##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 27, 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
 Yes
o No 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
    
    
    17Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    27Item 4. Controls and Procedures
    
    
    28PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    29Item 1A. Risk Factors
    
    
    29Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    29Item 3. Defaults upon Senior Securities
    
    
    29Item 4. Submission of Matters to a Vote of Securities Holders
    
    
    29Item 5. Other Information
    
    
    29Item 6. Exhibits
    
    
    29Signatures
    
    
    31Exhibit 31.1Exhibit 31.2Exhibit 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;
    
    regulatory changes that 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 tax rates;
    
    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 changes in demand for our services or competitive pressures on our
ability to maintain or improve our operating margins, including pricing pressures;
    
    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 and consulting markets
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
    
    
    Nine Months EndedSeptember 27,
    
    
    September 28,
    
    
    September 27,
    
    
    September 28,(In thousands, except per share amounts)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues from services
    
    $
    157,305
    
    
    $
    183,663
    
    
    $
    476,764
    
    
    $
    551,110Cost of services
    
    
    118,677
    
    
    
    138,483
    
    
    
    361,661
    
    
    
    416,442Gross profit
    
    
    38,628
    
    
    
    45,180
    
    
    
    115,103
    
    
    
    134,668Operating costs and expenses:Selling, general and administrative
    
    
    32,083
    
    
    
    34,579
    
    
    
    97,613
    
    
    
    103,634Restructuring costs
    
    
    155
    
    
    
    
    
    
    
    4,096
    
    
    
    Depreciation and amortization
    
    
    2,106
    
    
    
    2,185
    
    
    
    6,230
    
    
    
    5,90334,344
    
    
    
    36,764
    
    
    
    107,939
    
    
    
    109,537Operating income
    
    
    4,284
    
    
    
    8,416
    
    
    
    7,164
    
    
    
    25,131Interest expense, net
    
    
    1,057
    
    
    
    1,224
    
    
    
    3,135
    
    
    
    4,106Other expense (income), net
    
    
    45
    
    
    
    40
    
    
    
    (127
    )
    
    
    (185
    )Income before income taxes
    
    
    3,182
    
    
    
    7,152
    
    
    
    4,156
    
    
    
    21,210Income tax expense
    
    
    164
    
    
    
    1,105
    
    
    
    623
    
    
    
    3,847Net income
    
    $
    3,018
    
    
    $
    6,047
    
    
    $
    3,533
    
    
    $
    17,363Basic net income per common share
    
    $
    0.14
    
    
    $
    0.30
    
    
    $
    0.17
    
    
    $
    0.85Diluted net income per common share
    
    $
    0.14
    
    
    $
    0.30
    
    
    $
    0.17
    
    
    $
    0.84Weighted average basic and diluted shares outstanding:Basic
    
    
    19,815
    
    
    
    19,612
    
    
    
    19,795
    
    
    
    19,594Diluted
    
    
    19,815
    
    
    
    20,455
    
    
    
    19,795
    
    
    
    20,611
 See notes to consolidated financial statements
  3




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COMSYS IT Partners, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)
 Three
Months Ended
    
    

Nine
Months EndedSeptember 27,
    
    
    September 28,
    
    
    September 27,
    
    
    September 28,(In thousands)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Net income
    
    $
    3,018
    
    
    $
    6,047
    
    
    $
    3,533
    
    
    $
    17,363Foreign currency translation adjustments
    
    
    (29
    )
    
    
    (69
    )
    
    
    (121
    )
    
    
    (53
    )Total comprehensive income
    
    $
    2,989
    
    
    $
    5,978
    
    
    $
    3,412
    
    
    $
    17,310
 See notes to consolidated financial statements
  4




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COMSYS IT Partners, Inc. and Subsidiaries
Consolidated Balance Sheets
 September 27,
    
    
    December 28,2009
    
    
    2008(In thousands, except share and par value amounts)
    
    (Unaudited)
    
    
    (Note 1)AssetsCurrent assets:Cash and cash equivalents
    
    $
    1,213
    
    
    $
    22,695Accounts receivable, net of allowance of $3,480 and $3,232, respectively
    
