Welcome and thank you for standing by. At this time all participants are in a listen-only mode until the question-and-answer period of today's conference call. (Operator Instructions) I would now like to turn our conference call to Mr. Howard Goldman. Sir, you may begin.

Good morning. And thank you for your interest in the company, and for listening to this conference call, which is also being webcast. With me today are Joe Boshart, our President and Chief Executive Officer and Emil Hensel, our Chief Financial Officer. On this call, we will review our fourth quarter and full year 2007 results, for which we distributed our earnings press release after the close of business yesterday. If you do not have a copy, it is available on our website at www.crosscountryhealthcare.com. Replay information for this call is also provided in the press release. Before we begin, I would first like to remind everyone that this discussion contains forward-looking statements. Statements that are predictive in nature that depend upon or refer to events in the future such as conditions or includes words such as expects, anticipates, believes, estimates and similar expressions are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. These factors were set forth under the forward-looking statements section of our press release for the fourth quarter of 2007, as well as under the caption "Risk Factors" in our 10-K for the year ended December 31, 2006 and our quarterly reports on Form 10-Q issued during 2007, as well as in our 10-K for the year ended December 31, 2007, which is expected to be filed in the coming days. Although we believe that these statements are based upon reasonable assumptions, we cannot guarantee future results. Given these uncertainties, the forward-looking statements discussed in this teleconference might not occur. Cross Country Healthcare does not have a policy of updating or revising forward-looking statements, and thus it should not be assumed that our silence over time means that actual events are occurring as expressed or implied in such forward-looking statements. And now, I will turn the call over to Joe.

Thank you, Howard, and thank you to everyone listening in for your continued interest in Cross Country Healthcare. As reported in our press release issued last evening, our revenue for the fourth quarter of 2007 was $182 million, up 3% from a year ago. Our net income in the quarter was $7.3 million or $0.23 per diluted share. Our earnings per share were in line with the prior year quarter which included a gain of $0.04 per diluted share related to the partial reversal of a legal settlement charge. Cash flow for the fourth quarter was $20 million, the highest ever quarterly cash flow for the company reflecting both improving margins and strong collection of receivables. Our fourth quarter performance resulted in full year 2007 revenue also reaching a record level of $718 million. In addition, our 2007 earnings of $0.76 per diluted share were up 49% on a reported basis. As outlined in our press release, the prior year included an after-tax charge of $0.13 per diluted share related to the settlement of losses. The improvement in our results in the fourth quarter and full year, largely reflected a substantial increase and contribution from our Clinical Trial Services business, along with continued margin expansion in our Nurse and Allied Staffing business. In our Nurse and Allied Staffing business, we had some very bright spots including; our bill-pay spread expanded during the 2007, and in the fourth quarter was the highest since we became a public company in 2001, something to partly offset inflation and housing and insurance over the same period. Our housing cost as a percent of revenue declined substantially for the second consecutive quarter, reflecting our heavy focus on bringing this important area of cost under control. Revenue per hour continued to rise in the low single-digit…

Thank you, Joe, and good morning everyone. First, I will go over the result for the fourth quarter and full year 2007. And then review our revenue and earnings guidance for the first quarter of 2008 as we provided in last night's press release. Consolidated revenue in the fourth quarter was $182 million, up 3% versus the prior year, but down 2% sequentially. The year-over-year increase was due to the clinical trial services acquisitions. The sequential decrease was primarily due to the lower staffing volume in our Travel Nursing business that Joe referred to earlier. Our gross profit margin was 25.7%, up 220 basis points from the prior year and 90 basis points sequentially. The year-over-year margin improvement is due to a combination of a higher mix of revenue from our clinical trial services business which has higher gross profit margins than our nurse and allied staffing businesses, and continued improvement in the bill-pay spread in our travel nurse staffing business. The improvement in the bill-pay spread was also the primary driver in the sequential margin improvement along with lower housing and insurance cost. SG&A expenses in the fourth quarter were up 12% year-over-year and less than 1% sequentially. The year-over-year increase is due to a combination of higher compensation expenses including approximately $200,000 of FAS 123 related equity compensation cost. The additional overhead associated with the two clinical trial acquisitions and increased mailing cost in our education business. Net interest expense was $764,000 of 58% from the prior year quarter but down 5% sequentially. The year-over-year increase reflects the additional debt incurred to finance to clinical trial acquisitions, while the sequential decrease reflects the re-payment of $4.8 million of debt during the quarter made possible by our strong operating cash flow. The affected tax rate in the fourth quarter…

Thank you. (Operator Instructions). Our first question today comes from Tobey Sommer with SunTrust Robinson Humphrey. You may ask your question.

