Welcome to the Cross Country Healthcare third quarter 2010 earnings conference call. At this time, all participants are in a listen-only mode. After the presentation, we will conduct a question-and-answer session. (Operator Instructions). Today’s conference is being recorded and if you have any objections, you may disconnect at this time. I would now like to turn the meeting over to Mr. Howard Goldman, Director of Investor and Corporate Relations. Sir, you may begin.

Good morning, and thank you for listening to our 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 third quarter 2010 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’d 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 third quarter of 2010, as well as under the caption "Risk Factors" in our 10-K for the year ended December 31, 2009 and our other Securities and Exchange Commission filings made during 2010. 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’ll turn the call over to Joe.

Thank you, Howard, and thank you to everyone listening in. As reported in our press release issued last evening, our revenue for the third quarter of 2010 was $116 million, down 11% from a year ago. Net income was $900,000 down 5% from the year-ago quarter. EPS was $0.03 per diluted share equal to the year-ago quarter. On a sequential basis, revenue was down 2% and net income was down 22% from the second quarter. Cash flow from operations for the third quarter was $1.1 million and our Nurse and Allied Staffing business which represents approximately 50% of our total revenue in the third quarter, momentum is building as we move through the fourth quarter, against the back drop of continued weakness in the National Labor market, demand for our Nurse and Allied Staffing services continues to be well below that of 2-3 years ago. However, even as these levels we should be able to grow our staffing volume from the currently depressed levels. In the segment we are encouraged by a substantial improvement in demand in most areas of the country since June, and unlike a year ago the rising demand does not appear to be driven by the flu season expectations to any meaningful extent. Part of the momentum we are seeing is the result of our success and wining VMS contracts at large prestigious hospital systems and healthcare facilities throughout the United States at the fastest pace since we began offering our service in 2003. I am also pleased to note a long standing vendor managed account which left us earlier this year, we engaged us at the end of the September under the same terms that we had with them previously. With respect to our vendor management service we have adopted a strategy to selectively offer…

Thank you, Joe and good morning everyone. First, I will go over the results for the third quarter and then review our revenue and earnings guidance for the fourth quarter that we provided in the press release issued last evening. Revenue in the third quarter was $116 million, down 11% versus the prior year and 2% sequentially. The revenue decline reflects primarily the soft demand in our physician and nurse staffing businesses earlier this year, which we believe was largely caused by the weak national labor market. More recently, we have seen an overall firming of demand across the country. And as Joe has just indicated, the improvement in demand for travel nursing services partly reflect our success in obtaining new vendor managed service contract which should allow us to generate sequential revenue growth in this segment in the fourth quarter. Our gross profit margin was 28%, up 120 basis points over the prior year quarter or down 60 basis points sequentially. The sequential margin decline was due to unfavorable workers' compensation claims development. The year-over-year margin improvement was due to a change in business mix among segments coupled improvements in the bill-pay spread and lower housing cost, partially offset by higher workers' compensation insurance expenses. The unfavorable year-over-year workers' compensation comparison was magnified by the unusually good claim experience we enjoyed in the prior policy year. SG&A expenses in the third quarter were down 6% from the prior year and 3% sequentially, reflecting our actions taken to reduce overhead expenses during the past year. Our SG&A expenses in the third quarter included approximately $700,000 in equity-based compensation expenses. Net interest income was $1.1 million, down 32% from the prior year quarter, reflecting the continued delevering of our balance sheet. The effective income tax rate was 48% in the third…

Thank you, we will now began the formal question and answer session (Operator Instructions). Tobey Sommer of SunTrust you may ask your question.

This is Frank in for Tobey. Wanted to ask you to kind of you remind us a little bit of the seasonality and physician staffing and kind of your thoughts you talked about a modest drop in that in 4Q perhaps how much of that is due to seasonality?

When we looked at it historically, the drop off is a $2 million from the third quarter revenue we achieved. The increase in the third quarter, which is seasonally typically the peak quarter for that business generally covering vacations and as such. That increase was probably not as much as we would have expected seasonally, but we did see just a modest sequential improvement, and I would describe the drop off in the fourth quarter maybe a little more than we would normally expect so that’s the one segment we right now the least confidence of the assumption growth we feel pretty good about where we are in Nurse and Allied businesses and we feel pretty good about the positioning of our clinical trials, our education business. The physician business is showing indications of stabilizing, but again given the very short nature of the contracts relative to our other businesses its really hard to pin that down as nearing a turn so probably a little more of the, its still tending a little unfavorably but it does seem to be given to a point where we can look to see better days ahead.