    
    191,266
    
    
    
    202,297Prepaid expenses and other
    
    
    2,764
    
    
    
    3,116Restricted cash
    
    
    2,486
    
    
    
    2,489Total current assets
    
    
    197,729
    
    
    
    230,597Fixed assets, net
    
    
    13,810
    
    
    
    16,596Goodwill
    
    
    89,155
    
    
    
    89,064Other intangible assets, net
    
    
    9,570
    
    
    
    11,962Deferred financing costs, net
    
    
    2,733
    
    
    
    1,175Restricted cash
    
    
    308
    
    
    
    308Other assets
    
    
    1,104
    
    
    
    1,478Total assets
    
    $
    314,409
    
    
    $
    351,180Liabilities and stockholders equityCurrent liabilities:Accounts payable
    
    $
    122,060
    
    
    $
    156,528Payroll and related taxes
    
    
    26,947
    
    
    
    25,975Interest payable
    
    
    271
    
    
    
    337Other current liabilities
    
    
    9,783
    
    
    
    9,728Total current liabilities
    
    
    159,061
    
    
    
    192,568Long-term debt
    
    
    59,170
    
    
    
    69,692Other liabilities
    
    
    6,660
    
    
    
    5,435Total liabilities
    
    
    224,891
    
    
    
    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 21,120,544 shares outstanding
at September 27, 2009; 95,000,000 shares authorized and 20,465,028 shares outstanding at December 28, 2008
    
    
    210
    
    
    
    203Common stock warrants
    
    
    1,734
    
    
    
    1,734Accumulated other comprehensive loss
    
    
    (211
    )
    
    
    (90
    )Additional paid-in capital
    
    
    229,974
    
    
    
    227,360Accumulated deficit
    
    
    (142,189
    )
    
    
    (145,722
    )Total stockholders equity
    
    
    89,518
    
    
    
    83,485Total liabilities and stockholders equity
    
    $
    314,409
    
    
    $
    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(In thousands, except share data)
    
    Stock
    
    
    Warrants
    
    
    Income (Loss)
    
    
    Capital
    
    
    Deficit
    
    
    EquityBalance 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,533
    
    
    
    3,533Foreign currency translations
    
    
    
    
    
    
    
    
    
    
    (121
    )
    
    
    
    
    
    
    
    
    
    
    (121
    )Issuance of 667,000 shares of restricted common stock
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    Forfeiture of 10,136 shares of restricted common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (41
    )
    
    
    
    
    
    
    (41
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,662
    
    
    
    
    
    
    
    2,662Balance as of September 27, 2009
    
    $
    210
    
    
    $
    1,734
    
    
    $
    (211
    )
    
    $
    229,974
    
    
    $
    (142,189
    )
    
    $
    89,518
 See notes to consolidated financial statements
  6




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COMSYS IT Partners, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
 Nine Months EndedSeptember 27,
    
    
    September 28,(In thousands)
    
    2009
    
    
    2008Cash flows from operating activitiesNet income
    
    $
    3,533
    
    
    $
    17,363Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    6,230
    
    
    
    5,903Restructuring costs
    
    
    2,905
    
    
    
    Provision for doubtful accounts
    
    
    903
    
    
    
    406Stock-based compensation
    
    
    2,662
    
    
    
    3,401Amortization of deferred financing costs
    
    
    766
    
    
    
    652Other noncash expense, net
    
    
    762
    
    
    
    3,847Changes in operating assets and liabilities, net of effects of acquisitions:Accounts receivable
    
    
    10,387
    
    
    
    (46,387
    )Prepaid expenses and other
    
    
    88
    
    
    
    (189
    )Accounts payable
    
    
    (31,833
    )
    
    
    27,500Payroll and related taxes
    
    
    928
    
    
    
    278Other
    
    
    (1,431
    )
    
    
    2,363Net cash provided by (used for) operating activities
    
    
    (4,100
    )
    
