----

----

| Minnesota                                          | 41-0905408                                |
|----------------------------------------------------|-------------------------------------------|
| (State      of Incorporation)                      | (I.R.S.      Employer Identification No.) |
|                                               |                                      |
| 3601      West 76th Street, Minneapolis, Minnesota | 55435                                     |
| (Address      of Principal Executive Offices)      | (Zip      Code)                           |

----

----

| PART      I   |                                                                                                                         |
|---------------|------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                         |
| Item      1.  | Business                                                                                                                     |
| Item      1A. | Risk      Factors                                                                                                            |
| Item      1B. | Unresolved      Staff Comments                                                                                               |
| Item      2.  | Properties                                                                                                                   |
| Item 3.       | Legal      Proceedings                                                                                                       |
| Item      4.  | Submission      of Matters to a Vote of Security Holders                                                                     |
|          |                                                                                                                         |
| PART      II  |                                                                                                                         |
|          |                                                                                                                         |
| Item      5.  | Market      for Registrant’s Common Equity, Related Stockholder Matters and Issuer      Purchases of Equity Securities |
| Item      6.  | Selected      Financial Data                                                                                                 |
| Item      7.  | Management’s      Discussion and Analysis of Financial condition and Results of      Operations                        |
| Item      7A. | Quantitative      and Qualitative Disclosures about Market Risk                                                              |
| Item      8.  | Financial      Statements and Supplementary Data                                                                             |
| Item      9.  | Changes      in and Disagreements with Accountants on Accounting and Financial      Disclosure                               |
| Item      9A. | Controls      and Procedures                                                                                                 |
| Item      9B. | Other      Information                                                                                                       |
|          |                                                                                                                         |
| PART      III |                                                                                                                         |
|          |                                                                                                                         |
| Item      10. | Directors,      Executive Officers and Corporate Governance                                                                  |
| Item      11. | Executive      Compensation                                                                                                  |
| Item      12. | Security      Ownership of Certain Beneficial Owners and Management and Related      Stockholder Matters                     |
| Item      13. | Certain      Relationships and Related Transactions, and Director      Independence                                          |
| Item      14. | Principal      Accounting Fees and Services                                                                                  |
|          |                                                                                                                         |
| PART      IV  |                                                                                                                         |
|          |                                                                                                                         |
| Item      15. | Exhibits,      Financial Statement Schedules                                                                                 |
|          |                                                                                                                         |
| SIGNATURES    |                                                                                                                         |

----

| Item 1. | Business. |
|---------|-----------|

| ·   | Staffing      Services:  Serving large, high-volume accounts, our      staffing services provide reasonably priced resources to volume      buyers on demand |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Professional      Services:  Serving mid-market clients in targeted      geographic regions, our professional services are designed to provide      professional resources, such as developers, project managers, business      analysts and other highly-skilled resources that can assist our clients in      achieving their business objectives;and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Solutions:  Providing      network services, infrastructure, application integration, IP telephony      and hardware solutions to mid-marketclients. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                |   | Approximate      Percent ofFY      2007 Revenue |   |
|-------------------------------------|--------|-------------------------------------------------|--------|
|                                |   |                                            |   |
| Professional/Business      Services |   |                                            | 22.4   | % |
| Electronics/Manufacturing           |   |                                            | 21.2   | % |
| Transportation                      |   |                                            | 10.3   | % |
| Financial/Insurance      Services   |   |                                            | 8.5    | % |
| Oil      and Chemical               |   |                                            | 7.1    | % |
| Health      Care                    |   |                                            | 6.7    | % |
| Educational      Services           |   |                                            | 6.0    | % |
| Utility                             |   |                                            | 5.5    | % |
| Telecommunications                  |   |                                            | 3.6    | % |
| Government                          |   |                                            | 3.4    | % |
| Merchandising                       |   |                                            | 3.1    | % |
| Entertainment                       |   |                                            | 2.1    | % |
| Other                               |   |                                            | 0.1    | % |

----

----

RiskFactors

| Item      1B. | Unresolved Staff  Comments. |
|---------------|-----------------------------|

| Item 2. | Properties. |
|---------|-------------|

| Item      3. | LegalProceedings. |
|--------------|-------------------|

| Item 4. | Submission of Matters to a Vote of Security      Holders. |
|--------------|-----------------------------------------------------------|

----

Market for Registrant’s Common Equity, Related Stockholder Matters,and Issuer Purchases of Equity Securities.

