##### 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 June 29, 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
(State or other jurisdiction 
of incorporation or organization)
    
    56-1930691
(I.R.S. Employer
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
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



TABLE OF CONTENTS
 PageCautionary Note Regarding Forward-Looking Statements
    
    
    2PART IItem 1.
    
    Financial Statements
    
    
    3Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    25Item 4.
    
    Controls and Procedures
    
    
    25PART IIItem 1.
    
    Legal Proceedings
    
    
    26Item 1A.
    
    Risk Factors
    
    
    26Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26Item 3.
    
    Defaults upon Senior Securities
    
    
    26Item 4.
    
    Submission of Matters to a Vote of Securities Holders
    
    
    26Item 5.
    
    Other Information
    
    
    26Item 6.
    
    Exhibits
    
    
    26Signatures
    
    
    28EX-10.1EX-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;
    
    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;
    
    changes in levels of unemployment and other economic conditions in the United
States, or in particular regions or industries;
    
    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 financial stability of our customers and other business partners and their
ability to pay their outstanding obligations;
    
    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 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 in an uncertain economic environment of increased incidences of employment
disputes, employment litigation and workers compensation claims;
    
    the risk that cost cutting or restructuring activities could cause an adverse impact
on certain of our operations;
    
    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;
    
    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
 
 ITEM 1. FINANCIAL STATEMENTS
 COMSYS IT Partners, Inc. and Subsidiaries
 Consolidated Statements of Operations
 (Unaudited)
 Three Months Ended
    
    Six Months EndedJune 29,
    
    July 1,
    
    June 29,
    
    July 1,(In thousands, except per share amounts)
    
    2008
    
    2007
    
    2008
    
    2007Revenues from services
    
    $
    184,064
    
    
    $
    186,602
    
    
    $
    367,447
    
    
    $
    372,810Cost of services
    
    
    139,232
    
    
    
    139,768
    
    
    
    277,959
    
    
    
    280,975Gross profit
    
    
    44,832
    
    
    
    46,834
    
    
    
    89,488
    
    
    
    91,835Operating costs and expenses:Selling, general and administrative
    
    
    34,291
    
    
    
    33,140
    
    
    
    69,055
    
    
    
    68,561Depreciation and amortization
    
    
    1,898
    
    
    
    1,589
    
    
    
    3,718
    
    
    
    3,04736,189
    
    
    
    34,729
    
    
    
    72,773
    
    
    
    71,608Operating income
    
    
    8,643
    
    
    
    12,105
    
    
    
    16,715
    
    
    
    20,227Interest expense, net
    
    
    1,279
    
    
    
    2,296
    
    
    
    2,882
    
    
    
    4,716Other income, net
    
    
    (172
    )
    
    
    (223
    )
    
    
    (225
    )
    
    
    (451
    )Income before income taxes
    
    
    7,536
    
    
    
    10,032
    
    
    
    14,058
    
    
    
    15,962Income tax expense
    
    
    1,324
    
    
    
    460
    
    
    
    2,742
    
    
    
    908Net income
    
    $
    6,212
    
    
    $
    9,572
    
    
    $
    11,316
    
    
    $
    15,054Basic earnings per common share
    
    $
    0.31
    
    
    $
    0.48
    
    
    $
    0.56
    
    
    $
    0.76Diluted earnings per common share
    
    $
    0.30
    
    
    $
    0.47
    
    
    $
    0.55
    
    
    $
    0.75Weighted average basic and diluted shares outstanding:Basic
    
    
    19,592
    
    
    
    19,243
    
    
    
    19,585
    
    
    
    19,044Diluted
    
    
    20,636
    
    
    
    20,195
    
    
    
    20,628
    
    
    
    20,087
 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
    
    Six Months EndedJune 29,
    
    July 1,
    
    June 29,
    
    July 1,(In thousands)
    
    2008
    
    2007
    
    2008
    
    2007Net income
    
    $
    6,212
    
    
    $
    9,572
    
    
    $
    11,316
    
    
    $
    15,054Foreign currency translation adjustments
    
    
    (5
    )
    
    
    77
    
    
    
    16
    
    
    
    103Total comprehensive income
    
    $
    6,207
    
    
    $
    9,649
    
    
    $
    11,332
    
    
    $
    15,157
 See notes to consolidated financial statements
 4




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COMSYS IT Partners, Inc. and Subsidiaries
Consolidated Balance Sheets
 June 29,
    