    
    15,137Cash flows from investing activitiesCapital expenditures
    
    
    (889
    )
    
    
    (5,144
    )Acquisitions, net of cash acquired
    
    
    (3,712
    )
    
    
    (7,884
    )Net cash used in investing activities
    
    
    (4,601
    )
    
    
    (13,028
    )Cash flows from financing activitiesBorrowings (payments) under revolving credit facility, net
    
    
    (10,522
    )
    
    
    1,703Cash paid for financing costs
    
    
    (2,325
    )
    
    
    Repayments of long-term debt
    
    
    
    
    
    
    (3,750
    )Exercise of stock options and warrants
    
    
    
    
    
    
    83Net cash used in financing activities
    
    
    (12,847
    )
    
    
    (1,964
    )Effect of exchange rates on cash
    
    
    66
    
    
    
    (149
    )Net decrease in cash
    
    
    (21,482
    )
    
    
    (4
    )Cash, beginning of period
    
    
    22,695
    
    
    
    1,594Cash, end of period
    
    $
    1,213
    
    
    $
    1,590
 See notes to consolidated financial statements
  7




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COMSYS IT Partners, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements
 1. General
      2. Business Combinations
    8




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3. Fair Value of Financial Instruments
   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
    
    
    356
    
    
    
    3,343
    
    
    
    3,699Cash payments
    
    
    (640
    )
    
    
    (542
    )
    
    
    (1,182
    )Balance as of September 27, 2009
    
    $
    128
    
    
    $
    3,043
    
    
    $
    3,171
  5. Long-Term Debt
     
    
    a $5.0 million minimum availability reserve, and
    
    a $0.9 million reserve for outstanding letters of credit.
  10




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
    
    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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##### Table of Contents



7. Net Income Per Share
     Three Months Ended
    
    
    Nine Months EndedSeptember 27,
    
    
    September 28,
    
    
    September 27,
    
    
    September 28,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income attributable to common stockholders  basic
    
    $
    2,834
    
    
    $
    5,817
    
    
    $
    3,326
    
    
    $
    16,698Net income attributable to unvested restricted stock holders
    
    
    148
    
    
    
    157
    
    
    
    165
    
    
    
    457Net income attributable to warrant holders
    
    
    36
    
    
    
    73
    
    
    
    42
    
    
    
    208Total net income
    
    $
    3,018
    
    
    $
    6,047
    
    
    $
    3,533
    
    
    $
    17,363Weighted average common shares outstanding  basic
    
    
    19,815
    
    
    
    19,612
    
    
    
    19,795
    
    
    
    19,594Add: dilutive restricted stock, stock options and warrants
    
    
    
    
    
    
    843
    
    
    
    
    
    
    
    1,017Diluted weighted average common shares outstanding
    
    
    19,815
    
    
    
    20,455
    
    
    
    19,795
    
    
    
    20,611Basic net income per common share
    
    $
    0.14
    
    
    $
    0.30
    
    
    $
    0.17
    
    
    $
    0.85Diluted net income per common share
    
    $
    0.14
    
    
    $
    0.30
    
    
    $
    0.17
    
    
    $
    0.84
  8. Commitments and Contingencies
   12




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9. Stock Compensation Plans
  Plan Descriptions
    13




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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
    )
    
    
    (14,833
    )
    
    
    (16,220
    )
    
    $
    9.29Outstanding at September 27, 2009
    
    
    723
    
    
    
    442,226
    
    
    
    288,897
    
    
    
    731,846
    
    
    $
    9.55Exercisable at September 27, 2009
    
    
    723
    
    
    
    425,529
    
    
    
    288,897
    
    
    
    715,149
    
    
    $
    9.57Available for issuance at September 27, 2009
    
    
    
    
    
    
    55,809
    
    
    
    1,134,368
    
    
    
    1,190,177
  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
    
    
    
    3.55
    
    
    $
    7.80
    
    
    
    219,000
    
    
    $
    7.80$8.55 to $8.88
    
    
    213,961
    
    
    
