##### 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 July 2, 2006.
 OR
 o
    
    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
 
 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 þ o
 o þ




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TABLE OF CONTENTS
 PagePART IFINANCIAL INFORMATIONItem 1.
    
    Financial Statements (unaudited)Consolidated Statements of Operations  Three Months and Six Months Ended July 2,
2006 and July 3, 2005
    
    
    3Consolidated Balance Sheets  July 2, 2006 and January 1, 2006
    
    
    4Consolidated Statements of Cash Flows  Six Months Ended July 2, 2006 and July 3, 2005
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    25Item 4.
    
    Controls and Procedures
    
    
    26PART IIOTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    27Item 1A.
    
    Risk Factors
    
    
    27Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    27Item 3.
    
    Defaults Upon Senior Securities
    
    
    27Item 4.
    
    Submission of Matters to a Vote of Securities Holders
    
    
    27Item 5.
    
    Other Information
    
    
    27Item 6.
    
    Exhibits
    
    
    28Signatures
    
    
    S-1Index to ExhibitsExhibit-10.1Exhibit 31.1Exhibit 31.2Exhibit 32
  2




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PART I
 
 ITEM 1. FINANCIAL STATEMENTS
 COMSYS IT Partners, Inc. and Subsidiaries
 
 Consolidated Statements of Operations
 For the Three Months and Six Months Ended July 2, 2006 and July 3, 2005
(In thousands, except per share data)
(Unaudited)
 Three months ended
    
    
    Six months endedJuly 2,
    
    
    July 3,
    
    
    July 2,
    
    
    July 3,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues from services
    
    $
    187,609
    
    
    $
    162,185
    
    
    $
    366,201
    
    
    $
    327,138Cost of services
    
    
    141,736
    
    
    
    124,647
    
    
    
    278,256
    
    
    
    252,013Gross profit
    
    
    45,873
    
    
    
    37,538
    
    
    
    87,945
    
    
    
    75,125Operating expenses:Selling, general and administrative
    
    
    34,283
    
    
    
    29,518
    
    
    
    68,521
    
    
    
    57,473Restructuring and integration costs
    
    
    
    
    
    
    424
    
    
    
    
    
    
    
    3,852Depreciation and amortization
    
    
    2,167
    
    
    
    2,515
    
    
    
    4,339
    
    
    
    4,986Total operating expenses
    
    
    36,450
    
    
    
    32,457
    
    
    
    72,860
    
    
    
    66,311Operating income
    
    
    9,423
    
    
    
    5,081
    
    
    
    15,085
    
    
    
    8,814Interest expense, net
    
    
    3,573
    
    
    
    4,348
    
    
    
    7,530
    
    
    
    8,374Other (income) expense, net
    
    
    (170
    )
    
    
    4
    
    
    
    (294
    )
    
    
    (83
    )Income before income taxes
    
    
    6,020
    
    
    
    729
    
    
    
    7,849
    
    
    
    523Income tax benefit
    
    
    5,342
    
    
    
    
    
    
    
    5,192
    
    
    
    Net income
    
    $
    11,362
    
    
    $
    729
    
    
    $
    13,041
    
    
    $
    523Basic earnings per common share
    
    $
    0.60
    
    
    $
    0.05
    
    
    $
    0.69
    
    
    $
    0.03Diluted earnings per common share
    
    $
    0.60
    
    
    $
    0.05
    
    
    $
    0.69
    
    
    $
    0.03Weighted average common shares outstanding:Basic
    
    
    18,562
    
    
    
    15,418
    
    
    
    18,556
    
    
    
    15,375Diluted
    
    
    18,920
    
    
    
    16,154
    
    
    
    18,862
    
    
    
    15,956
 See notes to consolidated financial statements
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COMSYS IT Partners, Inc. and Subsidiaries
 
 Consolidated Balance Sheets
 At July 2, 2006 and January 1, 2006
(In thousands, except per share data)
 July 2,
    
