Carl Camden – President & Chief Executive Officer Patricia Little – Executive Vice President & Chief Financial Officer.

Toby Sommer – SunTrust Robinson Humphrey Josh Vogel – Sidoti & Company Andrew Morey – Lee Munder.

Good morning and welcome to Kelly Services’ Q2 Earnings Conference Call. (Operator instructions.) Today’s call is being recorded at the request of Kelly Services. I would now like to turn the meeting over to your host, Mr. Carl Camden, President and CEO. Sir, you may begin..

Thank you, Nick, and good morning everyone. Welcome to Kelly Services’ Q2 2014 conference call. With me on today’s call is Patricia Little, our CFO. Let me remind you that any comments made during this call including the Q&A may include forward-looking statements about our expectations for future performance.

Actual results could differ materially from those suggested by our comments and we have no obligation to update the statements made on this call. Please refer to our SEC filings for a description of the risk factors that could influence the company’s actual future performance.

Turning to Kelly’s Q2 results I’m pleased to report that our performance was in line with our expectations, and we delivered solid results while continuing our aggressive strategic investments. Revenue was $1.4 billion, up 3% year-over-year.

Our gross profit rate for Q2 was 16.2%, up 10 basis points from the 16.1% delivered in the same period last year. As planned Q2 adjusted expenses were up 9% year-over-year as we accelerated our investments in the US and continued our aggressive investments in OCG.

As anticipated, these investments impacted our Q2 earnings and we delivered an operating profit excluding restructuring of $7.7 million, down compared to adjusted earnings of $18.9 million from Q2 last year but up from the $6.3 million earned in Q1.

Kelly’s Q2 earnings from continuing operations excluding restructuring were $0.10 per share compared to adjusted earnings of $0.33 per share for the same period last year. Patricia will cover our quarterly performance in more detail a bit later, but I can tell you that overall we’re pleased with Kelly’s performance during Q2.

We’re doing precisely what we set out to do – deliver a profit while acting on investments that will accelerate our long-term growth objectives. Now let’s take a closer look at our performance in each of our business segments, beginning with the Americas. Revenue demand in the Americas rebounded a bit during Q2.

Combined Staffing revenue for the region was up 1% year-over-year compared with the 4% declines we reported in the last three quarters. Americas’ commercial revenue was up 2% year-over-year for Q2, a nice improvement from the 4% decline reported in Q1.

Light industrial was down 2% from a year ago but also an improvement from the 8% decline we reported last quarter. Adjusting for the two sizable accounts we chose to exit in the US last year, as we discussed on our Q4 call, light industrial revenue increased 1% during the quarter year-over-year.

Office clerical was down only 2% for the quarter, which was an improvement both year-over-year and compared to the 6% reduction we reported in Q1 of this year; and the 10% reduction we saw in Q4 2014.

And once again, we continue to see significant growth from our new customer wins in our Kelly Educational Staffing unit which reported revenue growth of more than 60% year-over-year in the quarter, up from the 43% growth in Q1. Americas’ PT revenue was down 3% from the prior year, consistent with the 3% decline we reported in Q1.

Our Science and Engineering businesses continued to be the strongest performers during the quarter. Science revenue increased 4% year-over-year, and Engineering revenue was also up 4% adjusted for a sizable project we exited last year in Mexico. Sequentially our Science and Engineering businesses grew 6% and 4% respectively compared to Q1.

Our overall Americas’ PT results were offset by lower revenue in our IT and Finance business lines, which were both down 12% year-over-year and continued to underperform the market. Commercial fees and PT fees were both up 5% from a year ago and up 3% sequentially.

Americas’ gross profit rate was up 20 basis points from the previous year primarily due to better pricing and customer mix, somewhat offset by higher worker’s compensation costs. Expenses were up 10% year-over-year in the Americas.

As expected, the majority of this increase is due to planned investments which included additional headcount in our sales and recruiting staff as well as last year’s salary increases.