    4.96
    
    
    $
    8.57
    
    
    
    197,264
    
    
    $
    8.57$11.05 to $11.98
    
    
    298,162
    
    
    
    5.11
    
    
    $
    11.32
    
    
    
    298,162
    
    
    $
    11.32$63.25 to $132.75
    
    
    723
    
    
    
    0.36
    
    
    $
    100.64
    
    
    
    723
    
    
    $
    100.64$7.80 to $132.75
    
    
    731,846
    
    
    
    4.59
    
    
    $
    9.55
    
    
    
    715,149
    
    
    $
    9.57
  14




---



##### Table of Contents



Restricted Stock Awards
   Weighted AverageGrant DateShares
    
    
    Fair ValueUnvested balance at December 30, 2007
    
    
    490,635
    
    
    $
    18.34Granted
    
    
    342,878
    
    
    $
    11.09Vested
    
    
    (147,227
    )
    
    $
    17.35Forfeited
    
    
    (79,443
    )
    
    $
    17.30Unvested balance at December 28, 2008
    
    
    606,843
    
    
    $
    14.62Granted
    
    
    667,000
    
    
    $
    4.36Vested
    
    
    (214,911
    )
    
    $
    15.55Forfeited
    
    
    (1,666
    )
    
    $
    14.83Unvested balance at September 27, 2009
    
    
    1,057,266
    
    
    $
    7.96
     15




---



##### Table of Contents



10. Related Party Transactions
    11. Recent Accounting Pronouncements
 Subsequent Events
  Revenue Arrangements with Multiple Deliverables
  16




---



##### 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 IT staffing services company,
    
    blueRADIAN Engineering, LLC (blueRADIAN), an engineering staffing services
provider,
    
    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.
    17




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##### Table of Contents



st
 2009 Priorities
     18




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##### Table of Contents



Overview of Third Quarter 2009
  Results of Operations
 Three Months Ended September 27, 2009, Compared to Three Months Ended September 28, 2008
  Three Months Ended
    
    
    Percent of Revenues
    
    
    Percent ChangeSeptember 27,
    
    
    September 28,
    
    
    September 27,
    
    
    September 28,
    
    
    2009 $ vs.2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2008 $Revenues from services
    
    $
    157,305
    
    
    $
    183,663
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    -14.4
    %Cost of services
    
    
    118,677
    
    
    
    138,483
    
    
    
    75.4
    %
    
    
    75.4
    %
    
    
    -14.3
    %Gross profit
    
    
    38,628
    
    
    
    45,180
    
    
    
    24.6
    %
    
    
    24.6
    %
    
    
    -14.5
    %Operating costs and expenses:Selling, general and administrative
    
    
    32,083
    
    
    
    34,579
    
    
    
    20.4
    %
    
    
    18.8
    %
    
    
    -7.2
    %Restructuring costs
    
    
    155
    
    
    
    
    
    
    
    0.1
    %
    
    
    0.0
    %
    
    NADepreciation and amortization
    
    
    2,106
    
    
    
    2,185
    
    
    
    1.4
    %
    
    
    1.2
    %
    
    
    -3.6
    %34,344
    
    
    
    36,764
    
    
    
    21.9
    %
    
    
    20.0
    %
    
    
    -6.6
    %Operating income
    
    
    4,284
    
    
    
    8,416
    
    
    
    2.7
    %
    
    
    4.6
    %
    
    
    -49.1
    %Interest expense, net
    
    
    1,057
    
    
    
    1,224
    
    
    
    0.7
    %
    
    
    0.7
    %
    
    
    -13.6
    %Other expense, net
    
    
    45
    
    
    
    40
    
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    12.5
    %Income before income taxes
    
    
    3,182
    
    
    
    7,152
    
    
    
    2.0
    %
    
    
    3.9
    %
    
    
    -55.5
    %Income tax expense
    
    
    164
    
    
    
    1,105
    
    
    
    0.1
    %
    
    
    0.6
    %
    
    
    -85.2
    %Net income
    
    $
    3,018
    
    
    $
    6,047
    
    
    
