##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 28, 2009.
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 000-27792
 
 COMSYS IT PARTNERS, INC.
 (Exact name of Registrant as specified in its charter)
 
 Delaware
(State or other jurisdiction 
of incorporation or organization)
    
    56-1930691
(I.R.S. Employer
Identification Number)
 4400 Post Oak Parkway, Suite 1800
Houston, TX 77027
(Address, including zip code, of principal executive offices)
 (713) 386-1400
(Registrants telephone number, including area code)
 
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



TABLE OF CONTENTS
 PageCautionary Note Regarding Forward-Looking Statements
    
    
    2PART I  FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    26Item 4. Controls and Procedures
    
    
    27PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    28Item 1A. Risk Factors
    
    
    28Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    28Item 3. Defaults upon Senior Securities
    
    
    28Item 4. Submission of Matters to a Vote of Securities Holders
    
    
    28Item 5. Other Information
    
    
    28Item 6. Exhibits
    
    
    28Signatures
    
    
    30EX-31.1EX-31.2EX-32




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##### Table of Contents



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




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PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 COMSYS IT Partners, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
 Three Months Ended
    
    Six Months EndedJune 28,
    
    June 29,
    
    June 28,
    
    June 29,2009
    
    2008
    
    2009
    
    2008(In thousands, except per share amounts)Revenues from services
    
    $
    156,765
    
    
    $
    184,064
    
    
    $
    319,459
    
    
    $
    367,447Cost of services
    
    
    118,386
    
    
    
    139,232
    
    
    
    242,984
    
    
    
    277,959Gross profit
    
    
    38,379
    
    
    
    44,832
    
    
    
    76,475
    
    
    
    89,488Operating costs and expenses:Selling, general and administrative
    
    
    32,347
    
    
    
    34,291
    
    
    
    65,530
    
    
    
    69,055Restructuring costs
    
    
    321
    
    
    
    
    
    
    
    3,941
    
    
    
    Depreciation and amortization
    
    
    2,050
    
    
    
    1,898
    
    
    
    4,124
    
    
    
    3,71834,718
    
    
    
    36,189
    
    
    
    73,595
    
    
    
    72,773Operating income
    
    
    3,661
    
    
    
    8,643
    
    
    
    2,880
    
    
    
    16,715Interest expense, net
    
    
    1,126
    
    
    
    1,279
    
    
    
    2,078
    
    
    
    2,882Other income, net
    
    
    (67
    )
    
    
    (172
    )
    
    
    (172
    )
    
    
    (225
    )Income before income taxes
    
    
    2,602
    
    
    
    7,536
    
    
    
    974
    
    
    
    14,058Income tax expense
    
    
    216
    
    
    
    1,324
    
    
    
    459
    
    
    
    2,742Net income
    
    $
    2,386
    
    
    $
    6,212
    
    
    $
    515
    
    
    $
    11,316Basic net income per common share
    
    $
    0.11
    
    
    $
    0.31
    
    
    $
    0.02
    
    
    $
    0.56Diluted net income per common share
    
    $
    0.11
    
    
    $
    0.30
    
    
    $
    0.02
    
    
    $
    0.55Weighted average basic and diluted shares outstanding:Basic
    
    
    19,796
    
    
    
    19,592
    
    
    
    19,785
    
    
    
    19,585Diluted
    
    
    19,796
    
    
    
    20,636
    
    
    
    19,785
    
    
    
    20,628
 See notes to consolidated financial statements
 3




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COMSYS IT Partners, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)
 Three Months Ended
    
    Six Months EndedJune 28,
    
    June 29,
    
    June 28,
    
    June 29,2009
    
    2008
    
    2009
    
    2008(In thousands)Net income
    
    $
    2,386
    
    
    $
    6,212
    
    
    $
    515
    
    
    $
    11,316Foreign currency translation adjustments
    
    
    (97
    )
    
    
    (5
    )
    
    
    (92
    )
    
