##### Table of Contents

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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Form 10-Q



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(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended July 3, 2005



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from  to



Commission file number 000-27792



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COMSYS IT PARTNERS, INC.

(Exact name of Registrant as specified in its charter)



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|                                                               |  |                                                          |  |                                        
|-------------------------------------------------------------- |  | -------------------------------------------------------- |  | ---------------------------------------
|Delaware                                                       |  | 7363                                                     |  | 56-1930691                             
|(State or other jurisdiction of incorporation or organization) |  | (Primary Standard Industrial Classification Code number) |  | (I.R.S. employer identification number)



4400 Post Oak
Parkway, Suite 1800

Houston, TX 77027

(Address, including zip code, of

Registrants principal executive offices)



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(713) 386-1400

(Registrants telephone number, including area code)



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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange
Act of 1934).    Yes ̈No  x



As of August 16, 2005, 15,666,304 shares of the registrants Common
Stock, $.01 par value, were outstanding.



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##### Table of Contents

COMSYS IT PARTNERS, INC.



TABLE OF
CONTENTS



|                               |  |                                                                                                                   |  |     
|------------------------------ |  | ----------------------------------------------------------------------------------------------------------------- |  | ----
|                               |  |                                                                                                                   |  | Page
|PART I  FINANCIAL INFORMATION |  |                                                                                                                  
|                               |  |                                                                                                                  
|Item 1.                        |  | Financial Statements                                                                                              |  |     
|                               |  | Unaudited Consolidated Statements of Operations for the Three and Six Months Ended July 3, 2005 and June 30, 2004 |  | 1   
|                               |  | Unaudited Consolidated Balance Sheets as of July 3, 2005 and January 2, 2005                                      |  | 2   
|                               |  | Unaudited Consolidated Statements of Cash Flows for the Six Months Ended July 3, 2005 and June 30, 2004           |  | 3   
|                               |  | Notes to Unaudited Consolidated Financial Statements                                                              |  | 4   
|                               |  |                                                                                                                  
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                             |  | 10  
|                               |  |                                                                                                                  
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                                                        |  | 20  
|                               |  |                                                                                                                  
|Item 4.                        |  | Controls and Procedures                                                                                           |  | 21  
|                               | 
|PART II  OTHER INFORMATION    |  |                                                                                                                  
|                               |  |                                                                                                                  
|                               |  |                                                                                                                   |  | Page
|Item 1.                        |  | Legal Proceedings                                                                                                 |  | 21  
|                               |  |                                                                                                                  
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                       |  | 21  
|                               |  |                                                                                                                  
|Item 3.                        |  | Defaults Upon Senior Securities                                                                                   |  | 21  
|                               |  |                                                                                                                  
|Item 4.                        |  | Submission of Matters to a Vote of Securities Holders                                                             |  | 21  
|                               |  |                                                                                                                  
|Item 5.                        |  | Other Information                                                                                                 |  | 22  
|                               |  |                                                                                                                  
|Item 6.                        |  | Exhibits.                                                                                                         |  | 23  
|                               | 
|Signatures                     |  | S-1                                                                                                              
|                               | 
|Index to Exhibits              |  | E-1                                                                                                              



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##### Table of Contents

ITEM 1. FINANCIAL STATEMENTS



COMSYS IT Partners, Inc. and Subsidiaries

Unaudited Consolidated Statements of Operations

For the Three and Six Months Ended July 3, 2005 and June 30, 2004

(in thousands, except per share data)



|                                                       |  |                    |         |              |                  |           |              |  |   |               |   |  |   |            |  
|------------------------------------------------------ |  | ------------------ | ------- | ------------ | ---------------- | --------- | ------------ |  | - | ------------- | - |  | - | ---------- | -
|                                                       |  | Three months ended |         |              | Six months ended |          
|                                                       |  | July 3, 2005       |         | June 30,2004 |                  |           | July 3, 2005 |  |   | June 30, 2004 |  
|Revenues from services                                 |  | $                  | 162,185 |              | $                | 90,538    |              |  | $ | 327,138       |   |  | $ | 179,396    |  
|Cost of services                                       |  |                    | 124,647 |              |                  | 68,928    |              |  |   | 252,013       |   |  |   | 136,931    |  
|                                                       |  |                    |         |              |                  |           |              |  |   |               |   |  |   |            |  
|Gross profit                                           |  |                    | 37,538  |              |                  | 21,610    |              |  |   | 75,125        |   |  |   | 42,465     |  
|                                                       |  |                    |         |             
|Operating expenses:                                    |  |                    |         |              |                  |           |              |  |   |               |   |  |   |            |  
|Selling, general and administrative                    |  |                    | 28,129  |              |                  | 14,762    |              |  |   | 55,647        |   |  |   | 31,402     |  
|Restructuring and integration costs                    |  |                    | 424     |              |                  |          |              |  |   | 3,852         |   |  |   |           |  
|Registration statement fees and expenses               |  |                    | 950     |              |                  |          |              |  |   | 950           |   |  |   |           |  
|Stock based compensation expense                       |  |                    | 439     |              |                  |          |              |  |   | 876           |   |  |   |           |  
|Depreciation and amortization                          |  |                    | 2,515   |              |                  | 3,952     |              |  |   | 4,986         |   |  |   | 7,936      |  
|                                                       |  |                    |         |              |                  |           |              |  |   |               |   |  |   |            |  
|                                                       |  |                    | 32,457  |              |                  | 18,714    |              |  |   | 66,311        |   |  |   | 39,338     |  
|                                                       |  |                    |         |             
|Operating income                                       |  |                    | 5,081   |              |                  | 2,896     |              |  |   | 8,814         |   |  |   | 3,127      |  
|                                                       |  |                    |         |             
|Interest expense                                       |  |                    | 4,348   |              |                  | 15,600    |              |  |   | 8,374         |   |  |   | 30,849     |  
|Other (income) expense, net                            |  |                    | 4       |              |                  | (3        | )            |  |   | (83           | ) |  |   | (3         | )
|                                                       |  |                    |         |              |                  |           |              |  |   |               |   |  |   |            |  
|Income (loss) before income taxes                      |  |                    | 729     |              |                  | (12,701   | )            |  |   | 523           |   |  |   | (27,719    | )
|Income tax expense                                     |  |                    |        |              |                  |          |              |  |   |              |   |  |   |           |  
|                                                       |  |                    |         |              |                  |           |              |  |   |               |   |  |   |            |  
|Net income (loss)                                      |  | $                  | 729     |              | $                | (12,701   | )            |  | $ | 523           |   |  | $ | (27,719    | )
|                                                       |  |                    |         |              |                  |           |              |  |   |               |   |  |   |            |  
|Basic earnings (loss) per common share                 |  | $                  | 0.05    |              | $                | (5,205.33 | )            |  | $ | 0.03          |   |  | $ | (11,360.74 | )
|Diluted earnings (loss) per common share               |  | $                  | 0.05    |              | $                | (5,205.33 | )            |  | $ | 0.03          |   |  | $ | (11,360.74 | )
|                                                       |  |                    |         |             
|Weighted average basic and diluted shares outstanding: |  |                    |         |              |                  |           |              |  |   |               |   |  |   |            |  
|Basic                                                  |  |                    | 15,418  |              |                  | 2.4       |              |  |   | 15,375        |   |  |   | 2.4        |  
|Diluted                                                |  |                    | 16,154  |              |                  | 2.4       |              |  |   | 15,956        |   |  |   | 2.4        |  



The accompanying notes
are an integral part of these statements.



1



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##### Table of Contents

COMSYS IT Partners, Inc. and Subsidiaries

Unaudited Consolidated Balance Sheets

At July 3, 2005 and January 2, 2005

(in thousands, except shares and par value)



|                                                                                                                                                              |  |              |          |   |                |   |          |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | -------- | - | -------------- | - | -------- | -
|                                                                                                                                                              |  | July 3, 2005 |          |   | January 2,2005 |  
|Assets                                                                                                                                                        |  |              |          |   |                |   |          |  
|Current assets:                                                                                                                                               |  |              |          |   |                |   |          |  
|Accounts receivable, net of allowance of $4,445 and $3,195, respectively                                                                                      |  | $            | 148,182  |   |                | $ | 131,445  |  
|Prepaid expenses and other                                                                                                                                    |  |              | 5,414    |   |                |   | 6,858    |  
|                                                                                                                                                              |  |              |          |   |                |   |          |  
|Total current assets                                                                                                                                          |  |              | 153,596  |   |                |   | 138,303  |  
|                                                                                                                                                              |  |             
|Fixed assets, net                                                                                                                                             |  |              | 14,650   |   |                |   | 14,076   |  
|Goodwill                                                                                                                                                      |  |              | 154,154  |   |                |   | 153,677  |  
|Other intangible assets, net                                                                                                                                  |  |              | 5,537    |   |                |   | 7,137    |  
|Deferred financing costs, net                                                                                                                                 |  |              | 4,699    |   |                |   | 5,207    |  
|Restricted cash                                                                                                                                               |  |              | 2,500    |   |                |   | 2,500    |  
|Other                                                                                                                                                         |  |              | 579      |   |                |   | 601      |  
|                                                                                                                                                              |  |              |          |   |                |   |          |  
|Total assets                                                                                                                                                  |  | $            | 335,715  |   |                | $ | 321,501  |  
|                                                                                                                                                              |  |              |          |   |                |   |          |  
|Liabilities and stockholders equity                                                                                                                          |  |              |          |   |                |   |          |  
|Current liabilities:                                                                                                                                          |  |              |          |   |                |   |          |  
|Accounts payable                                                                                                                                              |  | $            | 81,292   |   |                | $ | 69,821   |  
|Accrued payroll and related taxes                                                                                                                             |  |              | 26,916   |   |                |   | 28,522   |  
|Other                                                                                                                                                         |  |              | 14,053   |   |                |   | 14,510   |  
|Interest payable                                                                                                                                              |  |              | 1,394    |   |                |   | 1,363    |  
|Current maturities of long-term debt                                                                                                                          |  |              | 7,500    |   |                |   | 7,500    |  
|                                                                                                                                                              |  |              |          |   |                |   |          |  
|Total current liabilities                                                                                                                                     |  |              | 131,155  |   |                |   | 121,716  |  
|                                                                                                                                                              |  |             
|Senior credit facility                                                                                                                                        |  |              | 65,545   |   |                |   | 62,623   |  
|Second lien term loan                                                                                                                                         |  |              | 70,000   |   |                |   | 70,000   |  
|Mandatorily redeemable preferred stock                                                                                                                        |  |              | 24,999   |   |                |   | 23,314   |  
|Other noncurrent liabilities                                                                                                                                  |  |              | 6,050    |   |                |   | 7,823    |  
|                                                                                                                                                              |  |              |          |   |                |   |          |  
|Total liabilities                                                                                                                                             |  |              | 297,749  |   |                |   | 285,476  |  
|                                                                                                                                                              |  |              |          |   |                |   |          |  
|Commitments and contingencies                                                                                                                                 |  |              |          |   |                |   |          |  
|                                                                                                                                                              |  |             
|Stockholders equity:                                                                                                                                         |  |              |          |   |                |   |          |  
|Common stock, par value $.01; 95,000,000 shares authorized and 15,558,655 and 15,515,155 shares outstanding at July 3, 2005 and January 2,
2005, respectively |  |              | 155      |   |                |   | 155      |  
|Common stock warrant                                                                                                                                          |  |              | 5,361    |   |                |   | 5,361    |  
|Deferred stock compensation                                                                                                                                   |  |              | (2,623   | ) |                |   | (3,499   | )
|Additional paid-in capital                                                                                                                                    |  |              | 168,626  |   |                |   | 168,242  |  
|Accumulated other comprehensive income                                                                                                                        |  |              | 158      |   |                |   |         |  
|Accumulated deficit                                                                                                                                           |  |              | (133,711 | ) |                |   | (134,234 | )
|                                                                                                                                                              |  |              |          |   |                |   |          |  
|Total stockholders equity                                                                                                                                    |  |              | 37,966   |   |                |   | 36,025   |  
|                                                                                                                                                              |  |              |          |   |                |   |          |  
|Total liabilities and stockholders equity                                                                                                                    |  | $            | 335,715  |   |                | $ | 321,501  |  
|                                                                                                                                                              |  |              |          |   |                |   |          |  



The accompanying notes
are an integral part of these balance sheets.



