----

----

**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                                                                      |
|                         | September                29, 2007 (Unaudited) and December 30, 2006                                                       |
|                         |                                                                                                                      |
|                         | Condensed                Consolidated Statements of Operations                                                            |
|                         | Three                and nine months ended September 29, 2007 and September 30, 2006                (Unaudited)           |
|                         |                                                                                                                      |
|                         | Condensed                Consolidated Statements of Cash Flows                                                            |
|                         | Nine                months ended September 29, 2007 and September 30, 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**

|                                                                     |   |                             |    |
|--------------------------------------------------------------------------|--------|----------------------------------|---------|
|                                                                     |   | **September                29,** |    |   | **December                30,** |   |
| ***(In                thousands)***                                      |   | **2007**                         |    |   | **2006** |   |
|                                                                     |   | ***(Unaudited)***                |    |   |   |   |
|                                                                     |   |                             |    |   |   |   |
| **ASSETS**                                                               |   |                             |    |   |   |   |
| Current                assets:                                           |   |                             |    |   |   |   |
| Cash                  and cash equivalents                               |   | $                                | 83      |   |   | $ | 179 |   |
| Accounts                receivable, less allowance for doubtful accounts |   |                             | 69,707  |   |   |   | 64,196 |   |
| Prepaid                  expenses and other current assets               |   |                             | 3,014   |   |   |   | 2,484 |   |
| Total                current assets                                      |   |                             | 72,804  |   |   |   | 66,859 |   |
|                                                                     |   |                             |    |   |   |   |   |   |
| Property                and equipment, net                               |   |                             | 2,662   |   |   |   | 2,925 |   |
| Intangible                  assets, net                                  |   |                             | 10,446  |   |   |   | 11,245 |   |
| Goodwill                                                                 |   |                             | 11,799  |   |   |   | 11,799 |   |
| Other                  assets                                            |   |                             | 3,226   |   |   |   | 3,403 |   |
| Total                assets                                              |   | $                                | 100,937 |   |   | $ | 96,231 |   |
|                                                                     |   |                             |    |   |   |   |   |   |
| **LIABILITIES                AND SHAREHOLDERS' EQUITY**                  |   |                             |    |   |   |   |   |   |
| Current                  liabilities:                                    |   |                             |    |   |   |   |   |   |
| Accounts                payable                                          |   | $                                | 27,600  |   |   | $ | 24,411 |   |
| Salaries                  and vacations                                  |   |                             | 5,564   |   |   |   | 7,416 |   |
| Line                of credit                                            |   |                             | 8,901   |   |   |   | 2,661 |   |
| Deferred                  revenue                                        |   |                             | 1,256   |   |   |   | 1,267 |   |
| Restructuring                accrual, current portion                    |   |                             | 365     |   |   |   | 385 |   |
| Health                  care reserves and other amounts                  |   |                             | 1,117   |   |   |   | 1,670 |   |
| Deferred                compensation                                     |   |                             | 1,329   |   |   |   | 208 |   |
| Total                  current liabilities                               |   |                             | 46,132  |   |   |   | 38,018 |   |
|                                                                     |   |                             |    |   |   |   |   |   |
| Non-current                  liabilities:                                |   |                             |    |   |   |   |   |   |
| Deferred                compensation                                     |   |                             | 1,517   |   |   |   | 2,319 |   |
| Restructuring                  accrual                                   |   |                             | 61      |   |   |   | 160 |   |
| Other                long term liabilities                               |   |                             | 275     |   |   |   | -- |   |
| Shareholders’                  equity                              |   |                             | 52,952  |   |   |   | 55,734 |   |
| Total                liabilities and shareholders’ equity          |   | $                                | 100,937 |   |   | $ | 96,231 |   |

