##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended September 28, 2008.
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 000-27792
 
 COMSYS IT PARTNERS, INC.
 (Exact name of Registrant as specified in its charter)
 
 Delaware
    
    56-1930691(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification Number)
 4400 Post Oak Parkway, Suite 1800
Houston, TX 77027
 (Address, including zip code, of principal executive offices)
 (713) 386-1400
 (Registrants telephone number, including area code)
 
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company o
 o þ




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##### 



TABLE OF CONTENTS
 PageCautionary Note Regarding Forward-Looking Statements
    
    2PART I  FINANCIAL INFORMATIONItem 1. Financial Statements
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    18Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    27Item 4. Controls and Procedures
    
    27PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    28Item 1A. Risk Factors
    
    28Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    28Item 3. Defaults upon Senior Securities
    
    28Item 4. Submission of Matters to a Vote of Securities Holders
    
    28Item 5. Other Information
    
    28Item 6. Exhibits
    
    28Signatures
    
    30EX-31.1EX-31.2EX-32




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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
   
    
    economic declines that affect our business, including our profitability, liquidity
or the ability to comply with applicable loan covenants;
    
    the financial stability of our lenders and their ability to honor their commitments
related to our credit agreements;
    
    the financial stability of our customers and other business partners and their
ability to pay their outstanding obligations;
    
    changes in levels of unemployment and other economic conditions in the United
States, or in particular regions or industries;
    
    the impact of competitive pressures on our ability to maintain or improve our
operating margins, including pricing pressures as well as any change in the demand for
our services;
    
    the risk in an uncertain economic environment of increased incidences of employment
disputes, employment litigation and workers compensation claims;
    
    adverse changes in credit and capital markets conditions that may affect our ability
to obtain financing or refinancing on favorable terms or that may warrant changes to
existing credit terms;
    
    our success in attracting, training, retaining and motivating billable consultants
and key officers and employees;
    
    our ability to shift a larger percentage of our business mix into IT solutions,
project management and business process outsourcing and, if successful, our ability to
manage those types of business profitably;
    
    weakness or reductions in corporate information technology spending levels;
    
    our ability to maintain existing client relationships and attract new clients in the
context of changing economic or competitive conditions;
    
    the entry of new competitors into the U.S. staffing services market due to the
limited barriers to entry or the expansion of existing competitors in that market;
    
    increases in employment-related costs such as healthcare and unemployment taxes;
    
    the possibility of our incurring liability for the activities of our billable
consultants or for events impacting our billable consultants on our clients premises;
    
    the risk that we may be subject to claims for indemnification under our customer
contracts;
    
    the risk that cost cutting or restructuring activities could cause an adverse impact
on certain of our operations;
    
    adverse changes to managements periodic estimates of future cash flows that may
affect our assessment of our ability to fully recover our goodwill; and
    
    whether governments will amend existing regulations or impose additional regulations
or licensing requirements in such a manner as to increase our costs of doing business.
  2




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PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 COMSYS IT Partners, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
 Three Months Ended
    
    Nine Months EndedSeptember 28,
    
    September 30,
    
    September 28,
    
    September 30,(In thousands, except per share amounts)
    
    2008
    
    2007
    
    2008
    
    2007Revenues from services
    
    $
    183,663
    
    
    $
    187,195
    
    
    $
    551,110
    
    
    $
    560,005Cost of services
    
    
    138,483
    
    
    
    139,945
    
    
    
    416,442
    
    
    
    420,920Gross profit
    
    
    45,180
    
    
    
    47,250
    
    
    
    134,668
    
    
    
    139,085Operating costs and expenses:Selling, general and administrative
    
    
    34,579
    
    
    
    33,064
    
    
    
    103,634
    
    
    
    101,625Depreciation and amortization
    
    
    2,185
    
    
    
    1,653
    
    
    
    5,903
    
    
    
    4,70036,764
    
    
    
    34,717
    
    
    
    109,537
    
    
    