    
    16Total comprehensive income
    
    $
    2,289
    
    
    $
    6,207
    
    
    $
    423
    
    
    $
    11,332
 See notes to consolidated financial statements
 4




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COMSYS IT Partners, Inc. and Subsidiaries
Consolidated Balance Sheets
 June 28,
    
    December 28,2009
    
    2008(Unaudited)
    
    (Note 1)(In thousands, except share and par value amounts)AssetsCurrent assets:Cash and cash equivalents
    
    $
    1,771
    
    
    $
    22,695Accounts receivable, net of allowance of $3,554 and $3,232, respectively
    
    
    182,333
    
    
    
    202,297Prepaid expenses and other
    
    
    3,518
    
    
    
    3,116Restricted cash
    
    
    2,486
    
    
    
    2,489Total current assets
    
    
    190,108
    
    
    
    230,597Fixed assets, net
    
    
    14,937
    
    
    
    16,596Goodwill
    
    
    88,962
    
    
    
    89,064Other intangible assets, net
    
    
    10,173
    
    
    
    11,962Deferred financing costs, net
    
    
    3,002
    
    
    
    1,175Restricted cash
    
    
    308
    
    
    
    308Other assets
    
    
    1,144
    
    
    
    1,478Total assets
    
    $
    308,634
    
    
    $
    351,180Liabilities and stockholders equityCurrent liabilities:Accounts payable
    
    $
    128,072
    
    
    $
    156,528Payroll and related taxes
    
    
    25,872
    
    
    
    25,975Interest payable
    
    
    248
    
    
    
    337Other current liabilities
    
    
    9,787
    
    
    
    9,728Total current liabilities
    
    
    163,979
    
    
    
    192,568Long-term debt
    
    
    52,174
    
    
    
    69,692Other liabilities
    
    
    6,827
    
    
    
    5,435Total liabilities
    
    
    222,980
    
    
    
    267,695Commitments and contingenciesStockholders equity:Preferred stock, no par value; 5,000,000 shares authorized; none issued
    
    
    
    
    
    
    Common stock, par value $.01; 95,000,000 shares authorized and 20,816,746 shares outstanding
at June 28, 2009; 95,000,000 shares authorized and 20,465,028 shares outstanding at December 28, 2008
    
    
    207
    
    
    
    203Common stock warrants
    
    
    1,734
    
    
    
    1,734Accumulated other comprehensive loss
    
    
    (182
    )
    
    
    (90
    )Additional paid-in capital
    
    
    229,102
    
    
    
    227,360Accumulated deficit
    
    
    (145,207
    )
    
    
    (145,722
    )Total stockholders equity
    
    
    85,654
    
    
    
    83,485Total liabilities and stockholders equity
    
    $
    308,634
    
    
    $
    351,180
 See notes to consolidated financial statements
 5




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COMSYS IT Partners, Inc. and Subsidiaries
Consolidated Statements of Shareholders Equity
(Unaudited)
 AccumulatedCommon
    
    Other
    
    Additional
    
    
    
    
    
    TotalCommon
    
    Stock
    
    Comprehensive
    
    Paid-in
    
    Accumulated
    
    StockholdersStock
    
    Warrants
    
    Income (Loss)
    
    Capital
    
    Deficit
    
    Equity(In thousands, except share data)Balance as of December 30, 2007
    
    $
    201
    
    
    $
    1,734
    
    
    $
    57
    
    
    $
    223,174
    
    
    $
    (80,534
    )
    
    $
    144,632Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (65,188
    )
    
    
    (65,188
    )Foreign currency translations
    
    
    
    
    
    
    
    
    
    
    (147
    )
    
    
    
    
    
    
    
    
    
    
    (147
    )Issuance of 342,878 shares of restricted common stock
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    Forfeiture of 25,132 shares of restricted common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (332
    )
    
    
    
    
    
    
    (332
    )Options exercised for 8,200 shares of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    83
    
    
    
    
    
    
    
    83Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,437
    
    
    
    
    
    
    
    4,437Balance as of December 28, 2008
    
    
    203
    
    
    
    1,734
    
    
    
    (90
    )
    
