Max Messmer – Chairman and CEO Keith Waddell – Vice Chairman, President and CFO

Mark Marcon – Robert W. Baird & Company Tim McHugh – William Blair & Company Andrew Steinerman – JPMorgan Sara Gubins – Bank of America Jeff Silber – BMO Capital Markets Gary Bisbee – Barclays Capital Kelly Flynn – Credit Suisse Vance Edelson – Morgan Stanley Tobey Sommer – SunTrust Phil Stiller – Citigroup Kevin McVeigh – Macquarie

Welcome to the Robert Half International conference call to discuss second quarter 2010 financial results. Our hosts for today's call are Mr. Max Messmer, Chairman and CEO of Robert Half International, and Mr. Keith Waddell, Vice Chairman, President, and Chief Financial Officer. Mr. Messmer, you may begin.

Good afternoon, everyone, and thank you for joining us. As is our custom, I would like to remind everyone before we begin that comments on this call contain predictions, estimates and other forward-looking statements. These statements represent our current judgment of what the future holds. They include words such as forecast, estimate, project, expect, believe, guidance, and similar such expressions. While we believe these remarks to be reasonable, they are subject to risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. We have described some of these risks and uncertainties in the press release issued today and in our SEC filings, including our 10-Ks, 10-Qs, and today’s 8-K. Our comments today should be considered in light of this press release and the SEC filings. We assume no obligation to update the statements made on this conference call. Now let's review our second quarter financial results. Second quarter revenues were $769 million, up 3% from the second quarter of last year. On a sequential basis, revenues were up 4% from the first quarter. Income per share for the second quarter was $0.08, up 147% from the $0.03 reported this time last year and up 54% from the $0.05 reported in the first quarter of this year. Cash flow from operations was $35 million during the second quarter. Capital expenditures were $6 million. During the second quarter, we paid a cash dividend to shareholders of $0.13 per share for a total of $19 million. We also repurchased 2.5 million shares of RHI common stock during the second quarter at a total cost of $66 million. There remain approximately 2.6 million shares available for repurchase under our Board approved stock repurchase plan. Keith will provide a more detailed review of our second quarter financial results, but I did want to note that we were pleased to see year-over-year and sequential revenue growth during the quarter. We believe this is indicative of improving labor markets in our various geographies. Our OfficeTeam and Robert Half Technology staffing divisions performed particularly well, as did our permanent placement operations. Second quarter revenues for our Robert Half Finance & Accounting permanent placement division were up 29% from one year ago and up 15% sequentially. Now I will turn the call over to Keith for a closer look at our results.

Thank you, Max. We will first start with companywide revenues. To recap, second quarter revenues were $769 million, up 3% from the second quarter of last year and up 4% sequentially from the first quarter of this year. On a constant currency basis, the year-over-year and sequential growth rates were 2% and 6% respectively. There were 63 billing days in the second quarter, the same as the second quarter of 2009 and up one day from last quarter. There are 64 billing days in the current third quarter. Second quarter revenues for Accountemps were $295 million. This is down 5% from a year ago and is flat sequentially on a same day basis. Accountemps is our largest staffing division and accounts for 38% of company revenues. There are 357 Accountemps locations worldwide. OfficeTeam had second quarter revenues of $150 million, which is up 11% from the second quarter of last year and up 5% sequentially on a same day basis. OfficeTeam is our high end administrative staffing division and represents 20% of company revenues. There are 322 OfficeTeam locations worldwide. Robert Half Management Resources revenues were $93 billion in the second quarter. This is down 1% from a year ago and down 1% sequentially on a same day basis. Robert Half Management Resources places senior level accounting and finance professionals on a project basis. It has 151 locations worldwide and makes up 12% of company revenues. Robert Half Technology had second quarter revenues of $82 million, up 9% from the second quarter of last year and up 7% sequentially on a same day basis. Robert Half Technology places information technology professionals on a consulting and full-time basis. It operates in 117 locations worldwide and accounts for 11% of company revenues. Our permanent placement division, Robert Half Finance & Accounting, had…

