Good day, ladies and gentlemen, and thank you for standing by. And welcome to the Kforce Q4 2010 Earnings Call. At this time, all participants are in a listen-only mode, later we’ll conduct a question-and-answer session, and instructions will follow at that time. (Operator Instructions) As a reminder, this conference is being recorded. And now, I turn the program over to Michael Blackman, Chief Corporate Development Officer. Sir, the floor is yours.

Thank you. Good afternoon and welcome to the Q4 Kforce conference call. Before we get started, I would like to remind you that this call may contain certain statements that are forward-looking. These statements are based on current expectations and assumptions and are subject to risks and uncertainties. Actual results may differ materially because of factors listed in Kforce’s public filings and other reports and filings with the Securities and Exchange Commission. We cannot undertake any duty to update any forward-looking statements. You could find additional information about Kforce in our 10-Q, 10-K and 8-K filings with the SEC. We provide substantial disclosure in our release and hope that this will improve the dissemination of information about our performance and the quality of this call. Now, I’d like to turn it over to Dave Dunkel, Chairman and CEO. Dave?

Thank you, Michael. We’re very pleased with our firm’s performance in Q4, as well as for the 2010 year and are optimistic about the firm’s prospects, what appears to be a secular shift towards a greater use of flexible staffing. Kforce reported revenue for the year ended December 31, 2010 of $991 million, an increase of 9%. Net income was approximately $21 million, which represents a year-over-year increase of 60% and EPS was $0.51, a 54.5% increase. 2010 was unprecedented in U.S. economic history in that never before have we seen a recovery where such a disproportionate percentage of hiring was created through the temp sector. In 2010, the United States saw 36% of net job creation take place through the 1.7% of the U.S. payroll spend in temp. This bodes very well for the sector going forward, as clients are looking at an uncertain economic recovery, combined with significant uncertainties surrounding regulatory tax and healthcare reform. Our clients are increasingly looking to flexible staffing which allows them to adjust in real time to this constantly shifting economic and regulatory environment. The objectives we established for 2010 were to focus on market and client share gains, and continue to expand our National Recruiting Center and Strategic Accounts teams, while remaining focus on our four service offerings of Technology, Finance and Accounting, Health and Life Sciences and Government. Over the past year and a half, we have successfully doubled the size of our NRC and Strategic Account team and significantly increased the business development staff in KGS, while continuing to outpace average industry growth. Our objectives for 2011, the third year of our three-year plan are to further penetrate existing Strategic Accounts, take additional client share and selectively target new accounts for service offerings in business model add value to our…

Thank you, Dave, and thanks to all of you for your interest in Kforce. Our ability to attain the near-term and longer term financial targets that Dave articulated began with laying a foundation through investments in people, processes and tools. Our philosophy in making these investments during more difficult economic periods has contributed significantly to our success in 2010. The significant investments are now essentially complete and we are beginning to realize the benefits. Our fourth quarter results are consistent with our five-year financial targets. In comparing fourth quarter results with the prior year, the firm was able to grow revenues by 15.1% to $258.5 million and increase net income by 79% to $6.3 million. These gains were driven primarily by the success in our core technology, and Finance and Accounting businesses, which collectively constitute 75% of total revenues, and grew fourth quarter year-over-year 20% and 34%, respectively. Both of these businesses benefit from the continuing maturation of our cost effective and highly flexible National Recruiting Center coupled with our Strategic Account strategy, as well as having the most tenured workforce in the firms history. As a frame of reference, between 2007 and 2010, the percentage of technology and F&A revenue being supported by the NRC has increased from 7% to 33% and the percentage of revenue contributed by our 25 largest Tech and FA clients increased from 25% to 33% of total Tech and FA revenues. The continued evolution of these teams and their related success we believe provides significant additional revenue and earnings leverage. With respect to fourth quarter results, we’re very pleased with our performance and the continued strong environment for professional staffing as clients appear to be looking increasingly to our services to meet their hiring needs. Our firm is well-positioned to take advantage of our…