    
    227,360
    
    
    
    (145,722
    )
    
    
    83,485Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    515
    
    
    
    515Foreign currency translations
    
    
    
    
    
    
    
    
    
    
    (92
    )
    
    
    
    
    
    
    
    
    
    
    (92
    )Issuance of 360,500 shares of restricted common stock
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    Forfeiture of 8,767 shares of restricted common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25
    )
    
    
    
    
    
    
    (25
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,771
    
    
    
    
    
    
    
    1,771Balance as of June 28, 2009
    
    $
    207
    
    
    $
    1,734
    
    
    $
    (182
    )
    
    $
    229,102
    
    
    $
    (145,207
    )
    
    $
    85,654
 See notes to consolidated financial statements
 6




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COMSYS IT Partners, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
 Six Months EndedJune 28,
    
    June 29,2009
    
    2008(In thousands)Cash flows from operating activitiesNet income
    
    $
    515
    
    
    $
    11,316Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    4,124
    
    
    
    3,718Restructuring costs
    
    
    3,057
    
    
    
    Provision for doubtful accounts
    
    
    752
    
    
    
    85Stock-based compensation
    
    
    1,771
    
    
    
    2,283Amortization of deferred financing costs
    
    
    497
    
    
    
    434Other noncash expense, net
    
    
    459
    
    
    
    2,742Changes in operating assets and liabilities, net of effects of acquisitions:Accounts receivable
    
    
    19,435
    
    
    
    (27,144
    )Prepaid expenses and other
    
    
    (654
    )
    
    
    (1,247
    )Accounts payable
    
    
    (26,650
    )
    
    
    18,304Payroll and related taxes
    
    
    (132
    )
    
    
    124Other
    
    
    (1,285
    )
    
    
    973Net cash provided by operating activities
    
    
    1,889
    
    
    
    11,588Cash flows from investing activitiesCapital expenditures
    
    
    (690
    )
    
    
    (3,207
    )Acquisitions, net of cash acquired
    
    
    (2,366
    )
    
    
    (6,441
    )Net cash used in investing activities
    
    
    (3,056
    )
    
    
    (9,648
    )Cash flows from financing activitiesBorrowings (payments) under revolving credit facility, net
    
    
    (17,518
    )
    
    
    575Cash paid for financing costs
    
    
    (2,325
    )
    
    
    Repayments of long-term debt
    
    
    
    
    
    
    (2,500
    )Exercise of stock options and warrants
    
    
    
    
    
    
    73Net cash used in financing activities
    
    
    (19,843
    )
    
    
    (1,852
    )Effect of exchange rates on cash
    
    
    86
    
    
    
    1Net increase (decrease) in cash
    
    
    (20,924
    )
    
    
    89Cash, beginning of period
    
    
    22,695
    
    
    
    1,594Cash, end of period
    
    $
    1,771
    
    
    $
    1,683
 See notes to consolidated financial statements
 7




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




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3. Fair Value of Financial Instruments
 Fair Value Measurements
 9




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4. Restructuring Costs
   Employeeseverance
    
    Lease costs
    
    TotalBalance as of December 30, 2007
    
    $
    
    
    
    $
    355
    
    
    $
    355Adjustments
    
    
    
    
    
    
    
    
    
    
    Charges
    
    
    453
    
    
    
    64
    
    
    
    517Cash payments
    
    
    (41
    )
    
    
    (177
    )
    
    
    (218
    )Balance as of December 28, 2008
    
    
    412
    
    
    
    242
    
    
    
    654Adjustments
    
    
    
    
    
    
    
    
    
    
    Charges
    
    
    252
    
    
    
    3,343
    
    
    
    3,595Cash payments
    
    
    (466
    )
    
    
    (285
    )
    
    
    (751
    )Balance as of June 28, 2009
    
    $
    198
    
    
    $
    3,300
    
    
    $
    3,498
  5. Long-Term Debt
    10




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
    
    a $5.0 million minimum availability reserve,
    
    a $1.0 million reserve for outstanding letters of credit, and
    
    a $1.0 million reserve for the ASET acquisition earnout.
   