    106,325Operating income
    
    
    8,416
    
    
    
    12,533
    
    
    
    25,131
    
    
    
    32,760Interest expense, net
    
    
    1,224
    
    
    
    1,993
    
    
    
    4,106
    
    
    
    6,709Other expense (income), net
    
    
    40
    
    
    
    (18
    )
    
    
    (185
    )
    
    
    (469
    )Income before income taxes
    
    
    7,152
    
    
    
    10,558
    
    
    
    21,210
    
    
    
    26,520Income tax expense
    
    
    1,105
    
    
    
    941
    
    
    
    3,847
    
    
    
    1,849Net income
    
    $
    6,047
    
    
    $
    9,617
    
    
    $
    17,363
    
    
    $
    24,671Basic earnings per common share
    
    $
    0.30
    
    
    $
    0.48
    
    
    $
    0.85
    
    
    $
    1.24Diluted earnings per common share
    
    $
    0.30
    
    
    $
    0.48
    
    
    $
    0.84
    
    
    $
    1.23Weighted average basic and diluted shares outstanding:Basic
    
    
    19,612
    
    
    
    19,459
    
    
    
    19,594
    
    
    
    19,182Diluted
    
    
    20,455
    
    
    
    20,118
    
    
    
    20,611
    
    
    
    20,101
 See notes to consolidated financial statements
 3




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COMSYS IT Partners, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)
 Three Months Ended
    
    Nine Months EndedSeptember 28,
    
    September 30,
    
    September 28,
    
    September 30,(In thousands)
    
    2008
    
    2007
    
    2008
    
    2007Net income
    
    $
    6,047
    
    
    $
    9,617
    
    
    $
    17,363
    
    
    $
    24,671Foreign currency translation adjustments
    
    
    (69
    )
    
    
    (6
    )
    
    
    (53
    )
    
    
    97Total comprehensive income
    
    $
    5,978
    
    
    $
    9,611
    
    
    $
    17,310
    
    
    $
    24,768
 See notes to consolidated financial statements
 4




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COMSYS IT Partners, Inc. and Subsidiaries
Consolidated Balance Sheets
 September 28,
    
    
    December 30,2008
    
    
    2007(In thousands, except share and par value amounts)
    
    (Unaudited)
    
    
    (Note 1)AssetsCurrent assets:Cash
    
    $
    1,590
    
    
    $
    1,594Accounts receivable, net of allowance of $3,167 and $3,389, respectively
    
    
    237,969
    
    
    
    189,317Prepaid expenses and other
    
    
    3,649
    
    
    
    3,153Restricted cash
    
    
    3,427
    
    
    
    3,365Total current assets
    
    
    246,635
    
    
    
    197,429Fixed assets, net
    
    
    17,308
    
    
    
    13,094Goodwill
    
    
    175,045
    
    
    
    174,160Other intangible assets, net
    
    
    12,829
    
    
    
    10,002Deferred financing costs, net
    
    
    1,392
    
    
    
    2,044Restricted cash
    
    
    2,803
    
    
    
    4,218Other assets
    
    
    1,397
    
    
    
    1,522Total assets
    
    $
    457,409
    
    
    $
    402,469Liabilities and stockholders equityCurrent liabilities:Accounts payable
    
    $
    177,296
    
    
    $
    145,622Payroll and related taxes
    
    
    30,068
    
    
    
    29,574Current maturities of long-term debt
    
    
    1,250
    
    
    
    5,000Interest payable
    
    
    291
    
    
    
    365Other current liabilities
    
    
    9,939
    
    
    
    7,897Total current liabilities
    
    
    218,844
    
    
    
    188,458Long-term debt
    
    
    68,606
    
    
    
    66,903Other noncurrent liabilities
    
    
    4,865
    
    
    
    2,476Total liabilities
    
    
    292,315
    
    
    
    257,837Commitments and contingenciesStockholders equity:Preferred stock, no par value; 5,000,000 shares authorized; none issued
    
    
    
    
    