Thank you, Bill. I also applaud our teams for their performance in the second year of our three-year strategic plan. From a financial standpoint, 2010 provided the opportunity for the firms to take advantage of our flexibility and capacity to gain market share, while protecting our strong balance sheet, delivering solid results of 991 million in revenues, $20.6 million of net income and earnings per share of $0.51. Flash flow and EBITDA also continued to be strong in 2010 which allowed us to purchase our headquarters facility and still end the year with low net debt of $10.8 million. We are well-positioned to take advantage of available opportunities in 2011 and return strong results to our shareholders. The firm continued its strong performance in the fourth quarter, coming in at the high-end of guidance for both revenue and earnings per share. Revenues for the quarter of $58.5 million, increased 4.5% sequentially and increased 15.1% year-over-year on a billing day basis. Quarterly revenues for Flex of $247.4 million increased 4.3% sequentially and 13.9% year-over-year on a billing day basis. Search revenues of $11.1 million increased by 4.7% sequentially and 49.4% year-over-year. Revenue trends for the beginning of the first quarter of 2011 are down slightly from pre-holiday levels, as we saw the impact of year-end assignment ends. However, they are up on a year-over-year basis. For the first four weeks of January, Tech Flex is up 15% year-over-year, Finance and Accounting Flex is up 30.5% year-over-year and HLS is flat year-over-year. Search revenues are up 15% year-over-year for the first five weeks of Q1 2011. We caution that it is difficult to draw conclusions for Q1 based upon this limited data. Net income of $6.3 million and earnings per share of $0.16 in Q4 2010 was a result of sequential decrease…

Yeah, sir. (Operator Instructions) our first question in queue is Mark Marcon with Robert W. Baird. Please go ahead. Mark Marcon – Robert W. Baird: Good afternoon and congratulations on the strong results.

Thank you, Mark. Mark Marcon – Robert W. Baird: Can you -- you’ve obviously done a ton of work on the NRC. It continues to bear fruit for you. You know, the area that has expanded more quickly than I think most people would have expected is on the F&A side. And I was wondering if you could just give a little more color in terms of what you’re seeing? How big is the opportunity there? How much longer can you continue to see the strong growth out of that side of the business?

Mark, this is Dave. A lot of that business, in fact most of it is generated as a result of our Strategic Account initiatives, large account initiatives, so we actually have some reasonable visibility into what’s happening in that space. The vast majority of this business is coming as a result of the nuclear bomb that hit real estate and we’re really dealing with the post nuclear world now which is years of cleanup. You have the CDOs which they run bundling, trying to figure out who owns what and if the guy living in it is actually the owner. You have financing considerations going on. So, unlike historical-mortgage related activities which were predominantly refinancing, this is a massive cleanup related to the whole real estate debacle and candidly we have not seen any indication that there is an end in sight. In fact, as Bill mentioned, that actually accelerated going from Q3 to Q4. So as we look forward we really believe that we’re uniquely positioned to serve this business. It’s done exclusively by our National Recruiting Center, which interestingly enough is able to distribute that throughout the whole United States regardless of whether or not we have a field office. So, we’re able to cover the white space and the key for us, of course, is to be able do it at scale and get leverage. So, as we’ve said in the past, we’re going for client share and market share here and we’re going after it aggressively. And thus far it would appear that we’re winning it because of our competency in that space. So I guess to net it all out, as we look at 2011 we expect it to continue and we’ve seen no indication that there’s going to be any end to this in the foreseeable future. With that said, because of the flexibility that we have in the NRC, all of those resources are redeployable. So one of the things that we’ve built into it is the competency and capability to move those resources across function and across geography. So, for example, if for some reason we did see a slow down in demand in F&A and those particular skill sets, we can move those people into traditional F&A skill set areas, we can also move them into technology. So the benefit of doing it, the way that we’ve done it is we have maximum flexibility and maximum leverage. So we are actually pleased to take that opportunity. Mark Marcon – Robert W. Baird: The other thing that I thought was noticeable was, if you’re gaining this share from some fairly large accounts who have some pretty big needs and yet the Flex gross margins there continue to run at pretty high levels, how sustainable is that?

Actually, the pricing because of the supply and demand in the market as Joe mentioned and Bill added some commentary as well, we actually believe the pricing environment is turning favorable. So, certainly in large accounts with volume, there are price considerations and concessions. But they also recognize that the market demand for those skills is quite strong. So as far as we’re concerned, we believe that there is still some pricing leverage and margin leverage to be gained there but we’re really after the volume, we’re really after the scale because that is what allows us competitively to take advantage of the model we’ve built through strategic accounts and the NRC. Mark Marcon – Robert W. Baird: Great. And then can you talk, despite you did had some great overall results despite the fact government has been sliding a little bit. Do you think the government is basically going to stabilize at these levels or maybe there’s another leg down and then you’ve got visibility with regards to your contracts or is there still a little pit of uncertainty in terms of how that’s going to fall through?

