Welcome to Kelly Services first quarter earnings 2009 conference call. (Operator Instructions) I would now like to turn the meeting over to your host, Mr. Carl Camden, President and CEO.

Welcome to Kelly Services first quarter conference call. Let me start by reviewing today's agenda. As we've done in the past, I'll start with a few comments on current economic conditions then talk about the affect they're having on the labor market. In that context, I'll then address Kelly's earnings for the quarter, as well as our performance by individual business segment. Following that, Patricia Little our CFO will supply you with more financial details and then we'll conclude this morning with a short commentary on Kelly's position relative to this economic environment, our strategic efforts, and the key strengths we bring to the challenge. And then we'll open the call for your questions. Let me remind you that any comments made during this call, including the Q&A, may include forward-looking statements about our expectations for future performance. Actual results could differ materially from those suggested by our comments. Please refer to our 2008 10-K for a description of the risk factors that could also influence the company's actual future performance. In addition, we also make reference to non-GAAP performance measures. Please refer to the schedules attached to our press release for information on the performance measures and a comparison to our reported financial results. In 2008, the U.S. lost more than 3.1 million jobs, roughly 1.9 million of them disappearing in the last four months of that year. That pace has worsened with more than 2 million jobs already lost during the first quarter of 2009. March saw the 15th straight month of overall job losses in the U.S., the nation's unemployment rate reached 8.5% it's highest in 25 years. For some hard hit sections of the country, the rate has entered double digits. Adding to the already tough employment picture, opportunities for college graduates have begun to shrink.…

Before I get into the operating results, let me provide a little more information on the first quarter restructuring charge. During our year end call, we announced that we would further restructure our U.K. operations and expected to take a charge of the $11 million to $14 million, including $1.5 million we recorded in the fourth quarter. But during the first quarter, we sold a number of U.K. commercial branches we had originally intended to close. We now estimate that the restructuring will total $8 million to $9 million. We recorded an additional $5.4 million in the first quarter and expect to incur the remaining $1 million to $2 million in the second quarter. The restructuring expenses include lease terminations cost related to renegotiating certain European data invoice contracts and costs related to the sale of the branches. Now, moving to our operating results for the quarter, revenue totaled $1 billion, a decrease of 25% compared to last year. On a constant currency basis, revenue decreased by 19% compared to last year and this compares to a year-over-year decrease of 8% in the fourth quarter. As Carl discussed, we are continuing to see revenue falloff worldwide with some stabilization in the Americas region. Our gross profit rate was 16.8%, a decrease of 120 basis points compared to last year. The decrease was caused by a significant decline in fees, as well as declines in our temporary gross profit rate primarily in our Americas business segment. Our Americas region has seen a lower level of adjustments to prior years workers comp reserves, as well as a shift in business from higher margin small customers to larger corporate customers with lower gross profit levels. We remain very focused on expenses. On the fourth quarter earnings call, we talked about actions we were…

The protracted recession has impacted every industry forcing companies to continually reassess their operations. And while Kelly faces some of the most challenging conditions, our company has experienced in it's 63 years, we believe that we're taking the right strategic steps to mitigate losses and to position our company to compete successfully when conditions improve, and conditions will improve. Right now demand for temporary staffing, temp to perm and permanent placement remain at anemic levels throughout the world, but we have seen, as I said, some trends in support stabilization here in the Americas. And while stabilization may be fragile, we're confident that we will eventually see job creation as the economy strengthens and optimism builds. We've always taken a long-term perspective, and despite this difficult environment, the outlook for the staffing industry remains positive. Maintaining operating leverage is always challenging for our industry in a downturn, but general works in our favor as things pick up. What's more, as economic conditions improve around the world, we think we'll actually see greater demand for a contingent workforce than in the past. The war for talent is far from over, and Kelly will continue to play a vital role in supplying that talent on a global basis. Let me close with a few thoughts about Kelly's future. First, the strategic plan that we're pursuing is playing out well, even in this challenging environment. Our emphasis on geographic diversity, expansion of high margin consulting services and high demand profession and technical talent, along with ongoing expense control has pointed us in the right direction and kept us on course. As proof as we reported this morning in aggregate, our Professional and Technical businesses posted positive earnings during the quarter. Second, the actions we've taken during this deep protracted recession have only strengthened…