Thank you, Keith. As previously noted, we were pleased to see our second quarter revenues improve on both the year-over-year and sequential basis. We believe the US economy, while still uncertain, is on a stronger footing today than it was one year ago. But the unemployment rate remains high and many companies are managing increased business demand by using temporary workers. This is allowing them to keep their labor costs variable until they are confident their business improvement is sustainable. We believe there is greater acceptance by companies of flexible staffing models that include a mix of both full-time and temporary workers. Business trends within our staffing operations are in some respects consistent with past economic cycles. For example, we saw strength in OfficeTeam during the second quarter, and it is not unusual for administrative staffing to improve before the Finance & Accounting segments. The relative strength in technology staffing, we believe, is likely the result of renewed investment by companies in new systems and software following years of postponing information technology investments. What is perhaps inconsistent with past cycles is the continued strong demand for our permanent placement services. Historically, full-time staffing has been the last to recover from a downturn because companies typically rely first on temporary employees to meet rising workload demands. We have said many times that we felt companies would need to add full-time personnel to make up for the deep personnel cuts made during the downturn. This apparently has been the case at least in our experience. Our Federal Reserve Chairman stated this morning that the US economy faces “unusually uncertain prospects.” However, if the economy is in fact on the path to recovery, we feel we are in a good position to benefit from increased demand for staffing and consulting services. Historically, we have emerged from economic downturns stronger and growing more rapidly than before. We feel we have an experienced management team in our staffing operations and in Protiviti, and I am confident in their leadership abilities. Protiviti continues to diversify its business and develop a loyal client base. SOX-related services now account for less than 20% of total revenues of Protiviti. This quarter we saw particular demand in various IT related areas, including IT security and privacy, IT applications controls, and infrastructure management. Protiviti and our staffing brands also are collaborating more frequently and bringing a full suite of staffing and consulting services to our clients. At this time, Keith and I will be happy to answer questions. We ask that you please limit yourself as usual 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.

Thank you. (Operator instructions) Our first question comes from Mark Marcon with Robert W. Baird & Company. Go ahead, please. Mark Marcon – Robert W. Baird & Company: Good afternoon. I was wondering if you could comment a little bit with regards to the litigation settlement. Specifically, was that envisioned in your guidance previously? And more importantly, how do you think it’s going to impact your business practices on a go-forward basis?

Mark, it was not included in our previous guidance. During the quarter, we did attempt to clean up many of the outstanding wage and hour law cases we have. If we could do so at reasonable amounts, as previously mentioned, we did this primarily to avoid the cost of protracted litigation even though we continue to believe we do have meritorious defenses. Some of these cases grow back as far as ten years. So they have been around forever. Because the remaining cases involve pending litigation, our attorneys have pretty much told us not to make further comments. That said, as we do every quarter, we update the specifics of these outstanding cases in our Form 8-K and that we filed today just like we always do with our earnings release. Mark Marcon – Robert W. Baird & Company: And so – I mean, just as we think about the model, there shouldn’t be any changes as it relates to the model?

I guess based on the settlements we’ve done so far, we wouldn’t see material long-term changes to our model. But that said, clearly the law continues to evolve. We’ve referenced in our disclosures other cases before the California Supreme Court. But again, based on everything we know, we do not expect material long-term changes to our models. Mark Marcon – Robert W. Baird & Company: Can you talk a little bit more about the strength that you are seeing in perm? Just the behavior is interesting this time around. Do you think it is just because people cut back or that people cut back on their own recruiting capabilities and need are depending on your more?

We think people over-cutback. And to some degree, they are having to reinstate levels of cutbacks, and they can do so at a time when the supply of labor has never been better. So it’s a win-win. Mark Marcon – Robert W. Baird & Company: Okay. I’ll hop off and get back in the queue. Thanks.