----

**Analysts      International Corporation**

**Condensed      Consolidated Statements of Operations**

*(Unaudited)*

|                                                                   | **Three                months ended** | **Nine                months ended** |
|------------------------------------------------------------------------|---------------------------------------|--------------------------------------|
|                                                                   |                                  | **September                29,**     |   |   | **September                30,** |   |   | **September                29,** |   |   | **September                30,** |   |
| ***(In                thousands except per share amounts)***           |                                  | **2007**                             |   |   | **2006** |   |   | **2007** |   |   | **2006** |   |
|                                                                   |                                  |                                 |   |   |   |   |   |   |   |   |   |   |
| Revenue:                                                               |                                  |                                 |   |   |   |   |   |   |   |   |   |   |
| Services                provided directly                              |                                  | $                                    | 59,938 |   |   | $ | 65,655 |   |   | $ | 183,275 |   |   | $ | 196,969 |   |
| Services                  provided through subsuppliers                |                                  |                                 | 13,709 |   |   |   | 12,470 |   |   |   | 44,651 |   |   |   | 40,194 |   |
| Product                sales                                           |                                  |                                 | 19,898 |   |   |   | 7,355 |   |   |   | 43,975 |   |   |   | 23,064 |   |
| Total                  revenue                                         |                                  |                                 | 93,545 |   |   |   | 85,480 |   |   |   | 271,901 |   |   |   | 260,227 |   |
|                                                                   |                                  |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Expenses:                                                              |                                  |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries,                contracted services and direct charges        |                                  |                                 | 61,117 |   |   |   | 64,333 |   |   |   | 189,253 |   |   |   | 195,443 |   |
| Cost                  of product sales                                 |                                  |                                 | 18,289 |   |   |   | 6,450 |   |   |   | 39,784 |   |   |   | 20,202 |   |
| Selling,                administrative and other operating costs       |                                  |                                 | 14,105 |   |   |   | 14,876 |   |   |   | 43,478 |   |   |   | 44,200 |   |
| Merger                related costs                                    |                                  |                                 | -- |   |   |   | (83 | ) |   |   | -- |   |   |   | (327 | ) |
| Restructuring                and other severance-related costs         |                                  |                                 | 337 |   |   |   | (39 | ) |   |   | 1,759 |   |   |   | (54 | ) |
| Amortization                  of intangible assets                     |                                  |                                 | 266 |   |   |   | 266 |   |   |   | 799 |   |   |   | 786 |   |
|                                                                   |                                  |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                  loss                                        |                                  |                                 | (569 | ) |   |   | (323 | ) |   |   | (3,172 | ) |   |   | (23 | )  |
| Non-operating                income                                    |                                  |                                 | 227 |   |   |   | 5 |   |   |   | 251 |   |   |   | 114 |   |
| Interest                  expense                                      |                                  |                                 | (100 | ) |   |   | (194 | ) |   |   | (243 | ) |   |   | (586 | ) |
|                                                                   |                                  |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss                  before income taxes                              |                                  |                                 | (442 | ) |   |   | (512 | ) |   |   | (3,164 | ) |   |   | (495 | )  |
| Income                tax expense                                      |                                  |                                 | 6 |   |   |   | 10 |   |   |   | 34 |   |   |   | 31 |   |
| Net                  loss                                              |                                  | $                                    | (448 | ) |   | $ | (522 | ) |   | $ | (3,198 | ) |   | $ | (526 | ) |
|                                                                   |                                  |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Per                  common share:                                     |                                  |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                loss                                              |                                  | $                                    | (.02 | ) |   | $ | (.02 | ) |   | $ | (.13 | ) |   | $ | (.02 | ) |
| Diluted                  loss                                          |                                  | $                                    | (.02 | ) |   | $ | (.02 | ) |   | $ | (.13 | ) |   | $ | (.02 | ) |
|                                                                   |                                  |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average                  common shares outstanding                     |                                  |                                 | 25,056 |   |   |   | 24,662 |   |   |   | 24,917 |   |   |   | 24,631 |   |
| Average                common and common equivalent shares outstanding |                                  |                                 | 25,056 |   |   |   | 24,662 |   |   |   | 24,917 |   |   |   | 24,631 |   |