(Operator Instructions) Our first question comes from Tobey Sommer – SunTrust Robinson. Tobey Sommer – SunTrust Robinson Humphrey: I was wondering if you could describe what the relative pace of decline has been recently in Europe and Asia because you did describe some moderating or stability in the U.S., I guess, in recent weeks. So I was just wondering on a relative basis kind of how those other markets shape up.

I'm not willing to comment on what we're seeing in April in either Europe or Asia, but we'll simply note that they have caught up to the U.S. in declines on a year-over-year basis and that you're seeing roughly the same level of job declines around the world now in our industry. Tobey Sommer – SunTrust Robinson Humphrey: On the gross margin side, one of your earlier points saying that temp margins under pressure. I'm wondering if you could describe what you're seeing from competitors out there both large and small. Have you seen some smaller ones go away and are the larger ones contributing to that gross margin pressure or is that coming from customers directly.

The answer is probably yes to every one of the sources you've raise. So customers have always – by the way during up times or down times, customers always try to place downward pressure on your margins and no different at this particular time. I wouldn't view that as the most critical pressure point. Again, I'll repeat much of what we've seen in the deterioration of temp GP has been due to shift of mix and customers and business lines with some modest pressure from customers and modest pressure from some small to medium sized competitors. Pricing discipline has remained relatively stable among the larger companies as kind of as a generic statement. That, of course, is one that would differ by country, by region and by specific company in that mix. But in general, I'll again say the temp GP decline is mostly due in our case from fee declines as well as mix of business lines and customers. Tobey Sommer – SunTrust Robinson Humphrey: Thank you, that's helpful. Then I'll ask one more question and I'll get in the queue. As we eventually see some improvement and we get to a point where temp is doing a little bit better and then perhaps perm, how should we think about how that may play out. Would temp to perm be the first to see some improvement and then direct hire or how may that play out in terms of how it has historically?

Assuming history repeats itself, which doesn't always, you would first see temp hiring then you would see temp to perm and then you would see direct placement fees. That would differ by some specific business lines. I think healthcare as an example one of the industries that I know you cover would move fairly quickly into permanent hiring, as an example.

(Operator Instructions) Our next question comes from Ashwin Shirvaikar – Citigroup.

My question I guess first of all a couple of your larger competitors have come out and said that March was relatively stable and you didn't quite come out with the same, I should say, the same level of – the same forcefulness to say that the conditions have stabilized. So why is Kelly that much different? Could you go a little bit into the specific maybe end markets what you're seeing in those end markets?

Maybe I didn't have enough coffee this morning so unambiguously we would see the same level of stabilization in the North American market that I think you're seeing our larger competitors say with stability looking and appearing around the March period and extending into April.

Okay. And I guess a question for Patricia. Could you go into some detail on how you would be able to flex the $65 million annualized cost savings up and down with revenues and expenses? Is there going to be some sort of a lag in that adjustment or is it variable actions with that stuff that you can go up and down relatively quickly?

Ashwin, it is a lot of actions that we can move relatively quickly. That said, I think there will be a lag because we'll want to feel quite confident that we've got sustainable economic improvement before we start layering back some of the frankly comp related expenses that we took out so quickly in the first quarter. And the other thing I would say is there's also a layer of costs that I think won't come back. When you push really hard on a lot of discretionary spending on things like travel and general expenses they come back but our intent would be that they come back slowly and maybe settle back to a level that's a little lower than they have been historically. So I would definitely see a lag of the expenses layering back into those regions.

Wherein my former COO had as you shut down branches slowly and continuously as we've been as we evaluate them one by one while branches do reopen over time, it always lags and comes deeper into the recovery. Ashwin Shirvaikar – Citigroup: And do you feel that the roughly $16 million to $18 million in quarterly cost cutbacks incrementally is enough to return to profitability, provided revenue remain roughly where they are?

