(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Caution Concerning Forward-Looking Statements

This report (including Management's Discussion and Analysis of Financial Condition and Results of Operations) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements that address expectations or projections about the future, including, but not limited to, statements about the Company's strategies for growth and future financial results (such as revenues, pre-tax profit and tax rates), are forward-looking statements. Some of the forward-looking statements can be identified by words like "anticipates," "believes," "expects," "may," "will," "could," "should," "intends," "plans," "estimates" and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions that are difficult to predict. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond the Company's control or are subject to change, actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to: continued deterioration in general economic conditions and levels of capital spending by customers in the industries the Company serves; further weakness in the financial and capital markets, which may result in the postponement or cancellation of the CDI customers' capital projects or the inability of CDI's customers to pay the Company's fees; competitive market pressures; the Company's ability to maintain and grow its revenue base; the availability and cost of qualified labor; adverse consequences arising out of the UK Office of Fair Trading investigation; the Company's level of success in attracting, training, and retaining qualified management personnel and other staff employees; changes in customers' attitudes towards outsourcing; credit risks associated with the Company's customers; changes in tax laws and other government regulations; the possibility of incurring liability for the Company's activities, including the activities of the Company's temporary employees; the Company's performance on customer contracts; and government policies or judicial decisions adverse to the Company's businesses. More detailed information about some of these risks and uncertainties may be found in the Company's filings with the SEC, particularly in the section entitled "Risk Factors" in Part 1, Item 1A. of the Company's Annual Report on Form 10-K for the year ended December 31, 2008. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company assumes no obligation to update such statements, whether as a result of new information, future events or otherwise, except as required by law.

Unless the context otherwise requires, all references herein to "CDI," "the Registrant," "the Company," "we," "us" or "our" are to CDI Corp. and its consolidated subsidiaries.

Executive Overview

The Company's first quarter 2009 performance reflected the same weak economic environment that drove the previous quarter's results. Continued weakness in permanent placement in the UK construction industry and a broad sector of the US economy caused significant year-over-year declines in high-margin permanent placement revenue in both the CDI AndersElite ("Anders") and Management Recruiters International, Inc. ("MRI") business segments.

In addition, the global recession and continued steep declines in demand for commodity chemicals and oil caused continued project delays and project cancellations in the Company's Process & Industrial ("P & I") vertical within the CDI Engineering Solutions ("ES") vertical. The Company had anticipated this continued weakness in these key areas and, throughout the first quarter, continued to reduce costs of operations to align expenses with business volumes. While remaining severe, economic conditions did not deteriorate significantly from the fourth quarter of 2008 and the Company did see some increased levels of engineering project bid activity later in the first quarter of 2009.

Both the CDI-Government Services ("Government Services") and CDI-Aerospace ("Aerospace") verticals within ES had revenue gains over the year-ago quarter driven by continued strength in government and defense spending and revenue gains associated with the July 2008 acquisition of certain assets of TK Engineering Associates, Inc. ("TK Engineering"). Additionally, the Company's CDI IT Solutions ("ITS") business segment had continued growth in its largest customer account, somewhat offset by declines in the automotive sector.

Overall, the Company reported a 22.2% decrease in revenue versus the first quarter of 2008 (or approximately 17% in constant currency).

The economic slowdown most impacted the Company's higher-margin permanent placement revenue, contributing to the Company's gross profit margin of 20.7% versus 24.3% in the prior year.

Management's Discussion and Analysis of Financial Condition and Results of Operations

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

For the first quarter of 2009, the Company reported a net loss of $0.9 million, including cost containment charges of $1.3 million primarily associated with severance payments and real estate exit costs. Excluding these charges, net earnings for the first quarter of 2009 were essentially breakeven. Cost reductions during the quarter were focused on establishing a leaner business platform that should enable the Company to be profitable at current business volumes and agile enough to react to improvements in the marketplace when economic conditions moderate.

Consolidated Discussion

Business Strategy

CDI's strategic objective is to be a leading global provider of engineering and information technology ("IT") outsourcing solutions and professional staffing. These services enable CDI's customers to focus on their core competencies and drive profitable growth and return on capital investment.

The Company seeks to achieve its strategic objectives by focusing on three core goals. These goals are:

• Shift service delivery up the value continuum, which requires the Company to focus business development efforts among existing and new customers on higher value, higher margin and higher skill services.

• Build international reach and global services delivery capabilities, particularly in engineering outsourcing, engineering project management and professional services.

• Leverage the long-term capital spending cycle by building skill sets and business scale in targeted ES verticals and Anders.

Key Performance Indicators

The Company manages and assesses its performance through various means, with the primary financial and operational measures including revenue, contract renewals, new contract wins, gross profit dollars and gross profit margin, operating profit, return on net assets and variable contribution margin.

