Jeffrey A. Joerres - Chairman, Chief Executive Officer Michael J.

Van Handel - Chief Financial Officer

Mark Marcon - Robert W. Baird & Co.

Andrew Steinerman - JP Morgan Thomas (T. C.)

Robillard - Banc of America Securities Andrew Fones – UBS Securities Vance Edelson - Morgan Stanley Kelly Flynn - Credit Suisse David Steinberg – Goldman Sachs Jeffrey Silber - BMO Capital Markets Garaz Reggie - JP Morgan Cavanaugh, UK

Good morning and welcome to the second quarter conference call for 2008. With me this morning is our Chief Financial Officer, Mike Van Handel.

Together we'll go through the second quarter results. I'll discuss the overall results of the [quarter], and then get into some segment detail.

Mike will then discuss the items affecting the balance sheet and cash flow and Mike will also spend some time covering how the outlook for the third quarter of 2008. Mike, before I move into that could you go through the Safe Harbor language?

This conference call includes forward-looking statements which are subject to risks and uncertainties. Actual results might differ materially from those projected in the forward-looking statements.

Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements can be found in the company's annual report on Form 10K and in the other Securities and Exchange Commission filings of the company, which information is incorporated herein by reference.

The second quarter of 2008 was a good quarter for Manpower. I will spend some time talking about some of the weakening that occurred in the second quarter, but even with the inter-quarter weakening, we achieved solid performance.

Our largest segment, Other EMEA, was up 30% in U.S. dollars and 18% in constant currency.

Right Management and Italy both did well and overall our financial results were as we anticipated. Second quarter results were solid.

However, we did see softening, which impacts our outlook for the balance of the year. The softer outlook is based on several different factors.

One is our largest single unit, France, has been experiencing softening in the second quarter. That softening will clearly affect our third quarter.

The second is we are not seeing the U.S. getting any strength in the near future.

Also, a few of the countries in Europe, German and Italy for example, are beginning to show some slower growth. At the same time, we have a large number of high performing units.

Unfortunately, the units are not sizeable enough to contribute in any scale, but they are contributing in a healthy blend. Countries like China, India, Argentina, and Poland, just to name a few, are really growing at rapid rates.

As you review our second quarter earnings, it is important to consider two non-recurring items impacting results. The first item is a change in the French payroll tax calculation, which favorably impacted operating profit by $53.7 million in 2008 and $99.3 million in 2007.

The second item is a $54.1 million legal provision for the exposure related to the French competition case that we recorded in the second quarter of 2008. The net of these two items reduced our 2008 earnings by $0.18.

The payroll tax item favorably impacted our 2007 earnings by $0.66. Mike will discuss both of these matters in a little bit more detail once we get further into the call.

Our revenue in the second quarter was $5.9 billion, up 17% in U.S. dollars and 5% in constant currency.

This was achieved from solid growth from Other EMEA, Italy, and our Other Operation segment. Our gross margin, excluding the non-recurring items, increased 49 basis points.

Our expenses were well managed though we are, in some geographies, experiencing some de-leveraging. Even in an environment like that, our operating profit was up 17%, excluding non-recurring items, or 2% in constant currency.

We were able to maintain our operating profit margin of 3.5% resulting in a total earnings per share, excluding the impact of the non-recurring items, of $1.52. This represents an increase of 27% in U.S.

dollars and 9% in constant currency. While we had a solid second quarter we did experience some intra-quarter softening, particularly in the French market.

We believe that our balanced business, both in service lines as well as geography, will help minimize some of the softening but based on the trends that we are seeing we anticipate the third quarter earnings per share to be between $1.45-$1.49, which includes $0.17 from currency. The gross margin was down 80 basis points.

The truer picture is to eliminate the impact of the payroll tax change from both years. Excluding the payroll tax change, our gross margin improved 55 basis points.

Part of that is the mix of the business, the other is through disciplined pricing. We were able to improve our temporary recruitment gross profit margin, resulting in a positive 47 basis points impact to the overall gross margin.

We are still seeing the impact of a healthy permanent recruitment environment with an increase in permanent recruitment fees of 26%. This favorably impacted our gross margin 28 basis points.

The staffing business outpaced the growth at Jefferson Wells, yielding a reduction based on mix in our gross margin of 20 basis points. I would like now to spend some time in the U.S.

segment. The U.S.

segment had revenue growth of 1%. Excluding acquisitions revenue growth was down 9%.

Revenue overall came in at $492 million, and OUP of $15 million was down 43%, including acquisitions, yielding a 3% operating unit profit margin. The U.S.

market continues to languish with mixed news. We are not seeing, however, any further declines.

And in fact, one could look at it as some slight improvements. Excluding acquisitions, revenue was up 3.7% sequentially from the first quarter and the rate of year-over-year contraction moderated from 11% in the first quarter to 9% in the second quarter.

The clients continue to be cautious. But other than specific industries they seem not to be making any real dramatic moves.

Our Manpower Professional business continued solid growth in the second quarter, up 17% with franchise acquisitions, and 5% on an organic basis. Our Permanent Recruitment business was up 12% from prior year.