Thank you. You commented that orders had picked up nicely since January. And I was wondering if you could have any sense for passing out the potential late flu season effect versus a more durable trend in a pickup in demand?

Tobey, I am not sure I can do that. Clearly, the end of January represented a low point and I think, fairly the seasonal business that we would expect in Arizona and California was much weaker than we would normally expect. So, the customer doesn't tell us, it's a flu related opening, it's just that, clearly they are seeing some more patient volumes and they are trying to respond quickly to the pickup. I would just caution that we're encouraged by the recent dynamics, and it really has been week-to-week where you see it building, if I had reported that pickup a week ago, it would have been in the low 20% increase. So we had a nice pickup in orders to the last week, and we are up year-over-year, probably for the first time in 16 months. Until those orders translate into bookings, I won't get too excited, and the fact that we really haven't seen a commensurate short-term pickup in bookings, leads me to believe that they may not be as durable as we would like.

Okay, thank you. And then, cash flow in the quarter was quite strong. Is there anything unusual in that or is it just good performance from all the businesses?

Nothing terribly unusual about it, Tobey. The major contributors to the cash flow in addition to net income was a reduction in receivables, we have a two day drop in our DSOs, which accounts for about $4 million of cash flow. We had an increase in deferred tax, which is always a factor due to the tax deductibility of goodwill. When we look at the year as a whole which is probably a little more meaningful than to look at any one quarter, we had $36 million of cash flow which was about 9% higher than last year, but it's important to know that what impacted our cash flow 2007 was a $6.7 million pretax payment that we made in the first quarter to settle the California transaction losses. So, had it not been for this payment, our cash flow from operations in 2007 would have actually exceed the $40 million, and our year-over-year increase would have been around 22%. So, in just a strong year there is a fair amount of volatility in our quarter-to-quarter cash flow, primarily due to changes in working capital which can be influenced by such factors as the timing of the payroll cycle in relation to the quarter-end and any changes in net receivables. And clearly, when our revenues are growing we expect to tie up some working capital and receivables.

Right, thank you, Emil. And then Joe, one last question and I'll get back in the queue. You ended your prepared remarks by saying; obviously, we grew revenue and earnings, and had a good cash flow year but that didn't translate directly into a strong shareholder value. You said that, this year you would take further additional steps. What sort of plan do you have in place to kind of increase the correlation between your financial performance and shareholder value?

Tobey, there are things we can control and things we can't control. We can't control the multiples that are assigned to the space that we operate in. Being a member of small cap or increasingly micro cap is not a good club to belong to today. And having said that, we think we have a lot of financial balance sheet flexibility, the board recognizes the opportunity to reduce the outstanding share account and has given us the authorization to buy back other 1.5 million shares in addition to the balance of the previous authorization. And we think in this environment given our debt-to-total capitalization, there is increasingly an opportunity for those companies that have the profile to go out and do acquisition. It's a much less competitive environment than it was for the last several years in this space. So we're encouraged on a number of fronts. Again, the things we can't control, we are just going to keep balancing the ball and growing our business, and improving the operating margin profile of the business. But those things that we can act upon, we will act upon and use the tools that we have at our disposal to achieve what we hope will be helpful greater shareholder value in 2008.

Thank you. Our next question comes from Jim Janesky with Stifel Nicolaus.

Yes. Hi, Joe and Emil.

Hi, Jim.

Couple of questions. First on the Nurse Travel space. Can you give us an idea why you think California has rebounded, and in that answer maybe imply why Arizona and Florida might rebound as there not really a link?

