project, significant pipeline projects andgenerally firm demand in most other segments. We also believe that we continue to gain market share by providingoutstanding field service and capitalizing on long term customer procurementtrends that favor larger, multi service and multi location serviceproviders. And, we’ve been able to meetthis increased demand by continuing to increase our service capacity. Since the beginning of the fiscal year on June 1, 2007 Teamhas increased it’s full-time field employee rank by 217 people about 8%excluding the impact of the Aitec acquisition. Our organic growth is being supplemented by attractive performance ofour new Canadian inspection activities, the former Aitec business. We are delighted with our new colleagues andvery pleased with their performance to date. We are more enthusiastic than ever about our long term prospects relatedto these new capabilities. As Ted indicated our operating income margin for the mostrecent quarter was about 12% flat with the prior year period. On an integrated basis an approximately twopercentage point decline in gross margin was offset by an approximate twopercentage point decline in SG&A expenses as a percent…

We will now begin the question and answer session. (Operator Instructions) Our first question comes from Arnie Ursanerfrom CJS Securities. Sir your line isopen please go ahead. Arnold Ursner – CJS Securities: The first question I have is regarding Aitec. I think at the time of acquisition it hadroughly $50 million of revenue and your run rate right now based on the currentquarter is materially above that. Arecurrencies one of the issues? Or, areyou in fact seeing dramatically higher growth in Aitec?

I think it’s a combination of the two. I’m just trying to get a hold of that? Would you have the revenue today for Aitec?

Revenue today of about $26 million for the year-to-datewhich is roughly that $50 million rate or slightly higher. We had $16 million in the quarter.

Arnie particular in the east should mirror the seasonalitythat we experienced in the USrelative to turnaround season in the fall and the spring. Arnold Ursner – CJS Securities: My second question relates to the acquisition you have madeof LRS. Can you give us a little bit offeel for the customer base they have? Are they as exposed as you are if you will to refineries? A little more on their customer base and youmentioned it would be minimally accretive to 08 but I wanted to get a feel forwhat sort of revenue and EBITDA and margin we might expect in 09 with a fullyear behind you?

I think just answering the second question first I believewe’ll have a much better feel for the outlook of the business as we getinvolved with the managers and really detail out some of our attractive growthopportunities. It’s our premise thatthey’ll be very attractive organic growth opportunities there goingforward. In addition we may supplementhere and there as we go forward with other tuck in type acquisitions. The profitability of the business isapproximately 10% EBIT in terms of margins. As I think it mentioned in the earnings release this has been part of alarger essentially an engineering and construction company a GGI group so we’regoing to be carving out some of their corporate support as putting our own inplace so it may not be completely apples-to-apples but we think it’s anattractive business that’s overall profitability is not all that dissimilar toours from that standpoint. In terms of customer and markets they have a heavy focus onthe energy sector just like we do which would be refining, petro chem andpower. They also have a more significantheavy industrial and marine business than we have in North Americaparticularly related to their very extensive and considerable field machinecapabilities. So, they’re doing a lot ofwork in terms of dock, harbor and also marine vessels as well as heavyindustrial such as steel mill machining and that kind of activity. So, they’re a slightly less intense mix onthe energy sector but kind of in the highest level abstraction it’s not greatlydifferent.

Our next question comes from Matt Duncan from StephensIncorporated. Matt please go ahead. Matt Duncan –Stephens, Inc. : Did you guys have any new significant mass or serviceagreements in the quarter by any chance?

We’re updating them all the time so I don’t have any –there’s nothing that comes to mind that we had kind of a big one here orthere. I would say that our organicgross rate from our master service agreements was about 30% in the quarter soit kind of mirrored our overall organic growth. Matt Duncan –Stephens, Inc. : Okay. That wasactually my next question – how much of that organic growth you think came frommaster service agreements and I guess if it’s really the same.

I think 25 to 30% of our total business is from those typesof agreements right now. Matt Duncan –Stephens, Inc. : Okay. But,year-over-year there’s not really any significant change in new agreementsthere?