Based on what we’re seeing in our RPO business and some of our large-scale recruitment, we are getting very good productivity and, therefore, solid contribution to the bottom line. The U.S.

revenues, as I spoke about earlier, were relatively stable during the quarter and we believe that as we look into the third quarter we would not see any further deterioration in our U.S. business.

The French operation had revenues of $2 billion, up 10% in U.S. dollars, down 5% in constant currency, which is at the lower end of our expectations.

Our French team did a superb job of managing expenses and, therefore, they were able to maintain their 3.6% operating unit profit margin, despite the top-line decline. Excluding the non-recurring items, our OUP increased 9% in U.S.

dollars, down 6% in constant currency. We have seen further softening in the demand in the French market, which began in May and continues through today.

Currently our French revenues are running about 8% below the prior year, which has been the case for the last several weeks. So at least we have seen some stabilization in the rate of contraction.

We believe that we are running slight below the market, which can be attributed to our disciplined pricing and our mix of business being skewed more toward the industrial side. That segment is hit more severely in the French market place right now than others.

We are also still working through some of the separation of our business that we did last quarter regarding our small/medium-size business focus and our strategic client focus and how we split those two parts of the business. This has affected the organization but we are confident that this will be a very positive move for us as we get through some of these changes that are now occurring in the organization.

Our Permanent Recruitment business in the French market place continues to grow well. In fact, extremely well.

Our Permanent Recruitment revenue was up 73% over 2007 and up 12% on a sequential basis, both very good signs as to what this market can do for us and how we are performing in a new service like permanent recruitment. We completed the acquisition of Spirit, a firm focused on IT and financial permanent recruitment.

The acquisition was quite small but it really intended to give us the management from that company and a jump start into Manpower Professional. We did the name change from Spirit to Manpower Professional and we are now working aggressively in the market and confident you will see gains over this in the next 12 months.

Other EMEA did quite well in the second quarter with revenue of $2.1 billion, up 30% in U.S. dollars and 18% in constant currency.

We are experiencing very good leverage with group growth margin expansion yielding an operating unit profit of $85 million, up 53% in U.S. dollars, 36% in constant currency, giving us an operating unit profit of 4.2%, an outstanding performance.

The Nordics revenue growth was up 7% in constant currency. Elan had a great performance, which is a continuation of several quarters growing in excess of 30%, with revenue growth up 42%.

At Manpower UK we continue to see a stable market at an increase of 10%, Germany 19%, Netherlands 31% taking out the Vitae acquisition of 5%, and the Vitae acquisition, by the way, is yielding some very good results for us. Spain, clearly our challenges that we saw in the first quarter persisting into the second quarter.

The Spanish market looks very similar to the U.S. market in that between housing and oil prices, it has really put a damper on the economic conditions in Spain.

We are getting good growth out of several of the smaller units in our other EMEA. Belgium up 17%, Israel up 14%, Austria up 30%.

So while we have seen some softening, and we do believe we will see further softening in Europe in the third quarter, there are still some very strong performance, therefore giving us a much better glide path as we go into a potentially slower period. Once again, Manpower Italy put up some very strong numbers.

Revenue up 25% in U.S. dollars, 8% in constant currency.

A great bottom of OUP of $38 million, up 12% in constant currency, a very strong operating unit profit margin of 8.5%. The Italian market continues to do well, though, like we are seeing in other parts of EMEA, there is a bit of slowing that is occurring and therefore it does give us some reason for pause and for some caution.

However, at the same time, there continues to be some good secular trends that are in our favor and therefore we would continue to see, and plan on seeing, a good performance out of Italy in the third quarter. Jefferson Wells revenue up $76 million, down 10%, weaker than what we had anticipated.

We were anticipating Jefferson Wells would be down 3% to 5% as we expected to see our sequential growth out of the first quarter. As in the first quarter, we continued to see clients delaying several projects.

At the same time, we are seeing a persistent, if not nagging, softening in organizations moving forward with financial projects. The reason we say that is our backlog is strong, our pipeline is healthy, but it just continues to be strung out.

We will be continuing to be vigilant about costs and pricing but at the same time we want to ensure that we are positioning ourselves for growth, as we believe this is a very good market for us in the U.S. as well as abroad.

However, the timing, of course, is not good for these types of services that we are currently selling. Moving on to Right Management, Right Management had a good and strong second quarter.

The second quarter is seasonally one of our stronger quarters. Revenue was up 4% in constant currency to $116 million.

We had good operating unit profit margin at 11.5%, yielding an operating unit profit of $13 million. As strong as the second quarter was for Right management, we still have yet to see any massive downsizing.

Clearly there is some industry-specific downsizing, as we are starting to hear more hallway chatter, if you will, regarding downsizing, but we have yet to see it any large numbers. This, I guess, bodes well in many ways.

There are views about how companies have dealt with their employment situations and how bloated or not bloated some of these companies may be. We continue to expand rapidly in our organizational consulting practice with Enright, which our primary focus is assessment, and then training and coaching.