    
    Common stock, par value $.01; 95,000,000 shares authorized and 20,386,027 shares outstanding;
95,000,000 shares authorized and 20,180,578 shares outstanding, respectively
    
    
    203
    
    
    
    201Common stock warrants
    
    
    1,734
    
    
    
    1,734Accumulated other comprehensive income
    
    
    4
    
    
    
    57Additional paid-in capital
    
    
    226,324
    
    
    
    223,174Accumulated deficit
    
    
    (63,171
    )
    
    
    (80,534
    )Total stockholders equity
    
    
    165,094
    
    
    
    144,632Total liabilities and stockholders equity
    
    $
    457,409
    
    
    $
    402,469
 See notes to consolidated financial statements
 5




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COMSYS IT Partners, Inc. and Subsidiaries
Consolidated Statements of Shareholders Equity
(Unaudited)
 AccumulatedCommon
    
    Other
    
    Additional
    
    
    
    
    
    TotalCommon
    
    Stock
    
    Comprehensive
    
    Paid-in
    
    Accumulated
    
    Stockholders(In thousands, except share data)
    
    Stock
    
    Warrants
    
    Income (Loss)
    
    Capital
    
    Deficit
    
    EquityBalance as of December 31, 2006
    
    $
    191
    
    
    $
    1,734
    
    
    $
    (12
    )
    
    $
    206,740
    
    
    $
    (113,883
    )
    
    $
    94,770Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,349
    
    
    
    33,349Foreign currency translations
    
    
    
    
    
    
    
    
    
    
    69
    
    
    
    
    
    
    
    
    
    
    
    69Issuance of 501,413 shares of common stock for acquistions
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    10,560
    
    
    
    
    
    
    
    10,565Issuance of 244,000 shares of restricted common stock
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    Forfeiture of 28,807 shares of restricted common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (428
    )
    
    
    
    
    
    
    (428
    )Options exercised for 185,683 shares of common stock
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    1,777
    
    
    
    
    
    
    
    1,779Stock issuance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19
    )
    
    
    
    
    
    
    (19
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,547
    
    
    
    
    
    
    
    4,547Balance as of December 30, 2007
    
    
    201
    
    
    
    1,734
    
    
    
    57
    
    
    
    223,174
    
    
    
    (80,534
    )
    
    
    144,632Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,363
    
    
    
    17,363Foreign currency translations
    
    
    
    
    
    
    
    
    
    
    (53
    )
    
    
    
    
    
    
    
    
    
    
    (53
    )Issuance of 259,878 shares of restricted common stock
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    Forfeiture of 62,629 shares of restricted common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (332
    )
    
    
    
    
    
    
    (332
    )Options exercised for 8,200 shares of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    83
    
    
    
    
    
    
    
    83Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,401
    
    
    
    
    
    
    
    3,401Balance as of September 28, 2008
    
    $
    203
    
    
    $
    1,734
    
    
    $
    4
    
    
    $
    226,324
    
    
    $
    (63,171
    )
    
    $
    165,094
 See notes to consolidated financial statements
 6




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COMSYS IT Partners, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
 Nine Months EndedSeptember 28,
    
    September 30,(In thousands)
    
    2008
    
    2007Cash flows from operating activitiesNet income
    
    $
    17,363
    
    
    $
    24,671Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    5,903
    
    
    
    4,700Provision for doubtful accounts
    
    
    406
    
    
    
    Stock-based compensation
    
    
    3,401
    
    
    
    3,791Amortization of deferred financing costs
    
    
    652
    
    
    
    654Noncash income tax expense
    
    
    3,847
    
    
    
    1,849Changes in operating assets and liabilities, net of effects of acquisitions:Accounts receivable
    
    
    (46,387
    )
    
    
    (6,288
    )Prepaid expenses and other
    
    
    (189
    )
    
    
    508Accounts payable
    
    
    27,500
    
    
    
    2,674Payroll and related taxes
    
    
    278
    
    
    