----

**Analysts      International Corporation**

**Condensed      Consolidated Statements of Cash Flows**

*(Unaudited)*

|                                                                      |   | **Nine                months ended** |   |
|---------------------------------------------------------------------------|--------|--------------------------------------|--------|
|                                                                      |   | **September                29,**     |   |   | **September                30,** |   |
| ***(In                thousands)***                                       |   | **2007**                             |   |   | **2006** |   |
|                                                                      |   |                                 |   |   |   |   |
| Net                  cash used in operating activities                    |   | $                                    | (5,122 | )  |   | $ | (5,178 | )  |
|                                                                      |   |                                 |   |   |   |   |   |   |
| Cash                  flows from investing activities:                    |   |                                 |   |   |   |   |   |   |
| Property                and equipment additions                           |   |                                 | (1,024 | ) |   |   | (1,181 | ) |
| Proceed                  from property and equipment sales                |   |                                 | 1      |   |   |   | 16 |   |
| Net                cash used in investing activities                      |   |                                 | (1,023 | ) |   |   | (1,165 | ) |
|                                                                      |   |                                 |   |   |   |   |   |   |
| Cash                flows from financing activities:                      |   |                                 |   |   |   |   |   |   |
| Net                change in line of                credit                |   |                                 | 6,240  |   |   |   | 6,422 |   |
| Common                stock                acquired                       |   |                                 | (191   | ) |   |   | -- |   |
| Net                cash provided by financing activities                  |   |                                 | 6,049  |   |   |   | 6,422 |   |
|                                                                      |   |                                 |   |   |   |   |   |   |
| Net                (decrease) increase in cash and cash equivalents       |   |                                 | (96    | ) |   |   | 79 |   |
|                                                                      |   |                                 |   |   |   |   |   |   |
| Cash                and cash equivalents at beginning of period           |   |                                 | 179    |   |   |   | 64 |   |
|                                                                      |   |                                 |   |   |   |   |   |   |
| Cash                and cash equivalents at end of period                 |   | $                                    | 83     |   |   | $ | 143 |   |
|                                                                      |   |                                 |   |   |   |   |   |   |
| Non-cash                  activities                                      |   |                                 |   |   |   |   |   |   |
| Common                  stock                  returned                   |   | $                                    | (198   | ) |   | $ | -- |   |
| Value                  of common stock issued                  for awards |   | $                                    | --     |   |   | $ | 20 |   |

----

**Analysts      International Corporation**

**Notes      to Condensed Consolidated Financial Statements**

| **1.** | **Summary                of Significant Accounting                Policies** |
|--------|------------------------------------------------------------------------------|

*Goodwill      and Intangible Assets*

|                                            |   | **September                29, 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 |   |                                 | $      | (6,216 | ) |   | $ | 8,859 |   |   | $ | 15,075 |   |   | $ | (5,417 | ) |   | $ | 9,658 |   |
| Tradename                                       |   |                                        | 1,720  |   |                                 |   | (133 | ) |   |   | 1,587 |   |   |   | 1,720 |   |   |   | (133 | ) |   |   | 1,587 |   |
|                                            |   | $                                           | 16,795 |   |                                 | $      | (6,349 | ) |   | $ | 10,446 |   |   | $ | 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        |   |       | 0       |   |                                                                                                   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
| Restricted                  stock   |   |       | 0       |   |                                                                                                   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
|                                |   |       |    |   |                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| **9                  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)***                                 |   | **Nine                months ended****September                29, 2007** |   |
|---------------------------------------------------------------------------|--------|---------------------------------------------------------------------------|--------|
|                                                                      |   |                                                                      |   |
| Balance                  at beginning of period                           |   | $                                                                         | 55,734 |   |
| Issuance                of common stock                                   |   |                                                                      | 114    |   |
| Amortization                  of deferred compensation expense            |   |                                                                      | 726    |   |
| FAS                123 R stock option expense                             |   |                                                                      | (35    | ) |
| Common                stock acquired under share repurchase program       |   |                                                                      | (191   | ) |
| Common                stock returned from 2005 acquisition escrow account |   |                                                                      | (198   | ) |
| Net                  Loss                                                 |   |                                                                      | (3,198 | ) |
| Balance                at end of period                                   |   | $                                                                         | 52,952 |   |