We believe the investments we’re making in the Americas position us well for the second half of the year and beyond to better capitalize on growth opportunities in the PT specialties and vertical markets we serve.

Even with these increased investments, Americas achieved earnings of nearly $23 million for Q2 and while this is a decrease from the previous year it is well within our performance expectations given our accelerated investment spending during the quarter. Let’s turn now to our operations outside the Americas beginning with EMEA.

Revenue in EMEA was up 9% in Q2 compared to last year. On a constant currency basis revenue was up by 6% with 10% growth in our professional and technical businesses on a year-over-year basis. For the remainder of my EMEA discussion, all revenue results will be discussed in constant currency.

Sales increases in EMEA during the quarter were driven by accelerating growth in our local business. Large account revenue grew by 3% while local revenue grew by 13% for the quarter. We achieved growth of 8% year-over-year in Western Europe primarily due to the solid performance of our operations in Portugal, Italy and France.

Our UK operations continued to show improvement with a 9% increase for the quarter year-over-year. Combined sales in the Nordics and Eastern Europe were down by 3% year-over-year. Russia continued to perform well with a 7% year-over-year increase but current political and regulatory conditions are beginning to impact our business there.

Many employers throughout the country are becoming uncertain due to the current and upcoming economic sanctions and plans for business expansion are being delayed. During the quarter, fee revenue was down by almost 3% year-over-year; however, we are starting to see signs of improvement in the market with commercial fees up 1% year-over-year.

EMEA’s GP rate for Q2 was 16.0% compared to the 16.9% for the same period last year, a 90 basis point decline. The overall GP decline is primarily attributable to lower fees as well as an unfavorable country mix and a one-time adjustment last year in the Benelux region. Excluding restructuring expenses increased 6% year-over-year.

This is primarily driven by investments in selected countries as well as the expansion of our regional sales team. The restructuring charge of $800,000 related to our decision to exit the Staffing business in Sweden where we will continue to serve that market through our OCG Solutions business.

Netting it all out EMEA reported a profit of $3.5 million for Q2 excluding restructuring. We expect that conditions across Europe will continue to improve slightly but will remain challenging for the Staffing industry in 2014 especially with regard to fee revenue. Next we’ll turn to APAC.

Revenue for the APAC region grew by 2% in constant currency year-over-year. This is largely due to continued growth in temporary Staffing volumes in Singapore and India. Fees declined by 14% in constant currency compared to the prior year due to the weaker economic climates in Australia and New Zealand combined with staff turnover in Singapore.

Our gross profit rate for the region was 15.5%, down 110 basis points compared to the same period last year. This decline was primarily due to lower Staffing fees across the region. During Q2 we closed several offices in Australia and incurred restructuring charges of $1 million.

Excluding restructuring our APAC region did a nice job of holding expenses roughly flat for the quarter. We concluded the quarter with a small profit excluding restructuring charges, down slightly from last year.

Now we’ll turn from our geographic results to our results from OCG, an important driver of our global talent supply chain management strategy. Revenue was up 17% and OCG gross profit was up 19% in Q2 compared to last year.

We had growth in all three of our key solutions – contingent workforce outsourcing, CWO; recruitment process outsourcing, RPO; and business process outsourcing, BPO. Gross profit in our CWO practice was up 24% year-over-year. This was attributed to growth in both our contingent workforce outsourcing and our payroll processing solutions.

RPO gross profit for the quarter increased 31% over last year driven by growth within both new and existing customers. And BPO gross profit grew 13% over the prior year, mainly due to our contact center outsourcing solution. Overall, OCG’s gross profit rate was 23.9% compared to 23.4% a year ago.

The year-over-year increase was primarily due to higher margins in our RPO and Contact Center Solutions practice areas.

Excluding restructuring expenses were up 15% year-over-year, the result of investments and new client implementations, servicing costs associated with the expansion of existing customer programs, and several planned strategic programs such as talent supply chain analytics.