    
    January 1,2006
    
    
    2006(Unaudited)AssetsCurrent assets:Cash
    
    $
    1,511
    
    
    $
    3,099Accounts receivable, net of allowance of $4,317 and $4,427, respectively
    
    
    194,060
    
    
    
    170,321Prepaid expenses and other
    
    
    3,850
    
    
    
    3,729Total current assets
    
    
    199,421
    
    
    
    177,149Fixed assets, net
    
    
    13,760
    
    
    
    14,976Goodwill
    
    
    153,737
    
    
    
    154,322Intangible assets, net
    
    
    10,188
    
    
    
    11,262Deferred financing costs, net
    
    
    4,109
    
    
    
    4,655Restricted cash
    
    
    2,764
    
    
    
    2,939Other assets
    
    
    2,266
    
    
    
    1,618Total assets
    
    $
    386,245
    
    
    $
    366,921Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    115,021
    
    
    $
    108,432Payroll and related taxes
    
    
    28,218
    
    
    
    22,600Current maturities of long-term debt
    
    
    1,370
    
    
    
    5,000Interest payable
    
    
    991
    
    
    
    933Other
    
    
    14,005
    
    
    
    15,667Total current liabilities
    
    
    159,605
    
    
    
    152,632Long-term debt
    
    
    134,599
    
    
    
    137,273Other non-current liabilities
    
    
    5,578
    
    
    
    5,920Total liabilities
    
    
    299,782
    
    
    
    295,825Commitments and contingenciesStockholders equity:Common stock, par value $0.01; 95,000 shares authorized; 18,855
and 18,738 shares outstanding at July 2, 2006 and January 1, 2006,
respectively
    
    
    188
    
    
    
    187Common stock warrants
    
    
    2,270
    
    
    
    2,815Deferred stock compensation
    
    
    
    
    
    
    (1,749
    )Accumulated other comprehensive loss
    
    
    (7
    )
    
    
    (65
    )Additional paid-in capital
    
    
    203,056
    
    
    
    201,993Accumulated deficit
    
    
    (119,044
    )
    
    
    (132,085
    )Total stockholders equity
    
    
    86,463
    
    
    
    71,096Total liabilities and stockholders equity
    
    $
    386,245
    
    
    $
    366,921
 See notes to consolidated financial statements
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COMSYS IT Partners, Inc. and Subsidiaries
 
 Consolidated Statements of Cash Flows
 For the Six Months Ended July 2, 2006 and July 3, 2005
(In thousands)
(Unaudited)
 Six months endedJuly 2,
    
    
    July 3,2006
    
    
    2005Cash flows from operating activitiesNet income
    
    $
    13,041
    
    
    $
    523Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    4,339
    
    
    
    4,986Provision for doubtful accounts
    
    
    1,408
    
    
    
    1,230Stock based compensation
    
    
    1,679
    
    
    
    876Amortization of deferred financing costs
    
    
    550
    
    
    
    548Noncash interest expense, net
    
    
    
    
    
    
    1,685Increase in fair value of derivative instruments
    
    
    (699
    )
    
    
    Other noncash gains, net
    
    
    (101
    )
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    (25,003
    )
    
    
    (17,967
    )Prepaid expenses and other
    
    
    863
    
    
    
    2,124Accounts payable
    
    
    6,461
    
    
    
    10,965Payroll and related taxes
    
    
    5,136
    
    
    
    (1,606
    )Other
    
    
    (335
    )
    
    
    (2,174
    )Net cash provided by operating activities
    
    
    7,339
    
    
    
    1,190Cash flows from investing activitiesCapital expenditures
    
    
    (2,057
    )
    
    
    (3,914
    )Cash paid for acquisitions
    
    
    (1,250
    )
    
    
    (348
    )Change in other noncurrent assets
    
    
    8
    
    
    
    (20
    )Net cash used in investing activities
    
    
    (3,299
    )
    