    
    incur additional indebtedness;
    
    pay more than $10 million in the aggregate for stock repurchases and dividends;
    
    incur liens;
    
    make certain capital expenditures;
    
    make certain investments or acquisitions;
    
    repay debt; and
    
    dispose of property.
   6. Income Taxes
    11




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Accounting for Income
Taxes
 Business Combinations
   7. Net Income Per Share
     Three Months Ended
    
    Six Months EndedJune 28,
    
    June 29,
    
    June 28,
    
    June 29,2009
    
    2008
    
    2009
    
    2008Net income attributable to common stockholders  basic
    
    $
    2,271
    
    
    $
    5,976
    
    
    $
    492
    
    
    $
    10,881Net income attributable to unvested restricted stock holders
    
    
    86
    
    
    
    161
    
    
    
    17
    
    
    
    299Net income attributable to warrant holders
    
    
    29
    
    
    
    75
    
    
    
    6
    
    
    
    136Total net income
    
    $
    2,386
    
    
    $
    6,212
    
    
    $
    515
    
    
    $
    11,316Weighted average common shares outstanding  basic
    
    
    19,796
    
    
    
    19,592
    
    
    
    19,785
    
    
    
    19,585Add: dilutive restricted stock, stock options and warrants
    
    
    
    
    
    
    1,044
    
    
    
    
    
    
    
    1,043Diluted weighted average common shares outstanding
    
    
    19,796
    
    
    
    20,636
    
    
    
    19,785
    
    
    
    20,628Basic net income per common share
    
    $
    0.11
    
    
    $
    0.31
    
    
    $
    0.02
    
    
    $
    0.56Diluted net income per common share
    
    $
    0.11
    
    
    $
    0.30
    
    
    $
    0.02
    
    
    $
    0.55
 12




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8. Commitments and Contingencies
        13




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9. Stock Compensation Plans
  Plan Descriptions
     14




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##### Table of Contents



Stock Options
  Weighted-Average1995
    
    
    2003
    
    
    2004
    
    
    
    
    
    
    Exercise PricePlan
    
    
    Equity Plan
    
    
    Equity Plan
    
    
    Total
    
    
    Per ShareOutstanding at December 30, 2007
    
    
    1,250
    
    
    
    445,000
    
    
    
    330,266
    
    
    
    776,516
    
    
    $
    9.75Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    (8,200
    )
    
    
    (8,200
    )
    
    $
    8.55Forfeited
    
    
    (527
    )
    
    
    (1,387
    )
    
    
    (18,336
    )
    
    
    (20,250
    )
    
    $
    17.94Outstanding at December 28, 2008
    
    
    723
    
    
    
    443,613
    
    
    
    303,730
    
    
    
    748,066
    
    
    $
    9.54Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    (1,387
    )
    
    
    (9,833
    )
    
    
    (11,220
    )
    
    $
    9.63Outstanding at June 28, 2009
    
    
    723
    
    
    
    442,226
    
    
    
    293,897
    
    
    
    736,846
    
    
    $
    9.54Exercisable at June 28, 2009
    
    
    723
    
    
    
    425,529
    
    
    
    293,897
    
    
    
    720,149
    
    
    $
    9.57Available for issuance at June 28, 2009
    
    
    
    
    
    
    55,809
    
    
    
    1,433,166
    
    
    
    1,488,975
  Options Outstanding
    
    Options ExercisableWeightedAverage
    
    Weighted
    
    
    
    
    
    WeightedContractual
    
    Average
    
    
    
    
    
    AverageOptions
    
    Years
    
    Exercise Price
    
    Options
    
    Exercise PriceRange of Exercise Prices
    
    Outstanding
    
    Remaining
    
    per Share
    
    Exercisable
    
    per Share$7.80
    
    
    219,000
    
    
    
    3.79
    
    
    $
    7.80
    
    
    
    219,000
    
    
    $
    7.80$8.55 to $8.88
    
    
    218,961
    
    
    
