Good morning, and welcome to the Cross Country Health second quarter 2008 earnings conference call. At this time, all participants are in a listen-only mode. (Operator instructions) Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to introduce Mr. Howard Goldman, Director of Investor and Corporate Relations. Mr. Goldman, you may begin.

Good morning and thank you for listening to this conference call which is also being webcast, and for your interest in the company. 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 second quarter 2008 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 at 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 future events or conditions, or that include 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 statement section of our press release for the second quarter of 2008, as well as under the caption Risk Factors in our 10-K for the year ended December 31, 2007, in our SEC filings made during 2008. Although we believe that these statements are based upon reasonable assumptions, we cannot guarantee future results. Given these uncertainties, the forward-looking statements discussed on 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'll turn the call over to Joe.

Thank you, Howard, and thank you to those listening in for your interest in Cross County Healthcare. As reported in our press release issued last evening, our revenue for the second quarter of 2008 was $171 million, down 3% from a year ago. However, our second quarter net income of $6.4 million was up 17% from the prior year, and our earnings per diluted share of $0.21 were up 24% from the prior year, reflecting a substantial improvement in our profit margins, along with a reduction in our share count. Cash flow for the second quarter was a very strong $15.8 million. I am very pleased with our results in a challenging business environment. Profit margins in all three business segments exceeded our expectations in the quarter thanks to the continued strong execution of our business unit management and our frontline employees. As a result, our profitability met the high end of our guidance range for the second quarter while our top line performance came in below the range of expectations we set forth in May. In our nurse and allied segment, which represented 78% of total revenue in the second quarter, we have been doing an excellent job of increasing profitability despite the current operating environment. While demand has been stable, it has not translated into increased booking activity. We believe this is due in large part to the reluctance of nurses to leave the security of a full-time hospital staff position and enter the travel mode of employment in a weak economy. Consequently, staffing volume is likely to remain under pressure through the third quarter. Nonetheless, we believe that business strategies we are executing will begin to reverse these negative volume trends later this year without slowing our favorable momentum on margins. In clinical trials services, our second…

Thank you, Joe, and good morning everyone. First, I will go over the results for the second quarter, and then review our revenue and earnings guidance for the third quarter that we provided in last night's press release. Revenue in the second quarter came in at $171 million, down 3% versus the prior year and 5% sequentially, reflecting the challenging operating environment in our nurse and allied staffing segment that Joe referred to earlier, coupled with the normal seasonality in this business. Our gross profit margin was 26.7%, up 300 basis points from the prior year and 150 basis points sequentially. The year-over-year margin improvement was due primarily to the continued improvement in the bill-pay spread in our travel nurse staffing business, and secondarily, to a higher mix of revenue from our clinical trials services and other human capital management businesses which have higher gross profit margins than our nurse and allied staffing business. The sequential margin improvement was due to a continued widening of the bill-pay spread in our nursing and allied segment, as well as lower payroll taxes. SG&A expenses in the second quarter were essentially flat sequentially but up 7% year-over-year. The increase was due to the additional overhead associated with the two clinical trial acquisitions made in mid-2007, as well as higher compensation expenses, including approximately $300,000 in equity compensation expenses due to the impact of FAS 123R. Net interest expense was $533,000, essentially flat versus the prior year and down 17% sequentially due to lower interest rates. Net income in the second quarter was $6.4 million, up 17% over the prior year and 9% sequentially. Earnings per diluted share came in at the high end of the guidance range at $0.21, up 24% over the last year and 11% sequentially. Our balance sheet remains strong.…

Thank you. We are now ready to begin the question-and-answer session. (Operator instructions) Our first question comes from Tobey Sommer of SunTrust. Frank Brown – SunTrust: Hi. This is Frank in for Tobey. Can you hear me?

Yes, Frank. Frank Brown – SunTrust: I wanted to ask a little bit about some of these volume growth initiatives that you have and some of the levers that you are going to be working with to build that.