    1.9
    %
    
    
    3.3
    %
    
    
    -50.1
    %Billable hours during the period
    
    
    2,071,234
    
    
    
    2,244,450
  Revenues.
 Three Months Ended
    
    
    Percent of Revenues from Services
    
    
    Percent ChangeSeptember 27,
    
    
    September 28,
    
    
    September 27,
    
    
    September 28,
    
    
    2009 $ vs.2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2008 $Staffing revenue
    
    $
    149,678
    
    
    $
    173,016
    
    
    
    95.1
    %
    
    
    94.2
    %
    
    
    -13.5
    %Vendor management fees
    
    
    4,884
    
    
    
    6,049
    
    
    
    3.1
    %
    
    
    3.3
    %
    
    
    -19.3
    %Reimburseable expense revenue
    
    
    2,456
    
    
    
    4,761
    
    
    
    1.6
    %
    
    
    2.5
    %
    
    
    -48.4
    %Pass-through fees
    
    
    1,779
    
    
    
    1,771
    
    
    
    1.1
    %
    
    
    1.0
    %
    
    
    0.5
    %Permanent placement fees
    
    
    646
    
    
    
    1,386
    
    
    
    0.4
    %
    
    
    0.8
    %
    
    
    -53.4
    %Other non-staffing revenue
    
    
    410
    
    
    
    250
    
    
    
    0.3
    %
    
    
    0.1
    %
    
    
    64.0
    %Gross revenue
    
    
    159,853
    
    
    
    187,233
    
    
    
    101.6
    %
    
    
    101.9
    %
    
    
    -14.6
    %Less: Discounts and rebates
    
    
    (2,548
    )
    
    
    (3,570
    )
    
    
    -1.6
    %
    
    
    -1.9
    %
    
    
    -28.6
    %Revenues from services
    
    $
    157,305
    
    
    $
    183,663
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    -14.4
    %
  19




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##### Table of Contents



Cost of Services .
 Three Months Ended
    
    
    Percent of Revenues from Services
    
    
    Percent ChangeSeptember 27,
    
    
    September 28,
    
    
    September 27,
    
    
    September 28,
    
    
    2009 $ vs.2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2008 $Labor costs
    
    $
    57,123
    
    
    $
    63,914
    
    
    
    36.3
    %
    
    
    34.8
    %
    
    
    -10.6
    %Subcontractor costs
    
    
    51,325
    
    
    
    62,681
    
    
    
    32.6
    %
    
    
    34.1
    %
    
    
    -18.1
    %Payroll burden costs
    
    
    6,198
    
    
    
    5,673
    
    
    
    3.9
    %
    
    
    3.1
    %
    
    
    9.3
    %Reimburseable expenses
    
    
    2,439
    
    
    
    4,787
    
    
    
    1.6
    %
    
    
    2.6
    %
    
    
    -49.0
    %Other costs of services
    
    
    1,592
    
    
    
    1,428
    
    
    
    1.0
    %
    
    
    0.8
    %
    
    
    11.5
    %Cost of services
    
    $
    118,677
    
    
    $
    138,483
    
    
    
    75.4
    %
    
    
    75.4
    %
    
    
    -14.3
    %
  Selling, General and Administrative Expenses .
 Three Months Ended
    
    
    Percent of Revenues from Services
    
    
    Percent ChangeSeptember 27,
    
    
    September 28,
    
    
    September 27,
    
    
    September 28,
    
    
    2009 $ vs.2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2008 $Compensation
    
    $
    20,515
    
    
    $
    20,963
    
    
    
    13.0
    %
    
    
    11.4
    %
    
    
    -2.1
    %Stock-based compensation
    
    
    891
    
    
    
    1,118
    
    
    
    0.6
    %
    
    
    0.6
    %
    
    
    -20.3
    %Payroll burden costs
    
    
    3,021
    
    
    
    3,677
    
    
    
    1.9
    %
    
    
    2.0
    %
    
    
    -17.8
    %Premises expense
    
    
    2,050
    
    
    