No. I mean, we’realways working on them and we will expect to kind of incrementally add alongthe way. But, I think the broader pointI’d make is we have a very broad based business by customer, by geography, byservice line and I don’t think the additions of new – you know we’re trying toget business everywhere including the bigger companies but we don’t expect tosee them dramatically increase as a portion of our total list. Matt Duncan –Stephens, Inc. : Did you have any particular service lines that outperformedthe others by a meaningful amount? Iknow you said that the growth was broad based across the board but, did youhave any particularly strong performers?

You always have kind of noise because of a particularly bigproject here or there compared to the prior year quarter. I’d believe all but one service line hadgrowth. I know if you look atyear-to-date all 13 of our regions, legacy regions had growth. 11 of our 13regions had double digit growth. That’sabout as broad based as you can get. Idon’t have that complete detail for each service line but I believe all servicelines year-to-date had growth. If notall certainly seven out of eight did. Matt Duncan –Stephens, Inc. : I want to talk a little bit more about the SG&A leveragethat you guys are seeing. It’s about 200basis points year-over-year so very high leverage there. Can you walk through just with us a littlebit kind what’s the main drivers of that leverage? And then, how long do you think you can carryon this sort of 200 basis point year-over-year leverage there in SG&A?

Well I think the key driver of that is top line. As we’re growing very, very attractively bothorganically and of course, we have the impact of Aitec on there. I guess as we’ve kind of evolved we’ve kindof increased our size about ten fold over the last eight years and we’ve hadgood operating leverage through most of that. From time-to-time as we hit different thresholds I guess we hit pointswhere we need significant upgrading of support activities in one area oranother. But, we don’t anticipate anymajor increase in kind of support costs other than the kind of normal rateswe’ve been running in the last year or so. Matt Duncan –Stephens, Inc. : A couple of final question here and then I’ll just jump backinto the queue. First, how’s the thirdquarter going so far? We’re about halfway through. Then also, I know you guyshave been talking about a pretty strong spring turnaround season. Is there any more background you can give usto that and kind of just maybe talk about the expectation for the springturnaround season this year?

I think as I mentioned in my remarks, is generally ouroutlook and our optimism is high for both third and fourth quarter. We see a lot of activity out there it’s justup to us to execute it.

Our next question comes from Byron Pope from TudorPickering. Please go ahead Byron. Byron Pope – Tudor,Pickering, Holt & Co., LLC: Just one question for you – with regard to how you thinkabout Europe going forward could you speak to the stateof the availability of field technicians. I know this has been an issue for the industry in the USmarket. Is that market as tight inEurope and does that impact the way you think about your approach to growth in Europeorganic versus more kind of both on acquisitions?

To be real honest our level of understanding of that levelof granularity is low right now. So, Ican’t tell you precisely what the kind of workforce availability is forhiring. But, I guess our premise wouldbe that organic growth supplemented by some acquisitions will be the way wego. As we have grown domestically, ornot domestically, within North America it is creating demand and training anddeveloping more personnel and it would be my hypothesis that that would beattractive to do in Europe as well. Byron Pope – Tudor,Pickering, Holt & Co., LLC: So, is it fair to think that there are other LRS typecompanies in Europe which you’re already licensingequipment to that might over time fit that model?

It’s a possibility. We don’t have any plan at this point to do it. But, as we kind of look at opportunitiesthat’s a possibility.

Our next question comes from Mike Cohen from CK Cooper. Michael please go ahead. Michael Cohen – C.K.Cooper & Company: I wanted to ask about the acquisition in Europe. I know that we’ve had a lot of discussionabout it but can you give us any sense in terms of the overlap with Furmaniteand sort of their position there? Areyou going to be sort of fighting it out a little bit here and are we going tosee some price compression there and that type of stuff?