Yes, we have, particularly in one strategy we think has a lot of promise. Unfortunately, we probably have as many competitors listening to these calls than we have investors, Frank, so rather than be specific, I'll just say we have–we are taking action. We think the actions will have an impact. Certainly by the end of this year we believe we would expect to see the benefit of the actions we're taking, but until we do we won't know. There are times you execute well and the tide continues to go out and you don't see the benefit of it. But we believe the things that we can control we're moving forward on. We believe it will make us a more attractive employer for nurses that are currently engaged in the travel nurse market, and we think it will move the needle. But rather than be specific, we would rather let our actions speak louder than our words in describing what we're doing. Frank Brown – SunTrust: Okay, great. And could you talk about maybe geographical areas of strength and weakness in terms of – you mentioned California and Arizona last quarter?

Yes. The weakest market by far is Florida right now. I've been doing this about 16 years, and I would say Florida is as weak as we've seen it during most of that period for a combination of reasons. Obviously, it’s probably one of the stronger housing markets that has been most impacted by the decline in the housing activity. The price of gasoline affects the number of visitors to Florida. So for a variety of reasons, the hospitals in Florida are not seeing strength in admissions, and most are seeing declines, and some are seeing significant declines in admissions year-over-year, and that has affected their desire and need for contract labor to meet the patient care demand. California is by far and away the strongest market year over year of those that are significant to us. If you take out California from the national statistics, the demand for our service would be down in the kind of mid-single digits, but including California, today as a data point, it would be up about 5%. So California is relatively strong on a total order demand. But even when you look at California specifically, the strength is largely driven by one system of hospitals. Those hospitals historically have been among the more difficult to work with, so if you are seeing strength, that's not where you would want to see it. The Upper Midwest and the Northwest are relatively strong. The Northeast is directionally weaker than it was this time a year ago. The Southeast is directionally even weaker than that. Again, kind of as you go down the East Coast, it gets progressively weaker until you get to Florida. And again, as I said, Florida is not strong. Texas which had been an area of strength for us over most of…

The share count for modeling purposes, Frank, should be about 31 million shares, and the price increase that we are estimating is 3% to 5% year-over-year in our travel nursing business. Frank Brown – SunTrust: Okay, great. Thanks so much.

Thank you, Frank.

Our next question comes from Jeff Silber of BMO Capital Markets. Jeff Silber – BMO Capital Markets: Thank you so much. I'm just trying to get a better understanding of what's been going on in the nurse market or nurse allied market since your last call. I'm looking at the notes from the last call. You were a little bit more optimistic. You started to see orders pick up in February. You talked about some of the supply constrain issues there. Did the supply issues get worse? Did demand slow? If you can just provide a little more color on I’d appreciate it.

It's a fair question, Jeff. When we look at the statistics, there is a little bit of a disconnect because the demand hasn't weakened significantly from the last time we spoke. We had anticipated that the market doesn't immediately respond to a pickup in demand, and that over time the behavior of nurses would become more favorably disposed towards entering the travel model if they felt there was continuous employment opportunities. Nurses are reluctant to leave a full-time job because they are full-time nurses and need the income related to a full-time employment. So we felt that we would see a pickup, and candidly that still remains a weakness in our business model. The renewal rate really hasn't deteriorated. I would describe it as actually strong, and I think, as I said in my prepared remarks, we think our execution is strong. Our service scores are improving. The margin improvement reflects a real focus on the business, but it has been very difficult to attract new nurses into the market. And even in the best of days, at any given three-month cycle, 25% to 30% of the nurses that do work for the company get out of travel nursing. They go staff, they return home. That's just the nature of the business, so it's important to have a strong pipeline of new nurse applicants to maintain the business and to grow the business. And that's really been the weakness in the business, Jeff. As I said, when you parse the demand, most of the strength is in California. Most of the strength within California is one system that historically for us has been difficult to get traction with. It's just administratively a tough client to work with, but it's not just that client. California clearly, and particularly in southern California, has strengthened from its low, so we're optimistic that there is traction in California, and hopefully it gets better for us in California. But I personally was disappointed by the relative weakening in Texas. Texas had been a source of strength, historically has been a big market for us. There has been housing weakness in Texas, but our understanding was the strength in the energy sector was really overweighting that, and as a result the dynamics were pretty favorable for us in Texas. That has directionally weakened since the last time we spoke, and of course that's a disappointment. The greatest disappointment by far is that Florida, rather than getting better as we had hoped, really has gotten worse over the last three months. Jeff Silber – BMO Capital Markets: All right. I appreciate that. If I could switch over to the MDA acquisition, when you announced the deal, I think you said it was going to be slightly accretive for this year. I think it was a couple pennies if I remember correctly. I'm just trying to model that in. What amortization assumptions are you using for that going forward?