That is now 305 of Right’s business and as you can see and as you imagine by reading the newspapers and trade publications, this will continue to be strong and a more important driver for us in business as we become more involved with our clients regarding their strategic direction of talent. Our Other Operations segment had a nice quarter, up 21% in U.S.

dollars, 10% in constant currency, to $772 million. Operating profit was $17 million.

We are still seeing the effects of our investments in emerging markets, yielding an operating unit profit margin of 2.1%. As last quarter, we continue to see good growth in Japan, up 21% in U.S.

dollars and 5% in constant currency. China, Taiwan, Hong Kong, all over 20% and India in excess of 50% in revenue.

Also stand-outs in the Other Operations segment is Argentina, up 47%, and Mexico up 10%, all in constant currency showing that there are areas, as I mentioned before, that are growing nicely and continue to grow nicely within our global operations. We have been notified by the Australian government that they will not be renewing our contract for the Australian Defense Force recruitment.

There will be a wind-down period in this contract, therefore it will affect us mostly in 2009. Overall company impact will not be material, however, for the region, and particularly Australia, it will have an impact.

In many ways I feel uncomfortable saying that we had a solid quarter because of the backdrop of sour news that we’re all hearing. But in fact, we did have a solid second quarter.

We did see some softening intra-quarter, which mirrors what is happening in the global economy, and we continue to make appropriate investments while being cautious not to invest too far ahead of the market. All geographies, all units, have done a very nice job of managing sluggish markets and taking advantage of strong markets.

No doubt we will be in choppy waters but we have a team that knows how to manage expenses and equally important, knows how to invest cleverly during this time so that we can rocket out the other side. Although we face softer economic conditions in many of our markets, others are still experiencing good growth and solid secular trends.

Given all of that, we are anticipating the third quarter to be in the range of $1.45 to $1.49 with favorable impact of $0.17 in currency. With that as the segment detail, what I would like to do now is to turn it over to Mike for some financial details.

I would like to start today by discussing the non-recurring items that Jeff mentioned earlier in the call. The first item relates to a change in the French payroll tax calculation that many of you will recall from last year.

In April of last year we were notified by the French Social Security Office that the calculation for payroll taxes was modified, resulting in a reduction of payroll taxes owed for 2006 and 2007. Through discussions with the Staffing Industry Association in France in the second quarter of 2008 it became apparent that we could also file a claim for a portion of payroll taxes paid in 2005.

As a result, we recorded an estimate of the recoverable 2005 payroll taxes of $53.7 million, which favorably impacted the gross margin and operating unit profit margin in France. On an after-tax basis the net earnings impact was $35.2 million, or $0.44 per share.

As we disclosed a year ago, this favorably impacted the net earnings in the second quarter of 2007 by $57.2 million, or $0.66 per share. The second item relates to French competition investigation that was announced in November of 2004.

During the second quarter we received a report from the case handler of the French Competition Council who rejected our defense arguments. The report alleges that the damage to the economy could be up to EU $76 million, or $120 million.

We continue to reject the accusations contained in the report and to defend our position. While we are unable to predict the outcome of these proceedings or the ultimate exposure, we understand that any fine levied by the Council will be based on its assessment of damage to the economy.

In view of their report and our assessment of the circumstances, we recorded a charge of $54.1 million in the quarter. This brings our total reserve related to this matter up to EU $45 million, or $70 million.

The net impact of this charge was $50 million, or $0.62 per share. As you can see there is not a full income tax fund to report on this charge as any ultimate fine payable will not be deductible for French income tax purposes.

While the first item is recorded on the gross profit line and the second item upon the S&L line, the net impact on operating profit is only a charge of $400,000. On an after-tax basis, however, the net charge is $14.8 million, or $0.18 per share, as a result of the tax treatment I mentioned earlier.

Turning to the balance sheet, our balance sheet remains strong at quarter end with total debt just over $1 billion and net debt of $453 million. Our total debt to total capitalization remains stable during the quarter at 26%.

Net debt increased $95 million during the quarter as available cash was used to fund acquisitions. In the quarter we used $194 million of cash to acquire U.S.

franchises and specialty staffing businesses, which included Vitae in Holland and CRI in the U.S. Accounts receivables were $4.9 billion at the end of the quarter, an increase of $133 million during the quarter.

Our accounts receivable activity was strong during the quarter, resulting in a one-day improvement in DSO. Free cash flow, defined as cash from operations less capital expenditures, was $213 million in the first half of the year compared to $100 million in the prior year.

This stronger free cash flow represents effective working capital management as well as less working capital required due to the lower growth rates this year. Capital expenditures were up $51 million in the first half of the year compared to $42 million in the prior year.

This increase is partially impacted by the change in currency rates but also reflects our continued investments in growing and maintaining our branch network. Cash used for share repurchases for the first half of the year was $53 million and relates to purchases in the first quarter.

In the second quarter of the year our free cash was directed towards the acquisitions previously discussed. Lastly, I would like to discuss our outlook for the third quarter.

As Jeff discussed earlier, we have seen softening demand in a number of markets as we have made our way through the second quarter. Therefore we are assuming slower growth in the third quarter, similar to where we exited the second quarter.