We are a direct competitor of Furmanite where LRS or LeakRepair Specam currently operates and that’s in Holland andBelgium. I’m not an expert on Furmanite but it’s myunderstanding that they have a broader European presence than just thosemarkets that we are not currently in. Apoint I’d make though is that Furmanite is a direct competitor of Teamthroughout North America certainly, throughout the US.So, to the extent there’s any, if you will, price pressure from competitiveintensity I think we’ve kind of experienced it and I would certainly notanticipate anything different than what’s already taken place. Michael Cohen – C.K.Cooper & Company: Just one question I think maybe Ted if you might addressit. I think in the first quarter youspoke about a 93 to 94% utilization rate ex of the vacation timing. Was that comparable in this quarter?

Yeah. In fact ifanything, it might be a little bit higher in the second quarter. Second quarter utilization is typically higher. We just run flat out Michael in both oursecond and fourth quarter during those turnaround seasons.

Our next question comes from Mike Carney from CokerPalmer. Mike please go ahead. Michael Carney –Coker & Palmer Investment Securities: First, on the acquisition again is that your largestlicensee in Europe?

Yes. Michael Carney –Coker & Palmer Investment Securities: Then, where do you have other licensees in Europe? Is it other regions other than the Benelux? Or, is that most of it?

We have active licensees in the UK,Spain, and then in the Middle East. Michael Carney –Coker & Palmer Investment Securities: Okay.

Arabia and Kuwait. Michael Carney –Coker & Palmer Investment Securities: Phil, you mentioned the growth in the consultant base but Ikind of missed that. Do you want torepeat that?

The total field personnel base excluding the acquisition, the Aitec acquisitionwas up from the beginning of the year about 217 people so that’s about 8%. Michael Carney –Coker & Palmer Investment Securities: So, you had 225 or something from Aitec. So, basically you continue to add at aboutthe same pace as you did in the first quarter that you did in the secondquarter organically?

Approximately very similar, you’re right. It’s a little over 100 I think we added inthe quarter. Michael Carney –Coker & Palmer Investment Securities: That doesn’t include contractors through, correct?

Correct. These arefull-time technicians and we supplement those with our project specific orproject personnel. Michael Carney –Coker & Palmer Investment Securities: Okay. What was theturnaround versus the online growth in the quarter?

They were actually – I don’t have a complete [inaudible] ofthat but they were actually pretty comparable. Both were quite strong. Michael Carney –Coker & Palmer Investment Securities: So, both were above 20%?

Yes. Certainly above15, I mean give me a little wiggle room. But, they’re high teens or twenties. Michael Carney –Coker & Palmer Investment Securities: Ted you had mentioned the D&A was $2.7 million in thequarter, is that right?

Correct. Michael Carney –Coker & Palmer Investment Securities: How much of that was amortization?

Mike I don’t have that number. I can get it for you. Michael Carney –Coker & Palmer Investment Securities: Well, tell me was it small? I mean $100,000? Any idea?

I think it was very small relative to the total. Michael Carney –Coker & Palmer Investment Securities: It’s only coming from Aitec, right?

No, no, no. We have anon-compete capitalized cost associated with a prior acquisition that’s beingamortized. Michael Carney –Coker & Palmer Investment Securities: So, there’s a little bit leftover from many years ago?

Yes. Exactly. It’s not a lot though. It’s a fairly insignificant amount. Michael Carney –Coker & Palmer Investment Securities: The intangible on the European business I assume are goingto be pretty small, right? That’s goingto be almost minimal amortization there?

I think that will be correct, yes. Michael Carney –Coker & Palmer Investment Securities: Phil, you had mentioned 10% EBIT on the current Europeanbusiness. Is that including any newsynergies? Or, is that currently whatthey’re running at?