|                                     |   | Market      Range |   |
|------------------------------------------|--------|-------------------|--------|
| Fiscal      Year Ended December 29, 2007 |   | High              |   |   | Low |   |   | Close |   |
|                                     |   |              |   |   |   |   |   |   |   |
| Fourth      Quarter                      |   | $                 | 1.75   |   |   | $ | 1.05 |   |   | $ | 1.39 |   |
| Third      Quarter                       |   |              | 1.91   |   |   |   | 1.50 |   |   |   | 1.52 |   |
| Second      Quarter                      |   |              | 1.96   |   |   |   | 1.55 |   |   |   | 1.73 |   |
| First      Quarter                       |   |              | 1.99   |   |   |   | 1.66 |   |   |   | 1.95 |   |
|                                     |   |              |   |   |   |   |   |   |   |   |   |   |
| Fiscal      Year Ended December 30, 2006 |   |              |   |   |   |   |   |   |   |   |   |   |
|                                     |   |              |   |   |   |   |   |   |   |   |   |   |
| Fourth      Quarter                      |   | $                 | 2.26   |   |   | $ | 1.69 |   |   | $ | 1.87 |   |
| Third      Quarter                       |   |              | 2.47   |   |   |   | 1.79 |   |   |   | 2.11 |   |
| Second      Quarter                      |   |              | 2.87   |   |   |   | 1.99 |   |   |   | 2.00 |   |
| First      Quarter                       |   |              | 3.00   |   |   |   | 2.37 |   |   |   | 2.79 |   |

|       Plan      Category          |   |  a.       Number of securities to be issued upon exercise of outstanding options,      warrants and rights |           |   |   b.       Weighted average exercise price of outstanding options, warrants and      rights |    |        | c.       Number of securities remaining available for future issuance under equity      compensation plans (excluding securities reflected in column      (a)) |   |
|-----------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------|----------------|--------|------------------------------------------------------------------------------------------------------------|---------|-------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Equity      compensation plans approved by security holders     |   |                                                                                                                 | 1,706,806      |   |                                                                                                       |  $ | 5.33        |                                                                                                                                                                |   |   | 1,360,111 |   |
| Equity      compensation plans not approved by security holders |   |                                                                                                                 |   213,795 |   |                                                                                                       |    |   2.06 |                                                                                                                                                                |   |   |   3,158 |   |
| Total                                                           |   |                                                                                                                 | 1,920,601      |   |                                                                                                       |  $ | 4.97        |                                                                                                                                                                |   |   | 1,363,269 |   |

----

Item6.  

Item7.

| ·   | Staffing:  Serving large,      high volume, accounts, our staffing services are focused on      providing reasonably priced resources to volume buyers on      demand; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Professional      Services:  Serving mid-market clients in targeted      geographic regions, our professional services are designed to provide      professional resources such as developers, project managers, business      analysts and other highly-skilled resources that can assist our clients in      achieving their business objectives;and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Solutions:  Providing      network services, infrastructure, application integration, IP telephony      and hardware solutions to mid-marketclients. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| ·   | Add      headcount in key functional areas, including sales, recruiting, project      management and consulting, in order to respond to client      demand. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Expand      our Solutions business by launching project-oriented IT consulting      practices in our most attractive US markets.  In 2009 we plan to      continue our expansion in additional markets throughout the      US. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Exit      businesses that are non-core and non-strategic to our new plan and focus      on our core, IT-related competencies and  clients. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Invest      in our IT systems in order to simplify, streamline and automate our      business processes. |
|--------------------|----------------------------------------------------------------------------------------------------------|

| ·   | Application      development and support, including Microsoft technologies, PMO services,      business analysts, quality assurance and testing  services |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | IP      Communications which includes wireless, IP telecommunications, contact      center and security services |
|--------------------|------------------------------------------------------------------------------------------------------------------|

| ·   | Infrastructure      and Storage Solutions which includes VMware  services |
|--------------------|---------------------------------------------------------------------------|

| ·   | Lawson      Services which includes integration, customization and administration of      Lawson Software applications |
|--------------------|------------------------------------------------------------------------------------------------------------------------|

| ·   | IT      Outsourcing which includes application outsourcing, help desk, hosting,      and field engineering services |
|--------------------|---------------------------------------------------------------------------------------------------------------------|