Our guidance does not contemplate for the significant slowing from where we are today. With that in mind, we expect revenue growth between 2%-4% in constant currency, which compares to the 5% achieved in the second quarter.

In the U.S. we are looking for revenue growth ranging between 7%-9%, which includes the impact of acquisitions.

Excluding acquisitions we expect a detraction revenue growth albeit at a slightly lower rate than we experienced in the second quarter. In France we are expecting a revenue contraction of 7%-9% in constant currency.

This contraction is representative of what we have seen over the last several weeks. While we are hopeful we might see some improvements, we don’t see any signs of improving economic environment at this point.

We expect to see good growth in other EMEA ranging from 11%-13% in constant currency. While this growth rate is lower than what we had experienced in the second quarter, it is important to note that the second quarter growth includes an estimated 3% favorable impact due to the timing of the Easter holidays.

Additionally, [inaudible] large customer contract in [inaudible]. In Italy, we expect continued growth in the 6%-8% range.

While the continued growth rates are a slight moderation from what we experienced in the second quarter, at this point we do not see dramatic downturns in [inaudible]. Jackson Wells is expected to contract as it had in the second quarter and Right Management is shifting growth from the second quarter.

I should also point out that the third quarter as the seasonality [soft for this segment] and therefore we expect a sequential dip in the operating unit profit margin similar to last year. We expect growth to moderate slightly in our Other Operation segment ranging from 5%-7% in constant currency.

Our gross profit margin should range between 18.3%-18.5%, an increase of about 50 basis points over the prior year after excluding prior year non-recurring items. This report continues strong growth in Permanent Recruitment and strong price discipline.

Our operating profit margins are expected to contract slightly compared to the prior year and range between 3.2%-3.4% reflecting expensing leveraging primarily on declining markets. Our tax rate is expected to be in a range of 36% resulting in earnings per share of $1.45-$1.49, which includes a favorable currency impact of $0.17.

Now I will turn it back to Jeff.

And with that we will open it up for questions.

I was wondering, with regards to France, what do you think led to, it went pretty much as you projected, but the pace of the deceleration was interesting but it looks like you’re not anticipating it’s going to decelerate any further. What gives you the confidence that things will stabilize here, given some of the macro headwinds that are out there?

That’s a good question, Mark. I will take a little bit of it and then I think Mike can maybe add a little color to it.

A couple of things is that we have some insight into the first two weeks of July and what was happening at the end of June and any time you’re doing some type of forward projection, as we are for the third quarter, in an economic condition that could be a little bit more slippery or may not as slippery, without knowing those things what we’ve done is said, “We’ve got three weeks of data, we’ve got a lot of information on the ground. What’s been happening in those three weeks?

Is it getting worse, better the same?” And what we’ve really been seeing is kind of more of the same.

And when we dig into the client side, much of the industrial client, construction client, I’m not saying all of that has drained out because clearly it hasn’t, but a lot of that on the fringe has drained out. So from a current environment looking forward, that’s why we would get some level of comfort with that.

Clearly, I think underlining your question is correct. And that is something else could fall over there and consumer spending right now is at a pretty long-time low within France, which is a big part of the economy and therefore some other things could happen.

But we based it basically on the last three weeks and talking to clients and talking to our staff.

Maybe just add a little more color on the trends during the month. Clearly we saw a step down in the demand in May.

It was a little unclear at the time how much it had to do with the timing of holidays, which May is a big holiday month in France. But then clearly June looked a lot like May, both months being down between 7.5%-8% revenue year-over-year.

And as Jeff mentioned, as we moved into July we effectively saw the same. So there has been a fairly stable pattern of contraction and clearly we don’t have good insight as to where the economy is going to go from here and so we aren’t going to speculate.

But we didn’t see anything, again, on the ground that would suggest that things are going to turn more positively or more negatively at this point. So that was the basis for our guidance for the third quarter.

Along those lines can you talk a little bit about you do have a higher mix of perm business than you used to. Typically that tends to be more cyclically sensitive.

Should conditions remain at current levels, or deteriorate a little bit further in Europe, can you talk a little bit about what the margin implications might be when we look at France and some of the major markets in EMEA?

It is a good question and some of those markets we can speak a little bit more from experience, particularly the UK. Other markets, like France, which is brand new, it’s a little bit harder.

So right now what we would be seeing in France, as we announced in the prepared remarks, was that we’re still seeing good growth. In fact, we’re still seeing some good growth across the globe in perm.

But we also know that when things get quite dire that’s one of things that really falls down hard and therefore we will continue to watch that. We monitor each country’s percent of permanent recruitment to the staffing business to make sure that it doesn’t get out of line, so that we have the right levers to pull.

How we are looking at re-deployment plans, because in Europe it is very difficult to do any kind of redundancy in a quick matter for that staff, so therefore we’re looking at how do we get them maybe into S&B marketing and branch sales. But right now we feel as though what we are going to be doing is adding selectively adding Permanent consultants but spending more of our time working on the productivity of the current ones we have and slowing down hiring so that we can brace for something that might be a little bit sharper than what is in front of right now.