Jeff, let me take that. We have not yet done an independent valuation of the intangibles, but for modeling purposes we assume conservatively that definite live intangibles will be in the–the amortization of the definite life intangibles will be in the $2 million to $2.5 million per year range. There is also some incremental depreciation from the acquisition, roughly in the order of $1 million to $1.2 million per year. Jeff Silber – BMO Capital Markets: Okay, great. That's helpful. And on the term loan, can that be prepaid?

Yes. Jeff Silber – BMO Capital Markets: And what kind of interest rates do you have on that?

Well, out of the gate, we will start off at LIBOR plus 250, and as we de-lever our balance sheet, we should be able to see some deductions the next point down the grid at that LIBOR plus 200. Jeff Silber – BMO Capital Markets: All right.

We do intend to hedge a portion of the term debt, probably about $50 million. Jeff Silber – BMO Capital Markets: Okay, good. Just a couple of the numbers questions, I'll let somebody else jump on. What kind of CapEx should we be seeing for the rest of the year?

Well, the CapEx historically for us has been in the neighborhood of about 1% of revenues. I think that's still a good number for modeling purposes. On a year-to-date basis, we are below that. We are at 0.7% of revenue, and probably will end up the year at just under 1%, maybe 0.8% or 0.9% of revenue for the year. Jeff Silber – BMO Capital Markets: Okay, great. And then just going back to the second quarter results, can you just strip out the acquisitions and let us know what organic growth was in terms of revenues for the whole company as well as the clinical trials segment? Thanks.

Okay. Let me look that up. The organic growth – organically, the revenues in the second quarter were down about 6% year-over-year, basically all driven by the decline in the nursing and allied segment. Jeff Silber – BMO Capital Markets: And then if we strip it out the clinical trials segment, was there any organic growth without the acquisitions?

Without the acquisition, we would have had a small decline.

Jeff, when you look at the clinical trials business, the rev top line was modestly lower. The contribution income was modestly higher. It is the mix of the business that within that segment has become more favorable doing relatively more CRO work relative to the relatively lower margin staffing work. Jeff Silber – BMO Capital Markets: Okay, great. Thanks so much.

Okay.

Our next question comes from Jim Janesky of Stifel Nicolaus. Jim Janesky – Stifel Nicolaus: Yes. Hi, Joe.

Good morning, Jim. Jim Janesky – Stifel Nicolaus: I was under the impression that one of the most over– if not the most overriding factor for nurse travel demand is hospital admission rates in any type of employment environment. And we've seen some pretty decent volumes from hospitals in the second quarter. Some of the strength in the first quarter has spilled over into the second quarter. Is there just – is it a little bit different this time in terms of the reaction of nurses, or are the hospitals that were reporting volume increases the ones that just aren't buying?

I think there's a couple of pieces to that. I'm not sure I would argue that hospital admissions is the bigger driver, particularly in and of itself. As I think I have consistently said, it's what did hospitals expect coming into the quarter vis-a-vis how did admissions actually play out? If they expected 2% admissions growth and got 2% admissions growth, that's kind of a neutral outcome as far as their need for temporary labor. They have probably staffed appropriately for the patient loads. If they expected 1% and got 2%, that would be good for our business. If they expected 2% and got 1%, that would be relatively bad for our business. I personally believe the bigger driver of demand for our business is the labor market impact on the psychology of nurses and their willingness to work at wages hospitals are offering. I believe that hospitals use our service not because they truly desire to bring in outside labor. It's because they can't fill the shifts, all the shifts 24/7 at wages that nurses will sign on for. As nurses' husbands become underemployed or unemployed in a weaker macro labor market, their willingness to work for those wages becomes greater. So the elasticity of supply that hospitals face becomes flatter, and when it's flatter, that's bad for demand for our service. Now again, if we take a step back and look at the overall picture, demand for our service is up about 5% year-over-year. That's not the problem. The problem is filling those jobs and encouraging nurses to enter the labor market, to leave that full-time job and come work for us in increments of three months at a time. That's just a tougher sell when the economy is weak, and nurses are a little more skittish about leaving full-time employment. Having a pretty good place in the queue for the shift that they want and taking a risk that if they leave and come back they get back in the back of the line and have the least desirable shifts. I mean, that's just part of the decision process a nurse has to go through before they leave that security of full-time employment working for a hospital and come work for us. Jim Janesky – Stifel Nicolaus: Why is California in your opinion so strong?

