Welcome to the Robert Half International conference call to discuss third quarter 2008 financial results. Our hosts for today's call are, Mr. Max Messmer, Chairman and CEO of Robert Half International, and Keith Waddell, Vice Chairman, President and Chief Financial Officer. Mr. Messmer, you may begin.

Thank you and good afternoon, everyone. We appreciate you joining us. I’ll start by reminding everyone that comments made on this call contain predictions, estimates and other forward-looking statements. These statements represent our current judgment of what the future holds and they include words such as forecast, estimate, project, expect, believe, guidance, and similar expressions. We believe these remarks to be reasonable, but they are subject to risks and uncertainties that could cause the actual results to differ materially from the forward-looking statements. Some of these risks and uncertainties are described in the press release we issued today and in our SEC filings. We assume no obligation to update the statements made in this call. Now let's view the third quarter results. revenues for the third quarter were $1.16 billion, down 2% from the third quarter of last year. Income per share was $0.43, down 6% from the prior year's third quarter. During the third quarter, cash flow from operations was $96 million and capital expenditures were $22 million during the third quarter. We paid a quarterly cash dividend to stockholders of $0.11 per share for a total of $17 million. We paid a quarterly cash dividend to stockholders of $0.11 per share for a total of $17 million dollars. During the third quarter, we repurchased $900,000 RHI shares at a cost of $21 million. Approximately $13 million shares remain available for repurchase under our board approved stock repurchase plan. Our third quarter results clearly were impacted by the Trim Oil in the global financial markets. Clients did become increasingly cautious with their hiring actions as the quarter progressed. The quarter was not without its bright spots however. Revenues from our international operations grew 15% year-over-year on a constant currency basis. Our technology division also reported positive year-over-year revenue growth and our return on equity was 26% for the quarter. Our return on equity has averaged 26% for the past five years. Now, I’ll turn the call over to Keith to provide a more detailed analysis for our third quarter financial results and then we’ll have time for questions after our prepared remarks.

Thank you, Max. We’ll start with company-wide revenues. Third quarter revenues were $1.16 billion, a decrease of 2% from the third quarter of last year and down 5% sequentially. There were 64 billing days in the third quarter of this year compared with 63 billing days in the third quarter of last year and 64 for the second quarter sequentially. Revenues for Accountemps were $435 million, which are down 2% from the third quarter of last year and down 6% sequentially on a same-day basis. Accountemps is our largest staffing division with 375 offices worldwide. It accounts for 38% of company revenues. OfficeTeam had revenues of $209 million in the third quarter, down 3% from the third quarter of last year and down 5% sequentially on a same day basis. OfficeTeam was introduced in 1991 and is our high end administrator staffing division, represents 18% of company revenues. There are 329 OfficeTeam locations worldwide. Third quarter revenues for Robert Half Management Resources were $156 million, flat with the third quarter of 2007 and down 6% sequentially on a same-day basis. This division was introduced in 1997 and places senior level accounting and finance professionals on a project basis. It has 152 locations worldwide and makes up 13% of company revenues. Robert Half Technology revenues were $112 million in the third quarter, up 2% from the third quarter of last year and down 1% sequentially on a same-day basis. Robert Half Technology was introduced in 1994 and places information technology professionals on a consulting and full-time basis. This business operates in 112 locations worldwide and accounts for 10% of company revenues. Robert Half Finance and Accounting, a permanent placement division, had revenues of $108 million in the third quarter, down 4% from the third quarter of 2007 and down 15% on…