It's just too difficult to tell since we don't have such a good clarity on the future. Frankly, if need be we'll have to make more cost reductions if things are on the downside. If they're on the upside then, as I said, we'll start to layer them back. It's really such a short cycle business that that's the cycle we'll be responding on.

And do you feel that you have other things to cut?

Ashwin, I came from automotive and there are always a couple things to cut. I think that difficult management have is finding how to cut sensibly balancing that between not impeding our ability to compete on the upside. So that's what we really think hard about every day.

Our next question comes from [Ty Delvettos – CLG]. [Ty Delvettos – CLG]: You might not want to get that specific on this, but can you cut the SG&A in the second quarter by about the same amount between the fourth and first?

Let me clarify, do you mean cut it a further chunk or keep the cuts that we have layered in already? [Ty Delvettos – CLG]: Cut it a further chunk.

Not that level because we really, I think, have made some very decisive cost cuts. We want to let them continue and keep our eye very much on the economic conditions before we take that kind of chunk back out. Now, every day everybody's working hard on the sort of smaller things that will continue to give us good results, but I don't see us doing, unless the economy changed substantially, I don't see us doing another what to us is a huge cost down in the second quarter.

We also moved early, early in the first quarter so we had… [Ty Delvettos – CLG]: Most of it's there.

We have close to a full load in Q1, [Ty]. [Ty Delvettos – CLG]: Okay, that helps an awful lot. Can I assume that given resets and everything gross margins, theoretically would improve somewhat from the first quarter levels.

I don't know how things will move from a quarter-to-quarter basis. Understand, again, core temp GP rates pretty much around the world hung as they were per customer per business line, so shifts in revenue mix move it around. The biggest impact on GP rates globally were placement fees and then inside the U.S. how much adjustments are made and what direction they go to workers comp is variable. In this particular quarter we had fewer favorable adjustments than we had in prior quarters, but there isn't – we're not necessarily looking at a recovery in temp GP rates those are holding fairly well by individual business line and by customer. [Ty Delvettos – CLG]: Okay, that's really helpful. One more, when you say stabilize, did the light industrial stabilize more than clerical?

The answer is no, but, again, as you know, [Ty], you follow us we tend to have less light industrial lend to some of our other competitors. So whether we're necessarily a good gauge as to what's taking place there, I don't know.

Our next question is a follow-up from Tobey Sommer – SunTrust Robinson. Tobey Sommer – SunTrust Robinson Humphrey: I was wondering if I could get the total branch closures in the quarter.

We just did by one region, right?

We just did Americas.

All we announced was the Americas and that was 14. Tobey Sommer – SunTrust Robinson Humphrey: Okay, I wasn't sure if there were additional in other areas. And then I know it's perhaps a question that in this environment is maybe not on the front burner, but in terms of your growth in PT and other areas, do you see opportunities to scoop up any small lines of business over the next quarter or two, or in this environment are you just hunkering down looking at internal operations.

We've never looked just internally, as you know, we always look externally at what opportunities are there both with customers and in the industry. We haven't stopped looking. Tobey Sommer – SunTrust Robinson Humphrey: Okay. Are there any more interesting opportunities?

Excellent try. I think, as you know Tobey, that the distress that's in on the smaller companies more when there's a little bit of an uptick or when you get a full anniversary of the downturn. In the PT space, there hasn't been a full year of a downturn in that space. It went into decline after a commercial debt and hasn't hit the same level of intensity, so I expect that there might be interesting opportunities in the future.

Tobey, I realized when we talked about the 15 branches in the Americas, of course, that exclude the 37 in the U.K. as well.

At this time we have no additional questions. Please continue.

Very good, thank you all.

Ladies and gentlemen, this conference call will be available for replay after 11:30 am Eastern Time today through May 28, 2009 at midnight. You may access the AT&T teleconference replay system at any time by dialing 1-800-475-6701 and entering the access code of 981265. International participants may dial 320-365-3844.