----

| **4.** | **Earnings                Per Share** |
|--------|---------------------------------------|

|                                                                                                    |   | **Three                months ended** |   |   | **Nine                months ended**  |   |
|---------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|---------------------------------------|--------|
| ***(in                thousands, except per share amounts)***                                           |   | **September                29, 2007** |   |   | **September                30, 2006** |   |   | **September                29, 2007** |   |   | **September                30, 2006** |   |
|                                                                                                    |   |                                  |   |   |                                  |   |   |   |   |   |   |   |
| Net                  loss                                                                               |   | $                                     | (448   | )      |                                  | $      | (522 | ) |   | $ | (3,198 | ) |   | $ | (526 | ) |
| Weighted-average                number of common shares outstanding                                     |   |                                  | 25,056 |   |                                  |   | 24,662 |   |   |   | 24,917 |   |   |   | 24,631 |   |
| Dilutive                  effect of equity compensation plan awards                                     |   |                                  | --     |   |                                  |   | -- |   |   |   | -- |   |   |   | -- |   |
| Weighted-average                number of common and commonequivalent                shares outstanding |   |                                  | 25,056 |   |                                  |   | 24,662 |   |   |   | 24,917 |   |   |   | 24,631 |   |
| Net                  loss per share:                                                                    |   |                                  |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                   |   | $                                     | (.02   | )      |                                  | $      | (.02 | ) |   | $ | (.13 | ) |   | $ | (.02 | ) |
| Diluted                                                                                                 |   | $                                     | (.02   | )      |                                  | $      | (.02 | ) |   | $ | (.13 | ) |   | $ | (.02 | ) |

| **5.** | **Restructuring** |
|--------|-------------------|

| ***(In                thousands)***                               |   | **Office                Closure/****Consolidation** |   |
|-------------------------------------------------------------------|--------|-----------------------------------------------------|--------|
| Balance                  at December 30, 2006                     |   | $                                                   | 545    |   |
| Additional                  restructuring                  charge |   |                                                | 337    |   |
| Less:                cash expenditures                            |   |                                                | (456   | ) |
| Balance                  at September 29, 2007                    |   | $                                                   | 426    |   |

----

**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 our 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 Third-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; |
|--------|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ·   | Professional                Services:  serving middle market customers in                targeted geographic regions.  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 |
|--------|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ·   | Solutions:  providing                network services, infrastructure, application integration, IP 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 geographic regions 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 Third 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 NINE-MONTH PERIODS ENDED SEPTEMBER 29, 2007 VS.      SEPTEMBER 30, 2006**