    
    (4,282
    )Cash flows from financing activitiesBorrowings under revolving credit facility, net
    
    
    1,640
    
    
    
    6,672Repayments of long-term debt
    
    
    (7,944
    )
    
    
    (3,750
    )Exercise of stock options and warrants
    
    
    624
    
    
    
    384Cash paid for stock issuance costs
    
    
    (35
    )
    
    
    Cash paid for financing costs
    
    
    
    
    
    
    (40
    )Net cash provided by (used in) financing activities
    
    
    (5,715
    )
    
    
    3,266Effect of exchange rates on cash
    
    
    87
    
    
    
    Net increase (decrease) in cash
    
    
    (1,588
    )
    
    
    174Cash, beginning of period
    
    
    3,099
    
    
    
    710Cash, end of period
    
    $
    1,511
    
    
    $
    884Supplemental cash flow informationInterest paid
    
    $
    8,253
    
    
    $
    5,991Interest received
    
    
    632
    
    
    
    15Income tax refund
    
    
    5,799
    
    
    
    
 See notes to consolidated financial statements
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COMSYS IT Partners, Inc. and Subsidiaries
 
 Notes to Consolidated Financial Statements
 1. General
   st
   2. Stock Based Compensation
 Accounting
for Stock Issued to Employees Accounting for Stock-Based Compensation . Share-Based Payment
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COMSYS IT Partners, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements(Continued)
   Three months ended
    
    
    Six months endedJuly 3, 2005
    
    
    July 3, 2005(In thousands)Net income attributable to common stockholders as reported
    
    $
    729
    
    
    $
    523Add stock based compensation included in reported net income, net of tax effect
    
    
    439
    
    
    
    876Deduct stock based compensation determined under fair value based method for
all awards, net of tax effect
    
    
    (663
    )
    
    
    (1,336
    )Pro forma net income
    
    $
    505
    
    
    $
    63Basic and diluted net income per share, as reported
    
    $
    0.05
    
    
    $
    0.03Basic and diluted pro forma net income per share
    
    
    0.03
    
    
    
    0.00
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COMSYS IT Partners, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements(Continued)
  WeightedAverageRemainingWeighted
    
    Contractual
    
    AggregateAverage Exercise
    
    Life
    
    Intrinsic ValueShares
    
    Price
    
    (in years)
    
    (in thousands)Balance at January 1, 2006
    
    
    980,836
    
    
    $
    10.60Granted
    
    
    256,000
    
    
    
    11.07Exercised
    
    
    (1,666
    )
    
    
    8.55Forfeited
    
    
    (17,536
    )
    
    
    10.98Balance at July 2, 2006
    
    
    1,217,634
    
    
    $
    10.66
    
    
    
    7.9
    
    
    $
    7,087Exercisable at July 2, 2006
    
    
    692,651
    
    
    $
    11.33
    
    
    
    7.1
    
    
    $
    4,283Vested or expected to vest (as of July 2, 2006)
    
    
    1,153,647
    
    
    $
    10.69
    
    
    
    7.8
    
    
    $
    6,767
  July 2, 2006Expected life
    
    6 yearsRisk-free interest rate
    
    
    4.375
    %Expected volatility
    
    
    45
    %Dividend yield
    
    
    
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COMSYS IT Partners, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements(Continued)
    WeightedAverageGrant DateShares
    
    Fair ValueNonvested balance at January 1, 2006
    
    
    312,410
    
    
    $
    11.20Granted
    
    
    239,609
    
    
    $
    2.72Vested
    
    
    Forfeited
    
    
    (76,540
    )
    
    $
    11.20Nonvested balance at July 2, 2006
    
    
    475,479
    
    
    $
    6.93
   3. Income Taxes
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COMSYS IT Partners, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements(Continued)
    4. Earnings Per Share
    Three months ended
    
    
    Six months endedJuly 2,
    
    
    July 3,
    
    
    July 2,
    
    
    July 3,2006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands, except per share amounts)Net income attributable to common stockholders  basic
    