Again, it's a relative term. It had gotten pretty weak and now it's much stronger than it was. Historically, it probably is particularly strong. I've heard a variety of issues. I think clearly California has one of the older populations of registered nurses, and as nurses age they are less likely to work as many hours. I have also heard that it was the weakest – the first market to really weaken nationally as it relates to housing, and a lot of the construction workers who were just kind of sitting on their hands and waiting for the situation to turn around have picked up and moved to the Gulf Coast where housing activity is actually still pretty strong, recovering from the hurricanes of a couple of years ago. So I don't know how to weight those dynamics, but clearly there's no question that California is by far and away the strongest state year-over-year when we take a snapshot today. Jim Janesky – Stifel Nicolaus: Okay. Switching gears to locum tenens, what kind of growth rate could we expect out of MDA, and what can you do with MDA being part of your organization rather than independent that can accelerate any growth rate that the company has exhibited or margin expansion as well I guess is the question, do you expect any?

That's a fair question. It has been roughly a 10% top line grower. That's what we've modeled. We don't typically model top line synergies and then try to convince the banks to give us value for that. We believe we'll do better than that because there are clear opportunities for synergy, and the first and most obvious is that in our retained search business, there is a certain time to fill in any search that Cejka undertakes for its clients. And we now have an opportunity to go to those clients and say, "Look, it's going to take us a couple of months to fill this job. We would recommend that you work with an affiliate company, MDA, to bring in a revenue-producing physician on a locums basis while we're looking for a full-time solution." And the demographics of those two businesses tend to be very highly complementary. Typically in a retained search, the client is looking for a young physician just completing his internship who is going to work for 30 to 40 years. The locums business is, again, typically depicted by an older physician towards the end of his career who wants to keep his hand in the game, but doesn't want the burden of managing a practice. So again they are demographically complementary, and we think there is going to be a lot of synergy because historically Cejka would just give that business away to unaffiliated companies. We never had a locums opportunity internally. We think there is a strong opportunity to accelerate the top line of MDA through those opportunities. We think there is going to be opportunities to place physicians on clinical trials as we build that business. So clearly there are opportunities, more opportunities for MDA being associated with Cross Country Healthcare than there were for them independently, and their independent growth has been pretty consistent. Jim Janesky – Stifel Nicolaus: Okay, thank you.

And then furthermore we have clients that are looking for one-stop shopping for all their staffing needs, and having a complete range of services available under one roof should help us secure additional vendor management contracts. Jim Janesky – Stifel Nicolaus: Oh, I see. All right. Thanks, Emil.

Our next question comes from Michael Morin of Merrill Lynch. Michel Morin – Merrill Lynch: Yes, good morning. Joe, apologies if I missed this, I was a little bit late hopping on. But in terms of the lower than expected FTE counts, was that across the board or was it really concentrated on the travel nurse side?

It was travel nurse and allied, Michel. Michel Morin – Merrill Lynch: And allied? So per diem is holding up? I think last quarter, if I'm not mistaken, you were actually up year-on-year in that sub segment.

No. I wouldn't describe it as being up. It's actually at this point the volume trends are negative year-over-year. It has deteriorated a little bit, but it's a relatively small part of our business. Michel Morin – Merrill Lynch: Right.

