----

----

**UNITED        STATES**

**SECURITIES        AND EXCHANGE COMMISSION**

**FORM        10-Q**

**(x)        Quarterly Report Pursuant to Section 13 or 15(d) of**

**the        Securities Exchange Act of 1934**

**(  )        Transition Report Pursuant to Section 13 or 15(d) of**

**the        Securities Exchange Act of 1934**

| **ANALYSTS                  INTERNATIONAL CORPORATION**                                                                   |
|---------------------------------------------------------------------------------------------------------------------------|
| (Exact                  name of registrant as specified in its charter)                                                   |
|                                                                                                                      |
| **Minnesota**                                                                                                             | **41-0905408** |
| (State                  of Incorporation)                                                                                 | (IRS                  Employer Identification No.) |
|                                                                                                                      |   |
| **3601                  West 76th                  Street**                                                               |   |
| **Minneapolis,                  MN**                                                                                      | **55435** |
| (Address                  of Principal Executive Offices)                                                                 | (Zip                  Code) |
|                                                                                                                      |   |
| Registrant’s                  telephone number, including area code:  **(952)                  835-5900** |

----

----

----

**ANALYSTS        INTERNATIONAL CORPORATION**

**INDEX**

|                           |                                                                                                                          |
|--------------------------------|-------------------------------------------------------------------------------------------------------------------------------|
| **Part                  I.**   | **FINANCIAL                  INFORMATION**                                                                                    |
|                           |                                                                                                                          |
| Item                  1.       | Financial                  Statements                                                                                         |
|                           |                                                                                                                          |
|                           | Condensed                  Consolidated Balance Sheets                                                                        |
|                           | June                  30, 2007 (Unaudited) and December 30, 2006                                                              |
|                           |                                                                                                                          |
|                           | Condensed                  Consolidated Statements of Operations                                                              |
|                           | Three                  and six months ended June 30, 2007 and July 1, 2006                  (Unaudited)                       |
|                           |                                                                                                                          |
|                           | Condensed                  Consolidated Statements of Cash Flows                                                              |
|                           | Six                  months ended June 30, 2007 and July 1, 2006                  (Unaudited)                                 |
|                           |                                                                                                                          |
|                           | Notes                  to Condensed Consolidated Financial Statements                  (Unaudited)                            |
|                           |                                                                                                                          |
| Item                  2.       | Management’s                  Discussion and Analysis of Financial Condition and Results of                  Operations |
|                           |                                                                                                                          |
| Item                  3.       | Quantitative                  and Qualitative Disclosures About Market Risk                                                   |
|                           |                                                                                                                          |
| Item                  4.       | Controls                  and Procedures                                                                                      |
|                           |                                                                                                                          |
| **Part                  II.**  | **OTHER                  INFORMATION**                                                                                        |
|                           |                                                                                                                          |
| Item                  1        | Legal                  Proceedings                                                                                            |
|                           |                                                                                                                          |
| Item                  1A.      | Risk                  Factors                                                                                                 |
|                           |                                                                                                                          |
| Item                  2.       | Unregistered                  Sales of Equity Securities and Use of Proceeds                                                  |
|                           |                                                                                                                          |
| Item                  3.       | Defaults                  Upon Senior Securities                                                                              |
|                           |                                                                                                                          |
| Item                  4.       | Submission                  of Matters to a Vote of Security Holders                                                          |
|                           |                                                                                                                          |
| Item                  5.       | Other                  Information                                                                                            |
|                           |                                                                                                                          |
| Item                  6.       | Exhibits                                                                                                                      |
|                           |                                                                                                                          |
| Signatures                     |
|                           |                                                                                                                          |
| Exhibit                  Index |

----

**PART        I.  FINANCIAL INFORMATION**

**Item        1.  Financial Statements**

**Analysts        International Corporation**

**Condensed        Consolidated Balance Sheets**

|                                                                                        |   |                          |   |
|---------------------------------------------------------------------------------------------|--------|-------------------------------|--------|
|                                                                                        |   | **June                  30,** |   |   | **December                  30,** |   |
| ***(In                  thousands)***                                                       |   | **2007**                      |   |   | **2006** |   |
|                                                                                        |   | ***(Unaudited)***             |   |   |   |   |
|                                                                                        |   |                          |   |   |   |   |
| **ASSETS**                                                                                  |   |                          |   |   |   |   |
| Current                  assets:                                                            |   |                          |   |   |   |   |
| Cash                  and cash                  equivalents                                 |   | $                             | 77     |   |   | $ | 179 |   |
| Accounts                  receivable, less                  allowance for doubtful accounts |   |                          | 63,255 |   |   |   | 64,196 |   |
| Prepaid                  expenses and other                  current assets                 |   |                          | 4,717  |   |   |   | 2,484 |   |
| Total                  current                  assets                                      |   |                          | 68,049 |   |   |   | 66,859 |   |
|                                                                                        |   |                          |   |   |   |   |   |   |
| Property                  and equipment, net                                                |   |                          | 2,747  |   |   |   | 2,925 |   |
| Intangible                  assets, net                                                     |   |                          | 10,712 |   |   |   | 11,245 |   |
| Goodwill                                                                                    |   |                          | 11,799 |   |   |   | 11,799 |   |
| Other                  assets                                                               |   |                          | 2,885  |   |   |   | 3,403 |   |
| Total                  assets                                                               |   | $                             | 96,192 |   |   | $ | 96,231 |   |
|                                                                                        |   |                          |   |   |   |   |   |   |
| **LIABILITIES                  AND SHAREHOLDERS' EQUITY**                                   |   |                          |   |   |   |   |   |   |
| Current                  liabilities:                                                       |   |                          |   |   |   |   |   |   |
| Accounts                  payable                                                           |   | $                             | 27,554 |   |   | $ | 24,411 |   |
| Salaries                  and                  vacations                                    |   |                          | 8,442  |   |   |   | 7,416 |   |
| Line                  of                  credit                                            |   |                          | 1,329  |   |   |   | 2,661 |   |
| Deferred                  revenue                                                           |   |                          | 1,053  |   |   |   | 1,267 |   |
| Restructuring                  accrual, current                  portion                    |   |                          | 116    |   |   |   | 385 |   |
| Health                  care reserves and other                  amounts                    |   |                          | 910    |   |   |   | 1,670 |   |
| Deferred                  compensation                                                      |   |                          | 1,271  |   |   |   | 208 |   |
| Total                  current                  liabilities                                 |   |                          | 40,675 |   |   |   | 38,018 |   |
|                                                                                        |   |                          |   |   |   |   |   |   |
| Non-current                  liabilities:                                                   |   |                          |   |   |   |   |   |   |
| Deferred                  compensation                                                      |   |                          | 1,508  |   |   |   | 2,319 |   |
| Restructuring                  accrual                                                      |   |                          | 72     |   |   |   | 160 |   |
| Other                  long term                  liabilities                               |   |                          | 175    |   |   |   | -- |   |
| Shareholders’                  equity                                                 |   |                          | 53,762 |   |   |   | 55,734 |   |
| Total                  liabilities and                  shareholders equity                 |   | $                             | 96,192 |   |   | $ | 96,231 |   |