Thank you, Keith. Our results clearly were impacted by the turmoil in the financial markets and its effect on businesses of all sizes. Many companies put hiring plans on hold during the third quarter while others took much longer to make hiring decisions. The mood worsened as the quarter progressed. Employers are understandably cautious right now. The credit crisis and market instability have taken on global proportions. Obviously these conditions are unprecedented, which makes it difficult to provide you with any clear insight into what we may or may not expect to see from a business perspective in the next few months. As we have said in the past, however, we do feel the company is very well positioned to deal with an economic downturn. We have an experience field management team and I am confident in their abilities. We have essentially no debt and have maintained excellent cash liquidity. We have a cash balance of over $370 million dollars. We have demonstrated that we can maintain cash flows even in a downturn between 2001 and 2003 when the United States as last in a recession, RHI generated more than $550 in cash from operating activities. Our client and geographical diversity work in our favor. We have an extremely broad customer base without significant concentration in any one industry. We have a wide international presence than we have had in past downturns, which further diversifies our operations. International operations now represent 30% of our company’s total staffing revenues and make up 29% of Protiviti’s total revenues. During the past 60 years, Robert Half has grown market share even in downturns, as some of our smaller competitors were forced to close operations. There are few staffing firms that have our longevity, reputation, and resources. We think we provide considerable value to clients by offering cost effective solutions to their most immediate staffing needs. Protiviti further enhances and diversifies the suite of services its professionals continue to help organizations solve problems in finance, operations, technology, litigation, and compliance. Protiviti also remains a leader in internal audit. At this time Keith and I will be happy to answer questions. We would ask that you please limit yourself to one question and a single follow-up as needed. If you have additional questions, we will certainly try to return to you later in the call.

Thank you. If you would like to enter the queue for a question at this time, please press the * and 1 on your touchtone key pad. Our first question from Andrew Steinerman with JP Morgan. Go ahead please. Andrew Steinerman (Will for Andrew)- JP Morgan: This is Will for Andrew. Can you talk about SG&A and how those levels will look as revenues trail off, given the cost cut in second and third quarter?

Well when we did our guidance, we looked at revenue trends, which obviously are negative and at the low end of our guidance, we continued same levels of negative trends. At the SG&A line, clearly there will be some negative leverage of our fixed cost, which will put pressure on the SG&A percentage. It’s been our position in the past and we’ve begun as we speak to try to match our revenue levels on our headcount levels in the field and otherwise. There’s a lot of attrition that makes up a large part of that matching, but to some extent we go beyond that. So if you look back in history, you’ll see there definitely is some negative SG&A leverage as the revenues go down. The margins certainly bottom out lower than what we’ve been used to seeing, but that said, on the flip side if you look at the recovery, post the last couple of downturns, you see a lot of upside there as well.

And our next question from the side of Mark Marcon with RW Baird. Go ahead please.

I was wondering if you could talk a little bit just following on from the last question with regards to how we should think about expense reductions this time around relative to last time around. It seems fairly obvious that things are going to be tough at least for the next few quarters and so I’m wondering what your stance is going to be. Number one and number two, to what extent is it more difficult to ratchet back expenses, because of your greater international exposure.

Okay, Mark, again as we’ve talked about before on these calls, roughly two-thirds of our SG&A costs are payroll and we’ve long had a policy of trying to match those payroll costs to the extent we can with revenues. We’ve begun that process last quarter that we talked about at length. We continue that process into the third quarter and even to the time we speak. So I’d say if anything relative to the past, we’ve probably matched those costs with revenues more quickly than we’ve done in the past. Notwithstanding the fact we are every bit as committed as we’ve always been to protecting our best people so that when things get better we’ve got dry powder. There’s no question that going into the last downturn, about 15% of our revenues were non-US, whereas today it’s roughly double that. There’s also no question that it’s somewhat more difficult to control those costs outside of the US. France being the most difficult. The UK probably being the most similar to the US. As we’ve talked about before, our European exposure, we get more revenues from Belgium and Germany than we do from France and particularly the UK. So our French exposure where there’s the greatest difficult to control in cost is not near as significant as it is with many staffing firms.

Our next question comes from David Feinberg with Goldman Sachs. Go ahead please.

First question on the share repurchase program, to the last downturn you were able to generate sizable cash as you highlighted earlier in the call, but this time is a little bit different in light of the credit crisis. Any thoughts on suspending or continuing to pay back a share repurchase program?