So, that being the case, as we compare this down cycle to prior down cycles, what would your anticipation be that this ultimately plays out, assuming it ends up being like prior down cycles, do you think the margin implications would be similar to what we’ve experience in the past, or better or worse?

That’s a good question, Mark, and probably the one everyone’s trying to get their arms around. The question is exactly how does the cycle and across what geographies and how fast and how deep.

I think on the plus side our geographical diversification is much stronger than it was in the last cycle. We’ve got a larger contribution coming from strong markets like Italy and Germany, and those markets certainly have a secular wind behind them that certainly will help in a cyclical down turn.

So I think the mix of business is broader based. Certainly since the last cycle we have Right Management in the mix, which about 70% of their business is outplacement business, which is counter-cyclical.

So that certainly helps. But the point you made on the permanent recruitment side, that does tend to be a little bit more on the cyclical side and so if we do see a slower down turn we might get hit a little bit harder from the perm side.

So there are a lot of variables there so it’s pretty hard to say. As I look at it in a slowing environment, we would expect to see compression on the operating margin.

Looking back at the last cycle from the peak to the trough, we lost about 90 basis points, when you look at it on a full-year basis. And that doesn’t seem out of range when I think about it but I think it’s pretty hard to put any specifics around it because it really depends a lot upon on how the economic cycle plays out across the world.

Mike, could you just review for us the acquisition effect in the U.S. It was 10 points in the quarter.

Just remind us how that’s going to affect the third quarter and given that revenues are going to be down less on an organic basis, what does that imply for margin year-over-year, U.S.?

Just to recap the second quarter, the U.S. was up about 1% on an reported basis including acquisitions, down 9% on an organic basis.

Looking to the third quarter, our guidance was for growth of 7% to 9% including acquisitions. The acquisitions will be adding about 14% to our growth rate.

So, on an organic basis we expect to contract between 6%-7%. So effectively that is going to be the impact.

So we are again looking for a year-on-year contraction to be slightly better as we go into the third quarter. Part of that has to do with some business we see in the pipeline.

Part of that has to do with the comparables being slightly better and so there is a very modest improvement there. From a margin standpoint the acquisitions are adding a little bit to overall operating margin but just very slightly at this point, given the size and as we move into the third quarter I would expect that we are still going to see some of the de-leveraging that we saw in the second quarter continue to occur in the third quarter.

So I would expect the operating margin to be below prior year, maybe more in line with what you saw in the second quarter.

Could you just give us a little more granularity in terms of just flushing out the de-leveraging effect that you had highlighted early in your remarks? I’m assuming that we’re talking France being your biggest segment and we’ve seen some declines there but I’m just trying to get a sense as to where there is other sensitivity with respect to de-leveraging in the model.

When you look at overall in the second quarter we were able to maintain our operating margin at 3.5%, when you strip off the non-recurring items in both years. In fact, with a combination of some markets de-levering but some markets still seeing some good margin expansion, in balance things were, we were able to maintain our overall operating margin.

When you move to the third quarter, which speaks to our guidance and more directly to your question, what we would expect to see in some respects a bit of a continuation of the de-leveraging we saw in the U.S. market, given the contraction on the top line but probably the main element that changes here is the French market.

I would expect to see a little bit more de-leveraging in the third quarter. The second quarter they did a terrific job holding on to their operating margin in what was becoming a tough environment.

I think as we move into the third quarter we are going to see a little bit of a slip on their operating margin with the contraction of 7% to 9% that we’re calling for on the top line. They’ve been doing a nice job maintaining pricing.

As Jeff said earlier, the perm recruitment business is still doing quite nicely but it’s difficult to cut costs that quickly along with the top line movement. So we’ll see a little bit of compression there but I also expect within our other operations group, where our growth rate is slowing there, we’re going to see a little bit of compression on the operating margin there as well.

So, those are the markets that I would say we would see a little bit more than what we saw in the second quarter.

I just want to add a bit to it. This comes down to somewhat of a strategic decision.

You can de-leverage less by closing offices because that’s, if you will, fixed costs to staff the office, have the real estate, all of the systems in it. And while we will take some underperforming offices, offices that maybe we, frankly, didn’t have the courage to close before, we probably do now.

But what we’re not going to do is to manage that so tightly that on the other side of this, when you give up a location, a city, a part of a town, you can’t come back in there. So we’re going to look at discretionary things while trying to keep our offices intact so that we can keep the brand strong and come out with increased market share.

One more comment, T. C., just on the mechanics of the quarter.

You know, the second quarter our other EMEA regions showed really good operating leverage expansion there with about 70 basis points and as we move into the third quarter we will still some expansion but not to the same degree that we saw in the second quarter. So, that’s also playing into our expectation for the third quarter.

And if we’re looking, Jeff, off of your comments, people understand that you guys don’t want to make just some near-term changes. I mean, this is a cyclical business, you’ve got to manage through a cycle.

If we’re to assume France maintains the current levels, so you’re probably looking at another eight months or so of similar type of contraction, with the leverage that you can pull versus just maintaining your current infrastructure as is, where do you guys think margins could kind of stabilize at? I mean, is this a situation where they could get down to 2% or do you think down to a 2.5%-3% range under that scenario is achievable?