And our next question comes from Tim McHugh with William Blair & Company. Your line is open. Tim McHugh – William Blair & Company: Yes. Can you give us a little more color, you mentioned the bill pay rate spreads improved, maybe specifically what they are and just qualitatively what you are seeing out there from a supply and demand perspective?

Yes. Our direct answer is, if you look at our gross margin in temp, it was up 50-odd basis points for the quarter. About 20 of that was the workers’ comp credit, about 20 of that was better pay bill spreads, and the balance or a little over 10 of that were higher conversions. So it was better on all three scores. As far as trends we are seeing, let me talk a little bit overall and by division. I guess we were pleased that this quarter was the quarter whether it was an inflection point to positive year-over-year growth in our temp businesses, which is the first time that’s happened in a while, obviously led by OfficeTeam and Robert Half Technology. We actually went back and compared this cycle to last. And relative to the trough months in the last cycle, it took us 15 months thereafter to return to positive year-over-year growth. At this time, we returned to positive year-over-year growth in ten months. So obviously, faster than we did last time. Let’s talk a little bit divisionally. Accountemps, we’re happy to report the accounting operations or transactional part of Accountemps, which is about half its revenues, in fact had year-over-year growth during the quarter and they had a little sequential growth as well. The staff accountant level and above, what we call internally the financial positions, were still down year-over-year, but sequentially they flattened out. And this was a marked improvement from what we saw in the prior quarter. And it’s in fact if we stay on a flat sequential pace with Accountemps, we will return to positive year-over-year growth in Accountemps in the third quarter that we are in. And if you compare that to prior cycles, Accountemps would return to positive year-over-year growth three to…

Temp-to-perm, while strong, isn’t as strong as perm itself. And we’re still at the low end of the range relative to where we would typically – where we all ultimately would be in temp to perm conversions. So still a lot of upside there. Tim McHugh – William Blair & Company: Okay. Thank you.

And our next question comes from Andrew Steinerman with JPMorgan. Your line is open. Andrew Steinerman – JPMorgan: Hi there. Could you just go after Protiviti international versus US? If there were some challenges Protiviti international, do we feel like they are behind us? And remind me, was there a leadership change in Protiviti international and more changes might have occurred because of that?

We made nice improvement outside the US in our non-US results this quarter, and we were pleased with that. And we feel like they are on pace to make further improvements in the quarter we are in. That said, they are also impacted by August holidays, particularly in Italy and France. The pace at which the international is improving, frankly, it was about what we expected for the quarter. In the US, we were a little light at the revenue lines based or versus what we expected, but not a lot light. I think the overarching point is things continue to improve at Protiviti. The tone is clearly positive. I’d say the improvements are modest improvements rather than screaming improvements. But things are getting better incrementally. Second quarter was better than first quarter. We believe third quarter will be better than the second quarter. Andrew Steinerman – JPMorgan: Right. And how about internal changes at Protiviti international, things that will help spark growth or via cost controls?

Internal changes, there haven’t been major internal changes in over 12 months at Protiviti. I mean, there is always evolving changes in all of our lines of business. But in the last 12 months, there haven’t been major changes. Andrew Steinerman – JPMorgan: Okay. All right. Thank you very much.

Thank you. And our next question comes from Sara Gubins with Bank of America. Your line is open. Sara Gubins – Bank of America: Hi, thank you. Could you talk about plans for further share repurchases? Are you still active in the market?

We’ve repurchased 2.5 million shares this quarter. It is something we look at every quarter with our free cash flow, which is significant. As you know, we have a long-term commitment of returning our excess cash to shareholders. If you look back over a five-year period, I think you’d see that we’ve returned 100% of our cash to shareholders either in the form of dividends and repurchases. Some quarters are higher than other quarters, but over time we are returning our cash flow to shareholders. Sara Gubins – Bank of America: Okay. And then any additional color about client commentary, about how they are viewing the second half of the year. Are they – I mean, clearly things are improving based on the trends that you mentioned that you’ve seen in early July. But are you hearing them starting to take a more cautious tone suggesting that they are more willing to spend? What’s their tone at this point?