The answer would be no. If you look at the last downturn, coming out of the last downturn, since 2001, we’ve retired 30 million RHI shares, which is about 17% of the outstanding. That has helped propelled earnings post the last downturn. Also, from a cash flow standpoint, we not only have significant non-cash charges, particularly for stock comp. There is also a significant buffer from our AR. Remember with our clients being middle market accounts, the agings, the collection period for our receivables, doesn’t change dramatically in a downturn, which means as the revenues reduce, those get converted to cash. So given our current cash position, which is over $370 million, given our consistent history, even during prior downturns, of having positive cash flow, much less having to tap into current balances, we feel like it’d be a mistake not to continue to repurchase shares, particularly at these prices.

The only thing I’d add is that we discuss repurchases of course every quarter with our board and you heard how Keith and I feel and we will have that discussion each quarter, but we think we’d be missing a fairly large opportunity if we were to suspend stock repurchases at this point.

As it relates to your US versus international mix, clearly your international business was growing very strongly this quarter. I’m trying to reconcile your comments about the first few weeks of October with temp down 9% and perm off 26%. Is that across all regions or maybe you can give us some color domestic versus international.

So domestic is clearly more impacted than international. It’s the same states that are most effective. California, Florida, Arizona, Nevada, which attract highly with the housing crisis. More recently New York for obvious reasons. If you go outside the US, we’re weakest in the UK and we’re strongest in Germany. On a year-over-year basis, we had very, very strong growth in Belgium, Germany, Australia, and even France, quite frankly, on a year-over-year basis. On a sequential basis, everything weakened during the course of the quarter, which is why our guidance is somewhat bearish.

The only thing I’d add Keith is in the scheme of the global financial turmoil, it seems almost minor to mention, but some of our best offices have been in places like Texas and in the Midwest and they really took a hit this past quarter due to the hurricane activity. So that’s a slight factor as well in all of this.

Our next question from Tim McHugh of William Blair and Company. Your line is open.

I just wanted to ask about Protiviti. How would you expect them to fair in this environment going forward and then from a cost perspective as well? Are you satisfied with some of the measures you pushed through last quarter or will you take another look at some of the cost structure and the amount of people you have.

Well clearly we haven’t had Protiviti during a downturn. The last downturn was when we were starting up Protiviti, so you certainly can’t look at those numbers. At least so far Protiviti is holding up a little bit better than staffing. The regulatory and compliance nature of what they do is not as economically sensitive. That said, clients do come back to us and say - we’ll do more of it ourselves, less of it for you. We the client are our under pressure in turn you need to reduce your rates. So they’re clearly not immune, but at least so far they’re not as impacted as staffing and because we haven’t been there before, we’re not making big forecast about Protiviti in a downturn. As to the cost structure, Protiviti’s done a hell of a job in the last few quarters getting its cost in line with its revenues. As you’ll notice, this quarter they made $4 million dollars on less revenue than they did last quarter when they made only a million and so while $4 million can be argued not to be a huge amount of money, it certainly going in the right direction and it’s going in the right direction relative to what the revenues are doing. Protiviti has changed its year end from June 30 to January 1, effective the coming January 1 and the interesting part about that is that means there’s a typical performance evaluation promotion cycle happening as of January 1, which will give it another opportunity to look at its cost structure. It continues to rebalance its resources away from the compliance areas, more into the consulting areas. They had a lot of success this quarter. IT security privacy, supply chain consulting engagements, finance process improvement. So Protiviti continues to do well in the non-compliance area, but there are still headwinds in the compliance area. In the quarter just ended, Protiviti did not get the lift it had gotten seasonally in prior years, principally in the compliance area, and therefore the revenues were actually down a little bit. Again, not withstanding that, they actually made more money and less revenue.

Can you give us an update on the bill and pay rate translate you saw year-over-year in the most recent quarter?

Sure. A little bit of a change. The year-over-year bill rates are up around 5% and that’s down from being up in the 8% range. On a sequential basis, they’re down half a percent, which is a turnaround from being up 1.5 to 2%. So consistent with what we’ve seen in prior slowdowns, the bill rates have come down and the playbook in that kind of environment is to go back to your temporary employees and say - we can’t afford to pay you for the next assignment what we paid you the last assignment and protect our margins accordingly. If you look over the course of the last few downturns that our temp margins typically peak to the trough, you lose a couple hundred basis points. Most of that decline is a loss of conversions. Unemployment taxes do go up, but they go up on a lag basis. It doesn’t happen immediately in a downturn and typically because it’s on a lag basis, our pricing has a chance to react and reflect that. So that at the end of the day, the temp gross margin decline you see peak to trough is typically more conversation related.