----

----

----

----

|                                                       |   | Year      EndedDecember      29, 2007 |    | Year      EndedDecember      30, 2006 |   | Increase      (Decrease) |   |
|------------------------------------------------------------|--------|---------------------------------------|---------|---------------------------------------|--------|--------------------------|--------|
| (Dollars      in thousands)                                |   | Amount                                |    | %      ofRevenue                      |   | Amount                   |   | %      ofRevenue |   | Amount |   | %Inc      (Dec) |   | As      %of      Revenue |   |
| Revenue:                                                   |   |                                  |    |                                  |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Professional services provided      directly               |   | $                                     | 243,372 |                                  | 67.7   | %                        | $      | 261,489 |   | 75.4 | % | $ | (18,117 | ) | (6.9 | )% | (7.7 | %) |
| Professional services provided      through sub suppliers  |   |                                  | 58,339  |                                  | 16.2   |                     |   | 54,902 |   | 15.8 |   |   | 3,437 |   | 6.3 |   | 0.4 |   |
| Product sales                                              |   |                                  | 57,959  |                                  | 16.1   |                     |   | 30,596 |   | 8.8 |   |   | 27,363 |   | 89.4 |   | 7.3 |   |
| Total      revenue                                         |   |                                  | 359,670 |                                  | 100.0  |                     |   | 346,987 |   | 100.0 |   |   | 12,683 |   | 3.7 |   | -- |   |
|                                                       |   |                                  |    |                                  |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Expenses:                                                  |   |                                  |    |                                  |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries, contracted services      and direct charges      |   |                                  | 250,286 |                                  | 69.6   |                     |   | 260,619 |   | 75.1 |   |   | (10,333 | )  | (4.0 | )  | (5.5 | )  |
| Cost of product      sales                                 |   |                                  | 51,338  |                                  | 14.3   |                     |   | 27,149 |   | 7.8 |   |   | 24,189 |   | 89.1 |   | 6.5 |   |
| Selling, administrative and      other operating costs     |   |                                  | 58,347  |                                  | 16.2   |                     |   | 58,847 |   | 17.0 |   |   | (500 | ) | (0.9 | ) | (0.8 | ) |
|    Amortization      of intangible assets   |   |                                  | 1,065   |                                  | 0.3    |                     |   | 1,053 |   | 0.3 |   |   | 12 |   | 1.1 |   | -- |   |
| Expenses related to attempted      merger                  |   |                                  | --      |                                  | --     |                     |   | (327 | ) | (0.1 | ) |   | 327 |   | 100.0 |   | 0.1 |   |
| Restructuring costs and other      severance related costs |   |                                  | 3,604   |                                  | 1.0    |                     |   | (51 | ) | -- |   |   | 3,655 |   | 7,166.7 |   | 1.0 |   |
| Impairment of intangible      assets                       |   |                                  | 3,049   |                                  | 0.9    |                     |   | -- |   | -- |   |   | 3,049 |   | -- |   | 0.9 |   |
| Goodwillimpairment                                         |   |                                  | 5,500   |                                  | 1.5    |                     |   | -- |   | -- |   |   | 5,500 |   | -- |   | 1.5 |   |
| Non-operating      income                                  |   |                                  | (297    | )                                     | (0.1   | )                   |   | (20 | ) | -- |   |   | 277 |   | 1,385.0 |   | (0.1 | )  |
| Interest expense                                           |   |                                  | 384     |                                  | 0.1    |                     |   | 736 |   | 0.2 |   |   | (352 | )  | (47.8 | )  | (0.1 | )  |
| Loss      before income taxes                              |   |                                  | (13,606 | )                                     | (3.8   | )                        |   | (1,019 | ) | (0.3 | ) |   | (12,587 | )  | 1,235.2 |   | (3.5 | )  |
|                                                       |   |                                  |    |                                  |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Income tax expense                                         |   |                                  | 2,606   |                                  | 0.7    |                     |   | 41 |   | -- |   |   | 2,565 |   | 6,256.1 |   | 0.7 |   |
| Net      Loss                                              |   | $                                     | (16,212 | )                                     | (4.5   | %)                       | $      | (1,060 | ) | (0.3 | %) | $ | (15,152 | )  | 1,429.4 | % | (4.2 | %) |
|                                                       |   |                                  |    |                                  |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Personnel:                                                 |   |                                  |    |                                  |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Management      and Administrative                         |   |                                  | 378     |                                  |   |                     |   | 403 |   |   |   |   | (25 | )  | (6.2 | )% |   |   |
| Technical      Consultants                                 |   |                                  | 2,093   |                                  |   |                     |   | 2,277 |   |   |   |   | (184 | ) | (8.1 | )% |   |   |