2



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##### Table of Contents

COMSYS IT Partners, Inc. and Subsidiaries

Unaudited Consolidated Statements of Cash Flows

For the Six Months Ended July 3, 2005 and June 30, 2004

(in thousands)



|                                                                                         |  |                  |         |   |              |   |          |  
|---------------------------------------------------------------------------------------- |  | ---------------- | ------- | - | ------------ | - | -------- | -
|                                                                                         |  | Six months ended |        
|                                                                                         |  | July 3,2005      |         |   | June 30,2004 |  
|Cash flows from operating activities                                                     |  |                  |         |   |              |   |          |  
|Net income (loss)                                                                        |  | $                | 523     |   |              | $ | (27,719  | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                  |         |   |              |   |          |  
|Depreciation and amortization                                                            |  |                  | 4,986   |   |              |   | 7,936    |  
|Provision for doubtful accounts                                                          |  |                  | 1,230   |   |              |   | (1,802   | )
|Stock based compensation expense                                                         |  |                  | 876     |   |              |   |         |  
|Loss on asset disposal                                                                   |  |                  |        |   |              |   | 32       |  
|Amortization of deferred financing costs                                                 |  |                  | 548     |   |              |   | 1,025    |  
|Noncash interest expense, net                                                            |  |                  | 1,685   |   |              |   | 22,084   |  
|Changes in operating assets and liabilities, net of effects of acquisitions:             |  |                  |         |   |              |   |          |  
|Accounts receivable                                                                      |  |                  | (17,967 | ) |              |   | 472      |  
|Prepaid expenses and other                                                               |  |                  | 1,444   |   |              |   | 47       |  
|Accounts payable                                                                         |  |                  | 11,471  |   |              |   | (1,581   | )
|Accrued payroll and related taxes                                                        |  |                  | (1,606  | ) |              |   | 46       |  
|Other                                                                                    |  |                  | (2,174  | ) |              |   | 2,186    |  
|                                                                                         |  |                  |         |   |              |   |          |  
|Net cash provided by operating activities                                                |  |                  | 1,016   |   |              |   | 2,726    |  
|                                                                                         |  |                  |         |   |              |   |          |  
|Cash flows from investing activities                                                     |  |                  |         |   |              |   |          |  
|Capital expenditures                                                                     |  |                  | (3,914  | ) |              |   | (1,248   | )
|Cash paid for acquisitions                                                               |  |                  | (348    | ) |              |   |         |  
|Cash paid for other noncurrent assets                                                    |  |                  | (20     | ) |              |   | (587     | )
|                                                                                         |  |                  |         |   |              |   |          |  
|Net cash used in investing activities                                                    |  |                  | (4,282  | ) |              |   | (1,835   | )
|                                                                                         |  |                  |         |   |              |   |          |  
|Cash flows from financing activities                                                     |  |                  |         |   |              |   |          |  
|Proceeds from long-term debt, net                                                        |  |                  | 6,672   |   |              |   | 117,950  |  
|Repayments of long-term debt                                                             |  |                  | (3,750  | ) |              |   | (117,901 | )
|Exercise of stock options                                                                |  |                  | 384     |   |              |   |         |  
|Advances to stockholders                                                                 |  |                  |        |   |              |   | (709     | )
|Cash paid for financing costs                                                            |  |                  | (40     | ) |              |   | (231     | )
|                                                                                         |  |                  |         |   |              |   |          |  
|Net cash provided by (used in) financing activities                                      |  |                  | 3,266   |   |              |   | (891     | )
|                                                                                         |  |                  |         |   |              |   |          |  
|Net increase in cash                                                                     |  |                  |        |   |              |   |         |  
|Cash, beginning of period                                                                |  |                  |        |   |              |   |         |  
|                                                                                         |  |                  |         |   |              |   |          |  
|Cash, end of period                                                                      |  | $                |        |   |              | $ |         |  
|                                                                                         |  |                  |         |   |              |   |          |  
|Supplemental cash flow information                                                       |  |                  |         |   |              |   |          |  
|Interest paid                                                                            |  | $                | 5,976   |   |              | $ | 3,236    |  



The accompanying notes
are an integral part of these statements.



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##### Table of Contents

COMSYS IT Partners, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements



(1) General



The unaudited consolidated financial statements included herein have been prepared in
accordance with the instructions to Form 10-Q and do not include all the information and footnotes required by generally accepted accounting principles; however, they do include all adjustments of a normal recurring nature that, in the opinion of
management, are necessary to present fairly the results of operations of COMSYS IT Partners, Inc. and its subsidiaries (collectively, the Company) for the interim periods presented. These interim financial statements should be read in
conjunction with the Companys audited consolidated financial statements and related notes included in the Companys Annual Report on Form 10-K for the year ended January 2, 2005. The results of operations for the interim periods presented
are not necessarily indicative of the results to be expected for the entire year.



On September 30, 2004, COMSYS Holding, Inc. (COMSYS Holding) completed a merger transaction with Venturi Partners, Inc. (Venturi), a publicly-traded IT and commercial staffing company, in which COMSYS Holding merged
with a subsidiary of Venturi (the merger). At the effective time of the merger, Venturi changed its name to COMSYS IT Partners, Inc. and issued new shares of its common stock to stockholders of COMSYS Holding, resulting in former COMSYS
Holding stockholders owning approximately 55.4% of Venturis outstanding common stock on a fully diluted basis. Also on September 30, 2004, Venturi sold its commercial staffing business.



Accounting principles generally accepted in the United States of America require that one of
the two companies in the transaction be designated as the acquirer for accounting purposes. Because former COMSYS Holding stockholders now own a majority of the outstanding common stock as a result of the merger, COMSYS Holding is deemed the
acquiring company for accounting and financial reporting purposes. A majority of the initial board of directors of the Company are COMSYS Holding designees and most members of management are former COMSYS Holding employees. References to Old
COMSYS refer to COMSYS Holding and its consolidated subsidiaries prior to the merger and references to COMSYS or the Company refer to COMSYS IT Partners, Inc. and its consolidated subsidiaries after the merger.
References to Venturi refer to Venturi and its consolidated subsidiaries prior to the merger.



The financial results included in this report include only the historical results of Old COMSYS for the three and six months ended June 30, 2004. Financial results for the three and six months ended July 3, 2005
include the combined operations of Old COMSYS and Venturi. Following the merger, COMSYS adopted the fiscal accounting periods of Venturi. As a result, the Companys fiscal year ends on the Sunday closest to December 31stand its first three fiscal quarters are each equal to 13 calendar weeks (ending on a Sunday). Prior to the merger, Old
COMSYS fiscal quarters were consistent with calendar quarters and its fiscal year-end was December 31st.



All references to common stock, share and per share amounts have been
retroactively restated to reflect the exchange ratio of .0001 of a share of COMSYS common stock for each share of COMSYS Holding common stock outstanding immediately prior to the merger as if the exchange had taken place as of the beginning of the
earliest period presented.



Certain reclassifications of prior years
balances have been made to conform to the current period presentation.



(2)
Restructuring and Other Charges



In connection with the merger in 2004,
the Company recorded reserves amounting to $17.2 million for severance payouts and the costs to exit duplicate office space. Of this amount, $12.5 million was related to the termination of Venturi employees and leases and was included in the
purchase price allocation in accordance with Emerging Issues Task Force Issue No. 95-3, and $4.7 million was related primarily to terminated employees and leases of Old COMSYS and was charged to integration and restructuring expense in 2004. At July
3, 2005, $5.7 million remained of the reserves.



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##### Table of Contents

COMSYS IT Partners, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial StatementsContinued



The following is a summary of the liability for integration and restructuring costs for the six months ended July 3, 2005 (in thousands):



|                         |  |                   |        |   |            |   |        |                  |  |   |       |   |  |   |        |  
|------------------------ |  | ----------------- | ------ | - | ---------- | - | ------ | ---------------- |  | - | ----- | - |  | - | ------ | -
|                         |  | Employeeseverance |        |   | Leasecosts |   |        | Professionalfees |  |   | Total |  
|Balance, January 2, 2005 |  | $                 | 2,234  |   |            | $ | 7,986  |                  |  | $ | 48    |   |  | $ | 10,268 |  
|Adjustments              |  |                   |       |   |            |   | (1,346 | )                |  |   |      |   |  |   | (1,346 | )
|Charges                  |  |                   |       |   |            |   |       |                  |  |   |      |   |  |   |       |  
|Cash payments            |  |                   | (1,379 | ) |            |   | (1,794 | )                |  |   | (48   | ) |  |   | (3,221 | )
|                         |  |                   |        |   |            |   |        |                  |  |   |       |   |  |   |        |  
|Balance, July 3, 2005    |  | $                 | 855    |   |            | $ | 4,846  |                  |  | $ |      |   |  | $ | 5,701  |  
|                         |  |                   |        |   |            |   |        |                  |  |   |       |   |  |   |        |  



Of the remaining balance at July 3,
2005, COMSYS expects to pay approximately $2.4 million in the remainder of fiscal 2005 and the balance, which consists primarily of lease payments, over the following seven years. The Company recorded an adjustment in the second quarter of 2005 in
the amount of $1.3 million, of which $584,000 was included as an offset in integration and restructuring expense and $762,000 was recorded as an adjustment to goodwill. These adjustments resulted from the sublease of three offices and the
termination of two leases.



For the six months ended July 3, 2005, the Company
recorded restructuring and integration costs of $3.9 million, reflecting integration services provided by third parties and transition costs related to duplicative leases and integration of back-office systems.



In connection with the merger in 2004, the Company recorded an aggregate of $14.2 million for
restructuring and integration costs during the fiscal quarters ended January 2, 2005, April 3, 2005 and July 3, 2005. This amount includes $424,000 recorded in the second quarter of 2005, comprised of expenses of $1.0 million net of the
aforementioned adjustment to the reserve for lease termination costs in the amount of $584,000. Included in restructuring and integration costs in the second quarter of 2005 are expenses of $236,000 and $164,000 that pertain to the quarters ended
January 2, 2005 and April 3, 2005, respectively.



(3) Long-Term Debt



Long-term debt consisted of the following:



|                                                    |  |                |         |                 |   |        
|--------------------------------------------------- |  | -------------- | ------- | --------------- | - | -------
|                                                    |  | July 3, 2005   |         | January 2, 2005
|                                                    |  | (In thousands)
|Debt outstanding under credit facilities:           |  |                |         |                 |   |        
|Senior credit facilityrevolver                     |  | $              | 63,670  |                 | $ | 56,998 
|Senior credit facilitysenior term loan             |  |                | 9,375   |                 |   | 13,125 
|Second lien term loan                               |  |                | 70,000  |                 |   | 70,000 
|                                                    |  |                |         |                 |   |        
|                                                    |  |                | 143,045 |                 |   | 140,123
|Less current maturities                             |  |                | 7,500   |                 |   | 7,500  
|                                                    |  |                |         |                 |   |        
|Long-term obligations, excluding current maturities |  | $              | 135,545 |                 | $ | 132,623
|                                                    |  |                |         |                 |   |        



Effective September 30, 2004, in
conjunction with the merger, COMSYS entered into a new senior credit facility with Merrill Lynch Capital and a syndicate of lenders (the senior credit agreement) that replaced Old COMSYS prior credit arrangements. The senior credit
agreement provides for borrowings of up to $100.0 million under a revolving line of credit (the revolver) and a $15 million term loan payable in eight quarterly installments (the senior term loan). At the same time, COMSYS
borrowed $70 million under a second lien term loan credit agreement (the second lien term loan credit agreement) with Merrill Lynch Capital, Heritage Bank, SSB and a syndicate of lenders (the second lien term loan).



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##### Table of Contents

COMSYS IT Partners, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial StatementsContinued



Borrowings under the revolver are limited to 85% of eligible accounts receivable, as defined in the senior credit agreement, reduced by the amount of outstanding letters
of credit and designated reserves. Interest on the revolver and senior term loan is based on LIBOR plus a margin, which on the revolver is 2.25% or 2.50%, depending upon the Companys ratio of total debt to adjusted EBITDA, as defined in the
senior credit agreement, and which is 3.00% for the senior term loan. At our election, the interest on the revolver and senior term loan may be based on the prime rate plus a margin, which on the revolver is 1.25% or 1.50% depending upon the
Companys ratio of total debt to adjusted EBITDA, and which is 2.00% for the senior term loan. The borrowings under the senior credit agreement are secured by a pledge of the stock of the Companys subsidiaries and a lien on the assets of
the Companys subsidiaries. The senior credit agreement expires in September 2009.