----

**Analysts        International Corporation**

**Condensed        Consolidated Statements of Operations**

*(Unaudited)*

|   | **Three                      Months Ended** | **Six                      Months                      Ended** |
|--------|---------------------------------------------|----------------------------------------------------------------|

|                                                                                |   | **June                  30,** |   |   | **July                  1,** |   |   | **June                  30,** |   |   | **July                  1,** |   |
|-------------------------------------------------------------------------------------|--------|-------------------------------|--------|--------|------------------------------|--------|--------|-------------------------------|--------|--------|------------------------------|--------|
| ***(In                  thousands except per share amounts)***                      |   | **2007**                      |   |   | **2006**                     |   |   | **2007**                      |   |   | **2006**                     |   |
|                                                                                |   |                          |   |   |                         |   |   |                          |   |   |                         |   |
| Revenue:                                                                            |   |                          |   |   |                         |   |   |                          |   |   |                         |   |
| Services                  provided                  directly                        |   | $                             | 60,386 |   |                         | $      | 65,375 |                          |   | $      | 123,337                      |   |   | $ | 130,834 |   |
| Services                  provided through                  subsuppliers            |   |                          | 14,820 |   |                         |   | 14,127 |                          |   |   | 30,942                       |   |   |   | 28,204 |   |
| Product                  sales                                                      |   |                          | 14,043 |   |                         |   | 8,404  |                          |   |   | 24,077                       |   |   |   | 15,709 |   |
| Total                  revenue                                                      |   |                          | 89,249 |   |                         |   | 87,906 |                          |   |   | 178,356                      |   |   |   | 174,747 |   |
|                                                                                |   |                          |   |   |                         |   |   |                          |   |   |                         |   |   |   |   |   |
| Expenses:                                                                           |   |                          |   |   |                         |   |   |                          |   |   |                         |   |   |   |   |   |
| Salaries,                  contracted services                  and direct charges  |   |                          | 62,315 |   |                         |   | 65,915 |                          |   |   | 128,136                      |   |   |   | 131,110 |   |
| Cost                  of product                  sales                             |   |                          | 12,790 |   |                         |   | 7,308  |                          |   |   | 21,495                       |   |   |   | 13,752 |   |
| Selling,                  administrative and                  other operating costs |   |                          | 14,545 |   |                         |   | 14,573 |                          |   |   | 30,795                       |   |   |   | 29,065 |   |
| Amortization                  of intangible                  assets                 |   |                          | 267    |   |                         |   | 266    |                          |   |   | 533                          |   |   |   | 520 |   |
|                                                                                |   |                          |   |   |                         |   |   |                          |   |   |                         |   |   |   |   |   |
| Operating                  (loss) income                                            |   |                          | (668   | )      |                         |   | (156   | )                             |   |   | (2,603                       | )      |   |   | 300 |   |
| Non-operating                  income                                               |   |                          | 17     |   |                         |   | 105    |                          |   |   | 24                           |   |   |   | 109 |   |
| Interest                  expense                                                   |   |                          | (65    | )      |                         |   | (199   | )                             |   |   | (143                         | )      |   |   | (392 | ) |
|                                                                                |   |                          |   |   |                         |   |   |                          |   |   |                         |   |   |   |   |   |
| (Loss)                  income before income taxes                                  |   |                          | (716   | )      |                         |   | (250   | )                             |   |   | (2,722                       | )      |   |   | 17 |   |
| Income                  tax expense                                                 |   |                          | 7      |   |                         |   | 8      |                          |   |   | 28                           |   |   |   | 21 |   |
| Net                  loss                                                           |   | $                             | (723   | )      |                         | $      | (258   | )                             |   | $      | (2,750                       | )      |   | $ | (4 | ) |
|                                                                                |   |                          |   |   |                         |   |   |                          |   |   |                         |   |   |   |   |   |
| Per                  common share:                                                  |   |                          |   |   |                         |   |   |                          |   |   |                         |   |   |   |   |   |
| Basic                  loss                                                         |   | $                             | (.03   | )      |                         | $      | (.01   | )                             |   | $      | (.11                         | )      |   | $ | (.00 | ) |
| Diluted                  loss                                                       |   | $                             | (.03   | )      |                         | $      | (.01   | )                             |   | $      | (.11                         | )      |   | $ | (.00 | ) |
|                                                                                |   |                          |   |   |                         |   |   |                          |   |   |                         |   |   |   |   |   |
| Average                  common shares outstanding                                  |   |                          | 24,943 |   |                         |   | 24,620 |                          |   |   | 24,847                       |   |   |   | 24,616 |   |
| Average                  common and common equivalent shares outstanding            |   |                          | 24,943 |   |                         |   | 24,620 |                          |   |   | 24,847                       |   |   |   | 24,616 |   |