Revenue is impacted by, among other things, levels of capital spending by customers, particularly in the ES and Anders business segments. Other external factors, such as the general business environment and employment levels, impact the Company's staffing business. Economic growth or decline typically impacts the demand for labor. In periods of increasing unemployment and slowing GDP growth, CDI customers tend to first cut-back on their contract workforce. As economic weakness continues, CDI customers then tend to decrease permanent headcount. In a recovering economy, CDI customers tend first to increase their contract employee headcount and to delay hiring permanent employees until later in the recovery cycle, when they are more certain that the recovery will continue. Operationally, CDI's ability to capitalize on opportunities created by the economy, its performance on new and existing accounts, new contract and account wins and its ability to mitigate competitive pricing pressures affect the Company's revenue.

Gross profit dollars and gross profit margin reflect CDI's ability to realize pricing consistent with value provided, to address changes in market demand and to control and pass through direct costs. Gross profit margin will shift as a result of the mix of business. The Company is focused on improving margins over time through efforts to grow new higher margin business and to cycle out of lower margin business. Professional services revenue, consisting of permanent placement and franchise related services, has a significant impact on gross profit margin. Since there are no direct costs associated with professional services revenue, increases or decreases in such revenue can have a disproportionate impact on gross profit margin.

Operating profit is gross profit less operating and administrative expenses. Operating profit margin reflects the Company's ability to adjust overhead costs to changing business volumes.

Return on net assets ("RONA") reflects CDI's ability to generate earnings while optimizing assets deployed in the business. RONA means the pre-tax earnings for the current quarter and preceding three quarters, divided by the average net assets at the beginning and end of that four quarter period. Net assets include total assets minus total liabilities excluding cash and cash equivalents and income tax accounts. A key driver of RONA is the Company's ability to manage its accounts receivable, its largest asset.

Management's Discussion and Analysis of Financial Condition and Results of Operations

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

Variable contribution margin ("VCM") is a measure of the amount of profit that flows to the operating profit line for each dollar of revenue growth. VCM is calculated as the year-over-year change in operating profit divided by the year-over-year change in revenue.

The Company has established the following long-term performance goals:

• Produce pre-tax RONA of 20% and redeploy assets unable to meet this target;

• Generate operating profit margin of 5% through gross margin expansion, financial discipline and lean headquarters operations; and

• Generate VCM in the 12% to 14% range on incremental revenue.

During the first quarter of 2009, the Company achieved a RONA of 7.5%, primarily reflecting reduced profit levels. Operating profit margin declined from 3.7% to
(0.3)% primarily due to reduced capital spending by petrochemical, chemical and industrial customers in the P & I vertical and the significant decline in permanent placement hiring in the Anders and MRI business segments, resulting in decreased revenue and profits. VCM was not calculated for 2009 because in this instance both revenue and operating profit declined.

Management's Discussion and Analysis of Financial Condition and Results of Operations

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

Consolidated Results of Operations for the three months ended March 31, 2009 as compared to the three months ended March 31, 2008

The table that follows presents changes in revenue by service type along with selected financial information and some key metrics for the three-month periods ended March 31, 2009 and 2008:

                                                       Three months ended
                                                            March 31,                              Increase (Decrease)
                                                    % of Total                    % of Total
(in thousands)                         2009          Revenue          2008         Revenue            $             %
Revenue
Staffing services                    $ 157,391            68.8 %    $ 199,271           67.8 %   $    (41,880 )    (21.0 )%
Project outsourcing services            65,523            28.7         77,263           26.3          (11,740 )    (15.2 )
Professional services                    5,738             2.5         17,346            5.9          (11,608 )    (66.9 )

                                     $ 228,652           100.0 %    $ 293,880          100.0 %   $    (65,228 )    (22.2 )%

Gross profit                         $  47,427            20.7 %    $  71,255           24.3 %   $    (23,828 )    (33.4 )%
Operating and administrative
expenses                                48,078            21.0         60,292           20.5          (12,214 )    (20.3 )
Operating profit (loss)                   (651 )          (0.3 )       10,963            3.7          (11,614 )   (105.9 )
Net earnings (loss)                  $    (920 )          (0.4 )%   $   7,924            2.7 %   $     (8,844 )   (111.6 )%
Cash and cash equivalents            $  66,019                      $ 110,043                    $    (44,024 )    (40.0 )%
Effective income tax rate                (32.6 )%                        35.1 %
After-tax return on shareholders'
equity (1)                                 3.4 %                          9.8 %
Pre-tax return on net assets(2)            7.5 %                         21.4 %
Variable contribution margin(3)             NM                             NM

(1) Current quarter combined with the three preceding quarters' earnings divided by the average shareholders' equity.