At July 3, 2005, the Company had outstanding borrowings of $63.7 million under the revolver at interest rates ranging from 5.81% to 7.5% per annum (5.91% weighted average). The principal balance of the senior term loan was $9.4 million with
tranches bearing interest rates ranging from 6.31% to 6.5% per annum (6.46% weighted average). At July 3, 2005, the Company had available borrowing capacity under the revolver in the amount of $28.0 million.



The second lien term loan bears interest at the prime rate plus a margin of 6.50% or, at our
election, LIBOR plus a margin of 7.50%. The Company had outstanding borrowings of $70.0 million under the second lien term loan as of July 3, 2005, with interest rates ranging from 10.69% to 11.0% per annum (10.89% weighted average). The second lien
term loan is secured by a second lien position in the stock and assets of the Companys subsidiaries and matures on April 30, 2010.



The Company pays a fee on outstanding letters of credit equal to the LIBOR margin then applicable to the revolver. As of July 3, 2005, the Companys outstanding
letters of credit totaled $3.3 million and the fee was 2.50% per annum. The Company also pays commitment fees of 0.50% per annum on the unused portion of the revolver commitment.



Both the senior credit agreement and second lien term loan credit agreement contain customary covenants and events of default, including the
maintenance of fixed charge coverage ratios, total debt to adjusted EBITDA ratios and minimum levels of EBITDA, all as defined in the agreements. As of July 3, 2005, COMSYS was in compliance with all covenant requirements and believes it will be
able to comply with these covenants during the remainder of fiscal year 2005. These agreements also place restrictions on the Companys ability to enter into certain transactions without the approval of the lenders, such as the payment of
dividends, disposition and acquisition of assets and the assumption of contingent obligations.



Effective February 22, 2005, the Company entered into an interest rate swap and an interest rate cap that together effectively convert $40.0 million of variable rate debt to modified fixed rate debt through September
20, 2009, thus potentially reducing the impact of changes in interest rates on future interest expense. The swap and the cap are designated as cash flow hedges of the variable LIBOR-based interest payments on $40.0 million of borrowings under the
senior credit agreement and, as such, are carried at fair value. The swap is based on a $20.0 million notional amount at a rate of 4.59%, and the cap is based on a $20.0 million notional amount at a rate of 4.50%. The net fair value of the interest
rate swap and cap is reflected in the Companys consolidated balance sheet at July 3, 2005 as a noncurrent asset with an offset to accumulated other comprehensive income of $4,000.



6



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##### Table of Contents

COMSYS IT Partners, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial StatementsContinued



(4) Stock Based Compensation



Effective with the merger, 1,000 shares of Class D Preferred Stock that were issued as of July 1, 2004 under the 2004 Management Incentive Plan (the Plan),
which was adopted by Old COMSYS effective January 1, 2004, were exchanged for a total of 1,405,844 restricted shares of COMSYS common stock. One-third of these shares, or 468,615 shares, were vested at the merger date. Another 468,615 shares vest in
equal installments of 156,205 shares on January 1stof each of the years 2005, 2006 and 2007, and the remaining
468,614 shares vest in equal annual installments if specified earnings targets are met for fiscal years 2004, 2005 and 2006, in each case subject to earlier vesting as discussed below. A total of 624,820 shares vested in fiscal 2004. The fair value
of shares that will vest automatically with the passage of time, which amounted to $3.5 million at January 2, 2005, is recorded in stockholders equity as deferred stock compensation and is charged to expense throughout the vesting periods. The
stock based compensation expense recognized during the six months ended July 3, 2005 was $876,000.



Upon the occurrence of certain events, including the sale or transfer of more than 50% of the Companys assets, a merger or consolidation in which the Company is not the surviving corporation, the liquidation or
dissolution of the Company, a change in ownership (as defined in the Plan) or the completion of an equity offering resulting in gross proceeds of $35 million (a Qualified Offering), all outstanding shares of restricted stock
issued under the Plan will immediately vest in full other than shares that vest subject to the satisfaction of specified earnings targets. The shares subject to specified earnings targets are also subject to immediate vesting if the aggregate value
of the securities issued in the merger to the stockholders of Old COMSYS exceed $175 million over a 30-day period beginning after a Qualified Offering and ending on or prior to December 31, 2006.



As of July 3, 2005, there were 995,596 options outstanding to purchase COMSYS stock under the
Companys various stock incentive plans with a fair value of approximately $13.2 million. Additionally, the 1,405,844 restricted common shares described above are outstanding at July 3, 2005 with a fair value of $24.1 million. The Company
determined the fair value of these shares using the Black-Scholes option pricing model based on the following weighted average assumptions: risk-free interest rate of 3.8%; dividend yield of 0%; expected volatility of 81.38%; and a weighted average
expected life of five years.



Had compensation expense been determined
consistent with the fair value method, utilizing the assumptions set forth above and amortized over the vesting period, the Companys pro forma net income (loss) would have been reported as follows:



|                                                                                  |  |                                       |      |   |                  |   |           |              |  |   |               |   |  |   |            |  
|--------------------------------------------------------------------------------- |  | ------------------------------------- | ---- | - | ---------------- | - | --------- | ------------ |  | - | ------------- | - |  | - | ---------- | -
|                                                                                  |  | Three months ended                    |      |   | Six months ended |  
|                                                                                  |  | July 3, 2005                          |      |   | June 30,2004     |   |           | July 3, 2005 |  |   | June 30, 2004 |  
|                                                                                  |  | (In thousands, except per share data) |     
|Net income (loss) attributable to common stockholders as reported                 |  | $                                     | 729  |   |                  | $ | (12,701   | )            |  | $ | 523           |   |  | $ | (27,719    | )
|Add stock compensation included in reported net loss                              |  |                                       | 439  |   |                  |   |          |              |  |   | 876           |   |  |   |           |  
|Deduct stock compensation determined under fair value based method for all awards |  |                                       | (434 | ) |                  |   |          |              |  |   | (868          | ) |  |   |           |  
|Tax effect                                                                        |  |                                       |     |   |                  |   |          |              |  |   |              |   |  |   |           |  
|                                                                                  |  |                                       |      |   |                  |   |           |              |  |   |               |   |  |   |            |  
|Pro forma net income (loss) attributable to common stockholders                   |  | $                                     | 734  |   |                  | $ | (12,701   | )            |  | $ | 531           |   |  | $ | (27,719    | )
|                                                                                  |  |                                       |      |   |                  |   |           |              |  |   |               |   |  |   |            |  
|Basic and diluted earnings (loss) per share, as reported:                         |  | $                                     | 0.05 |   |                  | $ | (5,205.33 | )            |  | $ | 0.03          |   |  | $ | (11,360.74 | )
|Pro forma net income (loss) per share, basic and diluted:                         |  | $                                     | 0.05 |   |                  | $ | (5,205.33 | )            |  | $ | 0.03          |   |  | $ | (11,360.74 | )



7



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##### Table of Contents

COMSYS IT Partners, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial StatementsContinued



(5) Earnings (Loss) Per Share



Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for
the period. Diluted earnings per share reflect the potential dilution that would occur if options or other contracts to issue common stock were exercised or converted into common stock.



The computation of basic and diluted earnings (loss) per share is as follows:



|                                                                |  |                                                  |            |              |                  |           |              |  |               |            |  |   |            |  
|--------------------------------------------------------------- |  | ------------------------------------------------ | ---------- | ------------ | ---------------- | --------- | ------------ |  | ------------- | ---------- |  | - | ---------- | -
|                                                                |  | Three months ended                               |            |              | Six months ended |          
|                                                                |  | July 3, 2005                                     |            | June 30,2004 |                  |           | July 3, 2005 |  | June 30, 2004 |           
|                                                                |  | (In thousands, except shares and per share data) |           
|Net income (loss)                                               |  | $                                                | 729        |              | $                | (12,701   | )            |  | $             | 523        |  | $ | (27,719    | )
|Add preferred stock dividends not included in net income (loss) |  |                                                  |           |              |                  |          |              |  |               |           |  |   |           |  
|                                                                |  |                                                  |            |              |                  |           |              |  |               |            |  |   |            |  
|Net income (loss) attributable to common stockholders           |  | $                                                | 729        |              | $                | (12,701   | )            |  | $             | 523        |  | $ | (27,719    | )
|                                                                |  |                                                  |            |              |                  |           |              |  |               |            |  |   |            |  
|Weighted average common shares outstanding                      |  |                                                  | 15,418,268 |              |                  | 2,440     |              |  |               | 15,375,109 |  |   | 2,440      |  
|Add: dilutive stock options and warrants                        |  |                                                  | 736,017    |              |                  |          |              |  |               | 581,290    |  |   |           |  
|                                                                |  |                                                  |            |              |                  |           |              |  |               |            |  |   |            |  
|Diluted weighted average common shares outstanding              |  |                                                  | 16,154,285 |              |                  | 2,440     |              |  |               | 15,956,399 |  |   | 2,440      |  
|                                                                |  |                                                  |            |              |                  |           |              |  |               |            |  |   |            |  
|Basic and diluted earnings (loss) per share                     |  | $                                                | 0.05       |              | $                | (5,205.33 | )            |  | $             | 0.03       |  | $ | (11,360.74 | )



Stock options to purchase 4,296 and 84
shares of common stock are excluded from the computation of diluted earnings (loss) per share in the 2005 and 2004 periods, respectively, because their effect is antidilutive.



In July of 2005, the Company issued 96,649 shares of its common stock to Bank of America Strategic Solutions, Inc. in connection with Bank
of America Strategic Solutions cashless exercise as of May 9, 2005 of warrants to purchase 211,474 shares of the Companys common stock at the exercise price of $7.8025 per share. These shares are included in weighted average basic and
diluted shares outstanding for the three months and six months ended July 3, 2005.



(6) Commitments and Contingencies



The Company leases various
office space and equipment under noncancelable operating leases expiring through 2015. The Company has also entered into employment agreements with certain of its executives covering, among other things, base compensation, incentive bonus
determinations and payments in the event of termination or a change in control of the Company.



In connection with the merger and the sale of Venturis commercial staffing business, the Company placed $2.5 million in cash and 187,556 shares of its common stock in escrow pending the final determination of
certain state tax and unclaimed property assessments. Management cannot ascertain at this time what the final outcome of those assessments will be in the aggregate. Accordingly, the purchase price allocation related to the merger is subject to
finalization. The cash in escrow is reflected in the unaudited consolidated balance sheets as restricted cash.



The Company is a defendant in various lawsuits and claims arising in the normal course of business and is defending them vigorously. While the results of litigation cannot be predicted with certainty, management
believes the final outcome of such litigation will not have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company.



8



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##### Table of Contents

COMSYS IT Partners, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial StatementsContinued



(7) Comprehensive Income



The following sets forth the amount of comprehensive income of the Company for the periods indicated.



|                                                                              |  |                    |      |   |                  |   |         |              |  |              |     |  |   |         |  
|----------------------------------------------------------------------------- |  | ------------------ | ---- | - | ---------------- | - | ------- | ------------ |  | ------------ | --- |  | - | ------- | -
|                                                                              |  | Three months ended |      |   | Six months ended |  
|                                                                              |  | July 3, 2005       |      |   | June 30,2004     |   |         | July 3, 2005 |  | June 30,2004 |    
|                                                                              |  | (In thousands)     |     
|Net income (loss)                                                             |  | $                  | 729  |   |                  | $ | (12,701 | )            |  | $            | 523 |  | $ | (27,719 | )
|Foreign currency translation adjustments                                      |  |                    | 154  |   |                  |   |         |              |  |              | 154 |  |   |         |  
|Net unrealized gain (loss) on change in fair values of derivative instruments |  |                    | (315 | ) |                  |   |        |              |  |              | 4   |  |   |        |  
|                                                                              |  |                    |      |   |                  |   |         |              |  |              |     |  |   |         |  
|Total comprehensive income                                                    |  | $                  | 568  |   |                  | $ | (12,701 | )            |  | $            | 681 |  | $ | (27,719 | )
|                                                                              |  |                    |      |   |                  |   |         |              |  |              |     |  |   |         |  



(8) Subsequent Event



In July of 2005, the Company announced to its employees that it was
reorganizing its management team as a final step in the process of integrating Venturis operations into COMSYS. This reorganization will result in the elimination of approximately 20 staff positions and, as a result, the Company will record a
restructuring charge in its fiscal third quarter of $750,000 to accrue for severance payments.