OCG had an operating profit of $1.8 million for Q2, $1.0 million higher than the same period last year excluding restructuring and impairment. As we look out to Q3 we expect to further accelerate our planned investments in OCG beyond current levels as well as investing in current strategic accounts.

As such we anticipate lower operating earnings in OCG year-over-year. The progress we’re making in this segment is a key element in our overall strategy and we’re pleased to continue making the investments to support the strong revenue and GP growth we’re seeing.

Now I’ll turn the call over to Patricia who will cover our quarterly results for the entire company..

Thank you, Carl. Revenue totaled $1.4 billion, up 3% compared to Q2 last year. Staffing placement fees were down 4% year-over-year as we continue to experience declines in EMEA and APAC that more than offset growth in the Americas. Our gross profit rate was 16.2%, up 10 basis points compared to Q2 last year.

Overall GP was up nearly $7.5 million, about 3%. During the quarter we recorded $1.8 million in restructuring costs to exit branches in Australia and the Staffing business in Sweden. This is consistent with our willingness to optimize our footprint as our supply chain capabilities mature.

During Q2 2013 we recorded restructuring charges of $800,000 and impairment charges of $1.7 million as a result of our decision to exit our Executive Placement business in Germany. Excluding restructuring and impairment charges, expenses were up 9% year-over-year.

The increase is due to a number of factors including higher costs due to additional headcount related to investments in PT recruiters, OCG and centralized operations. Excluding restructuring and impairment costs, earnings from operations were $7.7 million compared to 2013 adjusted earnings of $18.9 million.

Income tax expense for Q2 was $2.8 million or 50% compared to $4.8 million or 32% in 2013. The rate reflected the cessation of US Opportunity Credits in 2014 as well as a valuation allowance for foreign tax credits. Excluding restructuring and impairment charges, diluted earnings per share for Q2 2014 totaled $0.10 per share compared to $0.33 in 2013.

Looking ahead for the full year we now expect revenue to be up 4% to 6%, down slightly from the 5% to 7% we were expecting last quarter. We expect the gross profit rate to be relatively flat and we expect SG&A to be up 6% to 8%, also down slightly compared to the 6% to 9% we were expecting last quarter.

As we complete the build-out of our central operations in the US we will be looking closely for opportunities to reduce the cost of our service delivery, so I expect that expenses will be in the low end of the range.

I would also like to reiterate that at this level of economic growth we would normally expect SG&A to be much lower; however, there are three factors impacting our expected expense growth – regulatory pressure including the impact of implementation of the Affordable Care Act, investments to drive growth in our PT Staffing business, and investments to continue to build our solutions capability in OCG.

We are on track with our milestones on these strategic initiatives. As I’ve previously noted, we expect that revenue will lag these investments and that our full-year earnings will also be down compared to 2014.

Over the last several years we’ve managed our expenses closely, and while the investments we are making are very important to the long-term growth of Kelly we will continue to focus on expense management in all areas. Our 2014 annual income tax rate is now expected to be slightly negative, assuming Work Opportunity Credits are renewed.

Work Opportunity Credits expired at the end of 2013 which puts us in the same situation we were in two years ago. At this point we don’t know if or when they will be renewed. If Work Opportunity Credits are not renewed our income tax rate is expected to be about 30%.

For Q3 we expect revenue to be up 5% to 7% on a year-over-year basis, up 1% to 3% sequentially. We expect our gross profit rate to be flat both on a year-over-year basis and sequentially, and we expect expenses to be up 11% to 13% on a year-over-year basis. Turning to the balance sheet I’ll make a few comments.

Cash totaled $63 million compared to $126 million at year-end 2013. A portion of the decrease, approximately $20 million was due to payments we received very late in our F2013, most of which were paid to suppliers in the first few days of F2014. Accounts receivable totaled $1.1 billion and increased $110 million compared to year-end 2013.

For the quarter, our global DSO was 57 days, up three days compared to last year. The increase is largely due to the timing of our month-end cutoff as well as extended terms and invoicing complexities for certain large customers. Accounts payable and accrued payroll and related taxes totaled $629 million, down $8 million compared to year-end 2013.