    December 30,2008
    
    2007(In thousands, except share and par value amounts)
    
    (Unaudited)
    
    (Note 1)AssetsCurrent assets:Cash
    
    $
    1,683
    
    
    $
    1,594Accounts receivable, net of allowance of $3,117 and $3,389, respectively
    
    
    218,576
    
    
    
    189,317Prepaid expenses and other
    
    
    4,668
    
    
    
    3,153Restricted cash
    
    
    3,411
    
    
    
    3,365Total current assets
    
    
    228,338
    
    
    
    197,429Fixed assets, net
    
    
    16,984
    
    
    
    13,094Goodwill
    
    
    175,460
    
    
    
    174,160Other intangible assets, net
    
    
    12,379
    
    
    
    10,002Deferred financing costs, net
    
    
    1,610
    
    
    
    2,044Restricted cash
    
    
    2,822
    
    
    
    4,218Other assets
    
    
    1,414
    
    
    
    1,522Total assets
    
    $
    439,007
    
    
    $
    402,469Liabilities and stockholders equityCurrent liabilities:Accounts payable
    
    $
    167,105
    
    
    $
    145,622Payroll and related taxes
    
    
    29,837
    
    
    
    29,574Current maturities of long-term debt
    
    
    2,500
    
    
    
    5,000Interest payable
    
    
    246
    
    
    
    365Other current liabilities
    
    
    8,756
    
    
    
    7,897Total current liabilities
    
    
    208,444
    
    
    
    188,458Long-term debt
    
    
    67,478
    
    
    
    66,903Other noncurrent liabilities
    
    
    5,081
    
    
    
    2,476Total liabilities
    
    
    281,003
    
    
    
    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 20,386,879 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
    
    
    73
    
    
    
    57Additional paid-in capital
    
    
    225,212
    
    
    
    223,174Accumulated deficit
    
    
    (69,218
    )
    
    
    (80,534
    )Total stockholders equity
    
    
    158,004
    
    
    
    144,632Total liabilities and stockholders equity
    
    $
    439,007
    
    
    $
    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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,316
    
    
    
    11,316Foreign currency translations
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    16Issuance of 259,878 shares of restricted common stock
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    Forfeiture of 23,746 shares of restricted common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (316
    )
    
    
    
    
    
    
    (316
    )Options exercised for 7,000 shares of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    
    
    
    
    73Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,283
    
    
    
    
    
    
    
    2,283Balance as of June 29, 2008
    
    $
    203
    
    
    $
    1,734
    
    
    $
    73
    
    
    $
    225,212
    
    
    $
    (69,218
    )
    
    $
    158,004
 See notes to consolidated financial statements
 6




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COMSYS IT Partners, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
 Six Months EndedJune 29,
    
    July 1,(In thousands)
    
    2008
    
    2007Cash flows from operating activitiesNet income
    
    $
    11,316
    
    
    $
    15,054Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    3,718
    
    
    
    3,047Provision for doubtful accounts
    
    
    85
    
    
    
    (48
    )Stock-based compensation
    
    
    2,283
    
    
    
    2,749Amortization of deferred financing costs
    
    
    434
    
    
    
    437Noncash income tax expense
    
    
    2,742
    
    
    
    908Changes in operating assets and liabilities, net of effects of acquisitions:Accounts receivable
    
    
    (27,144
    )
    
    
    (22,668
    )Prepaid expenses and other
    
    
    (1,247
    )
    
    
    (299
    )Accounts payable
    
    
    18,304
    
    
    
    6,685Payroll and related taxes
    
    
    124
    
    
    
    (3,798
    )Other
    
    
    973
    
    
    
    (1,454
    )Net cash provided by operating activities
    
    
    11,588
    
    
    
    613Cash flows from investing activitiesCapital expenditures
    
    
    (3,207
    )
    
    
    (618
    )Acquisitions, net of cash acquired
    
    
    (6,441
    )
    
    
    (1,186
    )Net cash used in investing activities
    
    
    (9,648
    )
    
    
    (1,804
    )Cash flows from financing activitiesBorrowings under revolving credit facility, net
    
    
    575
    
    
    
    2,359Repayments of long-term debt
    
    
    (2,500
    )
    