I think if we were to see a continuation of 8% contractional, since you laid it out, there’s a 2.5% to 3%, and I would say it would be more in that range. I would certainly hope we could manage toward the higher end of that range rather than the lower end of that range, but that’s something we are working through and we’re looking at.

We’ve got different contingency plans that we’re working through to see what the opportunity might be so I’m not prepared today to give you any specifics around that. You know, last year we came in with an operating margin of 3.4%.

From what we see this year we would look for that to be north of 3% for sure, at least given what we’re seeing so far in the economy and we will be looking and working on plans based on where the economy goes from here.

I have a question on SG&A. I was wondering if you could tell us what number of offices you had at the end of last year, kind of where you stand now, where you may stand at the end of this year and what proportion of SG&A expense, office, lease cost and so forth make up relative to recruiters and other expense things.

We closed out the year last year at about 4,500 offices and we’re so far through this year we’ve opened about 30 net offices, if you will. That includes a combination of closing some offices in certain markets and opening in others.

And some consolidations. So we continue to invest in the faster growing markets, the emerging markets, in Asia and in Eastern Europe, still seeing opportunities in some of the German markets and we continue to expand our Elan brand across Europe.

So we still do see investment opportunities and to the extent that those are there and show a good return we will continue to invest there. In terms of the overall mix of expense, from a lease cost standpoint, our primary SG&A expense is people.

That’s going to be over one half of our expense within our overall expense base. The network itself is going to be more in the neighborhood of 15%.

I don’t have the exact number in front of me but it’s going to be something in that ballpark. So hopefully that gives you a feel, a sense of direction.

And the Netherlands, I think you saw some nice acceleration there, from about 6% constant currency growth in Q1 to 31% in Q2. It appears that the industry had been slowing a little in the second quarter.

Can you comment on that?

That had to do with the Vitae acquisition we made in Holland. That really was the cause of the acceleration so if we pull that acquisition out, we are showing a 5% year-on-year growth in constant currency there.

Could you comment on how you would characterize your current appetite for acquisitions and in this environment would you say that prices or valuations have come off a bit, which might make for some more attractive opportunities?

We would put acquisitions into two categories because in the U.S. we have a small number of franchises and we will continue to acquire those.

Those are acquisitions that are very easy acquisitions, they run our systems brand, the people stay. So we will continue to do that as that is appropriate.

And then there are acquisitions that, those of you who have followed us for some time, we would not deviate from the strategy, which is as we move into more specialty businesses and specialty services, we will look at those acquisitions. Some of those companies might be public, some of those companies might be private.

Our view is we are in the business of strengthening that side of our business, we will look at some, but frankly, and maybe in some of the cases, if you will, the prices of those companies may not be seasoned enough, down at that level. So we’re not overly anxious but we’re going to always have good conversations to keep our strategy going.

Our balance sheet is strong so it give us some good opportunities.

And given the European M&A that’s already taken place amongst some of your peers, does that give you any opportunities to take advantage of any disarray that there might be out there and maybe take some share?

On fact value it does and we are a company who is interested in having more clients experience the best service in the industry. So as a result we are going to be more aggressive where there are companies who might be going through some confusion and may not be giving the client the best service.

So we think there is opportunity. Our view, to go back to your acquisition question, for us to be looking at any large staffing company and combining forces, we have no appetite for that.

We don’t think that that works well because we have such great geographic presence now and a culture that is a very unique culture in the industry, so we’re going to go after any kind of soft spots throughout the world and aggressively market to those clients.

Could you just remind us on the current buy back authorization the amount, if there is any expiration, and kind of what the prospects are for seeing some repurchase activity going forward?

We bought a little less than 800,000 shares in the first quarter. I don’t have right at my fingertips what’s left under the authorization.

I think it’s about 2.5 million. Perhaps I’ll be able to find that number and get back later in the call.

But there is not an expiration on that, per se.

First, on Italy, similar to what Mark asked on France. The guidance doesn’t imply much deceleration.

I think you touched on why a bit, but could you get into that more, given the dramatic deceleration you saw in the second quarter? I would have thought you would have guided a little lower, so what’s going on there?

Mike, you can cover, but I would view the dramatic deceleration being more so in France than any other country and that’s kind of a segue into Mike and a little talk about Italy and what we’re seeing in Italy.

While the growth has slowed, it’s a tougher economic environment, we are still seeing some good secular trend there, despite what is one of the tougher economies in Europe, overall. We did see a slow down, frankly, in Italy that slow down really started earlier in the quarter, toward mid-April and carried us way through the balance of the quarter.

So we’ve been running at the current guidance range of 7.5% or so, pretty much throughout the quarter in terms of revenue growth. So we are not, at this point, seeing any further slowing.

So our view is we’re not going to try and speculate as to where things would go from here, but we’re not seeing any signs from our clients that things are necessarily going to get worse at this point in time but we’ll have to see how things play out.