----

**Analysts        International Corporation**

**Condensed        Consolidated Statements of Cash Flows**

*(Unaudited)*

|                                                                        |   | **Six                  Months Ended** |   |
|-----------------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                                        |   | **June                  30,**         |   |   | **July                  1,** |   |
| ***(In                  thousands)***                                       |   | **2007**                              |   |   | **2006** |   |
|                                                                        |   |                                  |   |   |   |   |
| Net                  cash provided by operating activities                  |   | $                                     | 1,947  |   |   | $ | 535 |   |
|                                                                        |   |                                  |   |   |   |   |   |   |
| Cash                  flows from investing activities:                      |   |                                  |   |   |   |   |   |   |
| Property                  and equipment                  additions          |   |                                  | (717   | ) |   |   | (774 | ) |
| Proceed                  from property and                  equipment sales |   |                                  | --     |   |   |   | 11 |   |
| Net                  cash used in investing activities                      |   |                                  | (717   | ) |   |   | (763 | ) |
|                                                                        |   |                                  |   |   |   |   |   |   |
| Cash                  flows from financing activities:                      |   |                                  |   |   |   |   |   |   |
| Net                  change in line of                  credit              |   |                                  | (1,332 | ) |   |   | 526 |   |
| Net                  cash (used in) provided by financing activities        |   |                                  | (1,332 | ) |   |   | 526 |   |
|                                                                        |   |                                  |   |   |   |   |   |   |
| Net                  (decrease) increase in cash and cash equivalents       |   |                                  | (102   | ) |   |   | 298 |   |
|                                                                        |   |                                  |   |   |   |   |   |   |
| Cash                  and cash equivalents at beginning of period           |   |                                  | 179    |   |   |   | 64 |   |
|                                                                        |   |                                  |   |   |   |   |   |   |
| Cash                  and cash equivalents at end of period                 |   | $                                     | 77     |   |   | $ | 362 |   |
|                                                                        |   |                                  |   |   |   |   |   |   |

----

**Analysts        International Corporation**

**Notes        to Condensed Consolidated Financial Statements**

**1.           Summary        of Significant Accounting Policies**

*Goodwill        and Intangible Assets*

|                                              |   | **June                  30, 2007**            |   |   | **December                  30, 2006** |   |
|---------------------------------------------------|--------|-----------------------------------------------|--------|--------|----------------------------------------|--------|
|   ***(In                  thousands)*** |   | **Gross****Carrying                  Amount** |   |   | **Accumulated****Amortization**        |   |   | **Other                  Intangibles, Net** |   |   | **Gross****Carrying                  Amount** |   |   | **Accumulated                  Amortization** |   |   | **Other                  Intangibles, Net** |   |
|                                              |   |                                          |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Customer                  list                    |   | $                                             | 15,075 |   |                                   | $      | (5,950 | ) |   | $ | 9,125 |   |   | $ | 15,075 |   |   | $ | (5,417 | ) |   | $ | 9,658 |   |
| Tradename                                         |   |                                          | 1,720  |   |                                   |   | (133 | ) |   |   | 1,587 |   |   |   | 1,720 |   |   |   | (133 | ) |   |   | 1,587 |   |
|                                              |   | $                                             | 16,795 |   |                                   | $      | (6,083 | ) |   | $ | 10,712 |   |   | $ | 16,795 |   |   | $ | (5,550 | ) |   | $ | 11,245 |   |

*Accounting        Pronouncements*

*Fair Value Measurements*

----

*Accounting for Uncertainty in        Income Taxes – an Interpretation of FASB Statement No. 109*
*Accounting for Income Taxes. *

*Equity        Compensation Plans*

**$**

** **
**,**

|                              |   | **2007**   |    |   | **2006**                                                                                               |   |
|-----------------------------------|--------|------------|---------|--------|--------------------------------------------------------------------------------------------------------|--------|
|                              |   |       |    |   |                                                                                                   |   |
|                              |   | **Grants** |    |   | **Weighted                Avg.**** Grant                Date**** Fair                Value** |   |   | **Grants** |   |   | **Weighted                Avg.**** Grant                Date**** Fair                Value** |   |
| **3                Months Ended** |   |       |    |   |                                                                                                   |   |   |   |   |   |   |   |
| Stock                options      |   |       | 12,000  |   |                                                                                                   |   | 1.05 |   |   |   | 0 |   |   |   | 0 |   |
| Restricted                stock   |   |       | 2,000   |   |                                                                                                   |   | 1.83 |   |   |   | 0 |   |   |   | 0 |   |
|                              |   |       |    |   |                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| **6                Months Ended** |   |       |    |   |                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Stock                options      |   |       | 190,321 |   |                                                                                                   |   | .95 |   |   |   | 164,000 |   |   |   | 1.62 |   |
| Restricted                stock   |   |       | 120,071 |   |                                                                                                   |   | 1.92 |   |   |   | 258,000 |   |   |   | 2.43 |   |

