Good morning. My name is Tasha and I will be your conference operator today. At this time, I would like to welcome everyone to the earnings release conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. Mr. Miller, you may begin your conference.

Thank you. Good morning, this is Jim Miller with Bill Sherertz. Today, we will provide you with our comments regarding the company's operating results for the second quarter ended June 30 and our outlook for the third quarter of 2010. At the conclusion of our comments, we'll respond to your questions. Our remarks during today's conference call may include forward-looking statements. These statements along with other information presented that are not historical facts are subject to a number of risks and uncertainties. Actual results may differ materially from those implied by the forward-looking statements. Please refer to our recent earnings release and to our quarterly and annual reports filed with the Securities & Exchange Commission for more information about the risks and uncertainties that could cause actual results to differ. Page one of yesterday's earnings release reflecting our operating results summarizes the company's revenues and cost of revenues on a net revenue basis as required by Generally Accepted Accounting Principles. Most of our comments today, however, will be based upon gross revenues and various relationships to gross revenues, as management believes such information is one, more informative as to the level of our business activity; two, more useful in managing and analyzing our operations and three, adds more transparency to the trends within our business. Comments related to gross revenues as compared to a net revenue basis of reporting have no effect on gross margin dollars, SG&A expenses or net income. Turning now to the second quarter results, as reported the company earned $0.22 per diluted share in the 2010 second quarter as compared to a $0.65 loss per share for the second quarter of 2009. Total gross revenues for the 2010 second quarter of $297.1 million increased $48.9 million or 19.7% over the 2009 second quarter. The $297.1 million…

Thanks, Jim. Overall, I would say very pleased with the quarter. We added 136 new customers on the PEO front during the quarter, which is in line with what we have been averaging on the quarter for this year – the quarters for this year. We lost 36 customers, forward canceled over AR issues, which is one of the lowest I’ve seen in the last probably year and a half. 13 were canceled due to risk issues that we were not comfortable with, 10 businesses sold or closed, six customers decided to leave due to pricing or costs. Typically they would go a step down, probably to ADP or paychecks and three customers decided to take the payroll in-house. That's probably the lowest – 36 is the lowest again number of customers that have left for various reasons in the last couple years in my memory. Our preferred payroll, which is competitive ADP of paychecks, was up 40% over the last year which is a very bright spot and certainly provides us some opportunities in the future. Having our PEO customers up 3% as Jim said on a same-store sales again would indicate that underlying economy maybe is somewhat better than most have expected. Our staffing same-store sales up 16%, again represents that the economy I think is a better environment in which we're working as opposed to simply outrunning it by adding new customers. Things that we're not necessarily happy with is the branch development of a couple of our larger branches in some mountain states and those are where we got our attention focused and continue to try to penetrate those markets and probably would hold back on us expanding to any great extent until we do penetrate those markets. In the quarter, our profit increase on a…

(Operator Instructions). Your first question comes from the line of Josh Vogel, Sidoti and Company. Josh Vogel – Sidoti & Company: Hey, good morning. Thanks for taking my questions, Bill and Jim. First question, I was curious if you could talk about some of the trends you're seeing with existing clients' payrolls. Obviously they're stable, same-store sales are up a little bit but is that more a product of hours worked picking up or they actually adding to their payrolls, adding employees to the payrolls?

I think, Josh, you have a little bit of both. I don't think it is in one – there is certainly not a tidal wave of hiring going on out there. I mean that's clear. I do think the hours, we haven't looked at it very specifically but the numbers Greg have shown me, our Vice President here, have been that the hours worked and overtime hours have picked up as well. And that would be the first signs of an overall economic upturn would be hours worked and overtime. Josh Vogel – Sidoti & Company: Right. Okay. Now, with the staffing business, obviously at least based on my expectations exceeded what I was looking for and your guidance for Q3 obviously pretty strong as well and I was curious what assumptions you were baking in for the staffing business for Q3 into your guidance?

I don't know that we really kind of look at it that way. I think we assume that the run rates that we're doing right now are very similar to what – how that plays out in the numbers. Staffing should be relatively strong in the third quarter, particularly with a lot of our seasonal business. And I would assume it will be similar to what we just did this quarter in terms of year-over-year assumptions. Josh Vogel – Sidoti & Company: Okay. Great. Now, with the G&A, as a percentage of revenue continues to come down and I was wondering what was driving that and how much more leverage have you there? And maybe if you had G&A target for the back half of the year, what kind of run rate should we be looking at that as?

Well, your profit sharing will go up and that's built into our numbers for the third quarter. That's the biggest component of SG&A for us is simply the profit sharing side of the world. Leverage as I pointed out, with the 16% increase in revenue with a 48% in net profit, that’s kind of – I would say that's kind of a standard average leverage that we would have based on revenue growth. Josh Vogel – Sidoti & Company: Okay.

It kind of takes care of itself. I guess when I look at it and I look down the list and I see that third quarter that the revenue will be up 16% and the SG&A will be up 3.3%. So, I mean, that's kind of where it is at. Josh Vogel – Sidoti & Company: Right. Okay. And you mentioned some of the larger branches you are looking for more penetration in those markets. I was curious – of the branches that you have that you are looking at right now, what kind of revenue run rate are they doing?