That’s our estimate of currently what they’re running at asif we owned them. So, in a sense as Imentioned, we’re going to transition off support activities. For example, financial systems, IT systems,HR, legal, support activities that are currently provided by GTI, their formerparent company that we’re estimating what it will cost us to provide those tothem. But, candidly in terms ofsynergies there aren’t really any because they’re servicing a differentmarket. We’re going to collaboratetechnically and commercially to support their activities but the real leverageis growth that we think will be possible as we go at this on a more focused andaggressive basis. Frankly, one of the issues they had at GTI when they were owned by GTI is thatdue to the GTI’s current company SUEZand they have a country-by-country approach to their businesses. So, LRF was not permitted to seek marketopportunities in contiguous areas such as Germany,France,etcetera so we see those as nice kind of opportunities just by opening theavailable market. Michael Carney –Coker & Palmer Investment Securities: Does SUEZ haveother services businesses?

Well GTI is a major engineering and construction company. Michael Carney –Coker & Palmer Investment Securities: But in services that you compete?

No. [Inaudible] typebusinesses. No but, they essentially don’t, no. Michael Carney –Coker & Palmer Investment Securities: And you’re keeping the entire management team?

Correct.

Our next question comes from Mike Breard from HodgesCapital. Please go ahead. Mike Breard – HodgesCapital Management: Just a question on the European market is that characterizedby any smaller competitors or [inaudible] larger ones? What happens with the structure there?

We believe that it is similar to the USin terms of lots of smaller competitors. Again, our detailed knowledge country-by-country is limited at thispoint. So, we can’t speak to it asknowledgeably as we will going forward. But, our premise is that having I’m going to say a technical base, alarge deep technical base to support an ever expanding geographic servicenetwork much like we do in North America will be a very attractive approach tothat business in Europe. It will give usflexibility to bring larger scale resources to bare that we think hashistorically been the case in some of those markets much like we’ve done inNorth America and that’s kind of the approach we’re looking at. And, we think that there’s lots of little orsmaller more limited service companies currently in each of these individualcountries that we’ll be an attractive alternative to perhaps some of thoseservice approaches today. Mike Breard – HodgesCapital Management: Okay. One other quickquestion is the second quarter your revenue growth how much of that might havebeen attributed to price increases for similar services?

That’s a difficult issue for us to measure precisely becauseof the effective mix. But, my estimatejust based on the activity level, the billed hours is that we’re generating inour system, my estimate is that the price affect is about 5 to 8% of therevenue growth.

At this time we’re going to go to the line of Richard Nelsonfrom J. Giordano Securities. Mr. Nelsonplease go ahead. Richard Nelson – J.Giordano Securities Group: Just a couple of quick questions, most of my other questionshave been answered. I noticed that yourtax rate notched down a little bit here. Is there something there that we should know about? Any change in the way you’re handlingthings? Or, can we look forward to thatbeing a little bit lower going forward?

I think in the aggregate you’re going to see about a 40%effective tax rate for the year. In thesecond quarter it’s a little less than it was in the prior quarter. It’s primarily a function of just higherearnings spooning the effect of permanent differences if you will. Then, the other thing with respect to ournon-cash comp expense we changed the kind of awards that we make. We now make non-qualified awards for taxpurposes that allow us to tax benefit new awards whereas relative to ourincentive stock options those were non-tax benefit previously. Richard Nelson – J.Giordano Securities Group: Cash, you might have mentioned this but, what is your endingcash balance for the quarter?

$5.8 million.

Our next question comes from Matt Duncan from Stephens,Inc. Matt your line is open. Matt Duncan –Stephens, Inc. : A couple of quick follow ups – first of all with LRS justone last quick question. Do you have atrailing EBITDA number for those guys?

I think EBIT is roughly the same as EBITDA and as I saidwe’re roughly at $22 million so that would be like $2.2 million. That would be roughly EBIT or EBITDA really. Matt Duncan –Stephens, Inc. : Next, on Aitec can you talk about how they’re performingrelative to your expectations? I knowyou said they’re doing very well so far but just looking at the expectationsyou guys had when you bought the business how’s it performing?