----

**2.           Line        of Credit**

**3.           Shareholders'          Equity**

|  ***(In                thousands)***                    |   | **Six                Months Ended****June                30, 2007** |   |
|--------------------------------------------------------------|--------|---------------------------------------------------------------------|--------|
|                                                         |   |                                                                |   |
| Balance                at beginning of period                |   | $                                                                   | 55,734 |   |
| Issuance                of common                stock       |   |                                                                | 114    |   |
| Restricted                shares                amortization |   |                                                                | 714    |   |
| FAS                123 R stock option                expense |   |                                                                | (50    | ) |
| Net                Loss                                      |   |                                                                | (2,750 | ) |
| Balance                at end of period                      |   | $                                                                   | 53,762 |   |

**4.           Earnings        Per Share**

|                                                                                                    |   | **Three                Months Ended** |   |   | **Six                Months Ended** |   |
|---------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|-------------------------------------|--------|
| ***(in                thousands, except per share amounts)***                                           |   | **June                30,****2007**   |   |   | **July                1, 2006**     |   |   | **June                30, 2007** |   |   | **July                1, 2006** |   |
|                                                                                                    |   |                                  |   |   |                                |   |   |   |   |   |   |   |
| Net                loss                                                                                 |   | $                                     | (723   | )      |                                | $      | (258 | ) |   | $ | (2,750 | ) |   | $ | (4 | ) |
| Weighted-average                number of common shares outstanding                                     |   |                                  | 24,943 |   |                                |   | 24,620 |   |   |   | 24,847 |   |   |   | 24,616 |   |
| Dilutive                effect of equity compensation plan awards                                       |   |                                  | --     |   |                                |   | -- |   |   |   | -- |   |   |   | -- |   |
| Weighted-average                number of common and commonequivalent                shares outstanding |   |                                  | 24,943 |   |                                |   | 24,620 |   |   |   | 24,847 |   |   |   | 24,616 |   |
| Net                loss per share:                                                                      |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                   |   | $                                     | (.03   | )      |                                | $      | (.01 | ) |   | $ | (.11 | ) |   | $ | (.00 | ) |
| Diluted                                                                                                 |   | $                                     | (.03   | )      |                                | $      | (.01 | ) |   | $ | (.11 | ) |   | $ | (.00 | ) |

**5.           Restructuring**

| ***(In                thousands)***                   |   | Office                Closure/Consolidation |   |
|-------------------------------------------------------|--------|---------------------------------------------|--------|
| Balance                at December 30, 2006           |   | $                                           | 545    |   |
| Less:                cash                expenditures |   |                                        | (357   | ) |
| Balance                at June 30, 2007               |   | $                                           | 188    |   |

----

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

*Forward-Looking        Statements*

| ·   | The                    market conditions in the IT services industry, including intense                    competition for billable technical personnel at competitive rates,                    strong                    pricing pressures from many of the largest clients and the potential                    impact of the Michigan economy on our solutions practices’                    performance. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Difficulty                    in identifying, attracting and retaining qualified technical                    personnel and                    its continued impact on our ability to grow our                    business. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our                    ability to effectively reduce employee-related costs and the                    possibility                    that reducing employee-related costs may limit our ability to                    retain or                    attract consultants. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our                    ability to respond to client needs in a cost-controlled environment                    and                    the possibility that we may not be able to continue reducing                    costs if it                    affects our ability to deliver timely services or otherwise respond                    to                    customer needs or                    requirements. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Significant                    rapid growth in or a significant loss in our business, or significant                    lengthening of payment terms with a major client could create                    a need for                    additional working capital.  A failure to obtain additional                    working capital, should it be required, would materially affect                    our                    business. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Significant                    changes, reductions in or loss of a relationship with a major                    client or                    technology partner. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Growth                    opportunities may not be made available to                    us. |
|--------------------|---------------------------------------------------------------------------------------------|

| ·   | Unsuccessful                    implementation or execution of our new business plan/strategy,                    including                    but not limited to: |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | The                    extent to which our investment and performance improvement initiatives                    are                    successful. |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Our                    success in hiring and retaining management with the necessary                    skills and                    experience. |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Lack                    of success with our strategy for capturing any growth opportunities,                    including geographic                    expansion. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Decisions                    not to fully implement certain aspects of the new business                    plan. |
|---------------|------------------------------------------------------------------------------------------------------------------|

*Introduction        and Overview of Second-Quarter 2007 Events*

----

| ·   | Staffing:  serving                  our large high-volume, major accounts.  This service focuses on                  providing reasonably priced resources to volume buyers effectively                  and on                  demand.  This is driven by a recruiting-centric                  approach; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Custom                  Services:  serving middle market customers in targeted                  geographies.  This part of our business focuses on understanding                  the customers’ businesses and providing professional resources for                  application development and integration, project managers, business                  analysts and other highly-skilled resources;                  and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Technology                  Solutions:  providing network services, infrastructure,                  application integration, I.P. telephony and hardware solutions                  to middle                  market customers. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Market        Conditions and Economics of Our Business*