    5.10
    
    
    $
    8.57
    
    
    
    202,264
    
    
    $
    8.57$11.05 to $11.98
    
    
    298,162
    
    
    
    5.46
    
    
    $
    11.32
    
    
    
    298,162
    
    
    $
    11.32$63.25 to $132.75
    
    
    723
    
    
    
    0.61
    
    
    $
    100.64
    
    
    
    723
    
    
    $
    100.64$7.80 to $132.75
    
    
    736,846
    
    
    
    4.85
    
    
    $
    9.54
    
    
    
    720,149
    
    
    $
    9.57
   Restricted Stock Awards
  15




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Weighted AverageGrant DateShares
    
    
    Fair ValueNonvested balance at December 30, 2007
    
    
    490,635
    
    
    $
    18.34Granted
    
    
    342,878
    
    
    $
    11.09Vested
    
    
    (147,227
    )
    
    $
    17.35Forfeited
    
    
    (79,443
    )
    
    $
    17.30Nonvested balance at December 28, 2008
    
    
    606,843
    
    
    $
    14.62Granted
    
    
    360,500
    
    
    $
    2.48Vested
    
    
    (210,744
    )
    
    $
    15.56Forfeited
    
    
    (333
    )
    
    $
    20.21Nonvested balance at June 28, 2009
    
    
    756,266
    
    
    $
    8.57
    10. Related Party Transactions
    16




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##### Table of Contents



11. Recent Accounting Pronouncements
 Subsequent Events
 17




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following discussion and analysis should be read in conjunction with the unaudited consolidated
financial statements and related notes appearing elsewhere in this report, as well as other reports
we file with the Securities and Exchange Commission. This discussion contains forward-looking
statements reflecting our current expectations and estimates and assumptions concerning events and
financial trends that may affect our future operating results or financial position. Actual
results and the timing of events may differ materially from those contained in these
forward-looking statements due to a number of factors, including those discussed in the section
entitled Cautionary Note Regarding Forward-Looking Statements included elsewhere in this report
and in the sections entitled Risk Factors included in this report and our Annual Report on Form
10-K for the fiscal year ended December 28, 2008.
 Our Business
  
    
    COMSYS Services, LLC (COMSYS Services), an IT staffing services provider,
    
    COMSYS Information Technology Services, Inc. (COMSYS IT), an IT staffing
services provider,
    
    Pure Solutions, Inc. (Pure Solutions), an information technology services
company,
    
    Econometrix, LLC (Econometrix), a vendor management systems software
provider,
    
    Plum Rhino Consulting LLC (Plum Rhino), a specialty staffing services
provider to the financial services industry,
    
    Praeos Technologies, LLC (Praeos), a business intelligence and business
analytics consulting services provider,
    
    TAPFIN, LLC (TAPFIN), a provider of vendor management services, recruitment
process outsourcing services and human resources consulting, and
    
    ASET International Services, LLC (ASET), a globalization, localization and
interactive language services provider.
   
    
    rate of technological change;
    
    rate of growth in corporate IT and professional services budgets;
    
    penetration of IT and professional services staffing in the general workforce;
    
    outsourcing of the IT and professional services workforce; and
    
    consolidation of supplier bases.
   18




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##### Table of Contents



st
 2009 Priorities
   Overview of Second Quarter 2009
  19




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##### Table of Contents



Results of Operations
 Three Months Ended June 28, 2009, Compared to Three Months Ended June 29, 2008
  Three Months Ended
    
    Percent of Revenues
    
    Percent ChangeJune 28,
    
    June 29,
    
    June 28,
    
    June 29,
    
    2009 $ vs.2009
    
    2008
    
    2009
    
    2008
    
    2008 $Revenues from services
    
    $
    156,765
    
    
    $
    184,064
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    -14.8
    %Cost of services
    
    
    118,386
    
    
    
    139,232
    
    
    
    75.5
    %
    
    
    75.6
    %
    
    
    -15.0
    %Gross profit
    
    
    38,379
    
    
    
    44,832
    
    
    