|                                                                    |   | **Three****months                ended** |   |   | **Three****months                ended** |   |   |                                   |   |   |                |   |   |   |   |
|-------------------------------------------------------------------------|--------|------------------------------------------|--------|--------|------------------------------------------|--------|--------|----------------------------------------|--------|--------|---------------------|--------|--------|--------|--------|
|                                                                    |   | **September                29, 2007**    |   |   | **September                30, 2006**    |   |   | **Increase                (Decrease)** |   |
|                                                                    |   |                                     |   |   | %                of                      |   |   |                                   |   |   | %                of |   |   |   |   |   | %                Inc |   |   | As                % of |   |
| ***(dollars                in thousands)***                             |   | Amount                                   |   |   | Revenue                                  |   |   | Amount                                 |   |   | Revenue             |   |   | Amount |   |   | (Dec) |   |   | Revenue |   |
| Revenue:                                                                |   |                                     |   |   |                                     |   |   |                                   |   |   |                |   |   |   |   |   |   |   |   |   |   |
| Services                provided directly                               |   | $                                        | 59,938 |   |                                     |   | 64.1   | %                                      |   | $      | 65,655              |   |   |   | 76.8   | % |   | $ | (5,717 | ) |   |   | (8.7 | )% |   |   | (12.7 | )% |
| Services                  provided through subsuppliers                 |   |                                     | 13,709 |   |                                     |   | 14.6   |                                   |   |   | 12,470              |   |   |   | 14.6   |   |   |   | 1,239 |   |   |   | 9.9 |   |   |   | 0.0 |   |
| Product                sales                                            |   |                                     | 19,898 |   |                                     |   | 21.3   |                                   |   |   | 7,355               |   |   |   | 8.6    |   |   |   | 12,543 |   |   |   | 170.5 |   |   |   | 12.7 |   |
| Total                  revenue                                          |   |                                     | 93,545 |   |                                     |   | 100.0  |                                   |   |   | 85,480              |   |   |   | 100.0  |   |   |   | 8,065 |   |   |   | 9.4 |   |   |   | 0.0 |   |
|                                                                    |   |                                     |   |   |                                     |   |   |                                   |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries,                  contracted services and direct charges  |   |                                     | 61,117 |   |                                     |   | 65.3   |                                   |   |   | 64,333              |   |   |   | 75.3   |   |   |   | (3,216 | ) |   |   | (5.0 | ) |   |   | (10.0 | ) |
| Cost                of product sales                                    |   |                                     | 18,289 |   |                                     |   | 19.5   |                                   |   |   | 6,450               |   |   |   | 7.5    |   |   |   | 11,839 |   |   |   | 183.6 |   |   |   | 12.0 |   |
| Selling,                  administrative and other operating costs      |   |                                     | 14,105 |   |                                     |   | 15.1   |                                   |   |   | 14,876              |   |   |   | 17.4   |   |   |   | (771 | ) |   |   | (5.2 | ) |   |   | (2.3 | ) |
| Merger                  related costs                                   |   |                                     | --     |   |                                     |   | 0.0    |                                   |   |   | (83                 | )      |   |   | (0.1   | ) |   |   | 83 |   |   |   | 100.0 |   |   |   | 0.1 |   |
| Restructuring                  and other severance-related costs        |   |                                     | 337    |   |                                     |   | 0.4    |                                   |   |   | (39                 | )      |   |   | (0.0   | ) |   |   | 376 |   |   |   | (964.1 | ) |   |   | 0.4 |   |
| Amortization                of intangible assets                        |   |                                     | 266    |   |                                     |   | 0.3    |                                   |   |   | 266                 |   |   |   | 0.3    |   |   |   | -- |   |   |   | 0.0 |   |   |   | 0.0 |   |
| Non-operating                  income                                   |   |                                     | (227   | )      |                                     |   | (0.2   | )                                      |   |   | (5                  | )      |   |   | (0.0   | ) |   |   | 222 |   |   |   | 4440.0 |   |   |   | (0.2 | )  |
| Interest                expense                                         |   |                                     | 100    |   |                                     |   | 0.1    |                                   |   |   | 194                 |   |   |   | 0.2    |   |   |   | (94 | ) |   |   | (48.5 | ) |   |   | (0.1 | ) |
|                                                                    |   |                                     |   |   |                                     |   |   |                                   |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss                before income taxes                                 |   |                                     | (442   | )      |                                     |   | (0.5   | )                                      |   |   | (512                | )      |   |   | (0.6   | ) |   |   | 70 |   |   |   | (13.7 | ) |   |   | 0.1 |   |
| Income                  tax expense                                     |   |                                     | 6      |   |                                     |   | 0.0    |                                   |   |   | 10                  |   |   |   | 0.0    |   |   |   | (4 | ) |   |   | (40.0 | ) |   |   | 0.0 |   |
| Net                loss                                                 |   | $                                        | (448   | )      |                                     |   | (0.5   | )%                                     |   | $      | (522                | )      |   |   | (0.6   | )% |   | $ | 74 |   |   |   | (14.2 | )% |   |   | 0.1 | % |