The biggest impact on volume – if you look at what we considered a miss on our part, it was on the travel nurse side primarily. Michel Morin – Merrill Lynch: Okay. And on the gross margin side, I mean, the margins were very solid this quarter. And could you describe a little bit where that's coming from? You mentioned bill-to-pay rate spread. Is that again across the board or is it more concentrated in one area?

The bill-pay spread is primarily in our travel nursing business, our core staffing activity. That was by far the largest contributor to the overall gross profit improvement. There was some impact also from the change of our business mix. The relative contribution from clinical trials– Michel Morin – Merrill Lynch: Right.

–and other human capital management being larger, it adds a little bit to the gross profit.

But it wasn't just bill pay, Michel. I mean, housing has been relatively benign. We've done a very good job of utilizing the housing stock that we have open, putting nurses in there that are generating revenue for us from our hospital clients. What we call our occupancy rate is really close to a historical high for us, and so we've done a very good job on that side. And insurance costs have been relatively benign from an inflationary standpoint. Other than health insurance, which I think is tough for everyone, we've had pretty good experience. And health insurance is in line with our expectations. It's higher than we want it to be, but it hasn't been a surprise for us. Michel Morin – Merrill Lynch: So–?

It's not just the bill – it’s clearly the biggest contributor, the increase in the bill-pay spread, but the other elements of our cost structure aren't filling it to the degree that we thought they would. Michel Morin – Merrill Lynch: Right. And if we just hone in on the travel nurse business, again on gross margin, is there still some room to move these numbers up further from here? I guess going forward, given what you just said, the bulk of that would have to come from the bill-pay rate spread.

Right. And as Emil just indicated, we do expect continued year-over-year improvement in bill rates, and as long as we manage our compensation appropriately, we should continue to see modest improvement in gross profit margins as long as these other costs stay in line with our expectation. Michel Morin – Merrill Lynch: Great. And then down one notch on the P&L, the SG&A line, you also had some very good cost control there. Obviously with volumes down, is there going to be room to cut back even further and actually see a decline in SG&A at some point?

Again, we're certainly not hoping for a continued decline in volumes, but if we do see that, there's a natural level of attrition in our business that allows us to manage our headcount pretty effectively without doing anything dramatic. We don’t – in my tenure, we really haven't had a formal reduction in force, and I don't anticipate that going forward. If you look at the headcount of recruitment, it's down about 5% today from the average of 2007, so again just a natural attrition that occurs when volumes are soft. The recruiter compensation program is really heavily geared towards commissions related to placements, and if the placements aren't there, we generally realize a natural rate of attrition that brings numbers into line. Michel Morin – Merrill Lynch: Great. Okay. Thanks very much.

Okay, Michel.

Our next question comes from Gary Taylor of Citigroup. Gary Taylor – Citigroup: Hi, good morning.

Hi, Gary. Gary Taylor – Citigroup: Could you repeat – I was writing down all the third quarter more detailed guidance, and I missed the gross margin guidance.

26.5% approximately. Gary Taylor – Citigroup: 26.5%. And when you talked about your third quarter pricing expectation of 3% to 5%, is that the same metric that we would be looking at when we look at revenue per FTE week, or is there something else happening in hours? Because that number I think was up 1.4% year-over-year this quarter.

There is an impact of hours. It's slightly different. The revenue per hour is fundamentally the more meaningful metric because it kind of gives you a purer view of what the pricing trends are in the market. The revenue per FTE is also impacted. Besides just the bill rate per hour, it's also impacted by the average number of hours worked. Now, I'm a little puzzled by the number that you just quoted because I did not think that the – of course, my data, the revenue per FTE per week is up 3.4%, so it's fairly close to the 4% number.

That's what I have too, Gary. I'm not – what number are you looking at? Gary Taylor – Citigroup: It's a number we calculated, so we must have an error or something.