----

----

----

|                                                           |   | Year      EndedDecember      30, 2006 |     | Year      EndedDecember      31, 2005 |   | Increase      (Decrease) |   |
|----------------------------------------------------------------|--------|---------------------------------------|----------|---------------------------------------|--------|--------------------------|--------|
| (Dollars      in thousands)                                    |   | Amount                                |     | %      ofRevenue                      |   | Amount                   |   | %      ofRevenue |   | Amount |   | %Inc      (Dec) |   | As      %of      Revenue |   |
| Revenue:                                                       |   |                                  |     |                                  |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Professional      services provided directly                   |   | $                                     | 261,489  |                                  | 75.4   | %                        | $      | 263,121 |   | 81.6 | % | $ | (1,632 | ) | (0.6 | %) | (6.2 | %) |
| Professional      services provided through sub suppliers |   |                                  | 54,902   |                                  | 15.8   |                     |   | 34,431 |   | 10.7 |   |   | 20,471 |   | 59.5 |   | 5.1 |   |
| Product      sales                                             |   |                                  | 30,596   |                                  | 8.8    |                     |   | 24,746 |   | 7.7 |   |   | 5,850 |   | 23.6 |   | 1.1 |   |
| Total      revenue                                             |   |                                  | 346,987  |                                  | 100.0  |                     |   | 322,298 |   | 100.0 |   |   | 24,689 |   | 7.7 |   | 0.0 |   |
|                                                           |   |                                  |     |                                  |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries,      contracted services and direct charges          |   |                                  | 260,619  |                                  | 75.1   |                     |   | 240,100 |   | 74.5 |   |   | 20,519 |   | 8.5 |   | 0.6 |   |
| Cost      of product sales                                     |   |                                  | 27,149   |                                  | 7.8    |                     |   | 22,550 |   | 7.0 |   |   | 4,599 |   | 20.4 |   | 0.8 |   |
| Selling,      administrative and other operating costs         |   |                                  | 58,847   |                                  | 17.0   |                     |   | 61,053 |   | 18.9 |   |   | (2,206 | ) | (3.6 | ) | (1.9 | ) |
| Amortization      of intangible assets                         |   |                                  | 1,053    |                                  | 0.3    |                     |   | 982 |   | 0.3 |   |   | 71 |   | 7.2 |   | 0.0 |   |
| Restructuring      costs and other severance related costs     |   |                                  | (51      | )                                     | 0.0    |                     |   | 3,914 |   | 1.2 |   |   | (3,965 | ) | (101.3 | ) | (1.2 | ) |
| Loss      on asset disposal                                    |   |                                  | --  |                                  | 0.0    |                     |   | 1,825 |   | 0.6 |   |   | (1,825 | ) | (100.0 | ) | (0.6 | ) |
| Goodwill      Impairment                                       |   |                                  | --  |                                  | 0.0    |                     |   | 7,050 |   | 2.2 |   |   | (7,050 | ) | (100.0 | ) | (2.2 | ) |
| Expenses      related to attempted merger                      |   |                                  | (327     | )                                     | (0.1   | )                        |   | 2,129 |   | 0.7 |   |   | (2,456 | ) | (115.4 | ) | (0.8 | ) |
| Non-operating      income                                      |   |                                  | (20      | )                                     | 0.0    |                     |   | (50 | ) | 0.0 |   |   | (30 | ) | (60.0 | ) | 0.0 |   |
| Interest      expense                                          |   |                                  | 736      |                                  | 0.2    |                     |   | 394 |   | 0.1 |   |   | 342 |   | 86.8 |   | 0.1 |   |
| Loss      before taxes                                         |   |                                  | (1,019   | )                                     | (0.3   | )                        |   | (17,649 | ) | (5.5 | ) |   | 16,630 |   | (94.2 | ) | 5.2 |   |
|                                                           |   |                                  |     |                                  |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      taxes                                              |   |                                  | 41       |                                  | 0.0    |                     |   | 50 |   | -- |   |   | (9 | ) | (18.0 | ) | 0.0 |   |
| Net      loss                                                  |   | $                                     | (1,060   | )                                     | (0.3   | %)                       | $      | (17,699 | ) | (5.5 | %) | $ | 16,639 |   | (94.0 | %) | 5.2 | % |
|                                                           |   |                                  |     |                                  |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Personnel:                                                     |   |                                  |     |                                  |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Management      and Administrative                             |   |                                  | 403      |                                  |   |                     |   | 400 |   |   |   |   | 3 |   | 0.8 | % |   |   |
| Technical      Consultants                                     |   |                                  | 2,277    |                                  |   |                     |   | 2,449 |   |   |   |   | (172 | ) | (7.0 | %) |   |   |