    $
    11,126
    
    
    $
    700
    
    
    $
    12,770
    
    
    $
    502Net income attributable to warrant holders
    
    
    236
    
    
    
    29
    
    
    
    271
    
    
    
    21Net income
attributable to common stockholders  dilutive
    
    
    11,362
    
    
    
    729
    
    
    
    13,041
    
    
    
    523Weighted average common shares outstanding
    
    
    18,562
    
    
    
    15,418
    
    
    
    18,556
    
    
    
    15,375Add: dilutive stock options and warrants
    
    
    358
    
    
    
    736
    
    
    
    306
    
    
    
    581Diluted weighted average common shares outstanding
    
    
    18,920
    
    
    
    16,154
    
    
    
    18,862
    
    
    
    15,956Basic earnings per share attributable to common stockholders
    
    $
    0.60
    
    
    $
    0.05
    
    
    $
    0.69
    
    
    $
    0.03Diluted earnings per common share
    
    $
    0.60
    
    
    $
    0.05
    
    
    $
    0.69
    
    
    $
    0.03
  5. Restructuring and Other Charges
 Recognition of Liabilities in Connection with a Purchase Business Combination,
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COMSYS IT Partners, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements(Continued)
    Employeeseverance
    
    
    Lease costs
    
    
    Total(In thousands)Balance, January 1, 2006
    
    $
    512
    
    
    $
    2,463
    
    
    $
    2,975Cash payments
    
    
    (512
    )
    
    
    (471
    )
    
    
    (983
    )Balance, July 2, 2006
    
    $
    
    
    
    $
    1,992
    
    
    $
    1,992
  6. Long-Term Debt
  July 2,
    
    
    January 1,2006
    
    
    2006(In thousands)Debt outstanding under credit facilities:Senior credit facility  revolver
    
    $
    33,915
    
    
    $
    32,273Senior credit facility  senior term loan
    
    
    2,054
    
    
    
    10,000Second lien term loan
    
    
    100,000
    
    
    
    100,000135,969
    
    
    
    142,273Less current maturities
    
    
    1,370
    
    
    
    5,000Long-term obligations, excluding current maturities
    
    $
    134,599
    
    
    $
    137,273
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COMSYS IT Partners, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements(Continued)
        12




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COMSYS IT Partners, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements(Continued)
 7. Commitments and Contingencies
     8. Executive Officer Resignations
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COMSYS IT Partners, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements(Continued)
 9. Comprehensive Income
  Three months ended
    
    
    Six months endedJuly 2,
    
    
    July 3
    
    
    July 2,
    
    
    July 32006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands)Net income
    
    $
    11,362
    
    
    $
    729
    
    
    $
    13,041
    
    
    $
    523Foreign currency translation adjustments
    
    
    52
    
    
    
    154
    
    
    
    58
    
    
    
    154Net unrealized gain (loss) on change in fair values of derivative instruments
    
    
    
    
    
    
    (315
    )
    
    
    
    
    
    
    4Total comprehensive income
    
    $
    11,414
    
    
    $
    568
    
    
    $
    13,099
    
    
    $
    681
 10. Subsequent Events
 Entry into Employment Agreement with Larry L. Enterline
    Changes Implemented at Compensation Committee Meeting
  1.
    
    The executive employment agreements for Mr. Michael H. Barker, Mr. Ken R. Bramlett,
Jr., Mr. David Kerr and Mr. Joseph C. Tusa, Jr. will be amended to include (i) a proration
of the incentive bonus in the event that the Company achieves a percentage of the EBITDA
target that falls between specified target levels and (ii) a restriction on the maximum
bonus potential.2.
    