Our next question comes from Kevin McVay with Credit Suisse. Go ahead.

I know you wind out the guidance given macro and it looks likes it’s probably $0.02 wider than what it’s been over the last couple quarters. Can you just help us understand some of the factors in that?

Sure. Again, if you continue early quarter trends sequentially, temp revenues down 9 or 10%, perm down around 25%, and coincidentally that’s about what the sequential revenue trends looked like the middle part of 2001 and further if you look at temp gross margins back then as I’ve just described, you lose conversions, which have an impact on your temp margins, which we’ve also dialed in for purposes of this guidance. You have some negative leverage on the SG&A line, primarily because you don’t cover your fix cost as well. Understand that in perm placement, fix cost are a larger percent of revenues. That is the case on the temp side, because you have more people per revenue dollar that take up more space, consumer more overhead than is the case on the temp side. So that the margins we dialed into our fourth quarter guidance kind of track the change in margins you saw middle part of 01 where we were essentially saying if you go back to the past and superimpose in an early down cycle performance on current revenues, this is what you get.

And as far as the spreading of the range, it’s just because there’s more uncertainty. We thought it appropriate to have a wider range. So our upside number simply moderates every assumption I just gave you. Doesn’t say it’s going to be true, doesn’t say it’s going to happen. You know, whether the duration and intensity of this downtown is going to be different than prior ones, we don’t know any more than you know, but what we can do is attempt to model what happened last time on top of where we are at the moment.

Keith, can you give us a sense of how conversions have been trending over the last couple quarters?

They clearly have been trending down and they account for most of the temp margin decline. On a sequential basis, temp margins went up. It’s a little bit of a head fake, because early in the year we very conservatively estimate what our state on deployment rates are going to be and as the year progresses and we get more and more actual data, it’s not unusual to see those rates moderate and that’s exactly what’s happened this year. So we were particularly conservative early in the year and you get a little benefit from that later in the year, but the underlying fundamental is just as perm is down, so are our conversions, which is very consistent with the past.

Our next question comes from T.C. Robillard with Banc of America Securities.

Just wanted to drill down if possible into the trends that you saw in September and into early October on the perm side. If you could give us a little bit of sense, international versus US. Are we looking minus 25% in the early part of October across the board both in your international markets as well as US or have you seen US ahead of the international? I’m just trying to get a little bit of sense as to how those two measure up, because I know international has a much greater percentage of perm than you do in the US.

That’s correct and it’s fair to say that international relatively speaking is still doing better than the US, but when you dial the two together, you got the trends you saw in early October, which were a continuation of September. Frankly, for the quarter through August, we were feeling pretty good and traditionally September, you get a huge upcheck relative to what you get in July and August and as we said, sequentially September and temp was flat. So you say gee whiz, that’s not like it’s fallen off a cliff, but the problem is that’s compared to most Septembers where you have a huge lift sequentially, which we didn’t have this year and going into the quarter we’re in in early October, not only was it not flat, but sequentially it’s down a few percentage points and hence one of the reasons why we gave the forecast we did, which we hope is conservative, but we don’t know.

Part of the dilemma when you talk to people in the field is that the three or four weeks of the expression used was a stun gun. It’s as though somebody hit the stun gun on the entire economy and everything from a hiring standpoint just ground to a halt. People were afraid to move and so that obviously impacted the numbers. Is that going to improve, is it going to get better as the credit markets begin to fall? What’s going to happen? Keith and I are just giving you our best guess of where we’re going. It’s very difficult to predict and that’s why the range was wider this time in guidance than before. Obviously we hope it’s going to at least begin to slowly improve, but we really don’t know anymore than you do.