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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 our audited consolidated financial statements and related notes appearing in our Annual Report on Form 10-K for the fiscal year ended January 2, 2005. 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 Forward-Looking Information 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 January 2, 2005. For accounting purposes, the merger of Old COMSYS with Venturi was treated as a reverse merger in which Old COMSYS was deemed to be the acquirer. The financial data and discussion
and analysis set forth below relating to all periods prior to the merger on September 30, 2004 reflect the historical results of Old COMSYS. The financial data and discussion and analysis set forth below relating to periods subsequent to September
30, 2004 reflect the financial results of COMSYS after giving effect to the merger and include Venturis results of operations from the effective date of the merger. In light of the merger of Old COMSYS and Venturi, the historical data
presented below is not necessarily indicative of future results.



Introduction



We are a leading information
technology, or IT, staffing services company that provides a full range of specialized staffing and project implementation services and products. The staffing services we provide allow our clients to focus their resources on their core businesses
rather than on recruiting, training and managing IT professionals. We contract with our customers to provide both short- and long-term IT staffing services at client locations throughout the U.S. Our consultants possess a wide range of skills and
experience, including website development and integration, application programming and development, client/server development, systems software architecture and design, systems engineering and systems integration.



Overview



Our business strategy is to become the leading provider of IT staffing services in the United States. Among our immediate
peer group, we are the only staffing provider focused exclusively on the IT sector. We intend to continue implementing our business strategy through a combination of internal growth and strategic acquisitions that complement or enhance our business.



Industry trends that affect our business include:



| |  |  | rate of technological change;
| | - |  | -----------------------------



| |  |  | rate of growth in corporate IT budgets;
| | - |  | ---------------------------------------



| |  |  | penetration of IT staffing in the general workforce;
| | - |  | ----------------------------------------------------



| |  |  | outsourcing of the IT workforce; and
| | - |  | ------------------------------------



| |  |  | consolidation of supplier bases.
| | - |  | --------------------------------



The Merger



On September 30, 2004, Old COMSYS completed a merger transaction with Venturi, a publicly traded IT and commercial staffing company, in which COMSYS
Holding was merged with a wholly owned subsidiary of Venturi. Concurrent with the merger, we sold Venturis commercial staffing business for $30.3 million in cash and the assumption of approximately $700,000 in liabilities. At the effective
time of the merger, we changed our name to COMSYS IT Partners, Inc. and issued new shares of our common stock to the stockholders of Old COMSYS, resulting in such stockholders owning approximately 55.4% of our outstanding common stock on a fully
diluted basis. Since former Old COMSYS stockholders owned a majority of our outstanding common stock as a result of the merger, Old COMSYS is deemed the acquiring company for accounting and financial reporting purposes.



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##### Table of Contents

The key elements of the integration of the legacy businesses of Old COMSYS and Venturi have been
completed on or ahead of the original schedule. We believe this diminishes the business risks associated with the integration and accelerates the recognition of cost savings. Further, we have created a corporate infrastructure capable of supporting
our internal growth strategy and future acquisitions. Since the closing of the merger, we have substantially completed the integration of the businesses of Old COMSYS and Venturi, resulting in:



| |  |  | consolidation of all 17 duplicate branch offices;
| | - |  | -------------------------------------------------



| |  |  | deployment of our proprietary front office information system (FOX) to the Venturi branch offices;
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | standardization of compensation plans for all account managers, recruiters and managing directors;
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | implementation of common health care and 401(k) programs;
| | - |  | ---------------------------------------------------------



| |  |  | transition of the Old COMSYS back office information system to Venturis PeopleSoft system and transition of legacy Venturi back office and accounting processes to our shared
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

services operation located in Phoenix, Arizona, together resulting in the consolidation of all of our back office operations
for COMSYS, including payroll, billing, accounts payable, collections and financial reporting; and



| |  |  | elimination of approximately 170 duplicative staff positions.
| | - |  | -------------------------------------------------------------



In connection with the integration of the information systems, we continue to refine and correct processes related to billing, accounts payable,
collections and financial reporting, which we expect to complete in the third fiscal quarter of 2005. Until such processes are fully refined and corrected, we may experience a delay in billing our customers and collections of accounts receivable,
which could adversely affect our revenue and results of operations.



Results
of Operations



The following table sets forth the
percentage relationship to revenues of certain items included in our unaudited consolidated statements of operations:



|                                             |  |                   |   |  |                  |    |  |             |   |  |              |   
|-------------------------------------------- |  | ----------------- | - |  | ---------------- | -- |  | ----------- | - |  | ------------ | --
|                                             |  | Three monthsended |   |  | Six months ended |   
|                                             |  | July 3,2005       |   |  | June 30,2004     |    |  | July 3,2005 |   |  | June 30,2004 |   
|Revenues                                     |  | 100.0             | % |  | 100.0            | %  |  | 100.0       | % |  | 100.0        | % 
|Cost of services                             |  | 76.9              |   |  | 76.1             |    |  | 77.0        |   |  | 76.3         |   
|                                             |  |                   |   |  |                  |    |  |             |   |  |              |   
|Gross profit                                 |  | 23.1              |   |  | 23.9             |    |  | 23.0        |   |  | 23.7         |   
|Selling, general and administrative expenses |  | 17.3              |   |  | 16.3             |    |  | 17.0        |   |  | 17.5         |   
|Restructuring and integration costs          |  | 0.3               |   |  |                 |    |  | 1.2         |   |  |             |   
|Stock based compensation expense             |  | 0.3               |   |  |                 |    |  | 0.3         |   |  |             |   
|Registration statement fees and expenses     |  | 0.6               |   |  |                 |    |  | 0.3         |   |  |             |   
|Depreciation and amortization                |  | 1.5               |   |  | 4.4              |    |  | 1.5         |   |  | 4.4          |   
|                                             |  |                   |   |  |                  |    |  |             |   |  |              |   
|                                             |  | 20.0              |   |  | 20.7             |    |  | 20.3        |   |  | 21.9         |   
|Operating income                             |  | 3.1               |   |  | 3.2              |    |  | 2.7         |   |  | 1.8          |   
|Interest expense and other expenses, net     |  | 2.7               |   |  | 17.2             |    |  | 2.5         |   |  | 17.2         |   
|Income tax expense                           |  |                  |   |  |                 |    |  |            |   |  |             |   
|                                             |  |                   |   |  |                  |    |  |             |   |  |              |   
|Net income (loss)                            |  | 0.4               | % |  | (14.0            | )% |  | 0.2         | % |  | (15.4        | )%
|                                             |  |                   |   |  |                  |    |  |             |   |  |              |   
|Billable headcount at end of period          |  | 4,705             |   |  | 2,933            |    |  | 4,705       |   |  | 2,933        |   

---

|(1) | Historically, Old COMSYS fiscal quarters ended with calendar quarters, while Venturis first three fiscal quarters were each equal to 13 calendar weeks
(ending on a Sunday). In connection with the merger, we adopted Venturis fiscal accounting periods. Accordingly, our second fiscal quarter ended on July 3, 2005.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Our billable consultant headcount increased from approximately 2,800 for Old COMSYS at June 30, 2003 to
approximately 3,000 for Old COMSYS prior to the merger on September 30, 2004. Our billable consultant headcount was approximately 4,900 at January 3, 2005 and approximately 4,700 at July 3, 2005. The decrease from the beginning of the year was due
to a seasonal reduction that occurred in January 2005, our decision not to renew an arrangement with a particular client that provided for lower gross margins and a higher than anticipated turnover rate with respect to our consultants.



Quarter Ended July 3, 2005 versus Quarter Ended June 30, 2004



We recorded operating income of $5.1 million and net
income of $729,000 in the second quarter ended July 3, 2005 compared to operating income of $2.9 million and a net loss of $12.7 million in the second quarter ended June 30, 2004. The increase in operating income was due primarily to the merger with
Venturi as well as a general improvement in the Companys operating results subsequent to the second quarter of 2004. A decrease in net interest expense of $11.3 million from the second quarter ended June 30, 2004 to the second quarter ended
July 3, 2005, which was due primarily to the redemption of Old COMSYS mandatorily redeemable preferred stock in connection with the merger, also contributed to the improvement in our results of operations. See Interest
Expense.



Revenues. Revenues for the
second quarter ended July 3, 2005 and the second quarter ended June 30, 2004 were $162.2 million and $90.5 million, respectively, representing an increase of 79.1%. The increase for the second quarter ended July 3, 2005 was due to revenues from our
combined operations following the merger and overall economic growth. Billable headcount was 4,705 as of July 3, 2005 compared to Old COMSYS billable head count of 2,933 as of June 30, 2004. In addition, fee revenues from our vendor management
services increased to $3.2 million for the second quarter ended July 3, 2005 from $1.4 million for Old COMSYS for the second quarter ended June 30, 2004. This increase was due to the merger and growth in vendor management programs.



Our revenue growth was driven by our clients in the financial services and
telecommunications industry sectors. Revenues from the financial services sector increased by $13.6 million, or 42.9% in the second quarter ended July 3, 2005 compared to the second quarter ended June 30, 2004 and accounted for 28.0% of our revenues
in the second quarter ended July 3, 2005 compared to 35.2% of Old COMSYS revenues in the second quarter ended June 30, 2004. Revenues from the telecommunications sector increased over the same period by $3.8 million, or 18.8%, but declined as
a percentage of total revenues from 22.0% of Old COMSYS second quarter 2004 revenues to 14.6% of our second quarter 2005 revenues. The declines in revenues from the financial services and telecommunications industries as a percentage of our
total revenues reflect the diversification of our client base following the merger.



Cost of Services.Cost of services for the second quarter of 2005 and for the second quarter of 2004 were $124.6 million and $68.9 million, respectively, representing an increase of 80.8%. The
increase for the second quarter of 2005 was due to our combined operations following the merger. Cost of services as a percentage of revenue increased to 76.9% in the second quarter of 2005 from 76.1% in the second quarter of 2004. The increase in
cost of services as a percentage of revenue was primarily due to increases in state unemployment taxes and health care expenses.



Selling, General and Administrative Expenses.Selling, general and administrative expenses in the second quarter ended July 3, 2005
and for the second quarter ended June 30, 2004 were $28.1 million and $14.8 million, respectively, representing an increase of 90.1%. The increase was due to our combined operations following the merger. As a percentage of revenue, selling, general
and administrative expenses increased to 17.3% in the second quarter of 2005 from 16.3% in the second quarter of 2004. This increase as a percentage of revenue was due to an increase in bad debt expense. In the second quarter of 2004, we collected
$1.8 million of accounts receivable that had previously been fully reserved for due to the bankruptcy of the client and therefore recorded this amount as a reduction of expense.



Restructuring and Integration Costs. For the three months ended July 3, 2005, we recorded restructuring
and integration costs of $424,000, which represents integration services provided by third parties and transition costs related to duplicative leases and integration of back-office systems.



In connection with the merger in 2004, we recorded an aggregate of $14.2
million for restructuring and integration costs during the fiscal quarters ended January 2, 2005, April 3, 2005 and July 3, 2005. This amount includes the $424,000 recorded in the second quarter of 2005, comprised of expenses of $1.0 million net of
adjustments to the reserve for lease termination costs in the amount of $584,000 (see Note 2). Included in restructuring and integration costs in the second quarter of 2005 are expenses of $236,000 and $164,000 that pertain to the quarters ended
January 2, 2005 and April 3, 2005, respectively.