Hi, Mark, this is Bill. Well, we have great visibility for Tech and F&A, we have almost zero visibility when we start talking about government. We have these uncertain budgets. We have awards that are being all held back because of continuing resolution authority, small business set asides, protests. I mean, this thing is really having a very challenging period of time. So while I would like to say that it is a very profitable unit, I think it will be stable to declining probably for the first half of this year. I’m starting to get a little bit optimistic in talking to our team about the second half of the year, but this is a very, very unusual time as we deal with the government client. And so we’re starting to get -- our morale is starting to picking up, we’re getting a little bit optimistic, but some things have to be done before we can really give you a good trend line.

As a practice, Mark, one of the things that we do when we go through these challenging times is take that opportunity to refocus the business, examine what our competencies are and we’re way down range in that now. We have focused our teams significantly in what it is that we do best. We’re working real closely with our commercial field offices as well. We’ve actually had some wins because of the competency in that area. So we’re taking full advantage of the fact that we’re going through this time to really improve the efficiency and the effectiveness. And as I mentioned in my opening comments, we’ve added substantially to the business development resources. God help us if we end or ever get to a place of normalcy in that space because as you know we believe we’re strongly there in the long-term that’s an excellent business for us. Mark Marcon – Robert W. Baird: Great. One last question, then I’ll jump back in the queue. In terms of the revenue and earnings guidance for the first quarter, does that incorporate the weird weather that we’ve already witnessed thus far in the quarter, whether we live in the Northeast or the Midwest?

Mark, I mentioned that in the opening comments. I mean through January that guidance does contemplate everything that’s happened through the first month. Mark Marcon – Robert W. Baird: Great. Thank you.

Thank you.

Thank you. Our next questioner in queue is Paul Ginocchio with Deutsche Bank. Please go ahead. Paul Ginocchio – Deutsche Bank: Thanks. It is just a couple -- first talking about technology gets revenue per billing day. It looks like the growth rate decelerated a little bit. I just felt that your revenue per bill rate, are we going up little faster. Is that just a mix shift and could you just go on that second, looks the clinical growth margin was pretty low in the fourth quarter. What kind of snap-back should we expect there? And then finally on the five-year guidance, appreciate that. Maybe give us a basic GDP scenario you’re using to come up with that. Thanks.

Paul, I’m -- I guess, I’m little confused on the Tech. Actually, Tech on a billing day basis was up about 5.8% sequentially. Paul Ginocchio – Deutsche Bank: Revenue per billing hour I was looking at.

Bill rate? I guess… Paul Ginocchio – Deutsche Bank: Yeah.

Bill rate for fourth quarter 2009 versus fourth quarter 2010 is up, as it is for Finance and Accounting and as it is for government. Paul Ginocchio – Deutsche Bank: Okay. Maybe looking out, you talked a little bit about pricing power. Do you think that’s going to accelerate from here or based on mix or shifts of types of people you’re placing. What do you think for that revenue per hour?

Well, this is one of the beginning of the turnaround. Joe gave you some history here, but we believe that rates will be improving as well gross margins as we go forward here. So we are optimistic on that as far as history tells us and as far as our discussions with the clients are.

Yeah. Paul, from a margin standpoint, I mean especially intact, we’re almost mirroring exactly what happened in the last cycle, meaning the last cycle our Tech Flex margins declined 230 basis points from peak to trough, then they improved about 450 basis points off the trough and we peaked out at about 29.4%. This time around we declined about 240 basis points at the trough and to date, we’ve recovered about 100 basis points which is almost identical to where we were at this same point in the last cycle. So, you know, if one were to extrapolate that to get back to peak levels, there is 140 basis points just to get back to peak in terms of expansion, and if you want to extrapolate that out even further, we were to get the same 450 basis points expansion, margins could even potentially grow higher. Paul Ginocchio – Deutsche Bank: Great. Clinical gross margins?

Yeah. Clinical gross margins, we always see that from (inaudible) because they have a very high percentage of their population. Most of those are employees of Kforce, the big pharmas typically shut down over the holidays for as much as almost two weeks. So we’re carrying a lot of costs and we’re paying people for that time and that has a direct margin impact. Paul Ginocchio – Deutsche Bank: Right. It just looks like it was down 500 basis points, almost 500 basis points year-on-year, so it is just a little bit more than the trends line. Can you back to where -- will we expect a bigger snap back?

Yeah. I think we’re down about 200 basis points on a year-over-year basis and we’ve articulated that in some of the prior quarters. That’s because we were in the second year of multiyear contracts where we’re experiencing having to pay the consultants more but we’re locked in at a bill rate and as I mentioned in my prepared remarks, we’re optimistic from a KCR standpoint because we’re actually -- this is the year where we renegotiate many of those multiyear contracts. Paul Ginocchio – Deutsche Bank: Great. And just a final GDP?