Turning back to a prior question, clearly we need to manage our cost structure through this downturn. We’ve been here now 22 years. We’ve done this before. Maybe it’ll be worse than it’s ever been. Maybe it won’t, but we’re prepared to do what we need to do on the cost side, but for us the focus is what’s the pot of gold on the other end of the rainbow? And there, if you look at even the last downturn, we grew revenues 2.5 times from the trough. We grew operating income 13 times from the trough and we did that on 17% fewer shares. So the point is we need to get through this storm, but there’s a long history of Robert Half and the staffing industry generally recovering nicely in an up cycle and it’s for that reason why we’re as committed as we ever had been to stock repurchases.

Another footnote, as long as we’re on this tangent, in terms of our conversations with our key people in the field, most of our field managers are veterans. They’ve been with us through prior recessions and of course they don’t need to be reminded, but we’re reminding them anyway of how well we’ve done coming out of prior recessions. We talk a lot of about the cost side on the revenue side. I try to remind people that in one of the prior recessions you’ll recall the Resolution Trust Corporation, they became our largest single staffing client. So obviously we’re attempting to be part of the solution in terms of the various government programs we’ve been talking about. We think we have the stature, the scale, and the resources to provide talent needed for a lot of the workouts and so forth. So, in other words, we’re trying to move on all fronts. We’re trying to watch expenses while also generating revenues in a tough environment and we’re reminding our people in the field that there will be a sunny day. It may take awhile, but we’ve done well before and we’ll do well again.

Can I just infer then from your comments and your commitment levels, it sounds as if you would be more aggressive on share repurchases given the share price over the last month, with the market obviously, but just relative to the levels that you guys bought back in the third quarter. Is that a fair assumption.

I think history would show that our cash flow holds up very nicely and just spending your cash flow at these levels afford a much greater number of shares to be repurchased. Operator Our next question comes from Paul Janochia with Deutsche Bank.

Just a question on headcount at Protiviti, just a percent change. Can you give us the Q-on-Q change in headcount, maybe year-to-date and then maybe your stomach for profitability at that division if revenue does decline and what point do you stop cutting headcount and maybe just start to take losses?

While we only give headcount numbers once a year, we indicated last quarter that we were down mid-single digit in headcounts and that trend is continuing. As to what we’re willing to stomach as we go forward, we’ll have to take it quarter-by-quarter. We haven’t been there with Protiviti before. I think if anything, if you look at the last couple of quarters, Protiviti has demonstrated a commitment and an ability to control its costs. So we’ve shown improvement outside of the US. That was our problem area for a year, frankly. We’ve also shown improvement in inside the US. So I think they’ve certainly demonstrated a commitment to address their cost structure and we’ll just have to take it one step at a time based on the severity of this downturn.

Our next question comes from Tobey Sommer with SunTrust Robinson and Humphrey.

In the technology space, you did demonstrate a little bit of year-over-year growth and I was curious about what you’ve got in terms of expectation in your guidance for the fourth quarter and what you may think how that may react in a downturn over the next couple of quarters relative to your other businesses in prior cycles.

So our project-driven divisions, technology to some extent, management resources, and Protiviti even as well, all did better than the transactional sides of our business, and frankly, clients didn’t cut projects off mid project and further, many of those projects, particularly on the technology side, were cost reduction justified projects - Voiceover IP, virtualization to save server costs. So those kind of projects, clients didn’t pull the plug mid project. So I think frankly we’re more concerned that come the end of the year when there’s a natural break in many projects, you’re liable to see more impact in those businesses, but our guidance has them perform a little better than the rest through the end of the year.

Our next question comes from Paul Kondra - BMO Capital Markets.

I wonder if you could give me your stock compensation for the quarter?

It was $16 million on the restricted stock and a $1.4 million on options. Options I think next quarter goes down to $800,000, because we quit issuing options all the way back in 2004. That expense will go to zero quickly.

You were talking about looking like somebody hit the economy with a stun gun out there late September, early October. I know it’s only been a couple weeks, but I’m just wondering does it still look like that?

We gave you the latest data we have and we gave you the October start numbers, which are what they are and they’re consistent with the early part of prior downturns. So that’s pretty much what happened during the period that Max described.