Well, look I want to copy out my response by saying this is what I believe. I believe those three states were among the most impacted by what was a very hot housing market that became a very cold housing market. We saw the earliest impact of a softening housing market which really softened a couple of years ago. It wasn't the subprime that hurt housing, and housing had the guns that declined well before the subprime market hit the fan, if you will. California was probably six months ahead of the declines that we have seen in the second half of '07 in Arizona and Florida, and in January in particular. It had been improving in the fourth quarter; the momentum was in the right direction although they were still negative year-over-year. And the operating metrics of California are positive in January. Orders are up, booking are up and again orders are great but it's not until they are translated to bookings that we get excited, and we are excited that we are seeing higher levels of booking activity in California. So if the same kind of timing holds through, and Florida and Arizona are six months behind California, then we would hope the other key states to get back in line with the rest of the country. And as I said several times, if you exclude California, Florida and Arizona we were up in orders, we were up in bookings, and we were up in working nurses through out 2007. But unfortunately those are three of our top five states accounting for roughly 40% of activity. So you can exclude them, if they get healthy and assuming the economy doesn't take another leg down, I think there is certainly the prospect for us to show much more favorable volume trends in the second half of '08 than we saw in the second half of '07.

You mentioned that hospitals are adjusted or have adjusted staffing levels to align themselves with a poor hospital admissions rate environment. Does that mean that even a very small surprise to the upside could drive a much larger than historical increase in the use of Travel Nurses, or will they first turn to Per Diem, what are your thoughts?

I think it depends on the hospital Jim. Each one has its own manner in which they respond to unexpectedly high census. Some will force their nurses to work overtime; some will try to get by with higher patient to nurse ratios. Having said that an upside surprise in census is typically disproportionately favorable to our performance than it is to the hospital performance. Just as an unexpectedly soft admission trend tends to be disproportionately unfavorable. But again it's all about expectations, it's not the absolute level of admission that drives our business even though I would say all things equal more admissions are better than less admissions. If one of the hospital expects, if they expected admissions to be flat, and they got 0.5% or 1% increase at admissions, that's going to be very favorable to us in the short term. If we had 2% admissions growth going forward for two quarters, I would expect our volume trends to be at least 10% ahead year-over-year responding pretty quickly to that favorable environment.

Okay. And now last question, you are shifting to clinical trials, you have referred to that business in the past as being somewhat lumpy both on the upside and the downside. Can you give us an idea of what the backlog is? Have you seen any change in the core underlying demand or the pending in the clinical trials area and do you think it's just a matter of time before we see that business start to accelerate?

Yeah, that's our current expectation Jim. First of all take a step back, we had a great third quarter in that business. I mean everything that could go right, went right and that's not a situation we are accustomed to, generally something is going to go unfavorable to your expectations. The fourth quarter was a little less favorable. We had a significant contract that ended during the third quarter, really right at the end of the third quarter, the end of September. We've replaced some of it, not all of it. And in the first quarter we see again a seasonal pattern, flow into the first quarter. We felt we were going to have one major contract start in the first quarter that now looks to be delayed, another smaller one was delayed. That's the nature of that business; we're not big enough in that space yet to be indifferent to the timing of when contracts start. So when they are pushed back, it does have an impact on our business. When I look at the backlog of contracts that we have won, it suggests, at worst we're stable organically in 2008, these would be 2007. Having said that, there is a lot of activity, a lot of situations that we remain involved in and have the opportunity to win that. I'm hopeful that we will see much more favorable sequential performance in that business, and I know the operating management of that business is very confident in their ability to grow the business in 2008.

Okay. Thank you.

Thank you. Our next question comes from Jeff Silber with BMO Capital Market. You may ask your question?

Thank you so much. Just to continue on the clinical trial side, in the press release you talked about how the bulk of the growth came from the recent acquisitions you made. Was there any organic growth in that division in the quarter?