----

----

| (Dollars      in thousands)           |   | December      29,2007 |   |   | December      30,2006 |   |   | Increase(Decrease) |   |   | PercentageIncrease(Decrease) |    |
|---------------------------------------|--------|-----------------------|--------|--------|-----------------------|--------|--------|--------------------|--------|--------|------------------------------|---------|
|                                  |   |                  |   |   |                  |   |   |               |   |   |                         |    |
| Cash      and cash equivalents        |   | $                     | 91     |   |                  | $      | 179    |               |   | $      | (88                          | )       |   |   | (49.2 | )% |
| Accounts      receivable              |   |                  | 66,074 |   |                  |   | 64,196 |               |   |   | 1,878                        |    |   |   | 2.9 |   |
| Other      current assets             |   |                  | 2,101  |   |                  |   | 2,484  |               |   |   | (383                         | )  |   |   | (15.4 | )  |
| Total      current assets             |   |                  | 68,266 |   |                  |   | 66,859 |               |   |   | 1,407                        |    |   |   | 2.1 |   |
|                                  |   |                  |   |   |                  |   |   |               |   |   |                         |    |   |   |   |   |
| Accounts      payable                 |   |                  | 27,780 |   |                  |   | 24,411 |               |   |   | 3,369                        |    |   |   | 13.8 |   |
| Salaries      and vacations           |   |                  | 6,885  |   |                  |   | 7,416  |               |   |   | (531                         | )       |   |   | (7.2 | ) |
| Line      of credit                   |   |                  | 1,587  |   |                  |   | 2,661  |               |   |   | (1,074                       | )       |   |   | (40.4 | ) |
| Restructuring      accruals - current |   |                  | 1,900  |   |                  |   | 385    |               |   |   | 1,515                        |    |   |   | 393.5 |   |
| Other      current liabilities        |   |                  | 5,327  |   |                  |   | 3,145  |               |   |   | 2,182                        |    |   |   | 69.4 |   |
| Total      current liabilities        |   |                  | 43,479 |   |                  |   | 38,018 |               |   |   | 5,461                        |    |   |   | 14.4 |   |
|                                  |   |                  |   |   |                  |   |   |               |   |   |                         |    |   |   |   |   |
| Working      capital                  |   | $                     | 24,787 |   |                  | $      | 28,841 |               |   | $      | (4,054                       | )       |   |   | (14.1 | )% |
| Current      ratio                    |   |                  | 1.57   |   |                  |   | 1.76   |               |   |   | (0.19                        | )  |   |   | (10.8 | )  |
|                                  |   |                  |   |   |                  |   |   |               |   |   |                         |    |   |   |   |   |
| Total      shareholders’ equity |   | $                     | 40,035 |   |                  | $      | 55,734 |               |   | $      | (15,699                      | )       |   |   | (28.2 | )% |

----

| (In      thousands)        |   | 1      Year |   |   | 2-3      Years |   |   | 4-5      Years |   |   | Over      5 Years |   |   | Total  |   |
|----------------------------|--------|-------------|--------|--------|----------------|--------|--------|----------------|--------|--------|-------------------|--------|--------|--------|--------|
|                       |   |        |   |   |           |   |   |           |   |   |              |   |   |   |   |
| Line      of Credit:       |   |        |   |   | $              | 1,587  |   |           |   |   |              |   |   |   | $      | 1,587 |   |
|                       |   |        |   |   |           |   |   |           |   |   |              |   |   |   |   |   |   |
| Operating      Leases      |   | $           | 3,056  |   |           |   | 5,566  |           |   | $      | 3,865             |   |   | $      | 645    |   |   |   | 13,132 |   |
|                       |   |        |   |   |           |   |   |           |   |   |              |   |   |   |   |   |   |   |   |   |
| Deferred      Compensation |   |        | 1,868  |   |           |   | 341    |           |   |   | 159               |   |   |   | 427    |   |   |   | 2,795 |   |
|                       |   |        |   |   |           |   |   |           |   |   |              |   |   |   |   |   |   |   |   |   |
| Total                      |   | $           | 4,924  |   |           | $      | 7,494  |           |   | $      | 4,024             |   |   | $      | 1,072  |   |   | $ | 17,514 |   |