*Strategy*

| ·   | Aligning                          our operations and services within selected target                          markets.  This means we will invest primarily in developing                          middle market customers in targeted geographies and in                          building our                          professional resource talent                          pools; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Improving                          our value proposition by providing services and benefit                          to customers which                          enhance their talent resources, productivity and                          profitability; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Leveraging                          our growth off a strong base of current and past customers;                          and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------|

| ·   | Positioning                          Analysts International as a best-in-class IT services provider                          to                          mid-market customers. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | IP                  Communications, which includes Wireless, IP Telecommunications,                  Call                  Center and Security Services; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Enterprise                  Networking, which includes storage product support and VMware                  services; |
|--------------------|----------------------------------------------------------------------------------------------------------------------|

| ·   | Lawson                  Services, which includes integration, customization, and administration                  of                  Lawson Software applications;                  and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | IT                  Outsourcing which includes Application Outsourcing, Help Desk,                  Hosting,                  and Field Engineering                  services. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Other        Factors*

*Overview        of Results of Second Quarter 2007 Operations*

*Estimates        of Future Operating Results*

----

*Allowance        for Doubtful Accounts*

*Accrual        of Unreported Medical Claims*

*Revenue        Recognition*

*Subsupplier        Revenue*

----

*Goodwill          and Other Intangible Impairment*

*Deferred        Taxes*

*Restructuring        and other severance-related costs*

----

*Sales Taxes*

*    *

*Income        Taxes*

*Accounting for the        Uncertainty in Income Taxes*

*Stock-Based        Compensation*

----

**RESULTS        OF OPERATIONS, THREE- AND SIX-MONTH PERIODS ENDED JUNE 30, 2007 VS. JULY        1,        2006**

|                                                                     |   | **Three****Months                  Ended** |   |   | **Three****Months                  Ended** |   |   |                                     |   |   |                  |   |   |   |   |
|--------------------------------------------------------------------------|--------|--------------------------------------------|--------|--------|--------------------------------------------|--------|--------|------------------------------------------|--------|--------|-----------------------|--------|--------|--------|--------|
|                                                                     |   | **June                  30, 2007**         |   |   | **July                  1, 2006**          |   |   | **Increase                  (Decrease)** |   |
|                                                                     |   |                                       |   |   | %                  of                      |   |   |                                     |   |   | %                  of |   |   |   |   |   | %                  Inc |   |   | As                  % of |   |
| ***(dollars                  in thousands)***                            |   | Amount                                     |   |   | Revenue                                    |   |   | Amount                                   |   |   | Revenue               |   |   | Amount |   |   | (Dec) |   |   | Revenue |   |
| Revenue:                                                                 |   |                                       |   |   |                                       |   |   |                                     |   |   |                  |   |   |   |   |   |   |   |   |   |   |
| Services                  provided                  directly             |   | $                                          | 60,386 |   |                                       |   | 67.7   | %                                        |   | $      | 65,375                |   |   |   | 74.4   | % |   | $ | (4,989 | ) |   |   | (7.6 | )% |   |   | (6.7 | )% |
| Services                  provided through                  subsuppliers |   |                                       | 14,820 |   |                                       |   | 16.6   |                                     |   |   | 14,127                |   |   |   | 16.1   |   |   |   | 693 |   |   |   | 4.9 |   |   |   | 0.5 |   |
| Product                  sales                                           |   |                                       | 14,043 |   |                                       |   | 15.7   |                                     |   |   | 8,404                 |   |   |   | 9.5    |   |   |   | 5,639 |   |   |   | 67.1 |   |   |   | 6.1 |   |
| Total                  revenue                                           |   |                                       | 89,249 |   |                                       |   | 100.0  |                                     |   |   | 87,906                |   |   |   | 100.0  |   |   |   | 1,343 |   |   |   | 1.5 |   |   |   | 0.0 |   |
|                                                                     |   |                                       |   |   |                                       |   |   |                                     |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries,                  contracted services and direct charges   |   |                                       | 62,315 |   |                                       |   | 69.8   |                                     |   |   | 65,915                |   |   |   | 75.0   |   |   |   | (3,600 | ) |   |   | (5.5 | ) |   |   | (5.2 | ) |
| Cost                  of product sales                                   |   |                                       | 12,790 |   |                                       |   | 14.3   |                                     |   |   | 7,308                 |   |   |   | 8.3    |   |   |   | 5,482 |   |   |   | 75.0 |   |   |   | 6.0 |   |
| Selling,                  administrative and other operating costs       |   |                                       | 14,545 |   |                                       |   | 16.3   |                                     |   |   | 14,573                |   |   |   | 16.6   |   |   |   | (28 | ) |   |   | (0.2 | ) |   |   | (0.3 | ) |
| Amortization                  of intangible assets                       |   |                                       | 267    |   |                                       |   | 0.3    |                                     |   |   | 266                   |   |   |   | 0.3    |   |   |   | 1 |   |   |   | 0.4 |   |   |   | 0.0 |   |
| Non-operating                  income                                    |   |                                       | (17    | )      |                                       |   | (0.0   | )                                        |   |   | (105                  | )      |   |   | (0.1   | ) |   |   | (88 | ) |   |   | (83.8 | ) |   |   | 0.1 |   |
| Interest                  expense                                        |   |                                       | 65     |   |                                       |   | 0.1    |                                     |   |   | 199                   |   |   |   | 0.2    |   |   |   | (134 | ) |   |   | (67.3 | ) |   |   | (0.1 | ) |
|                                                                     |   |                                       |   |   |                                       |   |   |                                     |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss                  before income taxes                                |   |                                       | (716   | )      |                                       |   | (0.8   | )                                        |   |   | (250                  | )      |   |   | (0.3   | ) |   |   | (466 | ) |   |   | (186.4 | ) |   |   | (0.5 | ) |