Frankly, there isn’t much change in their tone. And when we talk internally every quarter to all our key people, we specifically say relative to 90 days ago, its tone better, same or worse. And not one said worse. It’s either same or better. And that would go for Protiviti as well. Sara Gubins – Bank of America: Okay, thank you.

Thank you. And our next question comes from Jeff Silber with BMO Capital Markets. Go ahead, please. Jeff Silber – BMO Capital Markets: Thanks. I wanted to circle back to the whole temp versus perm discussion. I mean, you typically said that we usually see temp lead perm. And I think we’re seeing that in a lot of other verticals, except for accounting and finance. What do you think is going on specifically there?

What we think is that the typical lags we’ve seen in the past are in place. And as I just described, we actually think we will go from trough to positive year-over-year growth in Accountemps faster in this cycle than we did in the last cycle. But it always lags to some degree the administrative side. If you look at OfficeTeam by itself, it went from trough to positive year-over-year growth in about the same number of months in this cycle than it did in last cycle. So if anything, Accountemps is tracking relative to the last cycle on a little better pace and a return to positive growth.

And historically, the Accounting & Finance segments go into recession later and come out of it later. Jeff Silber – BMO Capital Markets: Okay, fair enough. Actually a couple quick numbers question. The tax rate in the quarter was a little bit higher, if you can just walk through that and what kind of tax rate should we expecting in the third quarter?

The tax rate fluctuations principally relate to the global composition of income by country. And certain countries have higher and lower rates and certain losses get benefited and don’t get benefited. And so the composition of our income this quarter was such that we have a higher foreign provision. In the current third quarter, the tax rate should be 42%, 43%, something like that, but it might be 40%, it might be 46%, sure. There is just volatility with income at the levels at they are related to the composition of that income on a country-by-country basis. Jeff Silber – BMO Capital Markets: Okay, great. And if I could just sneak one more in, the special charges that you mentioned, what was the impact on EPS in the quarter? I’m just curious if they were tax deductible or not.

They will be tax deductible. It was a couple of pennies. I mean, roughly a penny is 2.5 million pretax. Jeff Silber – BMO Capital Markets: Okay, great. Thanks so much.

And our next question comes from Gary Bisbee with Barclays Capital. Go ahead, please. Gary Bisbee – Barclays Capital: Hi, good afternoon. I guess just – has the commentary in trends you are seeing in Europe been any different than what you’ve been talking on an overall basis, specifically thinking in June and July?

Well, if we kind of back up the non-US generally, our strongest markets are Canada and Australia. Within Europe, inclusive of the UK, the UK and France are a little bit stronger than Belgium and Germany. On the Protiviti side, Australia, China and the UK were the strongest. But generally speaking, the trends were solid outside the US. Gary Bisbee – Barclays Capital: Okay. And I guess just the follow-up question, perm has obviously been doing very well, and I realized that couple of weeks is not a great data point. But should we read into that that it’s likely to slow if it’s a little slower in July, and then you’ve talked about August being a slower month for that business in Europe or –? I guess any other color on how – what's built into your guidance I guess is the question. Thank you.

I guess the color I would give would be a couple-fold. A, it is a couple weeks. B, even if we were flat sequentially for the quarter, we would growth 30% year-over-year, which is essentially what we just reported. And our guidance is a little more cautious than usual in perm principally because of the Europe piece that we talked about earlier. So I wouldn’t get too uptight about the first three weeks in perm. You’ve got a holiday period in there too, which further adds to the noise. Gary Bisbee – Barclays Capital: Okay. Thank you.