At the end of Q2 debt stood at $90 million, up $61 million from year-end 2013. Debt to total capital was 10%, up from 3% at year-end 2013. In our cash flow we used $108 million of net cash for operating activities compared to $14 million used for operating activities last year.

The change was due in large part to the increase in accounts receivable; again about $20 million was related to the payments which crossed over year-end. I’ll turn it back over to Carl for his concluding thoughts..

Thank you, Patricia. Reflecting on Kelly’s Q2 performance we’re pleased with our progress against strategic objectives. We’ve accelerated our targeted investments to drive continued growth in OCG, adjusted our service delivery models and positioned the business for higher-margin growth.

And given the long overdue lift we’re seeing in recent jobs reports it appears the US economy is finally on track to start producing jobs needed to sustain the recovery, and our strategy is well-aligned with market demands. The ongoing success of our OCG segment is confirmation of this market alignment.

OCG continues to deliver double-digit revenue, GP and earnings growth as evidenced in our Q2 results. Our OCG specialties are performing above expectations. CWO, BPO and RPO are key drivers of Kelly’s talent supply chain management approach, which delivers strategic global workforce solutions for the world’s largest companies.

OCG’s sustained performance reaffirms the significant investments we’re making to continue to accelerate this segment’s growth. We are seeing increased demand for integrated talent supply chains across our large clients’ global enterprises and our OCG roadmap is designed to capitalize on these trends.

With this in mind we’re accelerating our OCG investments in talent analytics that will help drive predictive workforce planning; strengthening the breadth and depth of our global supplier network; and evolving the independent contractor and statement of work solutions that will also drive higher-margin PT growth.

Even as we expand our solutions set in OCG we continue to strengthen our Staffing services with increased emphasis on winning higher-margin specialty business. As discussed in our last two earnings calls we’re introducing a new approach to PT recruiting in our local US markets.

I’m pleased to report we’ve launched the planned Centers of Recruiting Excellence in the US ahead of schedule and they’re now supporting flexible teams of targeted recruiters and sales resources for Kelly’s IT, Engineering, Science and Finance specialties across the country.

It’s still too early to see the results of our PT investment but with these recruiting and sales teams in place to secure PT talent we’re now turning our investments to adding PT business development resources in local US markets to aggressively pursue new, higher-margin business.

We also continue to invest in centralized service delivery for our large account base. We have completed the planned transition of all targeted large accounts into the centralized model giving us added visibility into the opportunities for additional growth among key clientele.

We will continue to redouble our recruiting and sales teams’ efforts to expand our relationships and margins in these large accounts. With the bulk of our delivery model investments behind us our focus during the second half of the year will shift to delivering results from these investments.

As we do so we will continuously evaluate our new operating models to ensure we are operating at peak efficiency and that we’re making adjustments accordingly.

Ultimately we expect these investments in centralization, Staffing and OCG to yield long-term efficiencies and additional revenue and gross profit growth opportunities late in 2014 and beyond, particularly in OCG and in our PT Staffing business.

Looking ahead, we’re encourage by the rate of job growth in the steadily improving US economy and we do not anticipate a slowdown among our large customer base. Above all we are confident that Kelly is well-positioned to meet the growing demand for flexible talent and strategic workforce solutions. We’re pleased with the progress we’ve made thus far.

We’ve executed our strategy as planned in the first half of 2014 and we continue to make aggressive investments that will enable Kelly’s long-term growth. Patricia and I will now be happy to answer your questions. Nick, the call can now be opened. .

Thank you. (Operator instructions.) We’ll go first to the line of Toby Sommer with SunTrust. Please go ahead..

Hi, Toby..

Thank you, good morning. Good morning, Carl. You’ve talked about investing to drive the specialty Staffing and your approach to the market. When is a reasonable time period to start to see the impact on growth and assess the effect of the new strategy? Thanks..