    2,445
    
    
    
    1.3
    %
    
    
    1.3
    %
    
    
    -16.2
    %Other selling, general and administrative
    
    
    5,606
    
    
    
    6,376
    
    
    
    3.6
    %
    
    
    3.5
    %
    
    
    -12.1
    %Selling, general and administrative
    
    $
    32,083
    
    
    $
    34,579
    
    
    
    20.4
    %
    
    
    18.8
    %
    
    
    -7.2
    %
 2009 Priorities
 Restructuring Costs .
 Depreciation and Amortization .
 Interest Expense, Net.
  20




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##### Table of Contents



Provision for Income Taxes .
  Nine Months Ended September 27, 2009, Compared to Nine Months Ended September 28, 2008
  Nine Months Ended
    
    
    Percent of Revenues
    
    
    Percent ChangeSeptember 27,
    
    
    September 28,
    
    
    September 27,
    
    
    September 28,
    
    
    2009 $ vs.2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2008 $Revenues from services
    
    $
    476,764
    
    
    $
    551,110
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    -13.5
    %Cost of services
    
    
    361,661
    
    
    
    416,442
    
    
    
    75.9
    %
    
    
    75.6
    %
    
    
    -13.2
    %Gross profit
    
    
    115,103
    
    
    
    134,668
    
    
    
    24.1
    %
    
    
    24.4
    %
    
    
    -14.5
    %Operating costs and expenses:Selling, general and administrative
    
    
    97,613
    
    
    
    103,634
    
    
    
    20.4
    %
    
    
    18.8
    %
    
    
    -5.8
    %Restructuring costs
    
    
    4,096
    
    
    
    
    
    
    
    0.9
    %
    
    
    0.0
    %
    
    NADepreciation and amortization
    
    
    6,230
    
    
    
    5,903
    
    
    
    1.3
    %
    
    
    1.1
    %
    
    
    5.5
    %107,939
    
    
    
    109,537
    
    
    
    22.6
    %
    
    
    19.9
    %
    
    
    -1.5
    %Operating income
    
    
    7,164
    
    
    
    25,131
    
    
    
    1.5
    %
    
    
    4.5
    %
    
    
    -71.5
    %Interest expense, net
    
    
    3,135
    
    
    
    4,106
    
    
    
    0.7
    %
    
    
    0.7
    %
    
    
    -23.6
    %Other income, net
    
    
    (127
    )
    
    
    (185
    )
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    -31.4
    %Income before income taxes
    
    
    4,156
    
    
    
    21,210
    
    
    
    0.8
    %
    
    
    3.8
    %
    
    
    -80.4
    %Income tax expense
    
    
    623
    
    
    
    3,847
    
    
    
    0.1
    %
    
    
    0.6
    %
    
    
    -83.8
    %Net income
    
    $
    3,533
    
    
    $
    17,363
    
    
    
    0.7
    %
    
    
    3.2
    %
    
    
    -79.7
    %
   21




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##### Table of Contents



Revenues.
 Nine Months Ended
    
    
    Percent of Revenues from Services
    
    
    Percent ChangeSeptember 27,
    
    
    September 28,
    
    
    September 27,
    
    
    September 28,
    
    
    2009 $ vs.2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2008 $Staffing revenue
    
    $
    453,166
    
    
    $
    520,755
    
    
    
    95.1
    %
    
    
    94.5
    %
    
    
    -13.0
    %Vendor management fees
    
    
    15,553
    
    
    
    17,275
    
    
    
    3.3
    %
    
    
    3.1
    %
    
    
    -10.0
    %Reimburseable expense revenue
    
    
    8,469
    
    
    
    12,617
    
    
    
    1.8
    %
    
    
    2.3
    %
    
    
    -32.9
    %Pass-through fees
    
    
    4,972
    
    
    
    4,737
    
    
    
    1.0
    %
    
    
    0.9
    %
    
    
    5.0
    %Permanent placement fees
    
    
    2,089
    
    
    
    4,934
    
    
    