    The Chairman of the Audit Committee will now receive an annual retainer of $15,000
and the Chairman of the Compensation Committee, if an outside director, will now receive
an annual retainer of $7,500. The remaining members of the audit committee will now
receive an annual retainer of $5,000. These annual retainers are in addition to the
annual retainers and meeting fees they receive if they are an outside director, as
disclosed in the
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proxy statement filed on Form DEF 14A with the Securities and Exchange Commission on June
27, 2006 (the Proxy Statement).3.
    
    Outside directors will no longer receive options to purchase shares of COMSYS common
stock, but will receive 5,000 shares of restricted stock when they join the Board and
subsequent annual grants of 2,000 shares of restricted stock on the date of each annual
shareholders meeting. All of these shares will be 100% vested on the grant date.
Effective July 27, 2006, a total of 9,000 shares of restricted stock were granted to
Board members.
 Election of New Board Members
   
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following discussion and analysis should be read in conjunction with the unaudited
consolidated financial statements and related notes appearing elsewhere in this report, as well as
other reports we file with the Securities and Exchange Commission. This discussion contains
forward-looking statements reflecting our current expectations and estimates and assumptions
concerning events and financial trends that may affect our future operating results or financial
position. Actual results and the timing of events may differ materially from those contained in
these forward-looking statements due to a number of factors, including those discussed in the
section entitled Cautionary Note Regarding Forward-Looking Statements included elsewhere in this
report and in the section entitled Risk Factors included in our Annual Report on Form 10-K for
the fiscal year ended January 1, 2006.
 Introduction
  Overview
   
    
    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
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
    
    consolidation of all 17 duplicate branch offices;
    
    deployment of our proprietary front-office exchange (FOX) information system 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 the back office operations for COMSYS, including payroll, billing, accounts
payable, collections and financial reporting; and
    
    elimination of a substantial number of duplicative staff positions.
 Results of Operations
  Three months ended
    
    Six months endedJuly 2,
    
    July 3,
    
    July 2,
    
    July 3,2006
    
    2005
    
    2006
    
    2005Revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of services
    
    
    75.6
    
    
    
    76.9
    
    
    
    76.0
    
    
    
    77.0Gross profit
    
    
    24.4
    
    
    
    23.1
    
    
    
    24.0
    
    
    
    23.0Selling, general and administrative expenses
    
    
    18.3
    
    
    
    18.2
    
    
    
    18.7
    
    
    
    17.6Restructuring and integration costs
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    1.2Depreciation and amortization
    
    
    1.1
    
    
    
    1.5
    
    
    
    1.2
    
    
    
    1.5Total operating expenses
    
    
    19.4
    
    
    
    20.0
    
    
    
    19.9
    
    
    
    20.3Operating income
    
    
    5.0
    
    
    
    3.1
    
    
    
    4.1
    
    
    
    2.7Interest expense and other (income) expense, net
    
    
    (1.8
    )
    
    
    (2.7
    )
    
    
    (1.9
    )
    
    
    (2.5
    )Income tax benefit
    
    
    2.9
    
    
    
    
    
    
    
    1.4
    
    
    
    Net income
    
    
    6.1.
    %
    
    
    0.4
    %
    
    
    3.6
    %
    
    
    0.2
    %Billable headcount at end of period
    
    
    5,183
    
    
    
    4,705
    
    
    
    5,183
    
    
    
    4,705
 Quarter Ended July 2, 2006 Versus Quarter Ended July 3, 2005.
  Provision for Income Taxes.
 Revenues.
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Cost of Services .
 Selling, General and Administrative Expenses .
 Share Based Payment, Accounting for Stock Issued to Employees
 Restructuring and Integration Costs .
  Employeeseverance
    
    
    Lease costs
    
    
    Total(In thousands)Balance, April 2, 2006
    
    $
    170
    
    
    $
    2,284
    
    
    $
    2,454Cash payments
    
    
    (170
    )
    
    
    (292
    )
    
    
    (462
    )Balance, July 2, 2006
    
    $
    
    
    