(2) Pre-tax earnings for the current quarter combined with the pre-tax earnings from the three preceding quarters, divided by the average net assets at the beginning and end of that four quarter period. Net assets include total assets minus total liabilities excluding cash and cash equivalents and income tax accounts.

(3) Year-over-year change in operating profit divided by year-over-year change in revenues. The calculation for the first quarters of 2009 and 2008 are not meaningful (NM) because both revenue and operating profit declined in 2009 and revenues were relatively flat in 2008.

Revenue by service type includes the following:

• Staffing services - Staffing services include providing the Company's skilled engineering, IT, project management, architecture, construction and other professionals to work at a customer's location under the supervision of customer personnel on a contractual basis for assignments that could range from several months to over one year. The Company also provides managed staffing services where the Company assumes overall management of a customer's contract staffing functions. All of the Company's four business segments provide customers with staffing services.

• Project outsourcing services - Project outsourcing services include engineering and IT projects, often performed at a CDI facility or at a customer's location under the supervision of CDI personnel, which provide a deliverable work product or service to the customer. These services are performed in the Company's ES and ITS segments.

• Professional services - Professional services include search, recruitment and permanent placement of technical, professional and managerial personnel; sales of new franchises; and services provided to franchisees to help them generate permanent placements. All of the Company's four business segments provide customers with professional services.

Revenue for the first quarter of 2009 declined as compared to the first quarter of 2008. Anders and MRI experienced significant declines in professional services revenue due to a drop in permanent placement hiring as a result of declining employment markets in North America and the UK. ES experienced a decline in revenue in its P & I vertical due to reduced capital spending by petrochemical, chemical and industrial customers, reduced revenue from permanent placement and the ending of several alternative energy projects in late 2008 and early 2009.

Management's Discussion and Analysis of Financial Condition and Results of Operations

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

These declines were partially offset by increased revenue from ITS, due primarily to a major account expansion, partially offset by reduced demand from customers in the automotive sector. Revenue also increased in ES's Government Services vertical, due to renewed US federal government funding of several US Navy shipbuilding and ship design projects and acquisition-driven growth in ES's Aerospace vertical, resulting from the 2008 acquisition of certain assets of TK Engineering.

Gross profit decreased primarily due to declines in revenue. Gross profit margin decreased due to the rapid decline of professional services revenue, lower levels of higher-margin project outsourcing and direct costs decreasing at a slower pace than revenue.

Consolidated operating and administrative expenses, including $1.3 million of severance and real estate exit costs, decreased primarily due to decreased headcount, cost containment measures and lower business volumes.

Operating profit declined to $(0.7) million and operating profit margin decreased from 3.7% to (0.3)% due to the factors noted above and infrastructure costs declining at a slower pace than revenue.

The Company's effective income tax rate was (32.6)% and 35.1% for the quarters ended March 31, 2009 and 2008, respectively. The effective income tax rate for the quarter was unfavorably impacted by an increase related to uncertain tax positions and an adjustment to income taxes payable, projected losses in foreign jurisdictions on which no tax benefit has been provided and a larger percentage of projected annual income being subject to US and state taxes. The rate in 2008 was favorably impacted by investments in tax-exempt instruments and a higher proportion of foreign earnings, which are taxed at lower rates.

Cash balances increased by $4.3 million to $66.0 million from December 31, 2008 to March 31, 2009. The increase in cash was due to decreased working capital requirements, resulting from increases in accrued compensation and related expenses attributable to payroll timing.

On April 30, 2009, Chrysler LLC and certain of its affiliates ("Chrysler") filed voluntary petitions for a structured bankruptcy under Chapter 11 of the US Bankruptcy Code. As of April 30, 2009, the Company had approximately $1.1 million in net accounts receivable due from Chrysler. As of March 31, 2009, the net accounts receivable balance from Chrysler was approximately $1.3 million (approximately $0.7 million after subsequent payments through April 30, 2009). It is reasonably possible that the Company may be unable to collect some of this accounts receivable balance. However, the Company does not believe it has sufficient information to determine, with any reliability, the amount of exposure regarding these accounts receivable. The Company has not made any bad debt provisions relating to this matter in its consolidated financial statements as of March 31, 2009.