----

Item7A

----

Item8

| (Dollars      in thousands except per share amounts)                                                                                                 |    | December      29,2007 |   | December      30,2006 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------|---------|-----------------------|--------|-----------------------|--------|
|                                                                                                                                                 |    |                  |   |                  |   |
| ASSETS                                                                                                                                               |    |                  |   |                  |   |   |
|                                                                                                                                                 |    |                  |   |                  |   |   |
| Current      assets:                                                                                                                                 |    |                  |   |                  |   |   |
| Cash      and cash equivalents                                                                                                                       | $  | 91                    |   | $                     | 179    |   |
| Accounts      receivable, less allowance for doubtful accounts of $1,545 and $1,423,      respectively                                               |    |  66,074          |   |                  | 64,196 |   |
| Prepaid      expenses and other current assets                                                                                                       |    | 2,101                 |   |                  | 2,484  |   |
| Total      current assets                                                                                                                            |    |  68,266          |   |                  | 66,859 |   |
|                                                                                                                                                 |    |                  |   |                  |   |   |
| Property      and equipment, net                                                                                                                     |    | 2,711                 |   |                  | 2,925  |   |
| Intangible      assets other than goodwill, net of accumulated amortization of $6,128 and      $5,550, respectively                                  |    | 7,131                 |   |                  | 11,245 |   |
| Goodwill                                                                                                                                             |    | 6,299                 |   |                  | 11,799 |   |
| Other      assets                                                                                                                                    |    | 864                   |   |                  | 3,403  |   |
|                                                                                                                                                 |  $ | 85,271                |   | $                     | 96,231 |   |
| LIABILITIES      AND SHAREHOLDERS' EQUITY                                                                                                            |    |                  |   |                  |   |   |
|                                                                                                                                                 |    |                  |   |                  |   |   |
| Current      liabilities:                                                                                                                            |    |                  |   |                  |   |   |
| Accounts      payable                                                                                                                                | $       | 27,780                |   | $                     | 24,411 |   |
| Salaries      and vacations                                                                                                                          |    | 6,885                 |   |                  | 7,416  |   |
| Line      of credit                                                                                                                                  |    | 1,587                 |   |                  | 2,661  |   |
| Deferred      revenue                                                                                                                                |    | 1,943                 |   |                  | 1,267  |   |
| Restructuring      accrual                                                                                                                           |    | 1,900                 |   |                  | 385    |   |
| Health      care reserves and other                                                                                                                  |    | 1,516                 |   |                  | 1,670  |   |
| Deferred      compensation                                                                                                                           |    | 1,868                 |   |                  | 208    |   |
| Total      current liabilities                                                                                                                       |    | 43,479                |   |                  | 38,108 |   |
|                                                                                                                                                 |    |                  |   |                  |   |   |
| Non-current      liabilities                                                                                                                         |    |                  |   |                  |   |   |
| Deferred      compensation                                                                                                                           |    | 927                   |   |                  | 2,319  |   |
| Other      long-term liabilities                                                                                                                     |    | 692                   |   |                  | --     |   |
| Restructuring      accrual                                                                                                                           |    | 138                   |   |                  | 160    |   |
| Total      non-current liabilities                                                                                                                   |    | 1,757                 |   |                  | 2,479  |   |
|                                                                                                                                                 |    |                  |   |                  |   |   |
| Commitments      (Note H)                                                                                                                            |    |                  |   |                  |   |   |
| Shareholders'      equity:                                                                                                                           |    |                  |   |                  |   |   |
| Common      stock, par value $.10 a share; authorized 120,000,000 shares; issued and      outstanding 24,904,076 and 24,695,396 shares, respectively |    | 2,490                 |   |                  | 2,469  |   |
| Additional      capital                                                                                                                              |    | 22,652                |   |                  | 22,079 |   |
| Retained      earnings                                                                                                                               |    | 14,893                |   |                  | 31,186 |   |
| Total      shareholders' equity                                                                                                                      |    | 40,035                |   |                  | 55,734 |   |
|                                                                                                                                                 |  $ | 85,271                |   | $                     | 96,231 |   |

| See      notes to consolidated financialstatements. |
|-----------------------------------------------------|