Not in the fourth quarter, Jeff. For a couple of reasons, as I indicated, the one contract that did come-off was in the organic piece of the business year-over-year. And the management hasn't come ahead on this. We did put in place a new operating system beginning in August for that business platform that really took our people off, the flowing with our clients and required them to sit it on training on the new system. And while I would describe that exercise as having gone pretty well, it wasn't necessarily disruptive; there weren't a lot of things that fell through the crack from the performance side of the business inevitably when you take people off the phone, you're going to have a slowdown in your momentum. So, again I would look at that as an exogenous event, we had to do that, we failed to allow the business to be more robust from an integration standpoint, integrating the new acquisitions we made onto a more robust platform, we'd like what we have now, it was just a process to get there, and I think that probably slowed the momentum of the organic business as well, in addition to losing what was a pretty significant contract that just ended. And we have held out some hopes that would be renewed but has turned out it wasn't.

Okay. So in terms of the guidance you are giving for the first quarter, should we assume -- what should we assume from a sequential perspective in the clinical trials business?

Well, sequentially we are expecting the revenue in that segment to be essentially flat to slightly up. So it's a kind of probably flat as the most reasonable assumption.

Okay.

Let me clarify in your first question, when we talked about the organic part of that business we are including both, our legacy ClinForce business and the Metropolitan Research business which was acquired in 2006. If you just look at our legacy business in the fourth quarter, we did achieve growth year-over-year, it's just that the Metropolitan Research which was/is more prone to lumpiness as you phrase that due to the nature of the contract that they have, they had that termination of contract at the end of the third quarter.

Okay, I appreciate the call and thank you. Going back to the Nurse Travel side of the business, I think in your prepared remarks, Joe you talked about the bill-pay spread, and did you say it was the highest since the company have gone public?

That's correct.

Okay. And I think, in other remarks you talked about bill rates going up about 4% year-over-year, how much did wage rates change?

Less than that, there was a smaller; it was an increase but a smaller increase in wage rates.

So the bulk of the widening of its spread was more than a housing costs and other employment cost that you talked about?

No, no, no. The compensation didn't go down; it went one up but at lesser rapid rate than bill rates. Housing costs were also up but also less rapidly than bill rate.

Okay.

And there is a leveraging effect of course Jeff, because if the wage rates go up at a lower rate than the bill rate, the actual differential is going up disproportionately.

Okay. In terms of looking-forward at 2008 and I know you don't give the annual guidance, but just in terms of capital spending and depreciation and amortization, what should we be expecting in 2008?

We are expecting to spend roughly 1% of our revenue in CapEx. Our depreciation and amortization on the sequential basis is expected to be relatively flat.

We call it, about $2.5 million a quarter.

Thank you. Our next question comes from Michel Morin with Merrill Lynch. You may ask your question.

Yes. Good morning.

Good morning, Michel.

I was wondering, I think a few months ago Joe you mentioned that the gross margin outlook was very solid, and you are pretty hopeful about the outlook for '08, continuing that momentum. Is that still the expectation? I think you would actually quantify that 100 basis points might be feasible in '08?

Yeah. I mean -- I think that's sincerely correct. And we still hold it to that. The issue I think that's the upside, the downside is the top line growth is less than we would like it to be.

Right. Okay. And then, you mentioned that your per diem is up both sequentially and year-on-year?

Correct.

And it's just interesting that you've had some slowdown on the travel side, is there anything specific that's where you've benefited on the per diem side, or is it just that the comps have gotten so easy now that you've kind of turned the corner there? Is there anything specific we should be aware of there?

A little bit of both. Some of the volume momentum is in disciplines that we do not place on the travel side, for example LPNs and CNAs. And per diem is more market specific. We are in about 18 markets today. There is obviously we are in far more markets on the travel side, so the dynamics can be different. We are not in Arizona in the per diem business. Today when you look at the volume momentum of the travel nurse business, it is the most significant decline that we are seeing anywhere in the country. Say, if we can just take out Arizona, we'd be shown much better trends in the business. So there is specific reasons, I wouldn't get, I wouldn't read too much into that. And clearly the comps in per diem had gone pretty weak.