| Income                  tax expense                                      |   |                                       | 7      |   |                                       |   | 0.0    |                                     |   |   | 8                     |   |   |   | 0.0    |   |   |   | (1 | ) |   |   | (12.5 | ) |   |   | 0.0 |   |
| Net                  loss                                                |   | $                                          | (723   | )      |                                       |   | (0.8   | )%                                       |   | $      | (258                  | )      |   |   | (0.3   | )% |   | $ | (465 | ) |   |   | (180.2 | )% |   |   | (0.5 | )% |
|                                                                     |   |                                       |   |   |                                       |   |   |                                     |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                                                    |   | **Six****Months                  Ended** |    |   | **Six****Months                  Ended** |   |   |                                     |   |   |                  |   |   |   |   |
|-----------------------------------------------------------------------------------------|--------|------------------------------------------|---------|--------|------------------------------------------|--------|--------|------------------------------------------|--------|--------|-----------------------|--------|--------|--------|--------|
|                                                                                    |   | **June                  30, 2007**       |    |   | **July                  1, 2006**        |   |   | **Increase                  (Decrease)** |   |
|                                                                                    |   |                                     |    |   | %                  of                    |   |   |                                     |   |   | %                  of |   |   |   |   |   | %                  Inc |   |   | As                  % of |   |
| ***(dollars                  in thousands)***                                           |   | Amount                                   |    |   | Revenue                                  |   |   | Amount                                   |   |   | Revenue               |   |   | Amount |   |   | (Dec) |   |   | Revenue |   |
| Revenue:                                                                                |   |                                     |    |   |                                     |   |   |                                     |   |   |                  |   |   |   |   |   |   |   |   |   |   |
| Services                  provided                  directly                            |   | $                                        | 123,337 |   |                                     |   | 69.2   | %                                        |   | $      | 130,834               |   |   |   | 74.9   | % |   | $ | (7,497 | ) |   |   | (5.7 | )% |   |   | (5.7 | )% |
| Services                  provided through                  subsuppliers                |   |                                     | 30,942  |   |                                     |   | 17.3   |                                     |   |   | 28,204                |   |   |   | 16.1   |   |   |   | 2,738 |   |   |   | 9.7 |   |   |   | 1.2 |   |
| Product                  sales                                                          |   |                                     | 24,077  |   |                                     |   | 13.5   |                                     |   |   | 15,709                |   |   |   | 9.0    |   |   |   | 8,368 |   |   |   | 53.3 |   |   |   | 4.5 |   |
| Total                  revenue                                                          |   |                                     | 178,356 |   |                                     |   | 100.0  |                                     |   |   | 174,747               |   |   |   | 100.0  |   |   |   | 3,609 |   |   |   | 2.1 |   |   |   | 0.0 |   |
|                                                                                    |   |                                     |    |   |                                     |   |   |                                     |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries,                  contracted services and                  direct charges |   |                                     | 128,136 |   |                                     |   | 71.8   |                                     |   |   | 131,110               |   |   |   | 75.0   |   |   |   | (2,974 | ) |   |   | (2.3 | ) |   |   | (3.2 | ) |
| Cost                  of product sales                                                  |   |                                     | 21,495  |   |                                     |   | 12.0   |                                     |   |   | 13,752                |   |   |   | 7.9    |   |   |   | 7,743 |   |   |   | 56.3 |   |   |   | 4.1 |   |
| Selling,                  administrative and other operating costs                      |   |                                     | 30,795  |   |                                     |   | 17.3   |                                     |   |   | 29,065                |   |   |   | 16.7   |   |   |   | 1,730 |   |   |   | 6.0 |   |   |   | 0.6 |   |
| Amortization                  of intangible assets                                      |   |                                     | 533     |   |                                     |   | 0.3    |                                     |   |   | 520                   |   |   |   | 0.3    |   |   |   | 13 |   |   |   | 2.5 |   |   |   | 0.0 |   |
| Non-operating                  income                                                   |   |                                     | (24     | )      |                                     |   | (0.0   | )                                        |   |   | (109                  | )      |   |   | (0.1   | ) |   |   | (85 | ) |   |   | (78.0 | ) |   |   | (0.1 | ) |
| Interest                  expense                                                       |   |                                     | 143     |   |                                     |   | 0.1    |                                     |   |   | 392                   |   |   |   | 0.2    |   |   |   | (249 | ) |   |   | (63.5 | ) |   |   | (0.1 | ) |
|                                                                                    |   |                                     |    |   |                                     |   |   |                                     |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss)                  income before income taxes                                      |   |                                     | (2,722  | )      |                                     |   | (1.5   | )                                        |   |   | 17                    |   |   |   | 0.0    |   |   |   | (2,739 | ) |   |   | (16,111.8 | ) |   |   | (1.5 | ) |
| Income                  tax expense                                                     |   |                                     | 28      |   |                                     |   | 0.0    |                                     |   |   | 21                    |   |   |   | 0.0    |   |   |   | 7 |   |   |   | 33.3 |   |   |   | 0.0 |   |
| Net                  loss                                                               |   | $                                        | (2,750  | )      |                                     |   | (1.5   | )                                        |   | $      | (4                    | )      |   |   | 0.0    | % |   | $ | (2,746 | ) |   |   | (68,650.0 | )% |   |   | (1.5 | )% |
|                                                                                    |   |                                     |    |   |                                     |   |   |                                     |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Personnel:                                                                              |   |                                     |    |   |                                     |   |   |                                     |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Management                  and administrative                                          |   |                                     | 370     |   |                                     |   |   |                                     |   |   | 435                   |   |   |   |   |   |   |   | (65 | ) |   |   | (14.9 | )% |   |   |   |   |
| Technical                  consultants                                                  |   |                                     | 2,135   |   |                                     |   |   |                                     |   |   | 2,385                 |   |   |   |   |   |   |   | (250 | ) |   |   | (10.5 | )% |   |   |   |   |