12



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##### Table of Contents

The following is an analysis of the restructuring reserve for the quarter ended July 3, 2005 (in
thousands):



|                       |  |                   |       |   |            |   |        |       |  |   |        |  
|---------------------- |  | ----------------- | ----- | - | ---------- | - | ------ | ----- |  | - | ------ | -
|                       |  | Employeeseverance |       |   | Leasecosts |   |        | Total | 
|Balance, April 3, 2005 |  | $                 | 1,384 |   |            | $ | 7,026  |       |  | $ | 8,410  |  
|Adjustments            |  |                   |      |   |            |   | (1,346 | )     |  |   | (1,346 | )
|Charges                |  |                   |      |   |            |   |       |       |  |   |       |  
|Cash payments          |  |                   | (529  | ) |            |   | (834   | )     |  |   | (1,363 | )
|                       |  |                   |       |   |            |   |        |       |  |   |        |  
|Balance, July 3, 2005  |  | $                 | 855   |   |            | $ | 4,846  |       |  | $ | 5,701  |  
|                       |  |                   |       |   |            |   |        |       |  |   |        |  



Stock
Based Compensation. Stock based compensation expense in the second quarter of 2005 was $439,000, which represents amortization of deferred stock based compensation related to restricted stock. In connection with the merger, all of the
outstanding shares of Old COMSYS Class D redeemable preferred stock, which were issued as of July 1, 2004 under the Old COMSYS 2004 Management Incentive Plan, were exchanged for 1.4 million shares of our common stock. Of these shares, 468,615 shares
were vested at the closing of the merger, and on January 1, 2005, an additional 156,205 shares vested. On January 1, 2006, 156,205 shares will vest, and another 156,205 shares will vest on January 1, 2007, resulting in compensation expense of $1.7
million in each of fiscal 2005 and 2006 when these unvested shares fully vest, which expense is accrued throughout the year. The remaining 468,614 shares will vest if certain performance based criteria specified in the 2004 Management Incentive Plan
are met. To the extent any of these shares vest, stock based compensation expense will be recognized in accordance with SFAS No. 123(R), Share-Based Payment, a revision of SFAS No. 123, Accounting for Stock-Based Compensation. The
vesting of all unvested shares will be accelerated upon the occurrence of certain events as specified in the 2004 Management Incentive Plan, and the associated stock based compensation expense will be recognized at the time of such accelerated
vesting. See Note 4 to the unaudited consolidated financial statements included elsewhere in this report.



Registration Statement Fees and Expenses. On April 4, 2005, we filed a Registration Statement on Form S-1, as amended on May 11, 2005, with
the Securities and Exchange Commission relating to a proposed public offering of our common stock. We intended to use the net proceeds from such offering to redeem all of COMSYS outstanding Series A-1 redeemable preferred stock and to repay
approximately $25.0 million of outstanding principal and interest under the second lien term loan. On June 17, 2005, we announced our decision to withdraw the proposed equity offering due to market conditions. As a result, we recorded expense of
$950,000 in the second quarter of 2005 related to the costs incurred in connection with the proposed equity offering and the registration statement.



Depreciation and Amortization.Depreciation and amortization expense consists primarily of depreciation of our fixed assets and
amortization of our customer base and contract cost intangible assets. For the second quarter ended July 3, 2005 and for the second quarter ended June 30, 2004, depreciation and amortization expense was $2.5 million and $4.0 million, respectively,
representing a decrease of 36.4%. This decline was due primarily to certain intangible assets becoming fully amortized subsequent to June 30, 2004.



Interest Expense. Interest expense was $4.3 million and $15.6 million in the second quarter of 2005 and the second quarter of 2004,
respectively, a decrease of $11.3 million which was due to the redemption of Old COMSYS preferred stock in connection with the merger. On July 1, 2003, we adopted SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of
Both Liabilities and Equity,which requires that dividends on mandatorily redeemable preferred stock be recorded as interest expense. SFAS No. 150 applies to both COMSYS and Old COMSYS redeemable preferred stock and, as a result,
interest expense includes dividends in the amount of $11.1 million in the second quarter of 2004 compared to $843,000 in the second quarter of 2005. Net interest expense on borrowings under our credit facilities was $3.2 million in the
second quarter of 2005 compared to $4.0 million in the second quarter of 2004. The decrease was due to the repayment of $64.8 million of senior subordinated notes in the third quarter of 2004 with a weighted average interest rate of 16.6% at
June 30, 2004 and the repayment of a $7.8 million interest deferred note with an interest rate of 11.0%, compounded quarterly. The increase in borrowings under the new senior credit facility entered into in connection with the merger was offset by
more favorable interest rates on this facility. See Liquidity and Capital ResourcesOverview.



Provision for Income Taxes. As of January 2, 2005 and July 3, 2005, we had $82.2 million in net deferred tax assets and had recorded a
reserve against those net assets due to the uncertainty related to the realization of these amounts. Net operating loss carryforwards from prior years will offset any projected tax provision generated during the current year.



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##### Table of Contents

Six Months Ended July 3, 2005 Versus Six Months Ended June 30, 2004



We recorded operating income of $8.8 million and net income of $523,000 in
the first six months of fiscal 2005 compared to operating income of $3.1 million and a net loss of $27.7 million in the same fiscal period of 2004. The increase in operating income was due primarily to the merger with Venturi as well as a general
improvement in the Companys operating results subsequent to the first half of 2004. A decrease in net interest expense of $22.5 million from the first six months of fiscal 2004 compared to the same fiscal period of 2005, which was due
primarily to the redemption of Old COMSYS mandatorily redeemable preferred stock in connection with the merger, also contributed to the improvement in our results of operations. See Interest Expense.



Revenues. Revenues for the first six months of fiscal 2005 and
for the first six months of fiscal 2004 were $327.1 million and $179.4 million, respectively, representing an increase of 82.4%. The increase for the first half of 2005 was due to revenues from our combined operations following the merger and
overall economic growth. Billable headcount was 4,705 as of July 3, 2005 compared to Old COMSYS billable headcount of 2,933 as of June 30, 2004. In addition, fee revenues from our vendor management services increased to $5.8 million for the
six-month period ended July 3, 2005 from $2.8 million for Old COMSYS for the six-month period ended June 30, 2004. This increase was due to the merger and growth in vendor management programs.



Our revenue growth was driven by our clients in the financial services and
telecommunications industry sectors. Revenues from the financial services sector increased by $30.5 million, or 49.2%, in the first half of 2005 compared to the first half of 2004 and accounted for 28.3% of our revenues in the first half of 2005
compared to 34.6% of Old COMSYS revenues in the first half of 2004. Revenues from the telecommunications sector increased over the same period by $5.8 million, or 14.5%, but declined as a percentage of total revenues from 22.4% of Old
COMSYS revenues for the six months ended June 30, 2004 to 14.1% of our revenues for the six months ended July 3, 2005. The declines in revenues from the financial services and telecommunications industries as a percentage of our total revenues
reflect the diversification of our client base following the merger.



Cost of Services.Cost of services for the first six months of fiscal 2005 and for the same six-month period of 2004 were $252.0 million and $136.9 million, respectively, representing an increase of 84.0%. The increase
for the first half of 2005 was due to our combined operations following the merger. Cost of services as a percentage of revenue increased to 77.0% in the first six months of fiscal 2005 from 76.3% in the first six months of fiscal 2004. The increase
in cost of services as a percentage of revenue was primarily due to increases in state unemployment taxes and health care expenses.



Selling, General and Administrative Expenses.Selling, general and administrative expenses in the first six months of fiscal 2005 and
the first six months of fiscal 2004 were $55.6 million and $31.4 million, respectively, representing an increase of 77.2%. The increase was due to our combined operations following the merger. As a percentage of revenue, selling, general and
administrative expenses decreased to 17.0% in the first half of 2005 from 17.5% in the first half of 2004. The decrease as a percentage of revenue was due to the elimination of duplicative office space and staff positions following the merger and
our ability to leverage fixed overhead costs over an expanding revenue base.



Restructuring and Integration Costs. For the first six months of fiscal 2005, we recorded restructuring and integration costs of $3.9 million, which represent integration services provided by
third parties and transition costs related to duplicative leases and integration of back-office systems.



In connection with the merger in 2004, we recorded an aggregate of $14.2 million for restructuring and integration costs during the fiscal quarters ended
January 2, 2005, April 3, 2005 and July 3, 2005. This amount includes the $424,000 recorded in the second quarter of 2005, comprised of expenses of $1.0 million net of adjustments to the reserve for lease termination costs in the amount of $584,000
(see Note 2). Included in restructuring and integration costs in the second quarter of 2005 are expenses of $236,000 and $164,000 that pertain to the quarters ended January 2, 2005 and April 3, 2005, respectively.



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##### Table of Contents

The following is an analysis of the restructuring reserve for the six-month period ended July 3, 2005 (in
thousands):



|                         |  |                   |        |   |            |   |        |                  |  |   |       |   |  |   |        |  
|------------------------ |  | ----------------- | ------ | - | ---------- | - | ------ | ---------------- |  | - | ----- | - |  | - | ------ | -
|                         |  | Employeeseverance |        |   | Leasecosts |   |        | Professionalfees |  |   | Total |  
|Balance, January 2, 2005 |  | $                 | 2,234  |   |            | $ | 7,986  |                  |  | $ | 48    |   |  | $ | 10,268 |  
|Adjustments              |  |                   |       |   |            |   | (1,346 | )                |  |   |      |   |  |   | (1,346 | )
|Charges                  |  |                   |       |   |            |   |       |                  |  |   |      |   |  |   |       |  
|Cash payments            |  |                   | (1,379 | ) |            |   | (1,794 | )                |  |   | (48   | ) |  |   | (3,221 | )
|                         |  |                   |        |   |            |   |        |                  |  |   |       |   |  |   |        |  
|Balance, July 3, 2005    |  | $                 | 855    |   |            | $ | 4,846  |                  |  | $ |      |   |  | $ | 5,701  |  
|                         |  |                   |        |   |            |   |        |                  |  |   |       |   |  |   |        |  

---



Stock Based Compensation. Stock based compensation expense for the first six months of fiscal 2005 was $876,000, which represents
amortization of deferred stock based compensation. In connection with the merger, all of the outstanding shares of Old COMSYS Class D redeemable preferred stock, which were issued as of July 1, 2004 under the Old COMSYS 2004 Management Incentive
Plan, were exchanged for 1.4 million shares of our common stock. Of these shares, 468,615 shares were vested at the closing of the merger, and on January 1, 2005, an additional 156,205 shares vested. On January 1, 2006, 156,205 shares will vest, and
another 156,205 shares will vest on January 1, 2007, resulting in compensation expense of $1.7 million in each of fiscal 2005 and 2006 when these unvested shares fully vest, which expense is accrued throughout the year. The remaining 468,614 shares
will vest if certain performance based criteria specified in the 2004 Management Incentive Plan are met. To the extent any of these shares vest, stock based compensation expense will be recognized in accordance with SFAS No. 123(R), Share-Based
Payment, a revision of SFAS No. 123, Accounting for Stock-Based Compensation. The vesting of all unvested shares will be accelerated upon the occurrence of certain events as specified in the 2004 Management Incentive Plan, and the
associated stock based compensation expense will be recognized at the time of such accelerated vesting. See Note 4 to the unaudited consolidated financial statements included elsewhere in this report.



Registration Statement Fees and Expenses. On April 4, 2005, we
filed a Registration Statement on Form S-1, as amended on May 11, 2005, with the Securities and Exchange Commission relating to a proposed public offering of our common stock. We intended to use the net proceeds from the offering to redeem all of
COMSYS outstanding Series A-1 redeemable preferred stock and to repay approximately $25.0 million of outstanding principal and interest under the second lien term loan. On June 17, 2005, we announced our decision to withdraw the proposed
equity offering due to market conditions. As a result, we recorded expense of $950,000 in the second quarter of 2005 related to the costs incurred in connection with the proposed equity offering and the registration statement.



Depreciation and Amortization.Depreciation and
amortization expense consists primarily of depreciation of our fixed assets and amortization of our customer base and contract cost intangible assets. For the first six months of fiscal 2005 and for the same six-month period of 2004, depreciation
and amortization expense was $5.0 million and $7.9 million, respectively, representing a decrease of 37.2%. This decline was due primarily to certain intangible assets becoming fully amortized subsequent to June 30, 2004.



Interest Expense. Interest expense was $8.4 million and $30.8
million for the first six months of fiscal 2005 and for the first six months of fiscal 2004, respectively, a decrease of $22.5 million, which was due to the redemption of Old COMSYS preferred stock in connection with the merger. On July 1, 2003, we
adopted SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity,which requires that dividends on mandatorily redeemable preferred stock be recorded as interest expense. SFAS No. 150
applies to both COMSYS and Old COMSYS redeemable preferred stock and, as a result, interest expense includes dividends in the amount of $21.8 million in the first half of 2004 compared to $1.7 million in the first half of
2005. Net interest expense on borrowings under our credit facilities was $6.1 million in the first six months of fiscal 2005 compared to $9.0 million in the same six month period of 2004. The decrease was due to the repayment of $64.8 million
of senior subordinated notes in the third quarter of 2004 with a weighted average interest rate of 16.6% at June 30, 2004 and the repayment of a $7.8 million interest deferred note with an interest rate of 11.0%, compounded quarterly. The increase
in borrowings under the new senior credit facility entered into in connection with the merger was offset by more favorable interest rates on this facility. See Liquidity and Capital ResourcesOverview.