And our next question comes from Kelly Flynn with Credit Suisse. Your line is open. Kelly Flynn – Credit Suisse: Thanks. So I mean, it looks like you did almost $0.11 really if you ex out the legal charges and normalize the tax rate. So given that and your higher revenue guidance for the third quarter, I’m a little surprised your EPS guidance is a little higher. So in light of that, I mean, can you give us a little guidance on your gross profit margin expectations for the quarter, at least relative to Q2? And just any qualitative color on my initial comment? Are there particular reasons you’re being conservative, if there are workers’ comp, market reversal influencing the margin or anything else that would be causing it to look a little more conservative?

As to our gross profit expectations and relative to your $0.11 comment, remember, we had a workers’ comp credit with the other way. So the absence of that credit cost you 20 basis points in and of itself. You’ve got conversions that are always volatile. So we always hedge a little bit with our gross margin forecasting that we build into the guidance. And I think you or maybe somebody else said last quarter they thought our earnings guidance seemed like relative to our revenue guidance. And so we try to be conservative. There is no fundamental change in any cost that we are building in. We just hope for being conservative. Kelly Flynn – Credit Suisse: Okay. That’s what I was hoping you would say. Thank you.

Our next question comes from Vance Edelson with Morgan Stanley. Go ahead, please. Vance Edelson – Morgan Stanley: Hi, thanks. Maybe just a follow-up on that. Granted you try to be conservative, but I just wanted to dig a little deeper on the outlook for expanding the platform to meet demand there in the downturn, you’re able to trim cost quite a bit. And now with what seems to be a pretty favorable sequential growth rate underway, what’s the outlook for starting to add locations? And does that work into their thinking if we are to look at the low end of the guidance range for earnings? Is that with the expectation that you will be adding some to the platform?

Remember now, during the downturn we closed a very de minimus number of offices. So we didn’t contract our footprint like many other firms did. And therefore our expectation would be on the upside. We’re not going to expand our footprint significantly as far as numbers of locations. As demand justifies, we will begin adding the headcount. We’ve talked about with OfficeTeam and Robert Half Technology, which are particularly strong; we are beginning to add the headcount. Perm, we had a lot of excess capacity. And so far, we’ve relied totally on that to support the growth we’ve had in perm. But we are probably getting close to where we started adding headcount there as well. That said, notice that our incremental margins in temp and perm this quarter were north of 30%. And as we’ve said in the past, we should get incremental margins at this point in the cycle that are 30% or better in perm and 20% or better in temp. And we actually did better than that this quarter, notwithstanding our conservative guidance last quarter. Vance Edelson – Morgan Stanley: Okay. That helps to clarify. Thanks.

And our next question comes from Tobey Sommer with SunTrust. Go ahead, please. Tobey Sommer – SunTrust: Thank you. I was wondering if you could give us a little bit more color on the bill pay rate trends, specifically in the Technology space. I’m wondering if the strength there, from a demand perspective, is translating into rising wages.

Well, we never actually give specific figures by division. If anything, the Technology figures are a little stronger than the overall. But overall, our prices year-over-year were down 4.6% versus a year ago, and sequentially they were down 1.5%. So what that means is you expanded your spreads with lower pay rates rather than higher client bill rates. But within Technology, if anything, it’s going to be modestly better than what I just described. Tobey Sommer – SunTrust: And I was wondering if you could put into context for me and then help us interpret the National Federation of Independent Business, the most recent poll they did showed some deterioration among small business in their outlook. I think it was published this month, probably a June survey. Wondering – by customer size, you have a lot of exposure there and have a good sense for what your customers are feeling. Is that something that was mirrored in your customer base or are you seeing something different than that index?

And if you track that over time and you try to correlate, that’s how well we do. You will find a very high correlation relationship there. I talked earlier about what our people are seeing tone-wise. And if anything, it’s same or better. So that would tend to be different. I would also point out that every month when ADP issues their data, a couple of months – a couple of days prior to the BLS data, they have a table that breaks out the additions to payroll between small, medium and large size firms, and they define medium to be 50 to 499. And if you look at that analysis, the strongest group of the three, or the medium sized firms, which is our sweet spot. Tobey Sommer – SunTrust: Thank you very much.