----

* *
*Revenue*

*Salaries,        Contracted Services and Direct Charges*

*Cost        of Product Sales*

*Selling,        Administrative and Other Operating Costs*

*Non-Operating        Income*

*Interest        Expense*

----

*Income        Taxes*

*Personnel*

|                                                     |   |                          |   |   |                              |   |   |           |   |   | **Percentage** |   |
|----------------------------------------------------------|--------|-------------------------------|--------|--------|-----------------------------------|--------|--------|----------------|--------|--------|----------------|--------|
|                                                     |   | **June                  30,** |   |   | **December                  30,** |   |   | **Increase**   |   |   | **Increase**   |   |
| ***(In                  thousands except percentages)*** |   | **2007**                      |   |   | **2006**                          |   |   | **(Decrease)** |   |   | **(Decrease)** |   |
|                                                     |   |                          |   |   |                              |   |   |           |   |   |           |   |
| Cash                  and cash equivalents               |   | $                             | 77     |   |                              | $      | 179    |           |   | $      | (102           | )      |   |   | (57.0 | )% |
| Accounts                  receivable                     |   |                          | 63,255 |   |                              |   | 64,196 |           |   |   | (941           | )      |   |   | (1.5 | ) |
| Other                  current assets                    |   |                          | 4,717  |   |                              |   | 2,484  |           |   |   | 2,233          |   |   |   | 89.9 |   |
| Total                  current assets                    |   | $                             | 68,049 |   |                              | $      | 66,859 |           |   | $      | 1,190          |   |   |   | 1.8 | % |
|                                                     |   |                          |   |   |                              |   |   |           |   |   |           |   |   |   |   |   |
| Accounts                  payable                        |   | $                             | 27,554 |   |                              | $      | 24,411 |           |   | $      | 3,143          |   |   |   | 12.9 | % |
| Salaries                  and vacations                  |   |                          | 8,442  |   |                              |   | 7,416  |           |   |   | 1,026          |   |   |   | 13.8 |   |
| Line                  of credit                          |   |                          | 1,329  |   |                              |   | 2,661  |           |   |   | (1,332         | )      |   |   | (50.0 | ) |
| Restructuring                  accruals current          |   |                          | 116    |   |                              |   | 385    |           |   |   | (269           | )      |   |   | (69.9 | ) |
| Other                  current liabilities               |   |                          | 3,234  |   |                              |   | 3,145  |           |   |   | 89             |   |   |   | 2.8 |   |
| Total                  current liabilities               |   | $                             | 40,675 |   |                              | $      | 38,018 |           |   | $      | 2,657          |   |   |   | 7.0 | % |
|                                                     |   |                          |   |   |                              |   |   |           |   |   |           |   |   |   |   |   |
| Working                  capital                         |   | $                             | 27,374 |   |                              | $      | 28,841 |           |   | $      | (1,467         | )      |   |   | (5.1 | )% |
| Current                  ratio                           |   |                          | 1.67   |   |                              |   | 1.76   |           |   |   | (.09           | )      |   |   | (5.1 | ) |
|                                                     |   |                          |   |   |                              |   |   |           |   |   |           |   |   |   |   |   |
| Total                  shareholders’ equity        |   | $                             | 53,762 |   |                              | $      | 55,734 |           |   | $      | (1,972         | )      |   |   | (3.5 | )% |

*Cash        Requirements*

----

*Sources        and Uses of Cash/Credit Facility*

|  ***(in                  thousands)*** |   | **1                  Year** |   |   | **2-3                  Years** |   |   | **4-5                  Years** |   |   | **Over                  5 Years** |   |   | **Total** |   |
|---------------------------------------------|--------|-----------------------------|--------|--------|--------------------------------|--------|--------|--------------------------------|--------|--------|-----------------------------------|--------|--------|-----------|--------|
|                                        |   |                        |   |   |                           |   |   |                           |   |   |                              |   |   |      |   |
| Line                  of credit             |   |                        |   |   | $                              | 1,329  |   |                           |   |   |                              |   |   |      | $      | 1,329 |   |
|                                        |   |                        |   |   |                           |   |   |                           |   |   |                              |   |   |      |   |   |   |
| Operating                  leases           |   | $                           | 3,912  |   |                           |   | 4,758  |                           |   | $      | 3,741                             |   |   |      |   |   |   | 12,411 |   |
|                                        |   |                        |   |   |                           |   |   |                           |   |   |                              |   |   |      |   |   |   |   |   |
| Deferred                  compensation      |   |                        | 1,271  |   |                           |   | 643    |                           |   |   | 183                               |   |   | $         | 682    |   |   |   | 2,779 |   |
|                                        |   |                        |   |   |                           |   |   |                           |   |   |                              |   |   |      |   |   |   |   |   |   |
| Total                                       |   | $                           | 5,183  |   |                           | $      | 6,730  |                           |   | $      | 3,924                             |   |   | $         | 682    |   |   | $ | 16,519 |   |

----

* Accounting for Uncertainty in        Income Taxes - an Interpretation of FASB Statement No. 109,*
*        Accounting for Income Taxes.*