----

|                                                         |   | Fiscal      Year |    |
|--------------------------------------------------------------|--------|------------------|---------|
| (In      thousands except per share amounts)                 |   | 2007             |    |   | 2006 |   |   | 2005 |   |
|                                                         |   |             |    |   |   |   |   |   |   |
| Revenue:                                                     |   |             |    |   |   |   |   |   |   |
| Professional      services provided directly                 |   | $                | 243,372 |   |   | $ | 261,489 |   |   | $ | 263,121 |   |
| Professional      services provided through sub suppliers    |   |             | 58,339  |   |   |   | 54,902 |   |   |   | 34,431 |   |
| Product      sales                                           |   |             | 57,959  |   |   |   | 30,596 |   |   |   | 24,746 |   |
| Total      revenue                                           |   |             | 359,670 |   |   |   | 346,987 |   |   |   | 322,298 |   |
|                                                         |   |             |    |   |   |   |   |   |   |   |   |   |
| Operating      expenses:                                     |   |             |    |   |   |   |   |   |   |   |   |   |
| Salaries,      contracted services and direct charges        |   |             | 250,286 |   |   |   | 260,619 |   |   |   | 240,100 |   |
| Cost      of product sales                                   |   |             | 51,338  |   |   |   | 27,149 |   |   |   | 22,550 |   |
| Selling,      administrative and other operating costs       |   |             | 58,347  |   |   |   | 58,847 |   |   |   | 61,053 |   |
| Amortization      of intangible assets                       |   |             | 1,065   |   |   |   | 1,053 |   |   |   | 982 |   |
| Restructuring      and other severance related costs         |   |             | 3,604   |   |   |   | (51 | ) |   |   | 3,914 |   |
| Impairment      of intangibles                               |   |             | 3,049   |   |   |   | -- |   |   |   | -- |   |
| Goodwill      impairment                                     |   |             | 5,500   |   |   |   | -- |   |   |   | 7,050 |   |
| Loss      on asset disposal                                  |   |             | --      |   |   |   | -- |   |   |   | 1,825 |   |
| Expenses      related to attempted merger                    |   |             | --      |   |   |   | (327 | ) |   |   | 2,129 |   |
|                                                         |   |             |    |   |   |   |   |   |   |   |   |   |
| Operating      loss                                          |   |             | (13,519 | ) |   |   | (303 | ) |   |   | (17,305 | ) |
|                                                         |   |             |    |   |   |   |   |   |   |   |   |   |
| Non-operating      income                                    |   |             | 297     |   |   |   | 20 |   |   |   | 50 |   |
| Interest      expense                                        |   |             | 384     |   |   |   | 736 |   |   |   | 394 |   |
|                                                         |   |             |    |   |   |   |   |   |   |   |   |   |
| Loss      before income taxes                                |   |             | (13,606 | ) |   |   | (1,019 | ) |   |   | (17,649 | ) |
|                                                         |   |             |    |   |   |   |   |   |   |   |   |   |
| Income      tax expense                                      |   |             | 2,606   |   |   |   | 41 |   |   |   | 50 |   |
|                                                         |   |             |    |   |   |   |   |   |   |   |   |   |
| Net      loss                                                |   | $                | (16,212 | ) |   | $ | (1,060 | ) |   | $ | (17,699 | ) |
|                                                         |   |             |    |   |   |   |   |   |   |   |   |   |
| Per      common share (basic):                               |   |             |    |   |   |   |   |   |   |   |   |   |
| Net      loss:                                               |   | $                | (.65    | ) |   | $ | (.04 | ) |   | $ | (.72 | ) |
|                                                         |   |             |    |   |   |   |   |   |   |   |   |   |
| Per      common share (diluted):                             |   |             |    |   |   |   |   |   |   |   |   |   |
| Net      loss:                                               |   | $                | (.65    | ) |   | $ | (.04 | ) |   | $ | (.72 | ) |
|                                                         |   |             |    |   |   |   |   |   |   |   |   |   |
| Average      common shares outstanding                       |   |             | 24,908  |   |   |   | 24,645 |   |   |   | 24,495 |   |
| Average      common and common equivalent shares outstanding |   |             | 24,908  |   |   |   | 24,645 |   |   |   | 24,495 |   |