Yeah. Paul, this is Dave. Interestingly enough, if you correlate GDP, the staffing of this growth, we have no business growing in 2010 and as we mentioned, with 36% of the jobs being created through 1.7% of the payroll dollars, it’s obviously and clearly different this time. So our assumption going into this relates somewhat to GDP but as much to the regulatory environment, the healthcare environment and the uncertainty and the unwillingness on the part of clients to go long on human capital. Our thesis going into this recovery literally a year and a half ago was that early on that they would rebuild their permanent staff, their core staffs based on the deep cuts they made during the panic time of 2008 and 2009. Once that stabilizes that the preference would shift back towards the flexible side which would give them the on/off switch, allow them by the way to avoid the significant increase in the unemployment tax rates by most states. So our hypothesis now really relates more to a hiring preference from our clients than a GDP environment. Assuming that the GDP environment remains relatively consistent with what it is now, we think it actually works toward our advantage. We can’t really contemplate a scenario where GDP accelerate substantially. We don’t see that happening, nor do we at this point assume that it will slow down. So if you think 2% to 3% would kind of be the sweet spot for our scenario, I would say that’s probably what we would probably like to see happen. Paul Ginocchio – Deutsche Bank: Thank you.

Thank you.

Thank you, sir. (Operator Instructions) Next questioner in queue is Tobey Sommer with Suntrust. Your line is now open. Tobey Sommer – Suntrust: Thank you. Few questions. One, I was wondering if you could comment about what your trends were like during the quarter in maybe January on a same day billing basis? Thanks.

Yeah. Actually trends during the quarter as we played out, I would say overall from a Flex standpoint we were up in October, we were up in November and as we would expect we were down in December because we lose a lot of billing days with the holidays. And then down in January and that’s typically driven by those end of year assignment ends as we rebill. I think Bill had mentioned in his comments that for example Tech Flex is back to pre-holiday billable consultants and FA is just about there. So we’ve made good progress through January on that front. Tobey Sommer – Suntrust: And in kind of a more typical seasonal pattern, would that pre-holiday threshold be hit kind of more like early March instead of early February?

Yeah. I would say last year was the first year that I recall in the 23 some years I’ve been in this business where the rebill happened as quick as it did. I think we hit our 100% about mid February last year and we’re actually tracking a little bit ahead of that this year. Tobey Sommer – Suntrust: Okay and then I was wondering if you could comment on -- any more color you gave us on the pricing power that is emerging and any other details can you provide on that would be great?

Tob, as I mentioned before, finally we’re seeing a year-over-year increase in our pricing power that, is as I suggested to you, bill rates are up on Tech. They’re up on F&A and they’re up in government. They’re down on HLS but that’s the phenomena that we were talking about with Joe. Joe was talking about with the long-term contracts, although some of those long-term contracts have actually renewed on January 1st. So we’re looking forward to pricing power as we go forward here. So we’re pretty optimistic that pricing power is right around the corner. Tobey Sommer – Suntrust: And, Bill, can you refresh my memory, if I am correct, when the momentum shifts on these rates that tends to be a durable phenomena that last for a while?

Yeah. Tobey, I mean, I was kind of what I was referencing, when we go back and dot historical look at last cycle where we saw that 450 basis points expansion in Tech over the course. I think that cycle ran about roughly three years or so from the up point. We saw even a greater expansion in FA, actually FA from trough to peak expanded about 660 basis points. And you know, we were holding on pretty good this time around and this obviously was pretty severe on most fronts. But both our Tech and F&A, they really mirrored the last cycle. I mean in FA, we declined about -- like I said, we declined about 590 basis points last time around. This time around we declined 510 basis points. As I mentioned in Tech, it was pretty much similar. So they seem to be tracking very comparable to last cycle. Getting back to peak levels, I would say we’re optimistic on getting back to peak levels. Our ability to get all of that extra juice in the orange, I mean, supply and demand and a lot of other dynamics, I’m going to dictate whether that upside exist. Tobey Sommer – Suntrust: Thank you. Could you -- I don’t know if you gave this in your prepared remarks, if you did, I apologize, I didn’t catch it. Could you give us some metrics around the NRC or your field sales in terms of either sequential or year-over-year growth?

Yeah. I believe, looking at the prepared remarks, the total growth inclusive of the NRC and the strategic accounts team was a growth of 7.6%. Most of that growth was in the first half of the year. Tobey Sommer – Suntrust: Okay. And then I have two little detail questions. In terms of your approximate 15% growth this year, what do you think the mix would between volume and rate? And then secondly, on the stock repurchase front, do you anticipate trying to offset equity grants or perhaps even reduce on an absolute basis the total shares outstanding? Thanks.