Thanks, Toby, good question. Substantively in Q4 you should expect us to begin to talk about results and in Q3 we’ll probably begin to texture with some of the early signs that we would be seeing. But Q4 is when we expect to see substantial results..

And based on these investments and the growth in SG&A this year should we expect less growth in expenses next year and therefore some leverage in the model?.

There’d better be. [laughter] Yes, Toby, the short answer is yes. Yeah, that’s what we’re expecting; that’s the whole point of in fact trying to speed up the investments early into this year so that we could obtain maximum leverage as we walk forward..

So what kind of expense growth might you envision in 2015, and not relative to guidance – even some sort of qualitative commentary would be helpful..

Do you know what the economy’s going to be doing in 2015?.

No, I didn’t get that email. [laughter].

[laughs] Neither did I. You know, I think we’ll get a better handle on that as we get deeper into the year. Without being joking about it we really need to see how are we exiting 2014 in terms of what types of growth rates, what are the programs doing, what type of investments would you need internal to some of the programs.

But do I expect the investments to be substantially less than they were in 2014? Yes..

Okay. How much have you increased sales-related headcount as a result of the new strategy and the investments? I’m just trying to get a sense for order of magnitude..

About 60 individuals..

And how might that compare to a base just to judge the growth?.

Yeah, we weren’t….

Well, I can ask another question maybe and if you come up with something during the call you can get back to me..

Say about a third, an increase of about a third, yes..

Oh, okay. Okay, perfect.

Are there any other offices that you might anticipate closing at this point or have you sort of optimized your footprint relative to what you see in the market right now?.

Yeah, the optimization effort is never done regardless of what’s taken place. Every year we close offices so do I expect there to be more? Yes.

Part of the issue, not issue but part of what we look at is what does our improvements in our supply chain capabilities do to where we need to have a Staffing footprint? As we just said we were able to exit the Staffing market in Sweden because the OCG capabilities there took away the need for that.

Do I expect that over the course of time there will be a further reduction of Staffing footprint in some countries? Yes.

And inside the US, as we look at the centralized delivery and the localized service delivery, will we end up with some branches that can be closed out of that effort? Probably over the course of time as we understand what’s taking place in the market..

Okay, and just a couple more from me.

What other kind of regulatory pressure are you facing other than ACA?.

Yeah, as we mentioned, in Russia which as you know has been historically a nice market for us – every two to three years they go through a round of looking at the nature of employment in Russia and how does temporary staffing fit that, and we’ve gone through various versions of bills as we look at that versus outsourcing.

So there’s always a constant, there’s always some country somewhere that is looking at the nature of employment regulation.

Inside the United States you know, there’s always constant pressure here lately in terms of sorting out wage hour issues – everything from when does somebody technically go on the clock? Do they go on the clock from the moment they enter the parking lot, from the moment they enter the door, from the moment they approach the time machine.

There’s lots of little issues like that but which are big issues for employment firms being sorted out by the Department of Labor and the courts..

do you expect growth to reaccelerate in Q3 and Q4 or might it continue to moderate from the growth level in Q1 and Q2? And then I didn’t catch the RPO growth that you cited so I’d love to get that number..

Yeah, we have programs that have seasonality in them and so we’ve tended to have Q4 be a very strong quarter for us. So do I expect there to be some acceleration deeper in the year? Yes, but more so in Q4 than in Q3 just given the nature of some of our business.

And in terms of the RPO, again we report this in terms of gross profit increases given the structure of that business, and we gave the number 31%, Toby..

Thank you very much..

Thank you. We’ll go now to the line of Josh Vogel with Sidoti..

Thank you, good morning everyone..

Good morning..

The first question, what would you say is your longer-term target of where you want PT and OCG to get to in terms of your overall revenue mix?.

Again, we would tend to talk more about gross profit than we would revenue because you have accounting rules as to which ones are denominated in payroll dollars and which ones in gross profit.