    $
    1,992
    
    
    $
    1,992
 Depreciation and Amortization .
 Interest
Expense, Net.
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Interest Rate Swap and Cap Provision for
Income Taxes.
 Provision for Income Taxes
  Six Months Ended July 2, 2006 Versus Six Months Ended July 3, 2005.
  Provision for Income Taxes.
 Revenues.
  Cost of Services .
 Selling, General and Administrative Expenses .
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Share Based Payment, Accounting for Stock Issued to Employees
 Restructuring and Integration Costs .
  Employeeseverance
    
    
    Lease costs
    
    
    Total(In thousands)Balance, January 1, 2006
    
    $
    512
    
    
    $
    2,463
    
    
    $
    2,975Cash payments
    
    
    (512
    )
    
    
    (471
    )
    
    
    (983
    )Balance, July 2, 2006
    
    $
    
    
    
    $
    1,992
    
    
    $
    1,992
 Depreciation and Amortization .
 Interest
Expense, Net. Interest Rate Swap and Cap.
 Provision for Income Taxes
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Liquidity and Capital Resources
   Cash Flows
  Six months endedJuly 2,
    
    
    July 3,2006
    
    
    2005(In thousands)Net cash provided by operating activities
    
    $
    7,339
    
    
    $
    1,190Net cash used in investing activities
    
    
    (3,299
    )
    
    
    (4,282
    )Net cash provided by (used in) financing activities
    
    
    (5,715
    )
    
    
    3,266Effect of exchange rates on cash
    
    
    87
    
    
    
    Net increase (decrease) in cash
    
    $
    (1,588
    )
    
    $
    174
     Credit Agreements and Related Covenants
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Debt Compliance
   Interest Rate Swap and Cap
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Off-Balance Sheet Arrangements
  Contingencies and Indemnifications
  Critical Accounting Policies and Estimates
   Revenue Recognition
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Recoverability of Goodwill and Other Intangible Assets
 Goodwill and Other Intangible Assets,
  Collectibility of Accounts Receivable
  Income Tax Assets and Liabilities
   Derivatives
 Accounting for Derivative Instruments and
Hedging Activities,
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Stock Based Compensation
 Share-Based Payment.
  CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
   
    
    the Companys 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 and
project management and, if successful, our ability to manage those types of business
profitably;
    
    changes in levels of unemployment and other economic conditions in the United States,
or in particular regions or industries;
    
    weakness or reductions in corporate information technology spending levels;
    
    the Companys ability to maintain existing client relationships and attract new
clients in the context of changing economic or competitive conditions;
    
    the impact of competitive pressures on our ability to maintain or improve our
operating margins, including any change in the demand for our services;
    
    the entry of new competitors into the U.S. staffing services market due to the
limited barriers to entry or the expansion of existing competitors in that market;
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##### Table of Contents




    
    increases in employment-related costs such as healthcare and unemployment taxes;
    
    the possibility of the Companys incurring liability for the activities of its
billable consultants or for events impacting its billable consultants on clients
premises;
    
    the risk in an uncertain economic environment of increased incidences of employment
disputes, employment litigation and workers compensation claims;
    
    integration and restructuring risks associated with the COMSYS and Venturi merger or
other business activities and the challenges of achieving anticipated synergies;
    
    the risk that further cost cutting or restructuring activities undertaken by the
Company could cause an adverse impact on certain of the Companys operations;
    
    economic declines that affect our business, including its profitability, liquidity or
the ability to comply with our loan covenants;
    
    adverse changes in credit and capital markets conditions that may affect our ability
to obtain financing or refinancing on favorable terms;
    
    adverse changes to managements periodic estimates of future cash flows that may affect
the Companys assessment of its ability to fully recover its goodwill; and
    
    whether governments will amend existing regulations or impose additional regulations
or licensing requirements in such a manner as to increase the Companys costs of doing
business.
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Market Risk Sensitivity
  Interest Rate Risk
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Equity Price Risks
  
 ITEM 4. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  Changes in Internal Controls over Financial Reporting
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PART IIOTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
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##### Table of Contents