Great, okay. And then just finally on the tax, you gave us an idea for the first quarter. Emil, could you do the same thing for the full year '08, should it be materially different from '07?

Well, again our expectation for the first quarter is based on our current projection for 2008, so barring any changes in mix that remains our full year expectation.

Great. Thanks very much.

Thanks for calling in.

Thank you. Your next question comes from Bruce Ackermann with Sand Hill Equity Research. You may ask question.

Bruce, are you there? I think we lost him, Dennis.

Mr. Ackermann, your line is open. Our next question comes from Tobey Sommer with SunTrust Robinson Humphrey. You may ask question.

Thank you. Joe, why don't you dig into the bill rates, a little bit if I could? I wondered if you had any discernable regional trends, for example, in some of the weaker markets over the last couple of months. Are those bill rates still keeping a pace with the average bill rate increase?

Yeah, I would not; I have not seen any discernable difference regionally. I think just to clarify, we are not getting 4% in every account that we may negotiate, it is as much as 10% and clearly it's zero in some cases. But when you look at the average, it's pretty encouraging, those that we negotiated and we're getting increases. We're typically getting more than 4%, they obviously averaging out of those, they were getting an increase, or are not being renegotiated at that point in time.

Right. And if we step back and take a look at, think about this cycle typically progresses, you get a period of demand followed by bill rate increases and then volumes. So this moderation of demand in certain markets has not been followed by a softening in bill rates which would be kind of more characteristic of a downturn right?

I think it's a fair comment and not to say that it can't. It's certainly hasn't happened yet. We by all indications, I mean internally our expectations are slightly I think we've been saying 4% to 6% bill rate going forward. I would say today 3% to 5%. We just have because of the dynamic you just described; we just want to be a little more cautious in our expectations. But what we have realized does not suggest things are softening on the bill rate front. So we remain encouraged that there's not a wholesale, the tide is not going out nationally, that it's been pretty market specific, and even in those markets we've been able to get fairly attractive pricing which allows us to offset some of the inflationary cost items in our wage and compensation package, and benefit package. And I it gives me a lot of confidence that what we tend to count on in '08 is continued margin improvements.

Right. Thank you. That was very helpful. And then if I pass out and kind of think specifically of your cost of services and leave the pay rate aside. Do you have any expectations regarding insurance and housing rates, anything you are seeing out in the market place, for example, in the real estate market that may change the rate of growth and your expense there?

I think in the housing area, we believe that rental markets are beginning to soften in most markets that should moderate our housing cost and obviously puts us in a better negotiating position vis-à-vis landlords. We are also improving our housing efficiency by focusing on reducing the number of open bedrooms. On the insurance front, we have kind of a longer-term trend in professional liability that we expect that line item to decrease over time. As I mentioned in previous calls, what drives that, is that in 2002 and 2004 we had high self-insurance retention and the further we get away from 2004, the smaller the tail associated with those losses become as part of our total cost. So while there could be some fluctuation in this area, over the long run we expect this line item to decrease. Health insurance is something that we do expect to increase over time, it just tied to over our healthcare inflation. And the third major insurance line for us is workers compensation which has been relatively stable over the years. So we don't expect much change on the percentage of compensation.

Thank you very much, Emil. And a specific question on the Clinical Trials Business. You talked about that revenue being lumpy and cited a specific contract entered around the end of the third quarter. To what extent, has there been customer concentration historically within that segment? And what was the largest percentage of revenue from a specific customer?

Well, the largest customer that we have accounts for about less than 3% of our consolidated revenue than less than 20% of the segments revenue. What I should point out that in this particular customer's case, we were involved in more than 20 different trials with this customer. So any one trial terminating early is not necessarily catastrophic, It's not like you are losing 20% of your business. Independent decisions associated with each trails. So, an early termination or a delayed start is not catastrophic, it can hurt you but it's not catastrophic.

So, on an individual trial basis, would it be fair just to take 10 or 20 projects and divide that 20% by that or one or two of those projects substantially larger than the other?