What we published, Gary, just to make sure we're on the same page, we had 2,174 in '07 for this quarter, 2,247 for 2008 this quarter, which I calculated to be 3.4%. Now, when you look at– Gary Taylor – Citigroup: Yes. I had 2,216 a year ago, so I'm assuming anyway–

Okay. So that's it. When you look at the bill rate, if you look within that division, the bill rate is up 4%, so the difference between the 3.9% increase in bill rates per hour and the 3.4% increase in revenue per week is really the function of hours, a modest really secular decline in the number of hours worked by nurses. Gary Taylor – Citigroup: I appreciate that. So the real – the question I was going for there, and it sounds like the answer is your expectation on the year-over-year pricing growth into the third quarter is fairly similar to what you saw this quarter.

That's correct, Gary. Gary Taylor – Citigroup: Not a pickup or a decline. When you talk about bill-pay spread, have you ever quantified what that is in your business?

We haven't. Gary Taylor – Citigroup: Can you quantify the improvement year-over-year? I know it's an important component of the gross margin increase, so can you quantify at least what the improvement is?

I want to say it's about 10%.

About 9% to 10% is what I would say.

Yes.

There is obviously a leveraging effect here because at the end of the day, it's that spread that really matters to us. And a relatively small improvement on the spread is a disproportionate benefit as on a percentage basis. Gary Taylor – Citigroup: Does the – you described how the weakening employment environment I guess hurts your ability to source nurses. Does it give you some benefit on the bill-pay spread just in terms of some relief on the pay component of that?

Not necessarily. Again, you want to offer a package that entices nurses to leave that contract. So while we don't currently feel that our package is under the market, that we're getting a lot of pushback from nurses saying we're just way below everybody else. On the contrary, we think we have a very attractive package for nurses. Clearly, all other things equal, it takes more to get them to leave the security of that full-time job when they're hearing on the news that things are bad and are going to get worse. Whether they will or not, that's just what they're hearing, and it just makes them more reluctant to leave that security. Gary Taylor – Citigroup: And on the housing costs, can you remind us what that runs as a percent of revenue?

About 17% of the segment revenue. Emil, is that–?

That's about right, yes. Gary Taylor – Citigroup: And how much–what is kind of the basis point improvement year-over-year, however you look at that?

I don't want to give you the wrong number, but I think it's about 40 or 50 basis points. Gary Taylor – Citigroup: Okay. And then my last question, I think you have answered it, as well. I just want to clarify my understanding, but when you look at the decline in FTEs that you placed year-over-year, your view is that it's indicative of the broader market. Your view is not there has been a market share shift or that you've lost market share in any particular state or any particular client, correct?

Well, I would say that when California is the strongest state and Florida is the weakest state, that's a scenario that's not particularly favorable for our ability to maintain or grow market share. Gary Taylor – Citigroup: Okay.

We tend to dominate Florida. Other companies tend to dominate California for the same reasons they're based in California. You are able to get out and get in front of your clients. It's a relationship business, so that's not a great scenario for us. It would not shock me to see that Cross Country has lost market share. And the truth is when you're focused, and our organization has been focused, on improving margin, getting it to the point where we can generate a healthy amount of cash flow from the nursing business in a tough environment to allow us to continue to diversify into businesses that have different and today more favorable characteristics, we are probably leaving some business on the table. We've looked at all that, and again we're on a path that we believe will change the dynamics over the next several months to be more favorable towards us, all other things equal. And again, the thing that we can't control is whether the market worsens from here or improves from here. If it worsens, again it will affect everyone, but we believe we'll have an opportunity to take market share over the next several quarters given the strategies we are undertaking, and do it in a way that really doesn't impact the margins that we report to our investors. Gary Taylor – Citigroup: Okay. Thank you.

Okay, Gary. Thanks for calling in.

Our next question comes from David Bachman of Longbow Research. David Bachman – Longbow Research: Good morning.

Hi, David. David Bachman – Longbow Research: Let me ask a couple more questions on the supply side. Just to help us get an understanding with what's going on there in the supply-and-demand equation, can you provide some sort of either a ratio of orders to placements or something along those lines or unfilled orders maybe to just help us understand where we're at in the second quarter relative to historical trends?