|                                                                   |   | **Nine****months                ended** |    |   | **Nine****months                ended** |   |   |                                   |   |   |                |    |   |   |   |
|------------------------------------------------------------------------|--------|-----------------------------------------|---------|--------|-----------------------------------------|--------|--------|----------------------------------------|--------|--------|---------------------|---------|--------|--------|--------|
|                                                                   |   | **September                29, 2007**   |    |   | **September                30, 2006**   |   |   | **Increase                (Decrease)** |   |
|                                                                   |   |                                    |    |   | %                of                     |   |   |                                   |   |   | %                of |    |   |   |   |   | %                Inc |   |   | As                % of |   |
| ***(dollars                in thousands)***                            |   | Amount                                  |    |   | Revenue                                 |   |   | Amount                                 |   |   | Revenue             |    |   | Amount |   |   | (Dec) |   |   | Revenue |   |
| Revenue:                                                               |   |                                    |    |   |                                    |   |   |                                   |   |   |                |    |   |   |   |   |   |   |   |   |   |
| Services                provided directly                              |   | $                                       | 183,275 |   |                                    |   | 67.4   | %                                      |   | $      | 196,969             |    |   |   | 75.7   | % |   | $ | (13,694 | ) |   |   | (7.0 | )% |   |   | (8.3 | )% |
| Services                  provided through subsuppliers                |   |                                    | 44,651  |   |                                    |   | 16.4   |                                   |   |   | 40,194              |    |   |   | 15.4   |   |   |   | 4,457 |   |   |   | 11.1 |   |   |   | 1.0 |   |
| Product                sales                                           |   |                                    | 43,975  |   |                                    |   | 16.2   |                                   |   |   | 23,064              |    |   |   | 8.9    |   |   |   | 20,911 |   |   |   | 90.7 |   |   |   | 7.3 |   |
| Total                  revenue                                         |   |                                    | 271,901 |   |                                    |   | 100.0  |                                   |   |   | 260,227             |    |   |   | 100.0  |   |   |   | 11,674 |   |   |   | 4.5 |   |   |   | 0.0 |   |
|                                                                   |   |                                    |    |   |                                    |   |   |                                   |   |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries,                  contracted services and direct charges |   |                                    | 189,253 |   |                                    |   | 69.6   |                                   |   |   | 195,443             |    |   |   | 75.1   |   |   |   | (6,190 | ) |   |   | (3.2 | ) |   |   | (5.5 | ) |
| Cost                of product sales                                   |   |                                    | 39,784  |   |                                    |   | 14.7   |                                   |   |   | 20,202              |    |   |   | 7.7    |   |   |   | 19,582 |   |   |   | 96.9 |   |   |   | 7.0 |   |
| Selling,                  administrative and other operating costs     |   |                                    | 43,478  |   |                                    |   | 16.0   |                                   |   |   | 44,200              |    |   |   | 17.0   |   |   |   | (722 | )  |   |   | (1.6 | )  |   |   | (1.0 | )  |
| Merger                  related costs                                  |   |                                    | --      |   |                                    |   | 0.0    |                                   |   |   | (327                | )       |   |   | (0.1   | ) |   |   | 327 |   |   |   | 100.0 |   |   |   | 0.1 |   |
| Restructuring                  and other severance-related costs       |   |                                    | 1,759   |   |                                    |   | 0.6    |                                   |   |   | (54                 | )       |   |   | (0.0   | ) |   |   | 1,813 |   |   |   | (3,357.4 | ) |   |   | 0.6 |   |
| Amortization                of intangible assets                       |   |                                    | 799     |   |                                    |   | 0.3    |                                   |   |   | 786                 |    |   |   | 0.3    |   |   |   | 13 |   |   |   | 1.7 |   |   |   | 0.0 |   |
| Non-operating                  income                                  |   |                                    | (251    | )      |                                    |   | (0.1   | )                                      |   |   | (114                | )       |   |   | (0.0   | ) |   |   | 137 |   |   |   | 120.2 |   |   |   | (0.1 | ) |
| Interest                expense                                        |   |                                    | 243     |   |                                    |   | 0.1    |                                   |   |   | 586                 |    |   |   | 0.2    |   |   |   | (343 | ) |   |   | (58.5 | ) |   |   | (0.1 | ) |
|                                                                   |   |                                    |    |   |                                    |   |   |                                   |   |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss                before income taxes                                |   |                                    | (3,164  | )      |                                    |   | (1.2   | )                                      |   |   | (495                | )  |   |   | (0.2   | )  |   |   | (2,669 | ) |   |   | 539.2 |   |   |   | (1.0 | ) |
| Income                  tax expense                                    |   |                                    | 34      |   |                                    |   | 0.0    |                                   |   |   | 31                  |    |   |   | 0.0    |   |   |   | 3 |   |   |   | 9.7 |   |   |   | 0.0 |   |
| Net                loss                                                |   | $                                       | (3,198  | )      |                                    |   | (1.2   | )%                                     |   | $      | (526                | )       |   |   | (0.2   | )% |   | $ | (2,672 | ) |   |   | 508.0 | % |   |   | (1.0 | )% |
|                                                                   |   |                                    |    |   |                                    |   |   |                                   |   |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Personnel:                                                             |   |                                    |    |   |                                    |   |   |                                   |   |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Management                  and administrative                         |   |                                    | 379     |   |                                    |   |   |                                   |   |   | 415                 |    |   |   |   |   |   |   | (36 | ) |   |   | (8.7 | )% |   |   |   |   |
| Technical                consultants                                   |   |                                    | 2,138   |   |                                    |   |   |                                   |   |   | 2,370               |    |   |   |   |   |   |   | (232 | ) |   |   | (9.8 | )% |   |   |   |   |