On the charges and gains related to France, can you just clarify which was in gross margin and which was in G&A. I imagine the payroll thing was in gross but can you just confirm that?

Yes, the French payroll tax change, that was a $53.7 million credit and that came on the gross profit line. And then the provision for the legal matter, we took on the SG&A line, which was $54.1 million.

On the corporate expense, where should we expect that will be in Q3?

Corporate expense, if I exclude amortization, that was at $25 million in the second quarter. It dipped down a bit from where we were in the first quarter.

Part of that had to do with a reduction in some of the incentive costs as our view on the year is profitability is running a little bit below original expectations. So that adjusted.

I think as we move into the third quarter I would expect that to move back up to a level that we saw in the first quarter, if not a little bit higher. We still do have some strategic investments that we are making on a global basis.

We’re being very careful as to where we do invest and what the returns look like, but we do have a number of projects that were started in the year that are in mid-phase that have a little bit more spending that comes through the later half of the year. So I would expect that line to move up a little bit from what you saw in the first half of the year.

You mentioned and you talked extensively about how markets in Europe had slowed, but when we look at where your expectations were at the start of the quarter versus where the constant currency numbers came in, it looks like the biggest change, or disappointment, was in Italy versus other Europe. You touched on this a little bit earlier, but can you talk about perhaps your expectations were at the beginning of the quarter, where things changed the most drastically, was it region, was it by business, and if in fact you see that type of disappointment spreading to other parts of Europe as well.

Based upon where our guidance was going into the second quarter, I think the two markets that ended up being a little bit tougher than anticipated, primarily were the French market and Italy, within Europe. When you look to the other EMEA markets, to put that into context, our growth in the second quarter was 17.6% in constant currency and our guidance range was 17% to 19%.

So, clearly we were toward the lower end of the range within other EMEA, but clearly within the range. I think when you look under the covers a little bit we still saw some very good performances across many of those countries and other EMEA but also when you look at the impact of Easter within those countries and strip that out you can see that there is some slowing across some of those geographies.

So, while they came in about where expected, the trend still is a bit of a slowing trend in some of the markets like Germany that we mentioned earlier.

I just want to go back to the perm business for a second. I’m not sure if you quantified the total impact on the company in terms of percentage of gross profit and the year-over-year change.

If you could just kind of review that. And just talk a little bit about what’s going on in the RPO market as well.

In terms of overall growth in the perm side, we were up 26% overall in perm GP on a year-on-year basis in constant currency. So that’s still a very good growth.

That compares to the first quarter up about 32%. And part of what you’re seeing here is in markets like France, it’s a law of large numbers.

The business is growing so you’re not going to be able to keep quite the astronomical rates that we had been seeing. But overall it’s still good growth there.

For the quarter itself, we’re running about 13% of our overall GP comps from the perm side. The first half of the year is typically a little bit heavier perm business, just given what happens within Australia and a few of our other markets that have heavier perm business.

So on a running 12-month basis we’re probably closer to 11% as an overall mix of GP.

On the RPO side, the RPO side with the acquisition of CRI, you know, it’s really filled in some very nice things on the West Coast. Our backlog is getting larger.

We have a very loud and confident goal of being the largest RPO provider in the world, and in many ways we already are. So, we’re seeing RPO still being pursued.

Of course, the numbers, when you secure an engagement are a little bit less because hiring is a little bit less. We’re seeing RPO now, you know, it’s called something a little different, but RPO in India, and RPO in Europe, and RPO in the Middle East really starting to take on.

So we’re putting a lot of muscle behind that. We know that it’s a little bit more of a slower time for RPO but we see it as a very strong secular trend so that’s one of the areas during this period of time that we’re going to invest in and we’re going to drive because we think it’s very complimentary to what we’re doing and adds a tremendous amount of value to the clients.

And one of the values we really stress heavily is this massive network we have. The ability to do this through centralized recruiting but then also tie the last bow up with local offices and local attention.

So, RPO right now. Backlog is good.

Slowing down a little from volumes, understanding, but we’re still moving nicely on that.

Besides Australia, can you just remind us which regions might be a little bit more heavily skewed towards the perm business?

China, India is almost all perm. Sweden has some heavy perm.

The UK, particularly Brook Street has heavy perm. I think that probably covers the big perm markets right now.

What kind of share count should we be looking for in the third quarter?

I don’t see a significant change. Our weighted average shares were 80.3 million in the second quarter, so I think that’s a reasonable place to be as you look forward to the third quarter.

With regards to the increased reserve in France, do you foresee any change in behavior from you, or any of your competitors there, on a go-forward basis that would have any sort of implications for either gross or margin?

That’s a very good question and without getting into massive amounts of detail, this goes all the way back to 1999, so this is some pretty old news and clearly we’re not in agreement with what’s going on there. We do believe that the market has changed dramatically in how practices are done and what clients’ expectations are.

So right now, as far as we know, we would not anticipate anything coming out of this that would structurally, either in a minor way or in a major way, change the way we would be able to operate.

And you’re not seeing any big changes, either, from legislation either EU-wide or country-specific-wise that has changed behavior any time in the near term, are you?