    24.5
    %
    
    
    24.4
    %
    
    
    -14.4
    %Operating costs and expenses:Selling, general and administrative
    
    
    32,347
    
    
    
    34,291
    
    
    
    20.6
    %
    
    
    18.6
    %
    
    
    -5.7
    %Restructuring costs
    
    
    321
    
    
    
    
    
    
    
    0.2
    %
    
    
    0.0
    %
    
    NADepreciation and amortization
    
    
    2,050
    
    
    
    1,898
    
    
    
    1.3
    %
    
    
    1.1
    %
    
    
    8.0
    %34,718
    
    
    
    36,189
    
    
    
    22.1
    %
    
    
    19.7
    %
    
    
    -4.1
    %Operating income
    
    
    3,661
    
    
    
    8,643
    
    
    
    2.4
    %
    
    
    4.7
    %
    
    
    -57.6
    %Interest expense, net
    
    
    1,126
    
    
    
    1,279
    
    
    
    0.7
    %
    
    
    0.7
    %
    
    
    -12.0
    %Other income, net
    
    
    (67
    )
    
    
    (172
    )
    
    
    0.0
    %
    
    
    -0.1
    %
    
    
    -61.0
    %Income before income taxes
    
    
    2,602
    
    
    
    7,536
    
    
    
    1.7
    %
    
    
    4.1
    %
    
    
    -65.5
    %Income tax expense
    
    
    216
    
    
    
    1,324
    
    
    
    0.2
    %
    
    
    0.7
    %
    
    
    -83.7
    %Net income
    
    $
    2,386
    
    
    $
    6,212
    
    
    
    1.5
    %
    
    
    3.4
    %
    
    
    -61.6
    %Billable hours during the period
    
    
    2,050,677
    
    
    
    2,294,540
  Revenues.
 Cost of Services .
 Selling, General and Administrative Expenses .
 Restructuring Costs .
 20




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##### Table of Contents



Depreciation and Amortization .
 Interest Expense, Net.
 Provision for Income Taxes . Accounting for Income Taxes Business Combinations
  Six Months Ended June 28, 2009, Compared to Six Months Ended June 29, 2008
  Six Months Ended
    
    Percent of Revenues
    
    Percent ChangeJune 28,
    
    June 29,
    
    June 28,
    
    June 29,
    
    2009 $ vs.2009
    
    2008
    
    2009
    
    2008
    
    2008 $Revenues from services
    
    $
    319,459
    
    
    $
    367,447
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    -13.1
    %Cost of services
    
    
    242,984
    
    
    
    277,959
    
    
    
    76.1
    %
    
    
    75.6
    %
    
    
    -12.6
    %Gross profit
    
    
    76,475
    
    
    
    89,488
    
    
    
    23.9
    %
    
    
    24.4
    %
    
    
    -14.5
    %Operating costs and expenses:Selling, general and administrative
    
    
    65,530
    
    
    
    69,055
    
    
    
    20.5
    %
    
    
    18.8
    %
    
    
    -5.1
    %Restructuring costs
    
    
    3,941
    
    
    
    
    
    
    
    1.2
    %
    
    
    0.0
    %
    
    NADepreciation and amortization
    
    
    4,124
    
    
    
    3,718
    
    
    
    1.3
    %
    
    
    1.1
    %
    
    
    10.9
    %73,595
    
    
    
    72,773
    
    
    
    23.0
    %
    
    
    19.9
    %
    
    
    1.1
    %Operating income
    
    
    2,880
    
    
    
    16,715
    
    
    
    0.9
    %
    
    
    4.5
    %
    
    
    -82.8
    %Interest expense, net
    
    
    2,078
    
    
    
    2,882
    
    
    
    0.7
    %
    
    
    0.8
    %
    
    
    -27.9
    %Other income, net
    
    
    (172
    )
    
    
    (225
    )
    
    
    -0.1
    %
    
    
    -0.1
    %
    
    
    -23.6
    %Income before income taxes
    
    
    974
    
    
    