----

*Revenue*

*Salaries,      Contracted Services and Direct Charges*

*Cost      of Product Sales*

*Selling,      Administrative and Other Operating Costs*

*Restructuring      and Other      Costs*

*Non-Operating      Income*

*Interest      Expense*

----

*Income      Taxes*

*Personnel*

|                                                   |   |                             |   |   |                            |   |   |           |   |   |                            |    |
|--------------------------------------------------------|--------|----------------------------------|--------|--------|---------------------------------|--------|--------|----------------|--------|--------|----------------------------|---------|
|                                                   |   | **September                30,** |   |   | **December                30,** |   |   | **Increase**   |   |   | **Percentage****Increase** |    |
| ***(In                thousands except percentages)*** |   | **2007**                         |   |   | **2006**                        |   |   | **(Decrease)** |   |   | **(Decrease)**             |    |
|                                                   |   |                             |   |   |                            |   |   |           |   |   |                       |    |
| Cash                  and cash equivalents             |   | $                                | 83     |   |                            | $      | 179    |           |   | $      | (96                        | )       |   |   | (53.6 | )% |
| Accounts                receivable                     |   |                             | 69,707 |   |                            |   | 64,196 |           |   |   | 5,511                      |    |   |   | 8.6 |   |
| Other                  current assets                  |   |                             | 3,014  |   |                            |   | 2,484  |           |   |   | 530                        |    |   |   | 21.3 |   |
| Total                current assets                    |   | $                                | 72,804 |   |                            | $      | 66,859 |           |   | $      | 5,945                      |    |   |   | 8.9 | % |
|                                                   |   |                             |   |   |                            |   |   |           |   |   |                       |    |   |   |   |   |
| Accounts                payable                        |   | $                                | 27,600 |   |                            | $      | 24,411 |           |   | $      | 3,189                      |    |   |   | 13.1 | % |
| Salaries                  and vacations                |   |                             | 5,564  |   |                            |   | 7,416  |           |   |   | (1,852                     | )  |   |   | (25.0 | )  |
| Line                of credit                          |   |                             | 8,901  |   |                            |   | 2,661  |           |   |   | 6,240                      |    |   |   | 234.5 |   |
| Restructuring                  accruals current        |   |                             | 365    |   |                            |   | 385    |           |   |   | (20                        | )       |   |   | (5.2 | ) |
| Other                current liabilities               |   |                             | 3,702  |   |                            |   | 3,145  |           |   |   | 557                        |    |   |   | 17.7 |   |
| Total                  current liabilities             |   | $                                | 46,132 |   |                            | $      | 38,018 |           |   | $      | 8,114                      |    |   |   | 21.3 | % |
|                                                   |   |                             |   |   |                            |   |   |           |   |   |                       |    |   |   |   |   |
| Working                  capital                       |   | $                                | 26,672 |   |                            | $      | 28,841 |           |   | $      | (2,169                     | )       |   |   | (7.5 | )% |
| Current                ratio                           |   |                             | 1.58   |   |                            |   | 1.76   |           |   |   | (.18                       | )       |   |   | (10.2 | ) |
|                                                   |   |                             |   |   |                            |   |   |           |   |   |                       |    |   |   |   |   |
| Total                shareholders’ equity        |   | $                                | 52,952 |   |                            | $      | 55,734 |           |   | $      | (2,782                     | )       |   |   | (5.0 | )% |