Yeah. Related to volume rate, I mean, we’re always looking at volume rate. I mean, we have a pretty sophisticated finance team that’s involved in all of our financing. We have dedicated sources that are aligned with our strategic accounts organization. So pricing is always near and dear to us and those are always considerations we’re looking at, the exchange of volume for rates. So we’re not going to take on high volume and no profitability, but if the true volume is going to be there we’ll exchange rate for that volume. Because at the end of the day, you know, percentages don’t pay the bills. At the end of the day, dollars pay the bills. So that’s really where we’re focused on and we have a real good team focusing on all of these unique contracts that come in.

Share and repurchase. The question on share repurchase, one of the things that we’ve done historically is we’ve looked at market conditions and pricing relative to competing uses of capital is to say, okay, how do we view the value of our shares relative to the alternative uses. And as Joe mentioned we made substantial acquisitions last year and also in Q1 of this year. The uses of capital retiring debt, which we believe notwithstanding any share repurchase or acquisitions we would be out of debt this year. So as we look at that and look at acquisition pricing, which by the way has remained relatively high, so our view now of acquisition alternatives would be that, it’s going to have to be very compelling, obviously culture comes first and we would look predominantly at tuck-in acquisitions in markets where we want to strengthen our team. So that would leave us back with our share repurchases. I think we demonstrated in Q1 that even at $17.50 roughly that we think our shares are fairly valued and still represent a good investment. So the likelihood going forward is we’ll be continuing to repurchase stock. Tobey Sommer – Suntrust: Thank you very much.

Thank you.

Thank you, sir. Our next questioner in queue is Giri Krishnan with Credit Suisse. Please go ahead. Giri Krishnan – Credit Suisse: Hi. Thank you. I have a couple of questions. First, the search revenue within Health and Life Sciences segment was nicely and I think almost back to ‘07 levels. Can you speak to what drove that?

That was a unique situation that was part of the search revenues for HLS and in the quarter that won’t necessarily repeat. We don’t have a specific search practice in HLS. It is a matter of conversions and so it is based upon client demand. Giri Krishnan – Credit Suisse: Okay. And as we look at your long-term outlook and I know you shared with us our outlook for KGS for 2011, are you assuming a, maybe a modest improvement? Are you assuming a worst case scenario or I guess, what would give you, given the fact that you’re adding to business development headcount, what is all of your expectation as we look longer term for the outlook for KGS?

This is Bill again. Our long-term outlook is that it will -- it certainly is a challenging specifically for the first half of this year. I’m looking for it to stabilize in the second half of the year. As we go forward because we’re in some of the lowest in demand sectors that the government is looking for. I am hopeful, I won’t go any farther than that to say that as we get into 2012 and ‘13 and the government sorts out some of its issues that we will see growth in that group. At least at a minimum, I expect that group to stabilize and not to be the drag on the revenue stream so far. It’s a very positive profitable unit at this point in time and we plan keeping it that way. Giri Krishnan – Credit Suisse: And so other than adding to business development headcount, are there any other changes that you’re contemplating, such as changing service provider, enhancing them? Anything else that we should be aware of?

Just processes and tools in the way we do it become more effective and efficient, make sure that we have everything in place so that we can excel in the niches that we specialize in. Are we after it? Yeah. Are they working hard? They are. Just because things are slow that is the opportune time to make sure processes, tools and activities. Teams are all in place to take advantage of things when they turnaround.

Yeah. Gary, this is Joe. Also, I want to make sure it’s clear when we talk about business development. If you were to look at Q4, for example, I mean, all those costs are already in our number so we’re not adding in addition to. I mean, we’ve made significant investments in terms of the business development resources in that unit because we believe in the long-term prospect and it’s a very long sales cycle so you have to get ahead of that curve. All of that taken there and it’s still a highly profitable unit for us. Giri Krishnan – Credit Suisse: Thanks a lot.

Thank you.

Thank you. And at this time, I’m showing no additional questioners in the queue. I’d like to turn the program back to David Dunkel for any closing remarks.

Okay. Thank you. Once again, we want to express our appreciation for your interest in and support for Kforce and also to thank our team for performing so very well in these challenging conditions and again, for winning on the field. So thanks to each and every member of our field and corporate teams and to our consultants and clients for allowing us to privilege of serving you and we look forward to the opportunity again to speak with you in April. Thank you very much.

Thank you, ladies and gentlemen. This does conclude today’s program. Thank you for your participation and have a wonderful day. Attendees, you may now disconnect.