Provision for Income Taxes.As of January 2, 2005 and July 3,
2005, we had $82.2 million in net deferred tax assets and had recorded a reserve against those net assets due to the uncertainty related to the realization of these amounts. Net operating loss carryforwards from prior years will offset any projected
tax provision generated during the current year.



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Liquidity and Capital Resources



Overview



Old COMSYS had historically financed its operations through internally generated funds, the issuance of preferred stock and borrowings under its credit
facilities. At July 3, 2005, we had net working capital of $22.4 million compared to net working capital of $16.6 million at January 2, 2005.



On September 30, 2004, in conjunction with the merger with Venturi, we issued $22.4 million of mandatorily redeemable preferred stock and entered into a
new senior credit facility with Merrill Lynch Capital and a syndicate of lenders (the senior credit agreement) that replaced our prior credit facility. The senior credit agreement provides for borrowings of up to $100.0 million under a
revolving line of credit (the revolver) and a $15.0 million term loan payable in eight quarterly installments (the senior term loan). At the same time, we borrowed $70.0 million under a second lien term loan credit agreement
with Merrill Lynch Capital, Heritage Bank, SSB and a syndicate of lenders (the second lien term loan).



Borrowings under the revolver are limited to 85% of eligible accounts receivable, as defined, reduced by the amount of outstanding letters of credit and
designated reserves. At September 30, 2004, these designated reserves were a minimum availability reserve of $5.0 million and a restructuring reserve of $22.9 million intended to fund certain liabilities of Venturi as of September 30, 2004, purchase
accounting reserves established in connection with the merger and the estimated cash outlays related to restructuring and transition costs associated with the merger that were not eligible for accrual in the purchase price allocation (comprised
primarily of expenses related to duplicative leases, redundant headcount, severance arrangements, asset write-offs and integration services provided by third parties). As of July 3, 2005, the $5.0 million minimum availability reserve remained and
the restructuring reserve was reduced to $0.0. Interest on the revolver and senior term loan is based on LIBOR plus a margin, which on the revolver is 2.25% or 2.50%, depending upon our ratio of total debt to adjusted EBITDA, as defined in the
senior credit agreement, and which is 3.00% for the senior term loan. At our election, interest on the revolver and senior term loan may be based on the prime rate plus a margin, which on the revolver is 1.25% or 1.50%, depending upon our ratio of
total debt to adjusted EBITDA, and which is 2.00% for the senior term loan. The senior credit agreement is secured by a pledge of the stock of our subsidiaries and a lien on the assets of our subsidiaries and expires in September 2009. At July 3,
2005, we had outstanding borrowings of $63.7 million under the revolver at interest rates ranging from 5.81% to 7.5% per annum (weighted average rate of 5.91%) and borrowing availability under the revolver of $28.0 million for general corporate
purposes. The principal balance of the senior term loan on that date was $9.4 million with tranches bearing interest rates ranging from 6.31% to 6.5% per annum (weighted average rate of 6.46%).



The second lien term loan bears interest at the prime rate plus a margin of
6.50% or, at our election, LIBOR plus a margin of 7.50%. The principal balance of the second lien term loan was $70.0 million as of July 3, 2005, and had interest rates ranging from 10.69% to 11.0% (weighted average rate of 10.89%). The second lien
term loan is secured by a second lien position in the stock and assets of our subsidiaries and matures on April 30, 2010. Prepayment of principal will be required under the senior term loan, the revolver and the second lien term loan in certain
circumstances.



We pay a fee on outstanding letters of credit
equal to the LIBOR margin then applicable to the revolver. As of July 3, 2005, our outstanding letters of credit totaled $3.3 million and the fee was 2.50% per annum. We also pay commitment fees of 0.50% per annum on the unused portion of the
revolver.



Effective February 22, 2005, we entered into an
interest rate swap and an interest rate cap that together effectively convert $40.0 million of variable rate debt to modified fixed rate debt through September 20, 2009, thus potentially reducing the impact of changes in interest rates on future
interest expense. The swap and the cap are designated as cash flow hedges of the variable LIBOR-based interest payments on $40.0 million of borrowings under the senior credit agreement and, as such, are carried at fair value. The swap is based on a
$20.0 million notional amount at a rate of 4.59%, and the cap is based on a $20.0 million notional amount at a rate of 4.50%. The net fair value of the interest rate swap and cap is reflected in the our consolidated balance sheet at July 3, 2005 as
a noncurrent asset with an offset to accumulated other comprehensive income of $4,000.



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The following table summarizes our cash flow activity during the periods indicated (in thousands):



|                                                    |  |                  |        |   |              |   |        |  
|--------------------------------------------------- |  | ---------------- | ------ | - | ------------ | - | ------ | -
|                                                    |  | Six months ended |       
|                                                    |  | July 3,2005      |        |   | June 30,2004 |  
|Net cash provided by operating activities           |  | $                | 1,016  |   |              | $ | 2,726  |  
|Net cash used in investing activities               |  |                  | (4,282 | ) |              |   | (1,835 | )
|Net cash provided by (used in) financing activities |  |                  | 3,266  |   |              |   | (891   | )
|                                                    |  |                  |        |   |              |   |        |  
|Net increase in cash                                |  | $                |       |   |              | $ |       |  
|                                                    |  |                  |        |   |              |   |        |  



Cash provided by
operating activities in the first six months of fiscal 2005 was $1.0 million compared to $2.7 million in the first half of 2004. Our positive cash flows from operating activities in the 2005 period reflect higher operating income than in the
previous year, offset by increased working capital requirements due to the costs associated with the integration of Venturis operations and the transition of the Old COMSYS back office functions to Venturis PeopleSoft system. Cash flows
from operating activities were also affected by the timing of cash receipts and disbursements.



Cash used in investing activities in the first six months of fiscal 2005 was $4.3 million compared to $1.8 million for the same period in 2004. The increase was due to an increase in capital expenditures related to
computer systems and leasehold improvements.



Cash provided by
financing activities was $3.3 million for the first six months of fiscal 2005 representing primarily net borrowings under the revolver of $6.6 million to fund operating and investing activities less the payment of $3.8 million of the senior term
loan. For the six months ended June 30, 2004, net cash used in financing activities was $891,000, which represented financing costs and advances to stockholders.



In the six months ended July 3, 2005, we incurred $3.9 million for merger integration costs. Capital expenditure
requirements, primarily for software upgrades for our PeopleSoft system, hardware for our internal information systems and leasehold improvements, are currently expected to be approximately $2.5 million for the remainder of 2005. We anticipate that
our capital requirements for at least the next 12 months will be satisfied through a combination of cash flow from operations and borrowings under our revolver.



Pursuant to the terms of the revolver, we maintain a zero balance in our cash accounts. Any excess cash in our accounts is swept on a daily basis and
applied to repay borrowings under the revolver, and any cash needs are satisfied through borrowings under the revolver.



Since May 13, 2004, our common stock has traded on the NASDAQ National Market. Following our name change in connection with our merger with Old COMSYS in
September 2004, our common stock has traded under the symbol CITP.



Debt Compliance



Our ability to continue operating is largely dependent upon our ability to maintain compliance with the financial covenants of our credit facilities. Both the senior credit agreement and second lien term loan contain customary covenants and
events of default, including the maintenance of fixed charge coverage ratios, total debt to adjusted EBITDA ratios and minimum levels of EBITDA, all as defined in the agreements. As of July 3, 2005, we were in compliance with all covenant
requirements under the senior credit agreement and the second lien term loan, and we believe we will be able to comply with these covenants during the remainder of fiscal year 2005.



Critical Accounting Policies and Estimates



Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, also referred to as GAAP.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates include the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during the period. We evaluate these estimates and assumptions on an ongoing basis, including but not limited to those related to revenue recognition, the
recoverability of goodwill, collectibility of accounts receivable, reserves for medical costs and realization of deferred tax assets. Estimates and assumptions are based on historical and other factors believed to be reasonable under the
circumstances. The results of these estimates may form the basis of the carrying value of certain assets and liabilities and may not be readily apparent from other sources. Actual results, under conditions and circumstances different from those
assumed, may differ materially from these estimates.



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We believe the following accounting policies are critical to our business operations and the
understanding of our operations and include the more significant judgments and estimates used in the preparation of our consolidated financial statements.



Revenue Recognition



Revenue under time-and-materials contracts is recorded at the time services are performed. Revenue from fixed-price contracts is recognized using the
units of production method based on the ratio of time incurred to total estimated time to complete the project. Provisions for estimated losses on incomplete contracts are made on a contract-by-contract basis and are recorded in the period the
losses are determinable. Estimated losses on incomplete projects are determined by comparing the revenue remaining to be recognized on fixed-price contracts to judgments as to estimated time and cost required to complete the project. If the
estimated cost to complete the project exceeds the remaining revenue to be recognized, the excess cost is recorded as a loss provision on the contract.



We report revenues from vendor management services net of the related pass-through labor costs. We also report revenues net of payrolling activity.
Payrolling is defined as a situation in which we accept a client-identified IT consultant for payroll processing in exchange for a fee. Revenue generated by payrollees is recorded net of labor costs. In our permanent placement business,
we recognize revenue when employment candidates accept offers of permanent employment.



Recoverability of Goodwill and Other Intangible Assets



Effective at the beginning of 2002, Old COMSYS adopted SFAS No. 142, Goodwill and Other Intangible Assets, which established a new method for
testing goodwill and other intangible assets for impairment using a fair value based approach. Under the new standard, goodwill and other intangible assets with indefinite lives are no longer amortized as was previously required, but are tested
annually for impairment, unless an event occurs or circumstances change during the year that reduce or may reduce the fair value of the reporting unit below its book value, in which event an impairment charge may be required during the year. The
annual test, which COMSYS performs on October 1st, requires estimates and judgments by management to determine
valuations for each reporting unit. Although we believe our assumptions and estimates are reasonable and appropriate, different assumptions and estimates could materially affect our reported financial results. Different assumptions related to future
cash flows, operating margins, growth rates and discount rates could result in an impairment charge, which would be recognized as a non-cash charge to operating income and a reduction in asset values on our balance sheet. The Company recorded
impairment charges in 2002 totaling $152.7 million and recorded no impairment charges in 2003 or 2004. At July 3, 2005 and January 2, 2005, total goodwill was $154.2 million and $153.7 million, respectively.



Our intangible assets other than goodwill represent contract costs and a
customer base and are amortized over the respective contract terms or estimated life of the customer base, ranging from two to five years. At July 3, 2005 and January 2, 2005, net intangible assets were $5.5 million and $7.1 million, respectively.
In the event that facts and circumstances indicate intangibles or other long-lived assets may be impaired, we evaluate the recoverability and estimated useful lives of such assets. The estimated future undiscounted cash flows associated with the
assets are compared to the assets carrying amount to determine if a write-down to fair value is necessary. We believe that all of our long-lived assets are fully realizable as of July 3, 2005.



Collectibility of Accounts Receivable



We make ongoing estimates relating to the collectibility of our accounts
receivable and maintain allowances for estimated losses resulting from the inability of our customers to make required payments. In determining the amount of the allowance, we consider our historical level of credit losses and make judgments about
the creditworthiness of significant customers based on ongoing credit evaluations. Further, we monitor current economic trends that might impact the level of credit losses in the future. Since we cannot predict with certainty future changes in the
financial stability of our customers, actual future losses from uncollectible accounts may differ from our estimates. Additional allowances may be required if the economy or the financial condition of our customers deteriorates. If we determined
that a smaller or larger allowance was appropriate, we would record a credit or a charge to selling, general and administrative expense in the period in which we made such a determination. As of July 3, 2005 and January 2, 2005, the allowance for
uncollectible accounts receivable was $4.4 million and $3.2 million, respectively.



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Income Tax Assets and Liabilities



We record an income tax valuation allowance when it is more likely than not
that certain deferred tax assets will not be realized. These deferred tax items represent expenses or operating losses recognized for financial reporting purposes, which will result in tax deductions over varying future periods. The judgments,
assumptions and estimates that may affect the amount of the valuation allowance include estimates of future taxable income, timing or amount of future reversals of existing deferred tax liabilities and other tax planning strategies that may be
available to us.



We record an estimated tax liability or tax
benefit for income and other taxes based on what we determine will likely be paid in the various tax jurisdictions in which we operate. We use our best judgment in the determination of these amounts. However, the liabilities ultimately realized and
paid are dependent upon various matters, including resolution of tax audits, and may differ from amounts recorded. An adjustment to the estimated liability would be recorded as a provision or benefit to income tax expense in the period in which it
becomes probable that the amount of the actual liability differs from the recorded amount.