Our next question comes from Vance Edelson of Morgan Stanley. Go ahead please.

Two questions. First one is really a follow-up. Do you have a feel from the front lines as to whether your international operations in terms of economic weakness or to some extent following the US and would therefore be effected for longer or put another way that the US is closer to a bottom and is likely to bounce first. Do you have a feel for that?

Well there’s no question there’s been a lag between what’s happened in the US and what’s happened outside the US. As I said earlier, we had tremendous year-over-year growth during this quarter in Belgium, in Germany, and Australia, and even in France, but that said, on a sequential basis they began to slow, particularly in the UK, which is more financial services driven than most countries. So there’s a lag. We’ve seen an impact more recently, sequentially, which we presume will follow into the quarter, but exactly how the lag into the downturn mirrors what it’ll look like in the subsequent upturn, we can’t say.

In terms of the domestic competitive environment, do you see any smaller players getting into trouble in the tough environment and perhaps giving you a chance to take share or I guess the flip side would be is competition intensifying as staffing firms attempt to maintain revenues. What are the latest competitive dynamics?

It’s still early, but there are a lot of smaller competitors that have shut down and most of the markets in which we operate in the US, I think in the last recession the Industry Trade Association reported there were something close to 8,000 mom and pop and little regional type firms that folded, and frankly I’d be surprised is something similar didn’t happen if this turns out to be a tough recession. Obviously on the operating side, all we talk about is how to gain market share in a downturn. There’s less business, but there’s less competition. You have better resources, better reputation, more experience people, so obviously our marching orders are to gain market share during these circumstances. We’ll just have to see how it plays out, but there are early signs of that. Some of the larger companies have begun closing offices as well. So it’ll get interesting.

Our next question comes from Andrew Fones with UBS. Go ahead please.

I wanted to ask what your Q4 revenue guidance applies to Protiviti. I know that usually it’s a seasonally strong quarter. Sequentially we usually see growth, but obviously we didn’t see that sequential growth in the third quarter. What are you expecting?

You’re correct. We didn’t see the lift in the third quarter from compliance activities we’ve seen in the past. So therefore, our guidance didn’t include a further lift in the fourth quarter. That said, our Protiviti revenue guidance is a little more bullish than our staffing revenue guidance, but because we don’t have the long history in Protiviti that we have in staffing, there’s probably more standard deviation around that number.

It looks as though saw a greater of a drop-off in your perm business in terms of trend down 26% in October from down 4% in Q3 and your temp staffing business down 9% versus down 1 or 2% in the third quarter. Should I infer from that that you saw a greater slowdown internationally and I understand currencies having an impact. Kind of which counties are you seeing the greatest slowdown?

Well clearly we a slowdown in perm, particularly perm. It’s not unusual as economic conditions toughen that perm is more impacted, because perm is a bigger part of all these international operations, it’s clearly impacted. We talked about the UK is most impacted. Germany is the least impacted so far. Belgium and France are somewhere in the middle.

Our next question comes from Gary Bisbee with Barclay Capital. Please go ahead.

I guess I just wanted to know in your time running the company, can you think of any or many periods in which things turn down this quickly and then rebounded fairly quickly? Particularly with the perm business. It looks like in the early 90’s recession and in the 2001 recession, perm revenue fell three years in a row in both of those time periods. I guess I’m trying to assess what the chances of a more quick rebound or when that starts going, does it just normally take a long time to come back?

Well, as far as the intensity of the rebound, I think clearly the biggest difference between now and prior down cycle/subsequent up cycles is the amount of government intervention and clearly there’s been more government intervention quicker now than before. How effective that’s going to be we could debate all day long, but I guess our central point is put timing aside, it comes back. It’s come back every time and before I was talking about how much we came back relative to the troughs. Let’s talk about how much we came back relative to the peaks. So if you look at prior peaks, we still grew revenues 1.5 times the prior peak. We still grew operating income 1.5 times the prior peak. We still reduced shares by 6% relative to the prior peak So peak-to-peak, it still grows and whether there’s a one-year hiatus or a two-year hiatus, don’t get me wrong, we care, but in the long term, peak-to-peak it grows and with the benefit of hindsight, what we’ve learned in past down cycles, take advantage of the stock price when it’s low. Turbo charges, the earnings from the recovery whenever it happens.