Well Frank just to give you some numbers behind that when we look at the sequential change from Q3 to Q4 last year, we had a 16% drop sequentially and the year before the drop was about 5% now keep in mind that last year’s drop reflected what was at time significantly weakening market, so it was probably greater than normal. So for this quarter our projections imply a high single digit drop offs in Q3 to Q4.

And I think you mentioned a slight bill rate decrease in Nurse and Allied of about 2% and it was geographic mix was mentioned as the cost for that, can you give us an color kind of where the areas of geographic weakness or strengths are and kind of how that’s playing out?

Well certainly our bill rates reflect the changes in our cost of service which are primarily driven by housing cost and we have had a decrease in the relative proportion of revenue derived from hike housing markets such as New York City or the North East. While at the same time we had some increase as a lower cost markets such as Florida, Arizona and Texas and Frank just the decrease year-over-year was actually 3% and as Emil indicated our analysis suggest at least part of it is due to the decline particularly in the North East which was an underperformed and was partly as a result of the temporary loss of an account that we have had for a number of years but we are pleased to say as come back to us. But there is no question on the fundamentals of that business. There is not a lot of strength in pricing. It's not a market where we have an opportunity to make a compelling case for price improvement. Most of our costs as you can see from our gross margins are pretty favorable. So we don’t have any expectation that we're going to see a firming in price going forward but we also don’t expect the underlying price reduction to weir much from the trend line that we see.

And if I could sneak one last one in. You gave some nice color on kind of recent trend results going into 4Q for nurse and allied as well as physicians, any visibility in terms of clinical trials or recent trends or indications that you have seen?

As we indicated we expect the number to be better than a year ago. At this point we're really comping mostly the staffing piece of the business and the staffing piece of the business has been on a generally improving trend line this year. We had some recent contracts wins; one in particular that we feel will give us some momentum going into 2011. There is another large engagement where we have better than 50% prospect of winning. That would move the needle to an even greater extent. So we do feel that that business is on track, as being able to get some traction and is likely to grow in 2011.

Need to keep in mind that the fourth quarter has about 5% less billing days than the third quarter as far as the clinical trial business is concerned, about three less days. So our guidance assumes essentially a flat revenue from Q3 to Q4 but that’s in the context of 5% less billing days.

AJ Rice from Susquehanna, you may ask your question.

It's actually Chris Rigg filling in for AJ. I was hoping you guys could help size up the vendor management relationship that used to decline earlier this year came back. Can you give us a sense for when that client left and a sense for how that affected the sequential trends from an FTE standpoint or any relevant metric that may give us a sense for how sort of the rest of the business tracked at least through second and third quarter of 2010?

Really almost it paralleled. We knew we lost it earlier in the year but it actually left us right at the end of the second quarter in early June as we start booking but we had a fair number of nurses there and it came back right at the end of September. The sequential impact of the ramp down of our activity at that account was a little more than $3 million. So accounted for more than all the sequential decline in the nurse and allied segment. We don’t know that it’s going to get back, how quickly or if it will get back to the same level it was earlier this year. Any of their contracts should work. I suppose they may have an electronic medical record implementation going on. So there may be things that drive activity even within an account. But it historically was a strong account for us, we thought we did a pretty good job for them and they did select another vendor, which I am not going to say didn’t hurt our feelings but it was a real, in our eyes a validation of the level of and the quality of service that we provided. They came back to us pretty quickly after having tested the waters with another vendor.

And so do they now have two vendors or just take out one of the one and rehired you guys?

As we understand there is an overlap and that going forward, we will be. Just as there was an overlap as we were transitioning out, we had nurses that were still there. In fact we still had nurses when they give it back but there was handful as opposed to relatively strong numbers we’ve got for the last several years. So there will be a period where both companies are providing service. With our understanding, we are the only ones getting the orders today.

And then a higher level question, you made a lot of comments about sort of how macro trends have impacted your volumes. Clearly in some of this it fits together but acute care hospital admissions have been very weak as well and we’ve seen that from some of the publicly traded guys. And we know that those volumes in the hospital side can turn very quickly, positive or negatively, we are giving over so low more likely to the positive. How quickly would you guys see a benefit in your opinion to the extent hospital volumes did begin to track favorably over the short-term?