    
    (2,500
    )Proceeds from issuance of common stock, net of issuance costs
    
    
    
    
    
    
    (119
    )Exercise of stock options and warrants
    
    
    73
    
    
    
    1,576Net cash provided by (used in) financing activities
    
    
    (1,852
    )
    
    
    1,316Effect of exchange rates on cash
    
    
    1
    
    
    
    43Net increase in cash
    
    
    89
    
    
    
    168Cash, beginning of period
    
    
    1,594
    
    
    
    1,605Cash, end of period
    
    $
    1,683
    
    
    $
    1,773
 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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9




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3. Fair Value of Financial Instruments
  Fair Value Measurements
 4. Long-Term Debt
  June 29,
    
    December 30,2008
    
    2007Revolver
    
    $
    67,478
    
    
    $
    66,903Senior term loan
    
    
    2,500
    
    
    
    5,00069,978
    
    
    
    71,903Less current maturities
    
    
    2,500
    
    
    
    5,000Total long-term debt
    
    $
    67,478
    
    
    $
    66,903
   10




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5. Income Taxes
    Accounting for Income Taxes
   11




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6. Earnings Per Share
     Three Months Ended
    
    Six Months EndedJune 29,
    
    July 1,
    
    June 29,
    
    July 1,2008
    
    2007
    
    2008
    
    2007Net income attributable to common stockholders  basic
    
    $
    5,976
    
    
    $
    9,218
    
    
    $
    10,881
    
    
    $
    14,524Net income attributable to unvested restricted stockholders
    
    
    161
    
    
    
    239
    
    
    
    299
    
    
    
    344Net income attributable to warrant holders
    
    
    75
    
    
    
    115
    
    
    
    136
    
    
    
    186Total net income
    
    $
    6,212
    
    
    $
    9,572
    
    
    $
    11,316
    
    
    $
    15,054Weighted average common shares outstanding  basic
    
    
    19,592
    
    
    
    19,243
    
    
    
    19,585
    
    
    
    19,044Add: dilutive restricted stock, stock options and warrants
    
    
    1,044
    
    
    
    952
    
    
    
    1,043
    
    
    
    1,043Diluted weighted average common shares outstanding
    
    
    20,636
    
    
    
    20,195
    
    
    
    20,628
    
    
    
    20,087Basic earnings per common share
    
    $
    0.31
    
    
    $
    0.48
    
    
    $
    0.56
    
    
    $
    0.76Diluted earnings per common share
    
    $
    0.30
    
    
    $
    0.47
    
    
    $
    0.55
    
    
    $
    0.75
  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
    
    
    
    
    
    
    (7,000
    )
    
    
    (7,000
    )
    
    $
    8.55Forfeited
    
    
    
    
    
    
    (13,335
    )
    
    
    (13,335
    )
    
    $
    10.93Outstanding at June 29, 2008
    
    
    445,000
    
    
    
    309,931
    
    
    
    754,931
    
    
    $
    9.46Exercisable at June 29, 2008
    
    
    411,656
    
    
    
    237,931
    
    
    
    649,587
    
    
    $
    9.33Available for issuance at June 29, 2008
    
    
    53,035
    
    
    
    596,681
    
    
    
    649,716
  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
    
    
    
    4.79
    
    
    $
    7.80
    
    
    
    219,000
    
    
    $
    7.80$8.55 to $8.88
    
    
    227,935
    
    
    
    6.21
    
    
    $
    8.56
    
    
    
    194,591
    
    
    $
    8.57$11.05 to $11.98
    
    
    307,996
    
    
    
    6.49
    
    
    $
    11.31
    
    
    
    235,996
    
    
    $
    11.38$63.25 to $306.25
    
    
    1,157
    
    
    
    1.10
    
    
    $
    175.97
    
    
    
    1,157
    
    
    $
    175.97$7.80 to $306.25
    
    
    756,088
    
    
    
    5.91
    
    
    $
    9.72
    
    
    
    650,744
    
    
    $
    9.63
   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
  14




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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
    
    
    $
    12.98Vested
    
    
    (143,061
    )
    
    $
    16.97Forfeited
    
    
    (72,127
    )
    
    $
    17.31Nonvested balance at June 29, 2008
    
    
    535,325
    
    
    $
    16.24
    15




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9. Related Party Transactions
  10. Recent Accounting Pronouncements
  Accounting for Leases
  Business Combinations
 16




