Human Capital Management Sector - August

We periodically review the completed transactions in the staffing, training, consulting and HCM technology segments.  Below are recent transactions within this sector.

CDI Corp (NYSE:CDI) and TK Engineering Associates

On 7/29/08 CDI acquired TK Engineering Associates of Cincinnati, Ohio in a cash transaction with undisclosed terms.

TK Engineering, with revenues estimated at $15 million, employs nearly 300 people and provides design, analysis, consulting and project engineering services for gas turbine engines used in aviation.

CDI Engineering has become a major provider of engineering outsourcing services to aerospace, life sciences, industrial and government sectors. This acquisition of TK Engineering supports CDI's corporate strategy of increasing overall capabilities in high margin solutions services.

In its 7/31/08 earnings announcement, CDI reported flat second quarter performance. The business outlook is also expected to remain flat to slightly down into the remainder of 2008 versus the prior year for the same period. CDI stock is trading at or near its low for the past 52 weeks.

Cross Country, Inc. (NasdaqGS:CCRN) and Medical Doctors Associates

On 7/22/08 Cross Country Healthcare announced its acquisition of Medical Doctors Associates for $12.3 million cash plus additional earnout payments. MDA, based in Norcross, VA, is a multi-specialty nationwide locum tenens (interim physician) staffing service business.

With MDA revenues of $158milion and $13.3million in EBITDA, this price, excluding earnouts, equates to 8.4 times '07 EBITDA and 0.7 times '07 revenues.  MDA's experienced management team will continue to operate the business moving ahead.

The transaction is CCRN's first entry into locum tenens and drives greater diversification as CCRN moves further from its primary nurse staffing business. The company made this strategic move to enhance its competitive position as a leading provider of healthcare staffing in the national marketplace.

Kelly Services Inc. (NasdaqGS:KELY.A) and Randstad Holdings, NV (RAND)

On 7/11/08 Kelley Services reached agreement to acquire the Portuguese subsidiaries of Randstad Holdings NV, the second largest HR services provider in the world.

Randstad Portugal generated revenues of €47million in 2007. When this transaction closes later in Q3 2008, it will represent a part of Kelly's continuing plan to increase its strong presence in Europe and Asia, helping to mitigate the economic downturn experienced in the domestic staffing arena.

Kelly's domestic commercial activity has consistently lost revenue for the past seven quarters. Continuing a concentration on high-margin corporate HR outsourcing services, Kelly will work to build its professional and technical businesses while diversifying geographically.

Watson Wyatt Worldwide Inc. (NYSE:WW) and Marcu Asociado

On 6/24/08 Watson Wyatt extended its South American reach by acquiring Buenos Aires-based compensation, benefits, and financial consulting firm Marcu & Asociado. The terms of the deal were not made public.

This transaction follows Watson Wyatt's creation of consulting offices in Chile and Uruguay over the past three years. As is the case with a number of other professional services companies who are expanding their global market presence, Watson Wyatt's growth in Latin America offsets weakness experienced in the domestic consulting environment.

Volt Information Sciences Inc. (NYSE:VOL) and Yellow Pages Group (YPG)

On 7/30/08 Volt Information Sciences announced it has agreed to sell its telephone directory systems, database management services, and publishing operations to Yellow Pages Group, Canada's largest publisher of telephone directories. A net purchase price of $178million in cash is to be paid at closing in September.

Divestiture of Volt's Directory Systems & Services and DataNational should bring substantial improvement to Volt's balance sheet and fund core investments in its mainstay staffing and call center businesses.

Volt has had a business association with Yellow Pages Group for 17 years, supporting the integration of   YPG's front and back office operations. YPG will continue to operate the acquired US community directory businesses in the MidAtlantic and Southeast markets.