The ones that we're not particularly enthused about? Josh Vogel – Sidoti & Company: Yes. I mean, are those particularly the 10 branches you were talking about that are unprofitable or are there more than 10 that you are really having a close eye on it?

All of them are below about $2 million in annual revenue. Josh Vogel – Sidoti & Company: Okay.

They're small. Obviously, there is a couple of them that we don't think should be small. Let's put it that way. Josh Vogel – Sidoti & Company: Okay. So, of the 10 maybe, of the 46 that are not profitable, is a chance you're going to close several of those down?

No. No. I think those markets that we're in we're very happy to be in them. It is really a matter of the talent level we have at the branch, not the market. The market's there, they're big enough and that's our challenge to make them better, make them bigger. Josh Vogel – Sidoti & Company: Okay. Sounds good. Thanks for taking my questions. I will jump back in the queue.

Josh, good to talk to you. Josh Vogel – Sidoti & Company: Likewise.

Your next question comes from the line of Jeff Martin of Roth Capital Partners. Jeff Martin – Roth Capital Partners: Good morning, Bill.

Good morning, Jeff. Jeff Martin – Roth Capital Partners: Hi, Jim.

Hi. Jeff Martin – Roth Capital Partners: Bill, can you give us a sense – if 10 of 46 branches are not profitable now. Take a timeframe, call it a year, two years, five years, I don't know – were those all profitable at one point? What's your typical level of branches that aren't profitable at any given point in time in a normal economy?

Well, smaller branches, they really are a little more economic sensitive than larger branches. There's just a bigger market for larger branches to be able to carve out their piece of the pie so to speak and I have had times when all branches have been profitable. That's kind of rare because you’ve got branches in different stages of development, from more mature branches to start-up branches. The ones that are most difficult really kind of are the start-up branches, the ones that you're trying to introduce new services in and it takes a while to penetrate a market. And somebody coming to my market when I was in Portland, I mean, there was six or seven of us that were fairly well ensconced and it was fairly difficult to break into our market. So we face the same thing going the other way. Jeff Martin – Roth Capital Partners: Okay. And then could you give us an update on the workers comp environment, if you are seeing any changes in frequency, severity of claims, how you think your base of clients is today in terms of risk profile versus a year, couple years ago?

Well, particularly with the construction business being almost nonexistent, I think the risk profiles of our overall company have declined rather substantially but having said that, the cost of claims has gone up, particularly on the medical front. And as California in particular where we're 70% or 80%, I guess – the attorneys have broken down the some of the reforms that got passed in 2005. And so the overall length of claims has gone up as well. So there are less claims but they're a lot more expensive. There's a lot more litigation than I have seen in a long time. So overall the costs have gone up and at some point when I look at the state of California, they're headed for a train wreck because you can't have insurance companies doing 160% loss ratios to premium and not raising premiums. They raised it some but nowhere near what they're going to have to do. I don't know exactly what the state of California is going to do. Jeff Martin – Roth Capital Partners: Right. Speaking of California, that was my next question. How do you feel about – I mean, obviously the state economy is not in great shape at all, does that make you nervous? Do you see opportunity out of it? What's your take on that because you are 80% in California right now?

Well, having been born in California, as long as the sun shines the way it does down there, I think California somehow is going to come out, okay. If it started to rain in California like it does up here in Oregon, I think that place would be a ghost town. But they’ve – certainly we kind of keep an eye on the fiscal issues facing California. And I think that's going to be a key for the rest of the country is how they get themselves out of this, whether or not that is huge tax increases or finally going to cut services and try and save the world. It will be very interesting to see what the final outcome that you all are down here in California come out with a solution to it because I don't think it can continue the way it is. Jeff Martin – Roth Capital Partners: Right, right. Okay. And then last quarter, if I recall correctly, you moved into white collar a little bit. Could you give us a sense or take a shot at how many of those 136 new clients?

39 of them were non-incentive, which to us would be more white collar. So 39 out of the 136… Jeff Martin – Roth Capital Partners: Okay.

Happen to have that number. Jeff Martin – Roth Capital Partners: All right. Well, very nice quarter. Happy to see you guys doing well.

It is a lot more fun to do well. Trust me. Jeff Martin – Roth Capital Partners: Yeah. Appreciate your time.

Thank you.

(Operator Instructions).

You guys are going to make this call easy.

(Operator Instructions) Your next question comes from the line of Bill Dagery [ph], a private investor.

In as much as there are no provocative questions, it highlights to me that you’ve done an exceptional job as usual, Bill. I thank you for your leadership and sometimes we don't take the time to do that. We only see the negative. So once again my hat's off to you and I thank you very much.

Well, thank you very much. I mean, I coach a little baseball and just like all sports teams you, kind of, work from the bottom up and that's fine. If we can fix the lower half of what we do in terms of our branches and make them better, we'll do better as a company and so dwelling on the negative, that's fine. We kind of do that here at corporate as well. Thank you.

There are no questions at this time.

Well, thank you all for your interest and I will be on the road here fairly soon. And I will hopefully see some of the investors listening and maybe some potential new investors for the company. So we're moving on and looks like third quarter is going to be a nice quarter for us and I appreciate all the interest. Thank you very much.

Thank you. This concludes today's conference call. You may now disconnect your line.