    (4,378
    )Other
    
    
    2,363
    
    
    
    (617
    )Net cash provided by operating activities
    
    
    15,137
    
    
    
    27,564Cash flows from investing activitiesCapital expenditures
    
    
    (5,144
    )
    
    
    (1,032
    )Acquisitions, net of cash acquired
    
    
    (7,884
    )
    
    
    (2,428
    )Net cash used in investing activities
    
    
    (13,028
    )
    
    
    (3,460
    )Cash flows from financing activitiesBorrowings under revolving credit facility, net
    
    
    1,703
    
    
    
    (22,058
    )Repayments of long-term debt
    
    
    (3,750
    )
    
    
    (3,750
    )Proceeds from issuance of common stock, net of issuance costs
    
    
    
    
    
    
    (113
    )Exercise of stock options and warrants
    
    
    83
    
    
    
    1,615Net cash used in financing activities
    
    
    (1,964
    )
    
    
    (24,306
    )Effect of exchange rates on cash
    
    
    (149
    )
    
    
    130Net decrease in cash
    
    
    (4
    )
    
    
    (72
    )Cash, beginning of period
    
    
    1,594
    
    
    
    1,605Cash, end of period
    
    $
    1,590
    
    
    $
    1,533
 See notes to consolidated financial statements
 7




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COMSYS IT Partners, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements
 1. General
    Disclosures About
Segments of an Enterprise and Related Information
 2. Business Combinations
   8




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3. Fair Value of Financial Instruments
  Fair Value Measurements
 4. Long-Term Debt
  September 28,
    
    December 30,2008
    
    2007Revolver
    
    $
    68,606
    
    
    $
    66,903Senior term loan
    
    
    1,250
    
    
    
    5,00069,856
    
    
    
    71,903Less current maturities
    
    
    1,250
    
    
    
    5,000Total long-term debt
    
    $
    68,606
    
    
    $
    66,903
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5. Income Taxes
    Accounting for Income Taxes
  11




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6. Earnings Per Share
     Three Months Ended
    
    Nine Months EndedSeptember 28,
    
    September 30,
    
    September 28,
    
    September 30,2008
    
    2007
    
    2008
    
    2007Net income attributable to common stockholders  basic
    
    $
    5,817
    
    
    $
    9,271
    
    
    $
    16,698
    
    
    $
    23,795Net income attributable to unvested restricted stockholders
    
    
    157
    
    
    
    231
    
    
    
    457
    
    
    
    574Net income attributable to warrant holders
    
    
    73
    
    
    
    115
    
    
    
    208
    
    
    
    302Total net income
    
    $
    6,047
    
    
    $
    9,617
    
    
    $
    17,363
    
    
    $
    24,671Weighted average common shares outstanding  basic
    
    
    19,612
    
    
    
    19,459
    
    
    
    19,594
    
    
    
    19,182Add: dilutive restricted stock, stock options and warrants
    
    
    843
    
    
    
    659
    
    
    
    1,017
    
    
    
    919Diluted weighted average common shares outstanding
    
    
    20,455
    
    
    
    20,118
    
    
    
    20,611
    
    
    
    20,101Basic earnings per common share
    
    $
    0.30
    
    
    $
    0.48
    
    
    $
    0.85
    
    
    $
    1.24Diluted earnings per common share
    
    $
    0.30
    
    
    $
    0.48
    
    
    $
    0.84
    
    
    $
    1.23
  7. Commitments and Contingencies
  12




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8. Stock Compensation Plans
     13




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Weighted-Average2003
    
    2004
    
    
    
    
    
    Exercise PriceEquity Plan
    
    Equity Plan
    
    Total
    
    Per ShareOutstanding at December 31, 2006
    
    
    540,198
    
    
    
    435,584
    
    
    
    975,782
    
    
    $
    9.48Granted
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (95,198
    )
    
    
    (90,485
    )
    
    
    (185,683
    )
    
    $
    9.46Forfeited
    
    
    
    
    