To an extent, you’re looking for differences this time versus the past. It’s all speculative on our part, but it’s probably worth noting that if you wanted to be slightly more optimistic, at this point, you have the baby boomer generation that’s preparing to retire. A lot of people think the job market will be stronger this time around. That there’ll be more demand because of more people leaving the workforce sooner than before. You know, who knows how important that will turn out to be. I think Keith’s basic point is that we’ve always come back strongly. We’ve always after recession faced far less competition and I don’t expect that to be any different this time. So we use the opportunity to be aggressive in attempting to pick up market share. We’ve always marketed our services in terms of advertising and so forth more aggressively than others and on occasion been criticized for spending more in advertising than others, but we think that the rewards pay off in terms of how much we’ve come out of these downturns. So we’re hoping to follow a similar game plan, but we don’t know if it’s a year or two years, but we expect to be there at the end.

Switching gears, do you have any sense at this point when you would likely benefit with the Protiviti business from the international accounting standard stuff that’s going on. Is that really sort of a year out at this point or are you getting some early indications of interest around that?

We are getting some early interest, but the early projects are principally GAAP technical projects where you’re technically determining for our client. These are the technical requirements of US GAAP and these are the technical requirements of IFRS. Frankly, relative to the whole conversion to IFRS, we see that technical comparison as maybe 10% of the effort. The heavy lifting is to change your processes, your control is your documentation to what you need to do to comply with the IFRS technical requirements. So we’re getting some of that early technical comparison work. It’s not a huge amount of work, but the bigger numbers we think are somewhat distant and they relate to processes and controls, which as you know, that’s our sweet spot. And further, the big four themselves have concluded while they can do this accounting technical comparison for their audit clients, they are conflicted from doing the process and controls work for their audit clients and what does that sound like? That sounds like a compliance period of a few years past.

Next we’ll go to Jim Janesky with Stifel Nicolaus. Go ahead please.

Keith and Max, can you give us an idea of what level of operating margins you expect sequentially or even overall, specifically within the perm division for the fourth quarter?

That’s getting pretty granular, Jim. I guess what we try to do is let’s go back to mid-01. Let’s look at what the margins did then and what we’re modeling now approximates that. So you get single digit margins clearly in temp and perm. We hope we’ll do better. We hope we’re not impacted as much by that, but we thought it was a time to be conservative and to at least model what we know and what we know is what’s happened in the past and we can try to make it better and we will try to make it better, but those are the kind of numbers dialed into the guidance that we gave.

In the past, your perm margins have gone negative. Pretty significantly, at the end of 02 they were negative 11% I believe and actually at the end of 01, but that was obviously event driven. They were over 13.5% negative. Do you think or do you feel that because you are reacting with headcounts quicker, as you said in your prepared remarks and maybe an answer to a question that you’re reacting quicker, that there is a possibility if trends continue to deteriorate that you’d be able to protect the margins within perm from going negative.

And the answer to the question is we’ll certainly try, but I think frankly saying the margins go to negative 11% overstates what happened. We lost $2.5 million dollars and so again, we hate to lose anything, but that was hardly a huge amount of money. So whether we lose $2.5 million dollars or break even, relative to the sparrow, which is how well do you do when things get better? Frankly, isn’t the highest priority.

Okay, and did you take actions early in the quarter with respect to any either, you know, not replacing attrition or laying off or I guess what level has worked into your outlook of $0.25 to $0.30 cents. Is there an opportunity that if things really continued, I mean perm being down sequentially over 25% is a pretty shocking number. I mean has that worked into the outlook or is there an opportunity that the margins could come in better?

That is what we worked into the outlook. It’s the down 25%. We were out of the gate down 26% mid-01, sequentially in the first few quarters of the downturn. Excuse me, we were down 25%. So all of those dots connect and that’s what we dialed in. Do we hope it’s better? Yes. Have we been more aggressive with the cost cutting? Yes. Were we attempting to be conservative? Yes

Our next question comes from Michel Morin of Merrill Lynch. Go ahead please.