Yes. It's actually a shockingly high ratio, David. It's probably seven orders for every nurse coming off contract. As I said earlier, demand is not the problem. It's attracting nurses and convincing those nurses you have and those nurses that you're trying to acquire to go to where your jobs are. You have to be a travel nurse today. You can't just be a contract nurse working in a local market. You have to be willing to get into your car and drive to where the job is. There is what I would describe as historically relatively high overhang of unmet demand. David Bachman – Longbow Research:

I'll take a step back. Again, every quarter 70% to 75% of our nurses renew with us, so that means 25% to 30% are leaving us for a variety of reasons. So you need to replace that 25% to 30% with the new nurses. The renewal rate has actually been pretty strong, and I would say directionally it has strengthened. That's not the problem with the business. So if you have made the decision to be a travel nurse, you are satisfied with the offerings that we have for you today and you're staying with us. It's the nurse that has never worked for us or is not currently working for us that's a little more difficult. And even what we call past working nurses, nurses that worked for us and then left us for whatever reason, are coming back to us in relatively greater numbers. It is purely–the metric that's falling short is the nurse that never worked for us and has not been willing to leave whatever their situation is to come work for us that is holding our volume down. David Bachman – Longbow Research: Okay. And just one more to push a little bit further on that, just are the nurses – the new nurses perhaps that are coming to you that you're having conversations with, are their expectations higher, their demands higher? I mean, do they feel like they've got a little bit more power in the equation to perhaps demand something that you can't table up for them?

I don't think that's what preventing them, to be honest with you. Again, I think we have a compensation package that is relatively attractive to what full-time hospital employment looks like. I believe it's attractive relative to our competitors. It's just that it’s really more the security of the full-time job versus the insecurity of not knowing whether in three months I'll be offered a position that's really attractive to me and then I'll have to go back and find – get in the back of a queue of a full-time staff position and maybe get a much less favorable shift than I currently have. I think that's the bigger driver, David, to be honest with you. David Bachman – Longbow Research: Okay. That's helpful.

I don't think it's economics. I think it's really psychological. David Bachman – Longbow Research: It's psychological. Okay. And then it looks like in my model, I'm having the same problem Gary is perhaps with last year's revenue per FTE per week. So could you maybe quantify what you're calling revenue per FTE per week in the third quarter of '07 or kind of give us the actual number for '08? I mean, I just want to make sure that we're looking at that year-over-year–

Okay. Let me see if I can dig that out for you.

Again, the number we have for the second quarter is 2,247 this year and 2,174 last year.

Last year, David, it was 2,243 in the third quarter. David Bachman – Longbow Research: Okay. And we should be looking at it apples-to-apples there with clinical trials moved out of that number completely last year.

I believe that's what I'm looking at, yes. David Bachman – Longbow Research: Yes. Okay.

We didn't anticipate that question so we're not as prepared, but I believe that's the table I'm looking at. David Bachman – Longbow Research: Okay, great. I'll hop off. Thank you.

Okay. Thank you.

Our next question comes from Michel Morin of Merrill Lynch. Michel Morin – Merrill Lynch: Yes. Just a quick follow-up on the MDA acquisition, are you going to be breaking that out as a new segment?

We will have a fourth segment, which will be the locum tenens business, and we will take the allied business that MDA currently engages in and put that into the nurse and allied segment. Michel Morin – Merrill Lynch: Okay. How big is the allied component within MDA, just roughly speaking?

It's about 5% of the business. Michel Morin – Merrill Lynch: Okay. And then are there going to be any cash tax savings given that I think you structured this as an asset purchase?

Yes, there will be. It will be attractive from a cash flow standpoint. Emil, do you want to elaborate?

I mean, obviously it will depend on the final intangible valuation, but again we are starting off with about $100 million of intangibles and goodwill. Most of that would fall into the goodwill bucket and would be amortizable for tax purposes over 15 years.

We would guide you to $0.08 of accretion in '09, and we are hoping that there are a number of conservative assumptions that get us there as it relates to interest rates and amortization. But again there are things we can't control, and we don't want to be too overly optimistic, but we think that's a conservative number for '09. Michel Morin – Merrill Lynch: Right. Okay. And then just finally on the clinical side, Joe, I think in the statement, in the press release last night you stated it should be up sequentially in Q3. I mean, it looks like it might still be down year-on-year, and presumably when you made these acquisitions, that was not your expectation. So I'm a little bit surprised by your comment that it's performing as planned. Could you elaborate a little bit more on that?