Derivatives



We
are party to an interest rate swap and an interest rate cap that mature in September 2009 and are designated as cash flow hedges under the provisions of SFAS No. 133, Accounting for Derivative Financial Instruments and Hedging Activities.The
combined net fair value of the swap and cap is recorded on our consolidated balance sheet at July 3, 2005 as an asset in the amount of $4,000. The estimated fair values of derivatives used to hedge our interest rate risk, which have been provided to
us by Merrill Lynch Capital, fluctuate over time and should be viewed in relation to the underlying hedging transaction and the overall management of our exposure to fluctuations in the underlying risk.



The offsetting amount for the net fair value of our interest rate swap and
cap is recorded in accumulated other comprehensive income within the equity section of our consolidated balance sheet. Upon termination, the associated balance in accumulated other comprehensive income is amortized to earnings as the hedged cash
flows occur. Any ineffectiveness present in our cash flow hedges will be recognized immediately in earnings without offset. There was no significant ineffectiveness in the first six months of 2005.



Recent Accounting Pronouncements



In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment,a revision of SFAS No. 123, Accounting for Stock-Based Compensation. SFAS 123(R) will require us to, among other things, measure all employee stock-based compensation awards using a fair value method and record such expense in our
consolidated financial statements. The provisions of SFAS 123(R) are effective for the first annual reporting period that begins after June 15, 2005; therefore, we will adopt the new requirements no later than the beginning of our first quarter of
fiscal 2006. Adoption of the expensing requirements may reduce our reported earnings. Management is currently evaluating the specific impacts of adoption, which include whether we should adopt the requirements on a retrospective basis and which
valuation model is most appropriate.



FORWARD-LOOKING INFORMATION



Our disclosure and analysis in this report, including
information incorporated by reference, may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, or the
Exchange Act, and the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. Forward-looking statements give our current expectations and projections relating to the financial condition, results of operations,
plans, objectives, future performance and business of COMSYS and its subsidiaries, as well as those relating to the merger on September 30, 2004 of Old COMSYS and Venturi. You can identify these statements by the fact that they do not relate
strictly to historical or current facts. These statements may include words such as anticipate, estimate, expect, project, intend, plan, believe and other words and
terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. All statements other than statements of historical facts included in, or incorporated into, this report
that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements.



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These forward-looking statements are largely based on our expectations and beliefs concerning future
events, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors relating to our operations and business environment, all
of which are difficult to predict and many of which are beyond our control, including:



| |  |  | the impact of competitive pressures on our ability to maintain or improve operating margins, including any change in the demand for our services;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our success in attracting, training, retaining and motivating consultants and key officers and employees;
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | changes in levels of unemployment and other economic conditions in the United States, or in particular regions or industries;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------



| |  |  | weakness or reduction 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;
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| |  |  | the challenges of integration and restructuring associated with the merger or other planned business activities and the challenges of achieving anticipated synergies; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the entry of new competitors into the U.S. staffing services market because of the limited barriers to entry or the expansion of existing competitors in that market.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



Although we believe our estimates and
assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, managements assumptions about future events may prove to be inaccurate. Management cautions
all readers that the forward-looking statements contained in this report are not guarantees of future performance, and we cannot assure any reader that those statements will be realized or the forward-looking events and circumstances will occur.
Actual results may differ materially from those anticipated or implied in the forward-looking statements due to the factors listed in this section and elsewhere in this report, as well as the factors listed in the Risk Factors section
and elsewhere in our Annual Report on Form 10-K for the fiscal year ended January 2, 2005. All forward-looking statements speak only as of the date of this report. We do not intend to publicly update or revise any forward-looking statements as a
result of new information, future events or otherwise, except as required by law. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Outstanding debt under our senior and term loan credit agreements at July 3, 2005 was $143.0 million. Interest on borrowings under these facilities is
based on the prime rate or LIBOR plus a variable margin. Based on the outstanding balance at July 3, 2005, a change of 1% in the interest rate would cause a change in interest expense of approximately $1.43 million on an annual basis.



We have historically been subject to market risk on all or a part of our
borrowings under bank credit lines, which have variable interest rates. Effective February 22, 2005, we entered into an interest rate swap and an interest rate cap. The swap agreement and cap agreement are contracts to effectively exchange variable
interest rate payments for fixed rate payments over the life of the instrument. The notional amount is used to measure interest to be paid or received and does not represent the exposure to credit loss. The purpose of the swap and cap is to limit
our exposure to increases in interest rates on the notional amount of bank borrowings over the term of the swap and cap. The swap is based on a $20.0 million notional amount at a rate of 4.59% and the cap is based on a $20.0 million notional amount
at a rate of 4.50%.



The interest rate swap and cap are
recorded at fair value, based on an amount estimated by Merrill Lynch Capital, which represents the amount that Merrill Lynch Capital would have paid us at July 3, 2005 if the swap and cap had been terminated at that date. The combined net fair
value at July 3, 2005 is $4,000, which is included in our consolidated balance sheet in noncurrent assets, with an offset to accumulated other comprehensive income.



20



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ITEM 4. CONTROLS AND PROCEDURES



As of July 3, 2005, our management, including our Chief Executive Officer and our Chief Financial Officer (our principal executive officer and principal financial officer, respectively), conducted an evaluation of our disclosure controls
and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that the information required to be disclosed by us
in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms.



Following the merger of Venturi and Old COMSYS on September 30, 2004, as part of our integration of the two businesses, we
began the process of transitioning Old COMSYS back office information system to Venturis PeopleSoft system and consolidating Venturis disparate back office operations, including payroll, billing, accounts payable, collections and
financial reporting, to Old COMSYS shared services center located in Phoenix, Arizona. This transition has continued throughout the second quarter of fiscal 2005. Other than changes relating to this transition, there has been no change in our
internal control over financial reporting during the quarter ended July 3, 2005 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



PART II - OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS.



We
are defendants in various lawsuits and claims arising in the normal course of business and are defending them vigorously. While the results of litigation cannot be predicted with certainty, management believes the final outcome of such litigation
will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.



In July of 2005, we issued 96,649 shares of our common stock to Bank of America Strategic Solutions, Inc. in connection with Bank of America Strategic
Solutions cashless exercise as of May 9, 2005 of warrants to purchase 211,474 shares of our common stock at the exercise price of $7.8025 per share. Such shares of our common stock were not registered under the Securities Act of 1933, as
amended, and were issued in reliance on the exemption from registration available under Section 4(2) of the Securities Act. The transaction did not involve any public offering and the requirements of the exemption were otherwise complied with.



On July 20, 2005, the SEC declared effective our shelf
registration statement on Form S-3 (File No. 333-120163), filed with the SEC on November 2, 2004, as amended on July 18, 2005, pursuant to which certain selling stockholders listed therein may, from time to time, offer and sell up to 14,925,700
shares of our common stock at prices to be determined at the time of the sale. Solely for purposes of determining the registration fee in connection with such offering, we estimated that the maximum aggregate offering price for the shares of our
common stock offered by the selling stockholders pursuant to the shelf registration statement will be $118,115,205. We also estimated that our total expenses in connection with the registration of such common stock will not exceed $175,000.
We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders under such registration statement, although we may receive consideration upon the exercise of outstanding warrants to acquire an aggregate of
557,523 shares of our common stock registered for resale under such registration statement. If all outstanding warrants are exercised in full for cash, we will receive aggregate proceeds of approximately $4,350,000. Such proceeds may be reduced or
not realized at all if some or all outstanding warrants are exercised by means of cashless exercise.



ITEM 3. DEFAULTS UPON SENIOR SECURITIES.



None.



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.



| | (a) | The Company held its Annual Meeting of Stockholders on June 9, 2005.
| | --- | --------------------------------------------------------------------



| | (b) | Larry L. Enterline, Frederick W. Eubank II, Ted A. Gardner, Victor E. Mandel, Kevin M. McNamara, Christopher R. Pechock, Arthur C. Roselle, Elias J. Sabo and Michael T. Willis were
elected to continue to serve as directors of the Company until the 2006 Annual Meeting of Stockholders of the Company and until their respective successors are elected.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| | (c) | Two proposals were approved by stockholders at the Annual Meeting, with the following vote tabulation:
| | --- | ------------------------------------------------------------------------------------------------------



Proposal No. 1Election of Directors.



|                       |  |            |  |         
|---------------------- |  | ---------- |  | --------
|DIRECTOR               |  | FOR        |  | WITHHELD
|Larry L. Enterline     |  | 14,811,896 |  | 9,580   
|Frederick W. Eubank II |  | 14,811,980 |  | 9,496   
|Ted A. Gardner         |  | 14,811,983 |  | 9,493   
|Victor E. Mandel       |  | 14,812,524 |  | 8,952   
|Kevin M. McNamara      |  | 14,812,548 |  | 8,928   
|Christopher R. Pechock |  | 14,812,546 |  | 8,930   
|Arthur C. Roselle      |  | 14,811,977 |  | 9,499   
|Elias J. Sabo          |  | 14,811,994 |  | 9,482   
|Michael T. Willis      |  | 14,812,545 |  | 8,931   



Proposal No. 2To
ratify the appointment of Ernst & Young LLP as the Companys independent auditor for the fiscal year ending January 1, 2006.



|           |  |         |  |        
|---------- |  | ------- |  | -------
|FOR        |  | AGAINST |  | ABSTAIN
|14,821,043 |  | 280     |  | 153    



ITEM 5. Other Information.



Effective as of July 21, 2005, we entered into (i) the Consent and Fourth Amendment to Credit Agreement among COMSYS Services LLC, COMSYS Information Technology Services, Inc., the Company, PFI Corp., Merrill Lynch Capital, as
Administrative Agent, ING Capital LLC, as Documentation Agent, GMAC Commercial Finance LLC, as Syndication Agent, and the lenders from time to time party thereto, and (ii) the Consent and Third Amendment to Term Loan Credit Agreement among COMSYS
Services LLC, COMSYS Information Technology Services, Inc., the Company, PFI Corp., Merrill Lynch Capital, as Administrative Agent, Heritage Bank, SSB, as Collateral Agent, and the lenders from time to time party thereto. Pursuant to the amendments
to these credit facilities, the lenders and agents thereunder consented to the changes in the definition of EBITDA described in more detail below and the related changes with respect to the compliance covenants set forth therein. Under these
amendments, the lenders and agents consented that for purposes of calculating EBITDA for any defined period, the following items will be added back to net income (loss) in the computation of EBITDA, in each case, to the extent deducted in the
determination of net income for such defined period: (i) costs incurred during the period commencing January 3, 2005 through and including July 3, 2005 by us and our subsidiaries in connection with the proposed equity offering pursuant to the
registration statement on Form S-1, filed with the SEC on April 4, 2005, as amended, in an aggregate amount not to exceed $1,250,000; (ii) costs incurred during the fiscal year ending January 1, 2006 by us and our subsidiaries in connection with
required Sarbanes-Oxley compliance, to the extent such costs are in excess of $650,000, provided, that such costs added back will not exceed $1,350,000 in the aggregate; and (iii) severance costs accrued during the period commencing on July 1, 2005
through and including September 30, 2005, in an aggregate amount not to exceed $1,500,000.



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##### Table of Contents

ITEM 6. Exhibits.