*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           |   |                      |   |   | $                            | 8,901  |   |                         |   |   |                            |   |   |      | $      | 8,901 |   |
|                                      |   |                      |   |   |                         |   |   |                         |   |   |                            |   |   |      |   |   |   |
| Operating                  leases         |   | $                         | 3,898  |   |                         |   | 4,949  |                         |   | $      | 3,491                           |   |   |      |   |   |   | 12,338 |   |
|                                      |   |                      |   |   |                         |   |   |                         |   |   |                            |   |   |      |   |   |   |   |   |
| Deferred                  compensation    |   |                      | 1,329  |   |                         |   | 671    |                         |   |   | 155                             |   |   | $         | 691    |   |   |   | 2,846 |   |
|                                      |   |                      |   |   |                         |   |   |                         |   |   |                            |   |   |      |   |   |   |   |   |   |
| Total                                     |   | $                         | 5,227  |   |                         | $      | 14,521 |                         |   | $      | 3,646                           |   |   | $         | 691    |   |   | $ | 24,085 |   |

----

* 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 our 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**

|    **Period**         |   | **Total                number of****shares                (or units)****purchased** |    |   | **Average                price paid****per                share (or unit)** |   |   | **Total                number of shares purchased**** as                part of publicly announced plan(1)** |   |   | **Maximum                number****of                shares that may****yet                be purchased****under                the plan(2)** |   |
|--------------------------------------|--------|-------------------------------------------------------------------------------------|---------|--------|-----------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Fiscal                July 2007      |   |                                                                                | 30,000  |   |                                                                        |   | 1.709  |                                                                                                                        |   |   | 30,000                                                                                                                                        |   |   |   | 970,000 |   |
| Fiscal                August 2007    |   |                                                                                | 79,000  |   |                                                                        |   | 1.726  |                                                                                                                        |   |   | 79,000                                                                                                                                        |   |   |   | 891,000 |   |
| Fiscal                September 2007 |   |                                                                                | --      |   |                                                                        |   | --     |                                                                                                                        |   |   | --                                                                                                                                       |   |   |   | 891,000 |   |
| Totals                               |   |                                                                                | 109,000 |   |                                                                        |   | 1.722  |                                                                                                                        |   |   |                                                                                                                                          |   |   |   |   |   |

**Item      3.  Defaults Upon Senior Securities**

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

**Item      5.  Other Information**

**Item      6.  Exhibits**

| ^   Exhibit                10.1 |   | Waiver                and Eleventh Amendment to Credit Agreement, dated July 26, 2007                (incorporated by reference as 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:  November                8, 2007 | By:                                               | /s/                Elmer N. Baldwin |
|                                             |                                              | Elmer                N. Baldwin |
|                                             |                                              | Chief                Executive Officer |
|                                             |                                              | (Principal                Executive Officer) |
|                                             |                                              |   |
|                                             |                                              |   |
| Date:  November                8, 2007 | By:                                               | /s/                David J. Steichen |
|                                             |                                              | David                J. Steichen |
|                                             |                                              | Chief                Financial Officer |
|                                             |                                              | (Principal                Financial and Accounting Officer) |

----

**EXHIBIT      INDEX**

| Exhibit                10.1 |   | Waiver                and Eleventh Amendment to Credit Agreement, dated July 26, 2007                (incorporated by reference as 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.                                      |

----