We agree with your assessment that when there's higher likelihood that they are likely to be above trend line or probably more importantly to us above expectations, we are the marginal provider of service. So the impact on demand for our service tends to be somewhat disproportionate to what may seem to be a modest improvement in trend line for admissions. There is no single answer to your question but it would be outsized to whatever the above expectation, the actual admission experience of the hospitals was, they expected to be flat or slightly down and they came in 1% to 2% up, it could have a pretty meaningful near-term impact on demand for our service. Now we may not be able to fill all the jobs that are given to us just because you then need to convince nurses that are not engaging in travel nursing market to engage, but we would certainly expect it to have a directionally a pretty meaningful change in slope of our activity.

Just a maintenance question, you talked about receivables billed in the quarter and that some money was released shortly after the close, in the third quarter, can you give us a sense for how much money we were talking about there?

That is roughly half of the increase in our DSOs, so when you do the math that works out to be just another $2 million, but in addition to that there were other factors that were timing in nature that affected our increase in DSOs. There was a shift in the revenue mix in our Nurse and Allied segment where revenue generated from historically fast paying clients was declining during the quarter while revenue from historically slower paying clients was ramping up and then finally there was also a timing impact of the payroll cycle which resulted in a fairly significant increase in unbilled receivables at quarter end which also contributed somewhere between half to a day of the DSO increase.

Jeff Silber of BMO Capital Markets.

Want to go back to the Nurse and Allied segment and talking about margin you mentioned a few times about some of the adverse clients and the unfavorable worker’s comp expense, can we just get a little bit more color on that?

Let me give you the background on how we adjust our reserves for worker’s comp. At the end of this quarter, we increased our worker’s comp reserve by about $0.5 million for incurred but not recorded losses that there were due to adverse loss development for the most recent policy. Our workers’ comp policy renews in the third quarter and the actuarial methodology that’s associated with the most recent green policy year changes, once you reach that 12 month anniversary from its inception. After that point, the losses are not considered credible from an actuarial standpoint and the estimate of ultimate losses is based more on the historical loss rates than on actual incurred losses, but after the 12 month anniversary the actuarial calculations rely more heavily on industry and company-specific loss development factors. Now because our losses were higher than normal in the 2009 to 2010 policy year, this resulted in a need for additional IBNR accrual and by contrast the reverse situation occurred last year when the 2008-2009 policy reached its 12-month anniversary, since our incurred losses in that policy were significantly lower than normal. So loss development tends to vary randomly from year-to-year, so these types of actuarially-driven accrual adjustments need to be made periodically, both for our worker’s comp and for our professional liability policies.

So these [trips] are only done in the third quarter each year, is that what you said.

Well we do look at it on a quarterly basis, but the impact on workers’ comp is typically most pronounced in the third quarter because that’s when we transition the methodology.

Okay great that’s very helpful, Joe, I think historically said, if we look at the variable contribution margin for every dollar increase in revenues I think it’s roughly been in the mid-teens, but it could be higher than that early in recovery. Can you just confirm that I had that correct? Are there any major differences than that by segment?

You are correct. That’s what we would historically have guided it to. Right now we are seeing a little bit different situation because, nothing significant part of our ramp up is related to adding the MS accounts and they tend to vary in complexity. So I think we are in a situation, given that we reduced headcount pretty aggressively when the industry was in a significant downward trend line late 2008 or in the first half of 2009. We have been adding overhead, probably to a greater extent then we would see ourselves doing at early point in a recovery and just because you need different skill sets to manage these large vendor managed accounts, but I would still say the incremental contribution margin would be in the 12 to 15% range even with the additional overhead that we are adding.

Okay. And any major differences by segment?

Well you would expect the segments that have a relatively high-fixed cost component to have the greatest marginal benefit from an increase in revenue. For example, our physician search business would probably give you the highest marginal contribution income. But also keep in mind that is also our smallest segment.

(Operator Instructions). There are no further questions at this time, sir.

Okay, thanks so much and thank you to everyone listening in. We look forward to updating you on our fourth quarter results in February. Take care.

This concludes today’s conference call. Thank you for your participation.