Each
exhibit identified below is filed as part of this report. Exhibits designated with an * are filed as an exhibit to this Quarterly Report on Form 10-Q. Exhibits designated with a + are identified as management contracts or
compensatory plans or arrangements. Exhibits previously filed as indicated below are incorporated by reference.



|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|3.1           |  | Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Companys Current Report on Form 8-K filed with the SEC on October 4,
2004).                                                                                                                                                                                                                                                                                              
|              | 
|3.2           |  | Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.21 to the Companys Current Report on Form 8-K filed with the SEC on October 4, 2004).                                                                                                                                                                                                                                                                                                                   
|              | 
|3.3           |  | First Amendment, effective April 28, 2005, to the Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.1 to the Companys Current Report on Form 8-K filed
with the SEC on May 4, 2004).                                                                                                                                                                                                                                                                      
|              | 
|4.1           |  | Registration Rights Agreement, dated as of September 30, 2004, by and among the Company and the stockholders party thereto (incorporated by reference to Exhibit 4.2 to the Companys Form
8-A/A filed with the SEC on November 2, 2004).                                                                                                                                                                                                                                                   
|              | 
|4.2           |  | Amendment No. 1, effective April 1, 2005, to Registration Rights Agreement, dated as of September 30, 2004, by and among the Company and the stockholders party thereto (incorporated by
reference to Exhibit 4.2 to the Companys Quarterly Report on Form 10-Q filed with the SEC on May 6, 2005).                                                                                                                                                                                        
|              | 
|4.3           |  | Amended and Restated Registration Rights Agreement, dated as of September 30, 2004, by and among the Registrant and the stockholders party thereto (incorporated by reference to Exhibit 4.3 to
the Companys Form 8-A/A filed with the SEC on November 2, 2004).                                                                                                                                                                                                                           
|              | 
|4.4           |  | Amendment No. 1, effective April 1, 2005, to Amended and Restated Registration Rights Agreement, dated as of September 30, 2004, by and among the Registrant and the stockholders party thereto
(incorporated by reference to Exhibit 4.4 to the Companys Quarterly Report on Form 10-Q filed with the SEC on May 6, 2005).                                                                                                                                                                
|              | 
|4.5           |  | Voting Agreement, dated as of September 30, 2004, by and among the Registrant and the stockholders party thereto (incorporated by reference to Exhibit 2.4 to the Registrants Current
Report on Form 8-K filed with the SEC on October 4, 2004).                                                                                                                                                                                                                                           
|              | 
|4.6           |  | Voting Agreement, dated as of September 30, 2004, between the Registrant and MatlinPatterson Global Opportunities Partners L.P. (incorporated by reference to Exhibit 2.5 to the
Registrants Current Report on Form 8-K filed with the SEC on October 4, 2004).                                                                                                                                                                                                                            
|              | 
|4.7#          |  | Common Stock Purchase Warrant dated as of April 14, 2003, issued by the Registrant in favor of BNP Paribas (incorporated by reference to Exhibit 99.16 to the Registrants Current Report
on Form 8-K filed with the SEC on April 25, 2003).                                                                                                                                                                                                                                                
|              | 
|4.8           |  | Specimen Certificate for Shares of Common Stock (incorporated by reference to Exhibit 4.0 to the Quarterly Report on Form 10-Q filed with the SEC on August 13, 2003).                                                                                                                                                                                                                                                                                                                      
|              | 
|10.1+         |  | Form of Indemnification Agreement with directors and executive officers of the Company (incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K filed with
the SEC on May 4, 2004).                                                                                                                                                                                                                                                                           
|              | 
|10.2          |  | Consent and Second Amendment to Term Loan Credit Agreement dated May 4, 2005 among COMSYS Services LLC, COMSYS Information Technology Services, Inc., the Company, PFI Corp., Merrill Lynch
Capital, as Administrative Agent, Heritage Bank, SSB, as Collateral Agent, and the lenders from time to time party thereto (incorporated by reference to Exhibit 10.3 to the Companys Quarterly Report on Form 10-Q filed with the SEC on May 6,
2005).                                        
|              | 
|10.3*         |  | Consent and Third Amendment to Term Loan Credit Agreement dated as of July 21, 2005 among COMSYS Services LLC, COMSYS Information Technology Services, Inc., the Company, PFI Corp., Merrill
Lynch Capital, as Administrative Agent, Heritage Bank, SSB, as Collateral Agent, and the lenders from time to time party thereto.                                                                                                                                                              
|              | 
|10.4          |  | Consent and Third Amendment to Credit Agreement dated May 4, 2005 among COMSYS Services LLC, COMSYS Information Technology Services, Inc., the Company, PFI Corp., Merrill Lynch Capital, as
Administrative Agent, ING Capital LLC, as Documentation Agent, GMAC Commercial Finance LLC, as Syndication Agent, and the lenders from time to time party thereto (incorporated by reference to Exhibit 10.4 to the Companys Quarterly Report on
Form 10-Q filed with the SEC on May 6, 2005).



23



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|              |   |  |                                                                                                                                                                                                                                                                                                                                                                         
|------------- | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |   |  | Description                                                                                                                                                                                                                                                                                                                                                             
|              |  
|10.5          | * |  | Consent and Fourth Amendment to Credit Agreement dated as of July 21, 2005 among COMSYS Services LLC, COMSYS Information Technology Services, Inc., the Company, PFI Corp., Merrill Lynch
Capital, as Administrative Agent, ING Capital LLC, as Documentation Agent, GMAC Commercial Finance LLC, as Syndication Agent, and the lenders from time to time party thereto.
|              |  
|31.1          | * |  | Certification of Chief Executive Officer of the Company pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.                                                                                                                                                                                                                   
|              |  
|31.2          | * |  | Certification of Chief Financial Officer of the Company pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.                                                                                                                                                                                                                   
|              |  
|32.1          | * |  | Certification of Chief Executive Officer of the Company pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title
18 of the United States Code.                                                                                                                                             
|              |  
|32.2          | * |  | Certification of Chief Financial Officer of the Company pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title
18 of the United States Code.                                                                                                                                             



---

|* | Filed herewith.
|- | ---------------

|# | This exhibit is substantially identical to Common Stock Purchase Warrants issued by the Registrant to each of Bank of America, N.A., Bank One, NA, Inland Partners, L.P., Links
Partners, L.P., MatlinPatterson Global Opportunities Partners L.P., R2Investments, LDC and Mellon HBV SPV LLC.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|+ | Management contract or compensatory plan or arrangement.
|- | --------------------------------------------------------



24



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##### Table of Contents

SIGNATURES



Pursuant to the
requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                      |  |  |  |                          |  |                                                  
|--------------------- |  |  |  | ------------------------ |  | -------------------------------------------------
|                      |  |  |  | COMSYS IT PARTNERS, INC.
|                      |  |  |  | (Registrant)            
|                      |  |  | 
|Date: August 17, 2005 |  |  |  | By:                      |  | /s/ Michael T. Willis                            
|                      |  |  |  |                          |  | Michael T. Willis                                
|                      |  |  |  |                          |  | President and Chief Executive Officer            
|                      |  |  | 
|Date: August 17, 2005 |  |  |  | By:                      |  | /s/ Joseph C. Tusa, Jr.                          
|                      |  |  |  |                          |  | Joseph C. Tusa, Jr.                              
|                      |  |  |  |                          |  | Senior Vice President and Chief Financial Officer



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##### Table of Contents

INDEX TO EXHIBITS



|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|3.1           |  | Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Companys Current Report on Form 8-K filed with the SEC on October 4,
2004).                                                                                                                                                                                                                                                                                              
|              | 
|3.2           |  | Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.21 to the Companys Current Report on Form 8-K filed with the SEC on October 4, 2004).                                                                                                                                                                                                                                                                                                                   
|              | 
|3.3           |  | First Amendment, effective April 28, 2005, to the Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.1 to the Companys Current Report on Form 8-K filed
with the SEC on May 4, 2004).                                                                                                                                                                                                                                                                      
|              | 
|4.1           |  | Registration Rights Agreement, dated as of September 30, 2004, by and among the Company and the stockholders party thereto (incorporated by reference to Exhibit 4.2 to the Companys Form
8-A/A filed with the SEC on November 2, 2004).                                                                                                                                                                                                                                                   
|              | 
|4.2           |  | Amendment No. 1, effective April 1, 2005, to Registration Rights Agreement, dated as of September 30, 2004, by and among the Company, and the stockholders party thereto (incorporated by
reference to Exhibit 2 to the Companys Quarterly Report on Form 10-Q filed with the SEC on May 6, 2005).                                                                                                                                                                                         
|              | 
|4.3           |  | Amended and Restated Registration Rights Agreement, dated as of September 30, 2004, by and among the Registrant and the stockholders party thereto (incorporated by reference to Exhibit 4.3 to
the Companys Form 8-A/A filed with the SEC on November 2, 2004).                                                                                                                                                                                                                           
|              | 
|4.4           |  | Amendment No. 1, effective April 1, 2005, to Amended and Restated Registration Rights Agreement, dated as of September 30, 2004, by and among the Registrant and the stockholders party thereto
(incorporated by reference to Exhibit 4.4 to the Companys Quarterly Report on Form 10-Q filed with the SEC on May 6, 2005).                                                                                                                                                                
|              | 
|4.5           |  | Voting Agreement, dated as of September 30, 2004, by and among the Registrant and the stockholders party thereto (incorporated by reference to Exhibit 2.4 to the Registrants Current
Report on Form 8-K filed with the SEC on October 4, 2004).                                                                                                                                                                                                                                           
|              | 
|4.6           |  | Voting Agreement, dated as of September 30, 2004, between the Registrant and MatlinPatterson Global Opportunities Partners L.P. (incorporated by reference to Exhibit 2.5 to the
Registrants Current Report on Form 8-K filed with the SEC on October 4, 2004).                                                                                                                                                                                                                            
|              | 
|4.7#          |  | Common Stock Purchase Warrant dated as of April 14, 2003, issued by the Registrant in favor of BNP Paribas (incorporated by reference to Exhibit 99.16 to the Registrants Current Report
on Form 8-K filed with the SEC on April 25, 2003).                                                                                                                                                                                                                                                
|              | 
|4.8           |  | Specimen Certificate for Shares of Common Stock (incorporated by reference to Exhibit 4.0 to the Quarterly Report on Form 10-Q filed with the SEC on August 13, 2003).                                                                                                                                                                                                                                                                                                                      
|              | 
|10.1+         |  | Form of Indemnification Agreement with directors and executive officers of the Company (incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K filed with
the SEC on May 4, 2004).                                                                                                                                                                                                                                                                           
|              | 
|10.2          |  | Consent and Second Amendment to Term Loan Credit Agreement dated May 4, 2005 among COMSYS Services LLC, COMSYS Information Technology Services, Inc., the Company, PFI Corp., Merrill Lynch
Capital, as Administrative Agent, Heritage Bank, SSB, as Collateral Agent, and the lenders from time to time party thereto (incorporated by reference to Exhibit 10.3 to the Companys Quarterly Report on Form 10-Q filed with the SEC on May 6,
2005).                                        
|              | 
|10.3*         |  | Consent and Third Amendment to Term Loan Credit Agreement dated as of July 21, 2005 among COMSYS Services LLC, COMSYS Information Technology Services, Inc., the Company, PFI Corp., Merrill
Lynch Capital, as Administrative Agent, Heritage Bank, SSB, as Collateral Agent, and the lenders from time to time party thereto.                                                                                                                                                              
|              | 
|10.4          |  | Consent and Third Amendment to Credit Agreement dated May 4, 2005 among COMSYS Services LLC, COMSYS Information Technology Services, Inc., the Company, PFI Corp., Merrill Lynch Capital, as
Administrative Agent, ING Capital LLC, as Documentation Agent, GMAC Commercial Finance LLC, as Syndication Agent, and the lenders from time to time party thereto (incorporated by reference to Exhibit 10.4 to the Companys Quarterly Report on
Form 10-Q filed with the SEC on May 6, 2005).



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##### Table of Contents

|              |  |                                                                                                                                                                                                                                                                                                                                                                         
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                                                                                             
|10.5*         |  | Consent and Fourth Amendment to Credit Agreement dated as of July 21, 2005 among COMSYS Services LLC, COMSYS Information Technology Services, Inc., the Company, PFI Corp., Merrill Lynch
Capital, as Administrative Agent, ING Capital LLC, as Documentation Agent, GMAC Commercial Finance LLC, as Syndication Agent, and the lenders from time to time party thereto.
|              | 
|31.1*         |  | Certification of Chief Executive Officer of the Company pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.                                                                                                                                                                                                                   
|              | 
|31.2*         |  | Certification of Chief Financial Officer of the Company pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.                                                                                                                                                                                                                   
|              | 
|32.1*         |  | Certification of Chief Executive Officer of the Company pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title
18 of the United States Code.                                                                                                                                             
|              | 
|32.2*         |  | Certification of Chief Financial Officer of the Company pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title
18 of the United States Code.                                                                                                                                             

---

|* | Filed herewith.
|- | ---------------

|# | This exhibit is substantially identical to Common Stock Purchase Warrants issued by the Registrant to each of Bank of America, N.A., Bank One, NA, Inland Partners, L.P., Links
Partners, L.P., MatlinPatterson Global Opportunities Partners L.P., R2Investments, LDC and Mellon HBV SPV LLC.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|+ | Management contract or compensatory plan or arrangement.
|- | --------------------------------------------------------



E-2