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CDI revenue falls 15.2%

February 26 2009

CDI Corp. (NYSE: CDI), the Philadelphia-based engineering and information technology services and staffing company, reported a 15.2% year-over-year decline in fourth-quarter revenue to $253.6 million.

Fourth-quarter revenue rose only in its information technology solutions segment, rising 1.4% to $57.9 million. Revenue fell in the company's other divisions. AndersElite, which provides temporary workers in the United Kingdom and Australia, posted the largest drop, down 42.7% to $36.0 million.

CDI's Management Recruiters International division posted an 18.5% year-over-year decline in fourth quarter revenue to $17.5 million. The company's engineering solutions revenue fell 9.7% to $142.2 million,

CDI reported a loss from continuing operations of $3.2 million for the fourth quarter. The company said the loss arose from:

*$1.8 million in reorganization charges that include severance payments and expenses related to the termination of its largest master franchise agreement for Management Recruiters International Inc.
*A $2.5 million increase in bad debt reserves over the bankruptcy of a large engineering solutions customer.
*$500,000 in costs from an unsuccessful acquisition effort.

CDI also reported a goodwill impairment of $500,000. Without the charges and the goodwill impairment, earnings from continuing operations would have been $300,000 for the fourth quarter, it said.

Fourth-quarter gross margin at the firm narrowed to 21.3% from 25.0% in the fourth quarter of 2007.

CDI's fourth-quarter loss of $3.2 million compared with net income of $7.8 million in the fourth quarter of 2007.

"We experienced a rapid deceleration in permanent placement revenue in our AndersElite segment and in our recruitment process outsourcing business within the engineering solutions segment," said President and CEO Roger Ballou. "We also saw accelerated weakness in permanent placement demand in industries served by our MRI segment, resulting in reduced royalty payments."

Ballou also noted project delays and cancellations at chemical and industrial customers in its engineering solutions business.

Full-year 2008 revenue fell 5.8% to $1.12 billion, and full-year gross margin narrowed to 22.8% from 24.2%.

2008 net income fell 42.1% to $19.8 million from $34.2 million in 2007.

"We anticipate continued weakness in hiring demand in many non-governmental sectors in both the U.S. and U.K. well into 2009," Ballou said. "Additionally, we anticipate continued weakness in capital spending by customers, particularly in the process & industrial vertical."

The company estimates a year-over-year decline in first-quarter revenue of 18% to 25%.

CDI Corp. (NYSE: CDI)
For the fourth quarter ended Dec. 31, 2008, compared with the same period in the previous year.
Revenue: $253.6 million, -15.2%
Net loss: $3.2 million vs. net income of $7.8 million

For the full year Dec. 31, 2008, compared with the previous year.
Revenue: $1.12 billion, -5.8%
Net income: $19.8 million, -42.1%

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