*Fair Value Measurements.*

**Item        3.  Quantitative and Qualitative Disclosures About Market        Risk**

**Item        4.  Controls and Procedures**

----

**PART        II.  OTHER INFORMATION**

**Item        1.  Legal Proceedings**

**Item        1A.  Risk Factors**

*Our        ability to meet our current revenue, earnings and cash flow goals is        substantially dependent on the successful implementation of our new business        plan.*

| ·   | We                  decide that we cannot, or it is inadvisable to, implement all or                  some                  aspects of our plan. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Demand                  for labor in the IT staffing and solutions markets does not meet                  levels                  projected in our business                  plan. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                  cannot identify and/or retain management personnel with the skills                  and                  experience we believe the plan                  requires. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Productivity                  initiatives and investments in growth do not provide the expected                  returns. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------|

| ·   | Geographic                  areas selected for expansion of the Company’s presence with middle-market                  clients do not produce the demand for services or revenue growth                  expected. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Costs                  associated with implementing the new plan, including but not limited                  to,                  consultation fees, implementation of the growth initiatives of                  the plan                  and other aspects of the plan are significantly higher than                  expected. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Improvement                  in productivity/utilization rates in our solutions practices is                  not                  attained. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------|

**Item        2.  Unregistered Sales of Equity Securities and Use of        Proceeds**

**Item        3.  Defaults Upon Senior Securities**

----

**Item        4.  Submission of Matters to a Vote of Security        Holders**

| **Nominee**                          | **Votes                For** | **Authority                Withheld** |
|--------------------------------------|------------------------------|---------------------------------------|
| Brigid                A. Bonner      | 19,758,629                   | 1,210,981                             |
| Willard                W. Brittain   | 19,852,983                   | 1,116,627                             |
| Krzysztof                K. Burhardt | 19,753,390                   | 1,216,220                             |
| Michael                B. Esstman    | 19,748,618                   | 1,220,992                             |
| Michael                J. LaVelle    | 19,439,516                   | 1,530,094                             |
| Margaret                A. Loftus    | 19,710,791                   | 1,258,819                             |
| Robb                L Prince         | 19,705,815                   | 1,263,795                             |

| In                favor | 20,707,825 |
|-------------------------|------------|
| Against                 | 196,984    |
| Abstain                 | 64,801     |

**Item        5.  Other Information**

| ^   Exhibit                          10.1 |   | Waiver                          and Tenth Amendment to Credit Agreement, dated May 1, 2007                          (incorporated                          by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K                          filed May 7, 2007).         |
|----------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ^   Exhibit                          10.2 |   | Waiver                          and Eleventh Amendment to Credit Agreement, dated July                          26, 2007                          (incorporated by reference to Exhibit 10.1 to the Company’s Current Report                          on Form 8-K filed August 1, 2007). |
| +   Exhibit                          31.1 |   | Certification                          of CEO Pursuant to Section 302 of the Sarbanes Oxley Act                          of                          2002.                                                                                                                                     |
| +   Exhibit                          31.2 |   | Certification                          of CFO Pursuant to Section 302 of the Sarbanes Oxley Act                          of                          2002.                                                                                                                                     |
| ++                          Exhibit 32                   |   | Certification                          of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted                          pursuant to                          Section 906 of the Sarbanes Oxley Act of                          2002.                                                     |

| *  |   | Denotes                          a management contract or compensatory plan or arrangement                          required to be                          filed as an exhibit to this quarterly report pursuant to                          Item 6 of Form                          10-Q. |
|----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ^  |   | Denotes                          an exhibit previously filed with the Securities and Exchange                          Commission                          and incorporated herein by reference.                                                                                            |
| +  |   | Filed                          herewith.                                                                                                                                                                                                                                                    |
| ++ |   | Furnished                          herewith.                                                                                                                                                                                                                                                |

----

**SIGNATURES**

|                                             | ANALYSTS                  INTERNATIONAL CORPORATION |
|--------------------------------------------------|-----------------------------------------------------|
|                                             | (Registrant)                                        |
|                                             |                                                |   |
|                                             |                                                |   |
|                                             |                                                |   |
| Date:  August                  9, 2007 | By:                                                 | /s/                  Michael J. LaVelle |
|                                             |                                                | Michael                  J. LaVelle |
|                                             |                                                | Interim                  Chief Executive Officer |
|                                             |                                                | (Principal                  Executive Officer) |
|                                             |                                                |   |
|                                             |                                                |   |
| Date:  August                  9, 2007 | By:                                                 | /s/                  David J. Steichen |
|                                             |                                                | David                  J. Steichen |
|                                             |                                                | Chief                  Financial Officer |
|                                             |                                                | (Principal                  Financial and Accounting                  Officer) |

----

**EXHIBIT        INDEX**

| Exhibit                  10.1 |   | Waiver                  and Tenth Amendment to Credit Agreement, dated May 1, 2007 (incorporated                  by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K                  filed May 7, 2007).         |
|-------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Exhibit                  10.2 |   | Waiver                  and Eleventh Amendment to Credit Agreement, dated July 26, 2007                  (incorporated by reference to Exhibit 10.1 to the Company’s Current Report                  on Form 8-K filed August 1, 2007). |
| Exhibit                  31.1 |   | Certification                  of CEO Pursuant to Section 302 of the Sarbanes Oxley Act of                  2002.                                                                                                                             |
| Exhibit                  31.2 |   | Certification                  of CFO Pursuant to Section 302 of the Sarbanes Oxley Act of                  2002.                                                                                                                             |
| Exhibit                  32   |   | Certification                  of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant                  to                  section 906 of the Sarbanes Oxley Act of                  2002.                                    |

----