Well, I think Emil had said that we're happy with the acquisitions and we are. There is one, again, if you focused on revenue, one acquisition, the business mix has shifted significantly. When we bought the business, it was approximately 40% staffing, which is relatively the–when you look at what makes up our clinical trials services, the lowest margin component of what we do, and today it does very little staffing and does significantly more true CRO work at much higher margins. So it is a slightly lower revenue business but a higher margin business. Now, in fairness and to be completely candid answering your question, I thought we would be doing better in the third quarter than we are going to do, but it is up sequentially about a $1 million. So it's not getting worse, and I think there are opportunities to improve that sequential momentum into the fourth quarter if we can win some of the contracts that we're currently bidding on and are being considered for. So we're not unhappy. Again, every one of the businesses we acquired is at or above plan when we modeled the business at the time of the acquisition, so that's a good thing. Having said that, we significantly–for example, in the third quarter last year, significantly higher than we had anticipated, so it's a very tough comparable for that business. Everything went right in the third quarter of '07, but everything is not going right today, but it's still a very good business and the businesses are performing well. Michel Morin – Merrill Lynch: Right. I noticed that you paid one of the earn-outs this quarter, if I'm not mistaken.

That's correct. Michel Morin – Merrill Lynch: Do you still have any others pending, and are they basically in the money at this point?

There is one more small earn-out on the AKOS acquisition and–

It is definitely in the money.

Yes. And we expect to pay that in the first quarter of '09. Michel Morin – Merrill Lynch: Great. Okay. Thanks very much.

Okay, Michel.

Our next question comes from Tobey Sommer of SunTrust. Frank Brown – SunTrust: Hi. This is Frank again. I wanted to just kind of verify in terms of the MDA acquisition, it's accretive affect on 2008. Have there been any changes there?

No. We're still estimating $0.02 in the fourth quarter, and really an immaterial impact on the third quarter because the timing of the close of the transaction, which we anticipate will be sometime in early to mid September. Frank Brown – SunTrust: Okay, great. And also in terms of the debt leverage ratio, any target there that you're comfortable with or what your thoughts are going forward in terms of paying down that debt?

Well we – out of the gate, when we close the MDA transaction, we will be at approximately just under 2.4. We are very comfortable at that level. Our businesses are continuing to be very strong cash flow generators. Even in a relatively weak environment, paradoxically our cash flow generation actually improves and – as some of the receivables are freed up. And our current projections–based on our current projections, we expect us to be able to very rapidly de-lever our balance sheet. By the first quarter of '09, we should be able to receive an interest rate reduction on our pricing grid.

So, but to answer your question, we are very comfortable with 2.4, and we will probably be comfortable with modestly higher leverage. We don't think anything above 3, but between 2 and 3, that is really our sweet spot where we believe we can enhance equity returns given the very consistent and predictable cash flow generating nature of the business. Frank Brown – SunTrust: Okay, great. Thanks so much.

Okay, Frank.

(Operator instructions) At this time we have one additional question. Bruce Ackermann of Sand Hill Equity Research, you may ask your question. Bruce Ackermann – Sand Hill Equity Research: Good morning, gentlemen.

Bruce Ackermann – Sand Hill Equity Research: Just one question. Could you comment on bad debt expense and what you see about your clients' ability to pay going forward?

Actually, our bad debt expense has really improved. We didn't really have any bad debt expense this quarter. We have been successful in collecting on some old receivables, so it's actually a very good story for us.

And that's likely to continue in the second half, Bruce. Maybe not quite as favorable as the second quarter, but as you've seen, the DSOs have come down, and when you look at the credit profile, it looks pretty attractive. Bruce Ackermann – Sand Hill Equity Research: Okay. Thank you.

Thank you.

At this time, I show no further questions.

Okay. With that, we would like to thank everyone for participating in this call, and we will look forward to updating you later this year on our third quarter. Thank you.

This concludes today's presentation. Thank you for your participation. You may now disconnect.