Segment Discussion

ES

Business Strategy

ES's business strategy is to pursue the development of long-term alliances with its customers as a cost-effective source provider of engineering services and professional staffing. By working as a core supplier and partner with its customers, ES is able to develop an understanding of its customers' overall business needs as well as the unique technical needs of their projects. This approach creates the opportunity for ES to provide a greater and more integrated range of services to its customers to facilitate efficient project management, procurement, overall program integration and execution. This strategy requires ES to develop capabilities to provide services to its customers who have global requirements. The Company has recently formed a joint venture in Kuwait to provide access to engineering project work in Middle Eastern petrochemical, industrial and commercial infrastructure projects. Success of the ES business strategy is dependent upon maintaining and renewing its existing customers or contracts, continued capital spending by its major engineering customers, the ability to win new contract awards and accounts and the availability of labor at a reasonable cost. In addition, ES is strategically engaging in global arrangements to lower its labor costs for customers, to access a broader talent pool and to provide worldwide servicing capabilities for its global customers. ES provides professional recruitment outsourcing ("PRO") services to manage a customer's entire recruitment process. PRO services provide domestic and multi-national customers with a single source of professional and technical permanent placements across an entire organization. ES continues to develop its strategy to acquire broader skill sets and greater leverage for servicing the alternative energy markets, as it continues to pursue further business opportunities in those markets.

Key Performance Indicators

Management's Discussion and Analysis of Financial Condition and Results of Operations

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

ES manages and assesses its performance through various means, with the primary financial and operational measures including revenue, contract renewals, new contract wins, account growth, gross profit dollars and gross profit margin, operating profit and return on net assets.

Revenue reflects performance on both new and existing contracts and accounts. Changes in revenue will not generally result in proportionate changes in costs, particularly operating and administrative expenses, thus potentially impacting operating profit margins.

New contracts, account wins and contract renewals are the primary drivers of future revenue and provide an assessment of ES's ability to compete. New contract wins fluctuate from quarter to quarter, depending on the timing of customer needs and external factors.

Gross profit dollars and gross profit margin reflect ES's ability to realize pricing consistent with value provided, to incorporate changes in market demand and to control and pass through direct costs. ES's focus on maintaining and improving overall margins can lead to improved profitability. Gross margins can also shift as a result of the mix of business, with project outsourcing services and professional services generally providing higher margins than staffing services. ES utilizes financial modeling and operational reviews in the contracting process to produce acceptable margins and returns.

Return on net assets ("RONA") reflects ES's ability to generate earnings while optimizing assets deployed in the business. A key driver of RONA is the Company's ability to manage its accounts receivable, its largest asset.

Results of Operations

The following table presents changes in revenue by service type, cost of service, gross profit, operating and administrative expenses and operating profit for ES for the three months ended March 31, 2009 and 2008:

ES



                                                       Three months ended
                                                            March 31,
                                                 2009                       2008                Increase (Decrease)
                                                    % of Total                 % of Total
(in thousands)                              $        Revenue           $        Revenue            $              %
Revenue
Staffing services                       $  68,322         53.2 %   $  82,143         52.6 %   $    (13,821 )    (16.8 )%
Project outsourcing services               59,315         46.1        70,878         45.4          (11,563 )    (16.3 )
Professional services                         918          0.7         3,131          2.0           (2,213 )    (70.7 )

                                          128,555        100.0       156,152        100.0          (27,597 )    (17.7 )
Cost of service                           103,388         80.4       121,452         77.8          (18,064 )    (14.9 )

Gross profit                               25,167         19.6        34,700         22.2           (9,533 )    (27.5 )
Operating and administrative expenses      21,718         16.9        23,879         15.3           (2,161 )     (9.0 )

Operating profit                        $   3,449          2.7 %   $  10,821          6.9 %   $     (7,372 )    (68.1 )%

ES's revenue decreased primarily due to:

• Reduced capital spending by customers in its P & I vertical, notably in the petrochemical, chemical and industrial sectors, driven by the global economic slowdown and the late 2008 decline in commodity chemical and oil prices;

• The ending of several alternative energy projects in combination with fewer project starts;

• Declines in several staffing projects in the Company's international operations; and

• Declines in professional services related to contracts ending and declines in customers hiring.

The decreases listed above were partially offset by an increase in ES's Aerospace vertical from revenue generated through the TK Engineering acquisition and continued organic revenue growth in its Government Services vertical.

ES's gross profit dollars decreased during the first quarter of 2009 as compared to the first quarter of 2008 due primarily to declines in revenue. Gross profit margin decreased due to decreases in volume of outsourcing projects in its P & I vertical, as well as a rapid decline in higher-margin revenue from professional services.

Management's Discussion and Analysis of Financial Condition and Results of Operations

(Amounts in thousands, except share and per share amounts, unless otherwise indicated)

ES's operating and administrative expenses decreased during the first quarter of 2009 as compared to the first quarter of 2008 due primarily to decreased headcount as well as cost containment initiatives implemented in the fourth quarter of 2008. These expense reductions were partially offset by $0.8 million . . .