Max, I think you mentioned RTC became a large customer going back to the early part of the 90’s. Can you remind us or share with us how significant of a client that became and what was the timing of that? In other words, how long did it take for that kind of revenue opportunity to actually materialize.

Let me jump in a little bit. Our role during RTC was principally as a sub-contractor to those that had the prime contract with the RTC and the nature of what we did primarily was due diligence around mortgage files. Was income verified? Did they get appraisals? And then you then classified them in valuation buckets based on that due diligence. You need a lot of feet on the street to do that kind of work but it was at the sub-contractor level. So it lagged a little bit the work that the prime contractors got. As we speak, we’re working hard, including with the capabilities that Protiviti gives us, that we didn’t have back then. We’d also like to be a prime contractor. We have the capability to be that today that we didn’t have back then. Now, we don’t have a huge track record with big government contracts, but again, our attempt is not only to participate at the sub level, which we’ve done traditionally and done quite well. We’re also attempting at least to participate at the prime level. We never gave percentage of revenues. I mean it wasn’t humongous, but given that, our typical account is one or two people on assignment at a time. It doesn’t take much to get to be our largest client quickly.

In terms of the office count, Keith. It looks like you still added a couple in the quarter and if we go back to the last downturn, it does look like you rationalized the branch network somewhat starting I guess the mid point of 2001. Is there any reason to think that would not happen again this time?

Well, the two offices we added during the quarter were Vienna and Dubois, so it’s again part of our international footprint expansion. I would offer that there will probably be less real estate contraction this time than last. I think we’ve been more careful in the up cycle with not getting too distributed with our real estate and therefore insulating ourselves to some degree from revenue contraction. That said, on average, a third to a fourth of our leases come due every year. So we’ll have a bite at the apple for a significant number of our leases in the ordinary cores this year and we will therefore have an opportunity to less rate, less square footage. You’ll naturally have that opportunity, which we plan to take advantage of.

I’ll try my luck on the last one. Would you be able to, given the volatility in perm, would you be able to break out how significant perm is within your international staffing operations?

We haven’t broken it out specifically. We’ve told you as a percent of revenues it’s significantly higher outside the US than inside the US, but it’s not something we’ve broken out specifically.

Our next question comes from Ashwin Shurvikar - Citigroup.

Most of my question is on the quarter have been answered, but just a step back to look at the business through the 90’s and early part of this decade you added a new line of business every three to five years. It’s been awhile since you’ve done that. Would you be wiling to perhaps use your balance sheet or take advantage of broken down asset prices to grow a new line of business? Maybe something like legal staffing?

First of all, we’re already in the legal staffing business and clearly we would use our balance sheet to buy broken down assets if those broken down assets were in functional areas geographically areas that made sense for us. In the absence of that, the acquisition we really like is Robert Half.

So the focus is going to be really buyback.

I think the focus is two-fold. I mean clearly there is activity with broken down assets as you described them, but again, they need to make sense for us. They need to be a function extension. They need to be a geographical extension. They need to be a tuck-in in a way that makes sense and so clearly that’s something we’re looking at, but in the absence of that, there’s Robert Half.

We are almost out of time. We do apologize we were not able to get all questioners and our final question will come from David Feinberg with Goldman Sachs. Go ahead please.

I’ll pass along, because I’ve already been in the queue. Thank you.

In that case, I’ll turn it back for closing remarks.

Alright, thank you very much. I’m sorry we don’t have more time. I thank all of you for participating in the call. This will conclude our teleconference. The tape recording of the call will be available later. Thank you, operator.

Thank you. This concludes today’s teleconference. A tape recording of this call will be available for replay later this evening through 8 PM Eastern on October 29. The dial-in number for the replay is 800-283-8217 or for outside the United States, country code plus 1-402-220-0868. Once again, inside the United States the number is 800-283-8217 and for outside the United States, 1-402-220-0868. This conference call will also be archived in audio format in the Investor Center at www.rhi.com.