And our next question comes from Ashwin Shirvaikar with Citigroup. Go ahead, please. Phil Stiller – Citigroup: Hi, this is Phil Stiller for Ashwin. I just wanted to follow-up on your incremental margin comment. Can you talk about how long you expect the incremental margin targets to hold in the recovery?

Well, if you look backwards and – if you just give me a second here, I’ll give you a little insight. The short answer is – let's see. So let’s take temp. In 2004, incremental margins were 25%. In 2005, incremental margins were 22%. In 2006, they came down to 13%. In 2007, they were 11%. Let’s look at perm. In 2004, they were 35%. In 2005, they were 33%. In 2006, they were 26%. And then in 2007, they dropped down to 11%. So you have a couple three pretty good incremental margin years, typically in an up-cycle. And so far, we’ve done that well or better. Phil Stiller – Citigroup: That’s helpful. Thank you. And then just following up on the legal charges in the temp and perm divisions, was it in temp or perm in the SG&A the $2.6 million?

It’s primarily temp. It’s primarily temp. They went into kind of the bucket we allocate rather than being directly charged. Phil Stiller – Citigroup: Okay. Thank you.

(Operator instructions) And our next question comes from Kevin McVeigh with Macquarie. Go ahead, please. Kevin McVeigh – Macquarie: Great, thanks. There has been a lot of talk about an increase in secular shift in temporary help among some of your peers. I wonder what your thoughts are on that, particularly given the pace you’ve seen in Accountemps. And how do you think about that as we work through the next up-cycle?

The facts are, as I’ve talked about before, we’ve returned to positive year-over-year growth more quickly in this up-cycle than we did last time. Many believe there is a very straightforward secular reason for that and that companies are going to use more temporaries. The odd ball is that they are even using more again of full-time hires to replace a tranche of people they probably overcut in the downturn. But again, I think our numbers would support there is a secular shift taking place. Companies are using more temporaries. We are on pace, grown a faster recovery pace relative to the prior downturn, and that includes accounting and finance. There has always been a lag between administrative and accounting. That lag exists as we speak. But given current trends, we are going to go to revenue positive in Accounting & Finance more quickly this time than last. Kevin McVeigh – Macquarie: Okay. And then Keith, real quick, in terms of your advertising budget, I don’t know if it’s just – I've noticed it more around the city, but it sounds like you are doing a lot of billboards and radio advertising in New York. Have you increased the target audience? And it seems like it’s primarily Accountemps. Is it still geared towards small to medium or is that more towards large financial services institutions in the cities?

I think our advertising is applicable to outside customers, but clearly we do have in the major cities the billboards in prominent locations. We allocate differently as to what types of media we choose to advertise on over time, but there hasn’t been a big shift there. But we’ve been very pleased with the billboards. That’s something we’re doing more of, not less of. I’m sure you’re talking about the one there up in Lincoln Tunnel. We get a lot of comments on that. In San Francisco, we have one, I don’t know, on 101 Freeway in downtown San Francisco. We try to get really, really prominent spots, and we get very good comments about them.

We have a national effort underway. It’s not limited to just New York City or San Francisco, and that applies to the billboards as well as radio. Kevin McVeigh – Macquarie: Great. Thank you.

That was our final question. Mr. Messmer, Mr. Waddell, I’ll turn it back for closing remarks.

Thank you for your interest in joining us today. That’s all that we have time for. I want to thank you again for your time. We appreciate it.

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 July 28. The dial-in number for the replay is 800-283-8486, or for outside the United States, country code plus 1-402-220-0869. This conference call will also be archived in audio format in the Investor Center at www.rhi.com.