In terms of gross profit dollars, the next stopping point that we’re trying to aggressively get to is where PT and OCG account for half of our gross profit dollar mix. After that you take a breath, stop and assess what are product demands out there and what’s happening to the nature of the job market.

But I would be expecting to see the proportion of our gross profit dollars being delivered by PT and OCG to continue to improve proportionally every year..

Okay. And Carl, you talked about how the IT and Finance divisions were underperforming the market.

Can you talk to that a little bit and also the investments that you’re making in PT recruiters today – are they geared towards improving the results of IT and finance?.

Uh, yes. [laughter] So you’ve clearly heard us bifurcate kind of our specialty units where we talk about Engineering and Science performing well against the market, and IT and Finance were underperforming the market.

We have focused on the leadership and we have focused on some of the areas for each of those adding to the recruiter base, and in others – in particular where we had a sufficient recruiter base but not enough order volume – increasing our salespeople, our BDRs.

And we now think we’re approaching Q3 with a good set of the salespeople in place and the recruiters ready to go. So I would say Q3 is the first quarter that you begin to see us more fully staffed and leadership repositioned in those two units..

Okay. And just lastly we’re a month into the quarter and it’s good to see revenue growth is accelerating.

As we look at your guidance both for Q3 and full-year, what assumptions are you using or assuming to get to the high end of this range outside of the growth we’re seeing in OCG? What other areas of strength will get us to the high end of that range?.

So we, as Carl said in the beginning of his remarks, we see a slowly improving economy and that’s a big part of the assumption that we’re making.

We’re also expecting to see that while the bulk of the improvement in PT comes in Q4 we should be and are already seeing some good traction of those initiatives, and continued strong performance in EMEA as well as OCG. So it’s a little bit of everything but underlying the basic economic growth.

And the other thing I’ll point out for Q3 is Carl talked about the impressive wins in our Education unit, and of course Q3 and Q4 are seasonally helped a lot by those since the school year kicks in, and in Q3 we’ll start to see the benefit of those wins..

Okay.

How big is the Education unit today?.

We haven’t dimensioned it in dollars but it’s becoming a really significant part of our business..

Okay, that’s all I have right now. Thank you..

Great, thank you..

(Operator instructions.) We’ll go now to the line of Andrew Morey at Lee Munder..

Yes, hi. Could you just, I know in the past you’ve given a lot of detail about the expenses on the centralization, and then you called out a little bit of extra expense for ACA rollout and some extra spending on OCG.

Is there any way to give just a short summary of the magnitude of the extra expenses just as far as what are the biggest buckets in order? Is it still centralization; is it several other initiatives, expanding specialties? Could you just give us a two-second review of that please?.

Yeah, I’d be happy to. So this year we’re spending on all of those about $25 million. We haven’t broken them down by pieces but let’s sort of tick through what’s included in that in total. Carl talked about it but basically the first two pieces relate to the Americas – one is moving more of our large customers into centralized service delivery.

The reason why that is an investment is because what that does is it takes business away from our branch structure which leaves them at an overcapacity situation, so we need to invest into those local branches with business development representatives as well as especially PT recruiters in order to fill up their capacity and most importantly grow that PT business that Carl was just talking about.

We have three areas in OCG where we’re very focused on – first is expanding our global supplier network. That is the situation that Carl talked about. It has a lot of benefits; it’s what our large customers demand. It also means that we get to be more selective about where we supply staffing around the world.

We can supply our large customers with OCG capabilities in many countries around the world where we don’t provide staffing. We’re also working on talent supply chain analytics solutions.

There’s a lot of demand for workforce planning amongst these very large, sophisticated customers and we have a lot of flow-through of data that’s very helpful for them.

We are also expanding beyond the traditional temporary staffing base in our OCG world, and as well as recruiting and business processing to include statement of work and independent contractors in our suite of services that we can help our large customers manage.

That’s something that they no longer see boundaries between those different ways of bringing talent into their organization whether it’s fulltime, temporary staffing or importantly statement of work and independent contractors.