    0.4
    %
    
    
    0.9
    %
    
    
    -57.7
    %Other non-staffing revenue
    
    
    1,054
    
    
    
    547
    
    
    
    0.2
    %
    
    
    0.1
    %
    
    
    92.7
    %Gross revenue
    
    
    485,303
    
    
    
    560,865
    
    
    
    101.8
    %
    
    
    101.8
    %
    
    
    -13.5
    %Less: Discounts and rebates
    
    
    (8,539
    )
    
    
    (9,755
    )
    
    
    -1.8
    %
    
    
    -1.8
    %
    
    
    -12.5
    %Revenues from services
    
    $
    476,764
    
    
    $
    551,110
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    -13.5
    %
  Cost of Services .
 Nine Months Ended
    
    
    Percent of Revenues from Services
    
    
    Percent ChangeSeptember 27,
    
    
    September 28,
    
    
    September 27,
    
    
    September 28,
    
    
    2009 $ vs.2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2008 $Labor costs
    
    $
    171,038
    
    
    $
    194,786
    
    
    
    35.9
    %
    
    
    35.3
    %
    
    
    -12.2
    %Subcontractor costs
    
    
    159,189
    
    
    
    186,703
    
    
    
    33.4
    %
    
    
    33.9
    %
    
    
    -14.7
    %Payroll burden costs
    
    
    18,186
    
    
    
    18,098
    
    
    
    3.8
    %
    
    
    3.3
    %
    
    
    0.5
    %Reimburseable expenses
    
    
    8,434
    
    
    
    12,681
    
    
    
    1.8
    %
    
    
    2.3
    %
    
    
    -33.5
    %Other costs of services
    
    
    4,814
    
    
    
    4,174
    
    
    
    1.0
    %
    
    
    0.8
    %
    
    
    15.3
    %Cost of services
    
    $
    361,661
    
    
    $
    416,442
    
    
    
    75.9
    %
    
    
    75.6
    %
    
    
    -13.2
    %
 Selling, General and Administrative Expenses .
 Nine Months Ended
    
    
    Percent of Revenues from Services
    
    
    Percent ChangeSeptember 27,
    
    
    September 28,
    
    
    September 27,
    
    
    September 28,
    
    
    2009 $ vs.2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2008 $Compensation
    
    $
    61,144
    
    
    $
    63,541
    
    
    
    12.8
    %
    
    
    11.5
    %
    
    
    -3.8
    %Stock-based compensation
    
    
    2,662
    
    
    
    3,401
    
    
    
    0.6
    %
    
    
    0.6
    %
    
    
    -21.7
    %Payroll burden costs
    
    
    10,663
    
    
    
    11,865
    
    
    
    2.2
    %
    
    
    2.2
    %
    
    
    -10.1
    %Premises expense
    
    
    6,609
    
    
    
    6,872
    
    
    
    1.4
    %
    
    
    1.2
    %
    
    
    -3.8
    %Other selling, general and administrative
    
    
    16,535
    
    
    
    17,955
    
    
    
    3.4
    %
    
    
    3.3
    %
    
    
    -7.9
    %Selling, general and administrative
    
    $
    97,613
    
    
    $
    103,634
    
    
    
    20.4
    %
    
    
    18.8
    %
    
    
    -5.8
    %
   22




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##### Table of Contents



Restructuring Costs .
 Depreciation and Amortization .
 Interest Expense, Net.
 Provision for Income Taxes .
  Liquidity and Capital Resources
 Overview
 Credit Agreement
 Cash Flows Credit
Agreement
    23




---



##### Table of Contents



Working Capital
    Credit Agreement
    
    
    a $5.0 million minimum availability reserve, and
    
    a $0.9 million reserve for outstanding letters of credit.
   24




---



##### Table of Contents



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.
   Cash Flows
  Nine Months EndedSeptember 27,
    
    
    September 28,2009
    
    
    2008Net cash provided by (used for) operating activities
    
    $
    (4,100
    )
    
    $
    15,137Net cash used in investing activities
    
    
    (4,601
    )
    