    14,058
    
    
    
    0.3
    %
    
    
    3.8
    %
    
    
    -93.1
    %Income tax expense
    
    
    459
    
    
    
    2,742
    
    
    
    0.1
    %
    
    
    0.7
    %
    
    
    -83.3
    %Net income
    
    $
    515
    
    
    $
    11,316
    
    
    
    0.2
    %
    
    
    3.1
    %
    
    
    -95.4
    %
 21




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##### Table of Contents



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




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##### Table of Contents



Liquidity and Capital Resources
 Overview
 Credit Agreement
 Cash Flows Credit
Agreement
   Working Capital
    Credit Agreement
  23




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##### Table of Contents




    
    a $5.0 million minimum availability reserve,
    
    a $1.0 million reserve for outstanding letters of credit, and
    
    a $1.0 million reserve for the ASET acquisition.
  Debt Compliance
  
    
    incur additional indebtedness;
    
    pay more than $10 million in the aggregate for stock repurchases and dividends;
    
    incur liens;
    
    make certain capital expenditures;
    
    make certain investments or acquisitions;
    
    repay debt; and
    
    dispose of property.
   24




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##### Table of Contents



Cash Flows
  Six Months EndedJune 28,
    
    
    June 29,2009
    
    
    2008Net cash provided by operating activities
    
    $
    1,889
    
    
    $
    11,588Net cash used in investing activities
    
    
    (3,056
    )
    
    
    (9,648
    )Net cash used in financing activities
    
    
    (19,843
    )
    
    
    (1,852
    )Effect of exchange rates on cash
    
    
    86
    
    
    
    1Net increase (decrease) in cash
    
    $
    (20,924
    )
    
    $
    89
       Seasonality
  25




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##### Table of Contents



Off-Balance Sheet Arrangements
  Related Party Transactions
    Contingencies and Indemnifications
  Critical Accounting Policies and Estimates
  Recent Accounting Pronouncements
  
 ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   26




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##### Table of Contents



Interest Rate Risks
  Foreign Currency Risks
  Equity Market Risks
   
 ITEM 4.
    
    CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
   Changes in Internal Controls over Financial Reporting
  27




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##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
  
 ITEM 1A.
    
    RISK FACTORS
  
 ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  Total Number of
    
    Average Price PaidPeriod
    
    Shares Purchased
    
    per ShareMarch 30, 2009 - April 26, 2009
    
    
    277
    
    
    $
    2.20April 27, 2009 - May 24, 2009
    
    
    
    
    
    $
    May 25, 2009 - June 28, 2009
    
    
    3,588
    
    
    $
    5.493,865
    
    
    $
    5.25
   
 ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5.
    
    OTHER INFORMATION
  
 ITEM 6.
    
    EXHIBITS
  28




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##### Table of Contents



Incorporated by ReferenceExhibit
    
    
    
    
    
    ExhibitNumber
    
    Exhibit Description
    
    Form
    
    Number
    
    Filing Date3.1
    
    Amended and Restated Certificate of Incorporation of COMSYS IT Partners, Inc.
    
    8-K
    
    
    3.1
    
    
    October 4, 20043.2
    
    Amended and Restated Bylaws of COMSYS IT Partners, Inc.
    
    8-K
    
    
    3.2
    
    
    October 4, 20043.3
    
    First Amendment to the Amended and Restated Bylaws of COMSYS IT Partners, Inc.
    
    8-K
    
    
    3.1
    
    
    May 4, 20054.1
    
    Registration Rights Agreement, dated as of September 30, 2004, between COMSYS IT Partners, Inc.
and certain of the old COMSYS Holdings stockholders party thereto
    
    8-A/A
    
    
    4.2
    
    
    November 2, 20044.2
    
    Amendment No. 1 to Registration Rights Agreement dated April 1, 2005 between COMSYS IT Partners,
Inc., and certain of the old COMSYS Holdings stockholders party thereto
    