    
    (14,833
    )
    
    
    (14,833
    )
    
    $
    9.56Outstanding at December 30, 2007
    
    
    445,000
    
    
    
    330,266
    
    
    
    775,266
    
    
    $
    9.48Granted
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    (8,200
    )
    
    
    (8,200
    )
    
    $
    8.55Forfeited
    
    
    
    
    
    
    (15,002
    )
    
    
    (15,002
    )
    
    $
    10.94Outstanding at September 28, 2008
    
    
    445,000
    
    
    
    307,064
    
    
    
    752,064
    
    
    $
    9.46Exercisable at September 28, 2008
    
    
    411,656
    
    
    
    236,731
    
    
    
    648,387
    
    
    $
    9.33Available for issuance at September 28, 2008
    
    
    53,035
    
    
    
    600,400
    
    
    
    653,435
  Options Outstanding
    
    
    Options ExercisableWeightedAverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedContractual
    
    
    Average
    
    
    
    
    
    
    AverageOptions
    
    
    Years
    
    
    Exercise Price
    
    
    Options
    
    
    Exercise PriceRange of Exercise Prices
    
    Outstanding
    
    
    Remaining
    
    
    per Share
    
    
    Exercisable
    
    
    per Share$7.80
    
    
    219,000
    
    
    
    4.54
    
    
    $
    7.80
    
    
    
    219,000
    
    
    $
    7.80$8.55 to $8.88
    
    
    226,735
    
    
    
    5.96
    
    
    $
    8.56
    
    
    
    193,391
    
    
    $
    8.57$11.05 to $11.98
    
    
    306,329
    
    
    
    6.20
    
    
    $
    11.31
    
    
    
    235,996
    
    
    $
    11.38$63.25 to $132.75
    
    
    723
    
    
    
    1.36
    
    
    $
    100.64
    
    
    
    723
    
    
    $
    100.64$7.80 to $132.75
    
    
    752,787
    
    
    
    5.64
    
    
    $
    9.55
    
    
    
    649,110
    
    
    $
    9.44
  14




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2007Expected life (in years)
    
    
    6.0Risk-free interest rate
    
    
    4.750
    %Expected volatility
    
    
    46.8
    %Dividend yield
    
    
    0.0
    %Weighted average fair value of options modified
    
    $
    17.29
     Weighted AverageGrant Date FairShares
    
    
    Value Per ShareNonvested balance at December 31, 2006
    
    
    353,550
    
    
    $
    15.56Granted
    
    
    244,000
    
    
    $
    21.70Vested
    
    
    (87,748
    )
    
    $
    16.63Forfeited
    
    
    (19,167
    )
    
    $
    13.09Nonvested balance at December 30, 2007
    
    
    490,635
    
    
    $
    18.34Granted
    
    
    259,878
    
    
    $
    13.23Vested
    
    
    (147,227
    )
    
    $
    17.35Forfeited
    
    
    (72,793
    )
    
    $
    17.33Nonvested balance at September 28, 2008
    
    
    530,493
    
    
    $
    16.25
  15




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9. Related Party Transactions
    10. Recent Accounting Pronouncements
  Accounting for Leases Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active
 16




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##### Table of Contents



The Fair Value Option for Financial Assets and
Financial Liabilities
 Business Combinations
 Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating Securities
 11. Subsequent Events
    17




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following discussion and analysis should be read in conjunction with the unaudited consolidated
financial statements and related notes appearing elsewhere in this report, as well as other reports
we file with the Securities and Exchange Commission. This discussion contains forward-looking
statements reflecting our current expectations and estimates and assumptions concerning events and
financial trends that may affect our future operating results or financial position. Actual
results and the timing of events may differ materially from those contained in these
forward-looking statements due to a number of factors, including those discussed in the section
entitled Cautionary Note Regarding Forward-Looking Statements included elsewhere in this report
and in the sections entitled Risk Factors included in this report and our Annual Report on Form
10-K for the fiscal year ended December 30, 2007.
 Our Business
    
    
    rate of technological change;
    
    rate of growth in corporate IT and professional services budgets;
    
    penetration of IT and professional services staffing in the general workforce;
    
    outsourcing of the IT and professional services workforce; and
    
    consolidation of supplier bases.
    18




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Overview of Third Quarter 2008 Results
   2008 Outlook
   19