And finally, we didn’t talk a lot about it on the call but all of that added complexity comes with a technology component, so we’re looking at improving our processes for our large accounts, including things like in my world back office processes that allow for payroll and billing; and revamping our front office systems which are a proprietary system that needed to have a fair amount of its processes reengineered to improve our ability to handle the sophistication of the market these days.

So we expect those to increase efficiency and productivity..

And I think in response to Toby’s question Carl mentioned we’re certainly looking for leverage next year, would that then imply that the peak in the investment spending has already happened in this quarter? Or no, that would be necessarily, the rate of change, the peak of that might be in Q3 or Q4? I understand year-over-year next year then you would gain leverage, but I’m just trying to think more sequentially and somewhat adjusted for the seasonality of your business when pretty much all of these expenses would have started and would have really ramped up?.

Yeah, we entered the year viewing it as a pretty even spend of our expenses. We have pulled ahead; we’re pleased that we’ve pulled ahead some of those expenses that we delivered earlier than our original plan on some of the initiatives.

So we’re probably a little bit of that money – we’ve probably pulled ahead a little bit more than half of it spent through the first half of the year. But yes, there will be expenses for those investments that continue in Q3 and Q4..

That’s it for now, thank you very much..

Thank you..

Thank you. And we do have a follow-up question from Toby Sommer..

Thank you. I’m curious about your kind of long lead time business in sense of demand as we work into the more active seasonal work that you do leading up to the holidays.

Do you have a sense for the kind of growth that clients are planning for and what kind of buildup to Q4 that you may be seeing?.

Yeah, mixed, and you’re kind of early in the year, you’re still a little early for all those plans to coalesce. But to an extent some numbers are beginning to be emitted here – it’s a mixed, some looking for more aggressive above-norm growth and others looking for a very tepid season. No particular help for you there, Toby..

Okay.

When would be a reasonable timeframe by which you would kind of have a more wholesome sense for that?.

Yeah, so probably towards the end of Q3, beginning of Q4 but we probably wouldn’t tell you what that was going to be until we were on a quarterly call there..

Okay, thanks for your help..

Yep..

You have a follow-up question from Andrew Morey..

Yes, hi, thank you again. You mentioned I guess discontinuing Sweden and some business in Germany and I think there was one other I’m forgetting.

But I get that the earnings would have backed out restructuring charges and things like that, whatever, shut down expenses, but do you have some guesstimate or rough number of any impact that may have had either in the quarter or maybe just for Q3 or Q4 as far as revenues?.

Yeah. Just first of all to be clear it was Australia and not Germany..

Sorry..

That’s okay. You know, the reason that we frankly exited those branches in those markets is because they were not a big driver of revenue or profits for us so there won’t be an appreciable impact in our results..

Okay, alright. Thank you..

Oh Andrew, you know, somebody just waved their hand and pointed out – you’re right, last year we exited Executive Placement in Germany, so yeah, that’s where you got the Germany. And it wasn’t, the reason we exited it is because it wasn’t significant enough to have a big impact so we didn’t call out the sort of that in our results..

I think that Carl had mentioned earlier, and I hope I paraphrase this correctly, that the revenue impact of many of these initiatives and spend would start to be seen or I guess seen somewhat in Q4.

Can you give us any more granularity on specifically where, whether it’s geographically or whether it’s by business line, where your hint is that that would really first show up?.

Yeah, if you listen to where we talked about it we would expect to see it in US PT operations and then secondarily in OCG, which we report not by geography but as a consolidated report..

That’s right, okay, thank you..

Yep..

Thank you. And there are no further questions at this time..

Great, thank you all and thank you, Nick..

Today’s conference call is being recorded and available for replay beginning at 11:30 today and running through September 6th at midnight. You may access the replay system by dialing 800-475-6701 or international with 320-365-3844 and an access code of 277695. Again, the toll-free number is 800-475-6701. International callers may use 320-365-3844.

Both will need an access code of 277695. That does conclude our conference for today and we thank you for using AT&T Teleconference. You may now disconnect..