There is probably one project that's larger but it spends many different trials, it's a functional outsourcing package for these where you are not really tied to a specific trial but rather to a functional area where the customer has contracted us to provide the service across many different trials. And just there again, try to give context there will be -- the contract that ended at the end of September that we referenced a couple of times represented about 4%, little less than 4% of segment's aggregate revenue. So, 4% doesn't sound like much but we felt it and we certainly have reduced the customer concentration as we made the acquisitions we made over the last two years. We expect to continue to reduce it going forward, we think there are a number of opportunities to add on to this business through acquisition going forward at reasonable prices. And so we would expect to see this volatility become less magnified and certainly have less impact on the sequential performance of the business, but today clearly, there is that potential for one contract to move the needle quarter-to-quarter. We just started breaking out the segment, so you don't really have historical color. We certainly have seen it internally. Overall, we loved the performance of this business. It has been an excellent acquisition. The management we acquired when we bought the business in 2001 is still with us. We have a lot of confidence in their ability to manage the business through the ups and downs and realize very attractive profitability from the segment. And we have acquired some excellent people that have stayed with the business post acquisition. So we like what we have and feel very good about our prospects in this area.

Thanks. And one last question. Joe you did initiate or add to your company share repurchase program and availability. To what extent could you get even more aggressive than that, as the stock comes in here, really take a chunk out of the diluted shares? Is there a price at what you become kind of even more aggressive?

The lower the price, the more aggressive we become, and you've seen that just in how we've managed our stock repurchase over the years, we don't rule anything out. So there is not anything on the table, but we said we're not interested in doing that. We want to use our capital to the best advantage of our shareholders. And again, we don't exclude anything from that opportunity. Our broad clearly has been supportive and has confidence in our ability to be disciplined in the execution of the stock repurchase program. And that if we go through this next repurchase quickly and we have the authorization under our credit agreement to do more, if we would expect that they would give us that opportunity.

Thank you very much.

Thank you. Our next question comes from Jeff Silber with BMO Capital Markets. You may ask question.

Thanks, just a couple of quick follow-ups. Joe you had mentioned one of the ways you might look to increase shareholder value, it might be if you do put some potential acquisitions, I am just curious. Are in terms of the multiples, since the public company multiples have contracted so much, have expectations on the private company side follow-up suit?

Well, we have been around long enough to know that, it doesn't, they don't go lock staff. The seller expectations are tend to be pretty sticky coming down the curve. And we would just say that, first of all investors need to know that we are always looking at acquisition opportunities. We look to build the businesses that we currently operate and increase the critical mass of those and operating leverage of those businesses. And we also look at other opportunities within the healthcare human capital space, that we are not currently in, such as physician (inaudible), such as the coder and biller area that we don't have our presence in today that we think both those opportunities are very interesting, and we think based on what we have seen there, our prospects in our core activity today that are more interesting and less competitive than they have been for several years. So, just have that expectation that we are on the hunt to find those acquisitions that are going to be accretive and provide a strong return on invested capital going forward. And I think our track record is pretty strong in this area.

Sure, and that's fair. And can you give us any color in terms of roughly what multiples are ranging these days?

Well, again we would say to any prospective seller look we were trading at 7 to 8 times EBITDA, your expectations should not be above that. If you look at the acquisitions we've made in the Clinical Trials space in the last two years, they've ranged from little over five to as much eight times trailing EBITDA. And that's pretty much a range that we think is manageable for us. Again there maybe a platform acquisitions that we were on the stretch for a little bit, but we still have to hit our performance criteria as relates to accretion and return on capital and that's discussion that we have with prospective sellers.

Okay, great. And then one more guidance question Emil, what share counts you will be using for the first quarter?

31.5 million.

Got it.

And that within the repurchases to-date this quarter about approximately 600,000 shares.

Okay, great. That was going to be my question as well. Thank you so much.

Thank you, Jeff.

(Operator Instructions). Sorry, at this time I show no further questions in queue.

Well, in that case we just want to thank everyone for participating in this call and we look forward to updating you in May on our first quarter performance. Thanks very much.

Thank you. At this time that does conclude today's conference. All parties may disconnect.