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##### Table of Contents



Results of Operations
 Three Months Ended September 28, 2008, Compared to Three Months Ended September 30, 2007
  Three Months Ended
    
    Percent of Revenues
    
    Percent ChangeSeptember 28,
    
    September 30,
    
    September 28,
    
    September 30,
    
    2008 vs.2008
    
    2007
    
    2008
    
    2007
    
    2007Revenues from services
    
    $
    183,663
    
    
    $
    187,195
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    -1.9
    %Cost of services
    
    
    138,483
    
    
    
    139,945
    
    
    
    75.4
    %
    
    
    74.8
    %
    
    
    -1.0
    %Gross profit
    
    
    45,180
    
    
    
    47,250
    
    
    
    24.6
    %
    
    
    25.2
    %
    
    
    -4.4
    %Operating costs and expenses:Selling, general and administrative
    
    
    34,579
    
    
    
    33,064
    
    
    
    18.8
    %
    
    
    17.6
    %
    
    
    4.6
    %Depreciation and amortization
    
    
    2,185
    
    
    
    1,653
    
    
    
    1.2
    %
    
    
    0.9
    %
    
    
    32.2
    %36,764
    
    
    
    34,717
    
    
    
    20.0
    %
    
    
    18.5
    %
    
    
    5.9
    %Operating income
    
    
    8,416
    
    
    
    12,533
    
    
    
    4.6
    %
    
    
    6.7
    %
    
    
    -32.8
    %Interest expense, net
    
    
    1,224
    
    
    
    1,993
    
    
    
    0.7
    %
    
    
    1.1
    %
    
    
    -38.6
    %Other expense (income), net
    
    
    40
    
    
    
    (18
    )
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    -322.2
    %Income before income taxes
    
    
    7,152
    
    
    
    10,558
    
    
    
    3.9
    %
    
    
    5.6
    %
    
    
    -32.3
    %Income tax expense
    
    
    1,105
    
    
    
    941
    
    
    
    0.6
    %
    
    
    0.5
    %
    
    
    17.4
    %Net income
    
    $
    6,047
    
    
    $
    9,617
    
    
    
    3.3
    %
    
    
    5.1
    %
    
    
    -37.1
    %Billable headcount at end of period
    
    
    4,729
    
    
    
    4,982
  Revenues.
 Cost of Services .
 Selling, General and Administrative Expenses .
 20




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##### Table of Contents



Depreciation and Amortization .
 Interest Expense, Net.
 Provision for Income Taxes . Accounting for Income Taxes
  Nine Months Ended September 28, 2008, Compared to Nine Months Ended September 30, 2007
  Nine Months Ended
    
    Percent of Revenues
    
    Percent ChangeSeptember 28,
    
    September 30,
    
    September 28,
    
    September 30,
    
    2008 vs.2008
    
    2007
    
    2008
    
    2007
    
    2007Revenues from services
    
    $
    551,110
    
    
    $
    560,005
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    -1.6
    %Cost of services
    
    
    416,442
    
    
    
    420,920
    
    
    
    75.6
    %
    
    
    75.2
    %
    
    
    -1.1
    %Gross profit
    
    
    134,668
    
    
    
    139,085
    
    
    
    24.4
    %
    
    
    24.8
    %
    
    
    -3.2
    %Operating costs and expenses:Selling, general and administrative
    
    
    103,634
    
    
    
    101,625
    
    
    
    18.8
    %
    
    
    18.1
    %
    
    
    2.0
    %Depreciation and amortization
    
    
    5,903
    
    
    
    4,700
    
    
    