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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 section entitled Risk Factors included in 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.
    17




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##### Table of Contents



Overview of Second Quarter 2008 Results
   2008 Outlook
   18




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##### Table of Contents



Results of Operations
 Three Months Ended June 29, 2008, Compared to Three Months Ended July 1, 2007
  Three Months Ended
    
    Percent of Revenues
    
    Percent ChangeJune 29,
    
    July 1,
    
    June 29,
    
    July 1,
    
    2008 vs.2008
    
    2007
    
    2008
    
    2007
    
    2007Revenues from services
    
    $
    184,064
    
    
    $
    186,602
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    -1.4
    %Cost of services
    
    
    139,232
    
    
    
    139,768
    
    
    
    75.6
    %
    
    
    74.9
    %
    
    
    -0.4
    %Gross profit
    
    
    44,832
    
    
    
    46,834
    
    
    
    24.4
    %
    
    
    25.1
    %
    
    
    -4.3
    %Operating costs and expenses:Selling, general and administrative
    
    
    34,291
    
    
    
    33,140
    
    
    
    18.6
    %
    
    
    17.8
    %
    
    
    3.5
    %Depreciation and amortization
    
    
    1,898
    
    
    
    1,589
    
    
    
    1.1
    %
    
    
    0.8
    %
    
    
    19.4
    %36,189
    
    
    
    34,729
    
    
    
    19.7
    %
    
    
    18.6
    %
    
    
    4.2
    %Operating income
    
    
    8,643
    
    
    
    12,105
    
    
    
    4.7
    %
    
    
    6.5
    %
    
    
    -28.6
    %Interest expense, net
    
    
    1,279
    
    
    
    2,296
    
    
    
    0.7
    %
    
    
    1.2
    %
    
    
    -44.3
    %Other income, net
    
    
    (172
    )
    
    
    (223
    )
    
    
    -0.1
    %
    
    
    -0.1
    %
    
    
    -22.9
    %Income before income taxes
    
    
    7,536
    
    
    
    10,032
    
    
    
    4.1
    %
    
    
    5.4
    %
    
    
    -24.9
    %Income tax expense
    
    
    1,324
    
    
    
    460
    
    
    
    0.7
    %
    
    
    0.3
    %
    
    
    187.8
    %Net income
    
    $
    6,212
    
    
    $
    9,572
    
    
    
    3.4
    %
    
    
    5.1
    %
    
    
    -35.1
    %Billable headcount at end of period
    
    
    4,646
    
    
    
    4,996
  Revenues.
 Cost of Services .
 Selling, General and Administrative Expenses .
 19




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##### Table of Contents



Depreciation and Amortization .
 Interest Expense, Net.
 Provision for Income Taxes . Accounting for Income Taxes
  Six Months Ended June 29, 2008, Compared to Six Months Ended July 1, 2007
  Six Months Ended
    
    Percent of Revenues
    
    Percent ChangeJune 29,
    
    July 1,
    
    June 29,
    
    July 1,
    
    2008 vs.2008
    
    2007
    
    2008
    
    2007
    
    2007Revenues from services
    
    $
    367,447
    
    
    $
    372,810
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    -1.4
    %Cost of services
    
    
    277,959
    
    
    
    280,975
    
    
    
    75.6
    %
    
    
    75.4
    %
    
    
    -1.1
    %Gross profit
    
    
    89,488
    
    
    
    91,835
    
    
    
    24.4
    %
    
    
    24.6
    %
    
    
    -2.6
    %Operating costs and expenses:Selling, general and administrative
    
    
    69,055
    
    
    
    68,561
    
    
    
    18.8
    %
    
    
    18.4
    %
    
    
    0.7
    %Depreciation and amortization
    
    
    3,718
    
    
    
    3,047
    
    
    
    1.1
    %
    
    
    0.8
    %
    
    
    22.0
    %72,773
    
    
    
    71,608
    
    
    
    19.9
    %
    
    
    19.2
    %
    
    
    1.6
    %Operating income
    
    
    16,715
    
    
    
    20,227
    
    
    
    4.5
    %
    
    
    5.4
    %
    
    
    -17.4
    %Interest expense, net
    
    
    2,882
    
    
    
    4,716
    
    
    
    0.8
    %
    
    
    1.2
    %
    
    
    -38.9
    %Other income, net
    
    
    (225
    )
    