Outstanding. We’rereally pleased. From a financialstandpoint I think they’re slightly ahead. I think revenue volume wise we’re probably about where we thought we’dbe. I think margin wise we’re a littleahead of where we thought we would be. But, I will tell you one of the things that has pleased me most is justthe enthusiasm of their entire organization to work closely with our group upin Canada; hasbeen outstanding. So, just the commercialsynergies that we’re in the process of generating and their leadership and kindof being part of that has been a very pleasant, it’s not a surprise so much buta very pleasant event I should say. And, like I say we just see thosecollaborations generating great opportunities for us down the road near term aswell as longer term. So, we areextremely pleased with their efforts. Richard Nelson – J.Giordano Securities Group: How’s it going taking their inspection service into[inaudible]? Have you had any successesthere?

We’ve got a branch there. We got their personnel in Fort McMurrayalready. And vice versa by the waytaking other services into account in geographic areas where they were strongand we had very limited presence. Richard Nelson – J.Giordano Securities Group: The last thing here just on your acquisition pipeline canyou talk a little bit about what that looks like right now? Specifically both in North America and in Europe. I know in Europeyou’ve now basically acquired the TMS piece but I assume you’re probablylooking for the TCM piece as well.

Actually, we don’t have a pipeline per say. Just as a little bit of a reminder organicgrowth has been the primary driver of our long term success. It’s about 60 to 70% of our overall revenuegrowth over time. We expect that tocontinue to be that way. We look atacquisitions as accelerators or enablers and I think both the recent twoobviously, we had no presence in inspection in Canadathat was a great enabler. Well, both anenabler and an accelerator. Obviously,we had no presence in Europe so just established acritical mass. I would just say that ourfocus as it has been historically is to let’s grow organically and let’s focusand make all of our business as strong as we can that way. Having said that, we’re opportunistic so if a extremelyattractive accelerator enabler out there that comes our way we’ll look atit. I think as Ted mentioned our levelof debt relative to – I should say the level of financial leverage of ourbusiness is approximately two to one to we’re not heavily leveraged and wewon’t be inclined to pass on great opportunities. But, having said that we’re really notlooking to do three or four more in quick succession we’re looking to make whatwe have great. Richard Nelson – J.Giordano Securities Group: So what level of leverage are you comfortable with? You’re two to one now.

I think it’s highly circumstantial. Richard Nelson – J.Giordano Securities Group: Okay. So, it’s goingto depend on the deal.

I would just say though and this is the way we think aboutit is organic growth only from here on out is extremely attractive. We’re talking about high profit growthbusiness so we don’t want to do anything that doesn’t build on that. So, if it’s stretching to buy something thatmaybe at a value that isn’t right or maybe a business that isn’t a great fitthat just doesn’t make sense irrespective of leverage. So, we’re going to be patient and try to befocused and disciplined so that we’ll only pursue things that are reallyattractive accelerators for us. Richard Nelson – J.Giordano Securities Group: Then last thing back on your commentary on organic growth ithas been outstanding 28% this quarter and it’s been strong for quite a whilenow. What’s your perspective on whatorganic growth should feel like going forward? I know you guys have historically talked about 10% but clearly we’re outstripping that number right now. Howlong do you think this will continue?

I think for along time if weexecute. But, you areright we are now – ourorganic growth hasexceeded kind of our 10/20 model by aconsiderable margin certainly last year and this year. And, part of itis we’re gearing up from acapacity increase standpoint. That we aresystematically kind of focused on adding resources and we think themore resources and capabilities we have that tends to drive activity or demandalmost rather than vice versa where we respond to demand with resourceadditions. We think kind of thedemand as a functionof our resources addition. So, we’regoing to continue to focus on that. But,we don’t believe that we have avery robust market but we think thedelta between a robustmarket and a normalmarket is only about 10% demand sowe don’t think that’s theprimary driver of itbut candidly it’s really strong right now sowe can’t be certainhow big acomponent that is inour overall growth. We doknow that execution is really important and just being here isn’t enough. We have to earn itand re-earn it everysingle day with every project. So, whilewe’re extremely optimistic [end of audio].