    10-Q
    
    
    4.2
    
    
    May 6, 20054.3
    
    Amended and Restated Registration Rights Agreement, dated as of September 30, 2004, between COMSYS
IT Partners, Inc. and certain of the old Venturi stockholders party thereto
    
    8-A/A
    
    
    4.3
    
    
    November 2, 20044.4
    
    Amendment No. 1 to Amended and Restated Registration Rights Agreement dated April 1, 2005 between
COMSYS IT Partners, Inc., and certain of the old Venturi stockholders party thereto
    
    10-Q
    
    
    4.4
    
    
    May 6, 20054.7#
    
    Common Stock Purchase Warrant dated as of April 14, 2003, issued by the Company in favor of BNP
Paribas
    
    8-K
    
    
    99.16
    
    
    April 25, 20034.8
    
    Specimen Certificate for Shares of Common Stock
    
    10-K
    
    
    4.6
    
    
    April 1, 200510.1
    
    COMSYS IT Partners, Inc. 2004 Stock Incentive Plan, as amended
    
    Proxy Statement
    
    Appendix A
    
    April 13, 200931.1*
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2*
    
    Certification of Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232*
    
    Certification of Chief Executive Officer and Chief Accounting Officer pursuant to 18 U.S.C.
Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 29




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##### Table of Contents



SIGNATURES
  COMSYS IT PARTNERS, INC.Date:  August 5, 2009
    By:
    /s/ Larry L. EnterlineName:
    Larry L. EnterlineTitle:
    Chief Executive OfficerDate:  August 5, 2009
    By:
    /s/ Amy BobbittName:
    Amy BobbittTitle:
    Senior Vice President and Chief Accounting Officer 30




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##### Table of Contents



EXHIBIT INDEX
 Incorporated by ReferenceExhibit
    
    
    
    
    
    ExhibitNumber
    
    Exhibit Description
    
    Form
    
    Number
    
    Filing Date3.1
    
    Amended and Restated Certificate of Incorporation of COMSYS IT Partners, Inc.
    
    8-K
    
    
    3.1
    
    
    October 4, 20043.2
    
    Amended and Restated Bylaws of COMSYS IT Partners, Inc.
    
    8-K
    
    
    3.2
    
    
    October 4, 20043.3
    
    First Amendment to the Amended and Restated Bylaws of COMSYS IT Partners, Inc.
    
    8-K
    
    
    3.1
    
    
    May 4, 20054.1
    
    Registration Rights Agreement, dated as of September 30, 2004, between COMSYS IT Partners, Inc.
and certain of the old COMSYS Holdings stockholders party thereto
    
    8-A/A
    
    
    4.2
    
    
    November 2, 20044.2
    
    Amendment No. 1 to Registration Rights Agreement dated April 1, 2005 between COMSYS IT Partners,
Inc., and certain of the old COMSYS Holdings stockholders party thereto
    
    10-Q
    
    
    4.2
    
    
    May 6, 20054.3
    
    Amended and Restated Registration Rights Agreement, dated as of September 30, 2004, between COMSYS
IT Partners, Inc. and certain of the old Venturi stockholders party thereto
    
    8-A/A
    
    
    4.3
    
    
    November 2, 20044.4
    
    Amendment No. 1 to Amended and Restated Registration Rights Agreement dated April 1, 2005 between
COMSYS IT Partners, Inc., and certain of the old Venturi stockholders party thereto
    
    10-Q
    
    
    4.4
    
    
    May 6, 20054.7#
    
    Common Stock Purchase Warrant dated as of April 14, 2003, issued by the Company in favor of BNP
Paribas
    
    8-K
    
    
    99.16
    
    
    April 25, 20034.8
    
    Specimen Certificate for Shares of Common Stock
    
    10-K
    
    
    4.6
    
    
    April 1, 200510.1
    
    COMSYS IT Partners, Inc. 2004 Stock Incentive Plan, as amended
    
    Proxy Statement
    
    Appendix A
    
    April 13, 200931.1*
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2*
    
    Certification of Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232*
    
    Certification of Chief Executive Officer and Chief Accounting Officer pursuant to 18 U.S.C.
Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 31