    1.1
    %
    
    
    0.9
    %
    
    
    25.6
    %109,537
    
    
    
    106,325
    
    
    
    19.9
    %
    
    
    19.0
    %
    
    
    3.0
    %Operating income
    
    
    25,131
    
    
    
    32,760
    
    
    
    4.5
    %
    
    
    5.8
    %
    
    
    -23.3
    %Interest expense, net
    
    
    4,106
    
    
    
    6,709
    
    
    
    0.7
    %
    
    
    1.2
    %
    
    
    -38.8
    %Other income, net
    
    
    (185
    )
    
    
    (469
    )
    
    
    0.0
    %
    
    
    -0.1
    %
    
    
    -60.6
    %Income before income taxes
    
    
    21,210
    
    
    
    26,520
    
    
    
    3.8
    %
    
    
    4.7
    %
    
    
    -20.0
    %Income tax expense
    
    
    3,847
    
    
    
    1,849
    
    
    
    0.6
    %
    
    
    0.3
    %
    
    
    108.1
    %Net income
    
    $
    17,363
    
    
    $
    24,671
    
    
    
    3.2
    %
    
    
    4.4
    %
    
    
    -29.6
    %
  21




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##### Table of Contents



Revenues.
 Cost of Services .
 Selling, General and Administrative Expenses .
 Depreciation and Amortization .
 Interest Expense, Net.
 Provision for Income Taxes . Accounting for Income Taxes
  22




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##### Table of Contents



Liquidity and Capital Resources
 Overview
   Working Capital
   23




---



##### Table of Contents



Credit Agreements and Related Covenants
   Debt Compliance
   24




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##### Table of Contents



Cash Flows
  Nine Months EndedSeptember 28,
    
    September 30,2008
    
    2007Net cash provided by operating activities
    
    $
    15,137
    
    
    $
    27,564Net cash used in investing activities
    
    
    (13,028
    )
    
    
    (3,460
    )Net cash used in financing activities
    
    
    (1,964
    )
    
    
    (24,306
    )Effect of exchange rates on cash
    
    
    (149
    )
    
    
    130Net decrease in cash
    
    $
    (4
    )
    
    $
    (72
    )
       Off-Balance Sheet Arrangements
  Related Party Transactions
  25




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##### Table of Contents



Contingencies and Indemnifications
  Critical Accounting Policies and Estimates
  Recent Accounting Pronouncements
  26




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate Risks
  Foreign Currency Risks
  Equity Market Risks
  
 ITEM 4. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  Changes in Internal Controls over Financial Reporting
  27




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##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  Total Number of
    
    Average PricePeriod
    
    Shares Purchased
    
    Paid per ShareJune 30, 2008  July 27, 2008
    
    
    574
    
    
    $
    10.70July 28, 2008  August 24, 2008
    
    
    
    
    
    $
    August 25, 2008  September 28, 2008
    
    
    812
    
    
    $
    10.261,386
    
    
    $
    11.61
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
  28




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##### Table of Contents



Incorporated by ReferenceExhibit
    
    
    
    
    
    ExhibitNumber
    
    Exhibit Description
    
    Form
    
    Number
    
    Filing Date3.1
    
    Amended and Restated Certificate of Incorporation of COMSYS IT Partners, Inc.
    
    8-K
    
    
    3.1
    
    
    October 4, 20043.2
    
    Amended and Restated Bylaws of COMSYS IT Partners, Inc.
    
    8-K
    
    
    3.2
    
    
    October 4, 20043.3
    
    First Amendment to the Amended and Restated Bylaws of COMSYS IT Partners, Inc.
    