    
    (451
    )
    
    
    -0.1
    %
    
    
    -0.1
    %
    
    
    -50.1
    %Income before income taxes
    
    
    14,058
    
    
    
    15,962
    
    
    
    3.8
    %
    
    
    4.3
    %
    
    
    -11.9
    %Income tax expense
    
    
    2,742
    
    
    
    908
    
    
    
    0.7
    %
    
    
    0.3
    %
    
    
    202.0
    %Net income
    
    $
    11,316
    
    
    $
    15,054
    
    
    
    3.1
    %
    
    
    4.0
    %
    
    
    -24.8
    %
  20




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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
   21




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##### Table of Contents



Liquidity and Capital Resources
 Overview
   Working Capital
    Credit Agreements and Related Covenants
  22




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##### Table of Contents



Debt Compliance
   Cash Flows
  Six Months EndedJune 29,
    
    July 1,2008
    
    2007Net cash provided by operating activities
    
    $
    11,588
    
    
    $
    613Net cash used in investing activities
    
    
    (9,648
    )
    
    
    (1,804
    )Net cash provided by (used in) financing activities
    
    
    (1,852
    )
    
    
    1,316Effect of exchange rates on cash
    
    
    1
    
    
    
    43Net increase in cash
    
    $
    89
    
    
    $
    168
  23




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##### Table of Contents



Off-Balance Sheet Arrangements
  Related Party Transactions
  Contingencies and Indemnifications
  Critical Accounting Policies and Estimates
  Recent Accounting Pronouncements
  24




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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
  25




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##### Table of Contents



PART II
 
 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 ShareMarch 31, 2008 - April 27, 2008
    
    
    
    
    
    $
    April 28, 2008 - May 25, 2008
    
    
    
    
    
    $
    May 26, 2008 - June 29, 2008
    
    
    5,988
    
    
    $
    9.835,988
    
    
    $
    9.83
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
  26




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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, 200510.1*
    
    Consent and Eighth Amendment to Credit Agreement, dated as of June 13, 2008, among COMSYS Services
LLC, COMSYS Information Technology Services, Inc., Pure Solutions, Inc., Plum Rhino Consulting,
LLC, Praeos Technologies, LLC, and TWC Group Consulting, LLC, as borrowers, COMSYS IT Partners,
Inc., PFI LLC, COMSYS IT Canada, Inc., Econometrix, LLC, , as guarantors, COMSYS Services LLC,
acting in its capacity as borrowing agent and funds administrator for the borrowers, GE Business
Financial Services, Inc., as administrative agent, a lender, sole bookrunner and sole lead
arranger, ING Capital LLC, Allied Irish Banks PLC and BMO Capital Markets Financing, Inc., as
co-documentation agents and as lenders, GMAC Commercial Finance LLC, as syndication agent and as a
lender, and the lenders from time to time party thereto31.1*
    
    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
 27




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##### Table of Contents



SIGNATURES
  COMSYS IT PARTNERS, INC.Date: August 6, 2008
    
    By:
    
    /s/ Larry L. EnterlineName:
    
    Larry L. EnterlineTitle:
    
    Chief Executive OfficerDate: August 6, 2008
    
    By:
Name:
    
    /s/ Amy Bobbitt

Amy BobbittTitle:
    
    Senior Vice President and Chief Accounting Officer
 28




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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, 200510.1*
    
    
    Consent and Eighth Amendment to Credit Agreement, dated as of June 13, 2008, among COMSYS Services
LLC, COMSYS Information Technology Services, Inc., Pure Solutions, Inc., Plum Rhino Consulting,
LLC, Praeos Technologies, LLC, and TWC Group Consulting, LLC, as borrowers, COMSYS IT Partners,
Inc., PFI LLC, COMSYS IT Canada, Inc., Econometrix, LLC, , as guarantors, COMSYS Services LLC,
acting in its capacity as borrowing agent and funds administrator for the borrowers, GE Business
Financial Services, Inc., as administrative agent, a lender, sole bookrunner and sole lead
arranger, ING Capital LLC, Allied Irish Banks PLC and BMO Capital Markets Financing, Inc., as
co-documentation agents and as lenders, GMAC Commercial Finance LLC, as syndication agent and as a
lender, and the lenders from time to time party thereto31.1*
    
    
    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