ITEM 6. EXHIBITS
  ExhibitNumber
    
    Description3.1
    
    Amended and Restated Certificate of Incorporation of COMSYS IT Partners, Inc. (incorporated by
reference to Exhibit 3.1 to the Form 8-K filed with the SEC on October 4, 2004).3.2
    
    Amended and Restated Bylaws of COMSYS IT Partners, Inc. (incorporated by reference to Exhibit 3.2 to
the Form 8-K filed with the SEC on October 4, 2004).3.3
    
    First Amendment to the Amended and Restated Bylaws of COMSYS IT Partners, Inc. (incorporated by
reference to Exhibit 3.1 to the Form 8-K filed with the SEC on May 4, 2005).4.1
    
    Registration Rights Agreement, dated as of September 30, 2004, between COMSYS IT Partners, Inc. and
certain of the old COMSYS Holdings stockholders party thereto (incorporated by reference to Exhibit
4.2 to the Form 8-A/A filed with the SEC on November 2, 2004).4.2
    
    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 (incorporated by reference to
Exhibit 4.2 to the 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, between COMSYS IT
Partners, Inc. and certain of the old Venturi stockholders party thereto (incorporated by reference to
Exhibit 4.3 to the Form 8-A/A filed with the SEC on November 2, 2004).4.4
    
    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 (incorporated by
reference to Exhibit 4.4 to the 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 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 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 Company in favor of BNP
Paribas (incorporated by reference to Exhibit 99.16 to the 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 4.6 to the Form
10-K filed with the SEC on April 1, 2005).10.1*
    
    Employment Agreement dated as of July 27, 2006 between COMSYS IT Partners, Inc. and Larry L. Enterline.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*
    
    Certification of Chief Executive Officer and 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.
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##### Table of Contents



SIGNATURES
  Date: August 7, 2006
    
    COMSYS IT PARTNERS, INC.By:
    
    /s/ LARRY L. ENTERLINEName:
    
    Larry L. EnterlineTitle:
    
    Chief Executive OfficerDate: August 7, 2006
    
    By:
    
    /s/ JOSEPH C. TUSA, JR.Name:
    
    Joseph C. Tusa, Jr.Title:
    
    Senior Vice President and Chief Financial Officer
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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description3.1
    
    Amended and Restated Certificate of Incorporation of COMSYS IT Partners, Inc. (incorporated by
reference to Exhibit 3.1 to the Form 8-K filed with the SEC on October 4, 2004).3.2
    
    Amended and Restated Bylaws of COMSYS IT Partners, Inc. (incorporated by reference to Exhibit 3.2 to
the Form 8-K filed with the SEC on October 4, 2004).3.3
    
    First Amendment to the Amended and Restated Bylaws of COMSYS IT Partners, Inc. (incorporated by
reference to Exhibit 3.1 to the Form 8-K filed with the SEC on May 4, 2005).4.1
    
    Registration Rights Agreement, dated as of September 30, 2004, between COMSYS IT Partners, Inc. and
certain of the old COMSYS Holdings stockholders party thereto (incorporated by reference to Exhibit
4.2 to the Form 8-A/A filed with the SEC on November 2, 2004).4.2
    
    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 (incorporated by reference to
Exhibit 4.2 to the 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, between COMSYS IT
Partners, Inc. and certain of the old Venturi stockholders party thereto (incorporated by reference to
Exhibit 4.3 to the Form 8-A/A filed with the SEC on November 2, 2004).4.4
    
    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 (incorporated by
reference to Exhibit 4.4 to the 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 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 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 Company in favor of BNP
Paribas (incorporated by reference to Exhibit 99.16 to the 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 4.6 to the Form
10-K filed with the SEC on April 1, 2005).10.1*
    
    Employment Agreement dated as of July 27, 2006 between COMSYS IT Partners, Inc. and Larry L. Enterline.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*
    
    Certification of Chief Executive Officer and 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.
 30