    8-K
    
    
    3.1
    
    
    May 4, 20054.1
    
    Registration Rights Agreement, dated as of September 30, 2004, between COMSYS IT Partners, Inc. and
certain of the old COMSYS Holdings stockholders party thereto
    
    8-A/A
    
    
    4.2
    
    
    November 2, 20044.2
    
    Amendment No. 1 to Registration Rights Agreement dated April 1, 2005 between COMSYS IT Partners, Inc.,
and certain of the old COMSYS Holdings stockholders party thereto
    
    10-Q
    
    
    4.2
    
    
    May 6, 20054.3
    
    Amended and Restated Registration Rights Agreement, dated as of September 30, 2004, between COMSYS IT
Partners, Inc. and certain of the old Venturi stockholders party thereto
    
    8-A/A
    
    
    4.3
    
    
    November 2, 20044.4
    
    Amendment No. 1 to Amended and Restated Registration Rights Agreement dated April 1, 2005 between
COMSYS IT Partners, Inc., and certain of the old Venturi stockholders party thereto
    
    10-Q
    
    
    4.4
    
    
    May 6, 20054.7#
    
    Common Stock Purchase Warrant dated as of April 14, 2003, issued by the Company in favor of BNP Paribas
    
    8-K
    
    
    99.16
    
    
    April 25, 20034.8
    
    Specimen Certificate for Shares of Common Stock
    
    10-K
    
    
    4.6
    
    
    April 1, 200531.1*
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2*
    
    Certification of Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232*
    
    Certification of Chief Executive Officer and Chief Accounting Officer pursuant to 18 U.S.C. Section 1350,
as adopted, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 29




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##### Table of Contents



SIGNATURES
  COMSYS IT PARTNERS, INC.Date:  November 6, 2008
    By:
    /s/ Larry L. EnterlineName:


    Larry L. EnterlineTitle:

    Chief Executive OfficerDate:  November 6, 2008
    By:
    /s/ Amy BobbittName:
    Amy BobbittTitle:
    Senior Vice President and Chief Accounting Officer 30




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##### Table of Contents



EXHIBIT INDEX
 Incorporated by ReferenceExhibit
    
    
    
    
    
    ExhibitNumber
    
    Exhibit Description
    
    Form
    
    Number
    
    Filing Date3.1
    
    Amended and Restated Certificate of Incorporation of COMSYS IT Partners, Inc.
    
    8-K
    
    
    3.1
    
    
    October 4, 20043.2
    
    Amended and Restated Bylaws of COMSYS IT Partners, Inc.
    
    8-K
    
    
    3.2
    
    
    October 4, 20043.3
    
    First Amendment to the Amended and Restated Bylaws of COMSYS IT Partners, Inc.
    
    8-K
    
    
    3.1
    
    
    May 4, 20054.1
    
    Registration Rights Agreement, dated as of September 30, 2004, between COMSYS IT Partners, Inc. and
certain of the old COMSYS Holdings stockholders party thereto
    
    8-A/A
    
    
    4.2
    
    
    November 2, 20044.2
    
    Amendment No. 1 to Registration Rights Agreement dated April 1, 2005 between COMSYS IT Partners, Inc.,
and certain of the old COMSYS Holdings stockholders party thereto
    
    10-Q
    
    
    4.2
    
    
    May 6, 20054.3
    
    Amended and Restated Registration Rights Agreement, dated as of September 30, 2004, between COMSYS IT
Partners, Inc. and certain of the old Venturi stockholders party thereto
    
    8-A/A
    
    
    4.3
    
    
    November 2, 20044.4
    
    Amendment No. 1 to Amended and Restated Registration Rights Agreement dated April 1, 2005 between
COMSYS IT Partners, Inc., and certain of the old Venturi stockholders party thereto
    
    10-Q
    
    
    4.4
    
    
    May 6, 20054.7#
    
    Common Stock Purchase Warrant dated as of April 14, 2003, issued by the Company in favor of BNP Paribas
    
    8-K
    
    
    99.16
    
    
    April 25, 20034.8
    
    Specimen Certificate for Shares of Common Stock
    
    10-K
    
    
    4.6
    
    
    April 1, 200531.1*
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2*
    
    Certification of Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232*
    
    Certification of Chief Executive Officer and Chief Accounting Officer pursuant to 18 U.S.C. Section
1350, as adopted, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 31