No, not in the near term. There’s always discussions and I think there will be continued discussions about, particularly France now, of what we will be doing with the 35 hour work week, would there be some more flexibility, in my words, banking hours and moving them to other parts of the year.

We will watch that carefully. The implications of those are hard to understand, if they even happen.

The agency-worker directive, and I know, Mark, you followed that from eight years ago or whatever, that has been, in essence passed, and passed in a way that probably has little effect through the work that we have done and others have done. So it does involve some parity pay but it gives some space between when you have to do that.

The other big one would be the working time directive, which I think is really pretty far off in the future. It’s not on anyone’s agenda right now.

And the agency work directive, is that one going to follow kind of the UK pattern?

No, it will follow a little bit more of the French pattern, and only that parity pay is a big part of it. But the waiting periods and the opt out times make it such that it probably will not have much effect, if any, in the industry right now.

And lastly on Australia, with the military contract that went away, is that being brought back in-house or did it go to a competitor or how should we view that and assess it in terms of your overall RPO strategy.

I’ll speak from an internal side and then on an external side. On an internal side, I hate loosing anything and therefore I am not a happy person right now.

Having said that, when I dissect and look at what’s happened is they gave it to a very small Australian-owned staffing firm who will have to have many partners. And the idea was kind of buy Australian was a big part of the decision.

So it’s a little bit disappointing to us because of the superior results we had. We will stay close to them, we’ll see what we can do to help.

But on a global basis it doesn’t interrupt our RPO strategy. It does interrupt our RPO capability, if you will, within the Australian market place.

When we take a look at the estimates that are out there for the year, I know you were just giving guidance for one quarter out, but when we look at the estimates that are out there for the balance of this year and next year, the way it sounds, it sounds like you’re not anticipating any sort of big U-turn, going back up any time soon, and so as we think about the balance of this year and maybe even the first half of next year, wouldn’t the way the cycles typically play out suggest that things will stay muted relatively over the next 6-9 months, before we could reasonably expect to see some upturn, and therefore shouldn’t the consensus estimates, if somebody was being logical, say maybe they should come down. It certainly doesn’t seem like the buy side believes the numbers that are out there and there does seem to be a little bit of frustration among some clients that we have that just seems like the numbers out there seem a little bit unrealistic.

I couldn’t agree with you more. You can read the FT this morning and yesterday and look at the little weather report in the FT that they had on economic gloom or doom or bright spots or not bright spots.

I think at the end of the day, I will go out on a limb a little, I mean there was only one analyst who, a couple of months ago, brought down the third quarter, based on some of that. And I think what’s happening is that it would be very unusual, and I would see no catalytic effect that would be happening in the next 60 days that would turn it around for the fourth quarter.

Having said that, we don’t go out to the fourth quarter and say this is what we think it will be because the visibility isn’t that good for us. So we look at this, and my internal memo that went out a half hour ago to 35,000 people said we are going to work on our strategic things but we are going to watch out what’s happening because we’re probably in this for a couple of quarters.

Because there’s no reason for us to think it would come out any faster than that. That’s our view on it.

Before we take the next call, if I could just confirm an answer I gave earlier on the share repurchases, and I’ll give you a little bit fuller answer. In August of 2007 the Board of Directors authorized 5 million shares.

We repurchased 1.7 million of those shares in 2007 and we purchased 752,000 in the first quarter of 2008 so we have repurchased about 2.5 million under that authorization and have about 2.5 million left to go.

Could you tell me in your key markets how much wage inflation is being pulled from your temp base and your own STEs and if you are seeing customers resisting the increasing price increases?

It’s quite interesting because we track wage inflation across many geographies and this is probably the lowest wage inflation that we have seen. Typically where you have this little bit odd environment where you have talent shortage, a lot of people out of work, you would see some wage inflation in some of the higher skilled jobs.

Now, clearly there is some of that and particularly in some exception jobs and exception market places. We’re still seeing wage inflation between 15%-17% in India, a little less than that in China, but if we look at the more mature markets we are seeing really some very disciplined wages.

So we are not really seeing wage inflation and in the U.S. when we compare our wage inflation to the general wage inflation, to the BLF numbers, and what we get from the Fed Reserve, we would be right in line, or a little bit less.

So right now companies are holding tight and therefore we’re not seeing a lot of wage inflation.

Looking forward, if there is a risk that wage inflation does become more of an issue and as economics goes down, your customers might increasingly resist any pricing increases. Is that a risk that is on your radar screen?

No, actually we wouldn’t view it that way. Because a company needs a person and the wages are the prevailing market wages.

And whether they get from us or someone else, if they have to pay an extra dollar, five dollars, or 50 pence, it’s what has to be. I guess maybe I’m just being the optimistic CEO, we’re one of the few industries that wage inflation is actually healthy for us.

Because a lot of our bill rates are based off of wage. So we’re not viewing it as a threat, from a diminishing amount of usage of our services.

We would just be viewing it as a spot market pricing that we do every day and we have to pass on to the client. Thank you attending the call.

As usual, if there are any questions, Mike and I are available. Thanks a lot for attending.