    
    (13,028
    )Net cash used in financing activities
    
    
    (12,847
    )
    
    
    (1,964
    )Effect of exchange rates on cash
    
    
    66
    
    
    
    (149
    )Net decrease in cash
    
    $
    (21,482
    )
    
    $
    (4
    )
     25




---



##### Table of Contents



Seasonality
  Off-Balance Sheet Arrangements
  Related Party Transactions
     26




---



##### Table of Contents



Commitments and Contingencies
  Contractual Obligations
  Critical Accounting Policies and Estimates
  Recent Accounting Pronouncements
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   Interest Rate Risks
  Foreign Currency Risks
  Equity Market Risks
    27




---



##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
   Changes in Internal Controls over Financial Reporting
   28




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  Total Number of
    
    
    Average PricePeriod
    
    Shares Purchased
    
    
    Paid per ShareJune 29, 2009  July 26, 2009
    
    
    
    
    
    $
    July 27, 2009  August 23, 2009
    
    
    599
    
    
    $
    7.25August 24, 2009  September 27, 2009
    
    
    770
    
    
    $
    6.571,369
    
    
    $
    6.87
   
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5.
    
    OTHER INFORMATION
  
 ITEM 6. EXHIBITS
   29




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##### Table of Contents



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




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##### Table of Contents



SIGNATURES
  COMSYS IT PARTNERS, INC.Date:  November 5, 2009
    By:

/s/ Larry L. EnterlineName:


    Larry L. EnterlineTitle:


    Chief Executive OfficerDate:  November 5, 2009
    By:

/s/ Amy BobbittName:


    Amy BobbittTitle:


    Senior Vice President and Chief Accounting Officer  31




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##### Table of Contents



EXHIBIT INDEX
 Incorporated by ReferenceExhibit
    
    
    
    
    
    ExhibitNumber
    
    Exhibit Description
    
    Form
    
    Number
    
    Filing Date3.1
    
    Amended and Restated Certificate of Incorporation of COMSYS IT Partners, Inc.
    
    8-K
    
    
    3.1
    
    
    October 4, 20043.2
    
    Amended and Restated Bylaws of COMSYS IT Partners, Inc.
    
    8-K
    
    
    3.2
    
    
    October 4, 20043.3
    
    First Amendment to the Amended and Restated Bylaws of COMSYS IT Partners, Inc.
    
    8-K
    
    
    3.1
    
    
    May 4, 20054.1
    
    Registration Rights Agreement, dated as of September 30, 2004, between COMSYS IT Partners, Inc. and
certain of the old COMSYS Holdings stockholders party thereto
    
    8-A/A
    
    
    4.2
    
    
    November 2, 20044.2
    
    Amendment No. 1 to Registration Rights Agreement dated April 1, 2005 between COMSYS IT Partners, Inc.,
and certain of the old COMSYS Holdings stockholders party thereto
    
    10-Q
    
    
    4.2
    
    
    May 6, 20054.3
    
    Amended and Restated Registration Rights Agreement, dated as of September 30, 2004, between COMSYS IT
Partners, Inc. and certain of the old Venturi stockholders party thereto
    
    8-A/A
    
    
    4.3
    
    
    November 2, 20044.4
    
    Amendment No. 1 to Amended and Restated Registration Rights Agreement dated April 1, 2005 between
COMSYS IT Partners, Inc., and certain of the old Venturi stockholders party thereto
    
    10-Q
    
    
    4.4
    
    
    May 6, 20054.7#
    
    Common Stock Purchase Warrant dated as of April 14, 2003, issued by the Company in favor of BNP Paribas
    
    8-K
    
    
    99.16
    
    
    April 25, 20034.8
    
    Specimen Certificate for Shares of Common Stock
    
    10-K
    
    
    4.6
    
    
    April 1, 200531.1*
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2*
    
    Certification of Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232*
    
    Certification of Chief Executive Officer and Chief Accounting Officer pursuant to 18 U.S.C.
Section 1350, as adopted, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
  32