----

|                                                                                                |   | Fiscal      Year |    |
|-----------------------------------------------------------------------------------------------------|--------|------------------|---------|
| (In      thousands)                                                                                 |   | 2007             |    |   | 2006 |   |   | 2005 |   |
|                                                                                                |   |             |    |   |   |   |   |   |   |
| Cash      flows from operating activities:                                                          |   |             |    |   |   |   |   |   |   |
| Net      loss                                                                                       |   | $                | (16,212 | ) |   | $ | (1,060 | ) |   | $ | (17,699 | ) |
|                                                                                                |   |             |    |   |   |   |   |   |   |   |   |   |
| Adjustments      to reconcile net loss to net cash provided by (used in) operating      activities: |   |             |    |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                                        |   |             | 1,699   |   |   |   | 2,411 |   |   |   | 2,763 |   |
| Amortization of intangible      assets                                                              |   |             | 1,065   |   |   |   | 1,053 |   |   |   | 982 |   |
| Goodwill    impairment                                                                              |   |             | 5,500   |   |   |   | -- |   |   |   | 7,050 |   |
| Impairment of      intangibles                                                                      |   |             | 3,049   |   |   |   | -- |   |   |   | -- |   |
| Loss on asset      disposal                                                                         |   |             | 19      |   |   |   | 42 |   |   |   | 1,867 |   |
| Stock based      compensation                                                                       |   |             | 902     |   |   |   | 482 |   |   |   | 267 |   |
| Deferred taxes                                                                                      |   |             | 2,596   |   |   |   | -- |   |   |   | -- |   |
| Settlement of preacquisition      contingency                                                       |   |             | (198    | ) |   |   | -- |   |   |   | -- |   |
|                                                                                                |   |             |    |   |   |   |   |   |   |   |   |   |
| Change      in:                                                                                     |   |             |    |   |   |   |   |   |   |   |   |   |
| Accounts    receivable                                                                              |   |             | (2,016  | )  |   |   | 2,772 |   |   |   | (8,012 | ) |
| Prepaid expenses and other      current assets                                                      |   |             | 407     |   |   |   | 265 |   |   |   | 604 |   |
| Other assets                                                                                        |   |             | 57      |   |   |   | 667 |   |   |   | 290 |   |
| Accountspayable                                                                                     |   |             | 3,151   |   |   |   | (174 | ) |   |   | 7,424 |   |
| Salaries and      vacations                                                                         |   |             | (531    | ) |   |   | (844 | ) |   |   | (580 | ) |
| Other accrued      expenses                                                                         |   |             | 202     |   |   |   | (572 | ) |   |   | 483 |   |
| Deferredrevenue                                                                                     |   |             | 1,012   |   |   |   | (378 | ) |   |   | (13 | ) |
| Restructuring      accrual                                                                          |   |             | 1,493   |   |   |   | (1,007 | ) |   |   | 1,234 |   |
| Deferred      compensation                                                                          |   |             | 268     |   |   |   | 115 |   |   |   | (1,718 | ) |
| Net      cash provided by (used in) operating activities                                            |   |             | 2,463   |   |   |   | 3,772 |   |   |   | (5,058 | ) |
|                                                                                                |   |             |    |   |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                                                          |   |             |    |   |   |   |   |   |   |   |   |   |
| Property and equipment      additions                                                               |   |             | (1,287  | ) |   |   | (1,335 | ) |   |   | (2,873 | ) |
| Payments for acquisitions, net of      cash acquired                                                |   |             | --      |   |   |   | -- |   |   |   | (5,010 | ) |
| Proceeds from property and      equipment sales                                                     |   |             | 1       |   |   |   | 17 |   |   |   | 18 |   |
| Net      cash used in investing activities                                                          |   |             | (1,286  | ) |   |   | (1,318 | ) |   |   | (7,865 | ) |
|                                                                                                |   |             |    |   |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                                          |   |             |    |   |   |   |   |   |   |   |   |   |
| Net      change in line of credit                                                                   |   |             | (1,074  | ) |   |   | (2,339 | ) |   |   | 5,000 |   |
| Purchase      of common stock                                                                       |   |             | (191    | )  |   |   | -- |   |   |   | -- |   |
| Proceeds      from the exercise of stock options                                                    |   |             | --      |   |   |   | -- |   |   |   | 98 |   |
| Net      cash (used in) provided by financing activities                                            |   |             | (1,265  | ) |   |   | (2,339 | ) |   |   | 5,098 |   |
|                                                                                                |   |             |    |   |   |   |   |   |   |   |   |   |
| Net      (decrease) increase in cash and equivalents                                                |   |             | (88     | )  |   |   | 115 |   |   |   | (7,825 | ) |
|                                                                                                |   |             |    |   |   |   |   |   |   |   |   |   |
| Cash      and equivalents at beginning of year                                                      |   |             | 179     |   |   |   | 64 |   |   |   | 7,889 |   |
|                                                                                                |   |             |    |   |   |   |   |   |   |   |   |   |
| Cash      and equivalents at end of year                                                            |   | $                | 91      |   |   | $ | 179 |   |   | $ | 64 |   |
|                                                                                                |   |             |    |   |   |   |   |   |   |   |   |   |
| Supplemental      cash flow information:                                                            |   |             |    |   |   |   |   |   |   |   |   |   |
| Cash      paid during the year for:                                                                 |   |             |    |   |   |   |   |   |   |   |   |   |
| Income      taxes                                                                                   |   | $                | 55      |   |   | $ | 22 |   |   | $ | 181 |   |
| Interest                                                                                            |   | $                | 399     |   |   | $ | 795 |   |   | $ | 528 |   |
|                                                                                                |   |             |    |   |   |   |   |   |   |   |   |   |
| Non-cash      investing activities:                                                                 |   |             |    |   |   |   |   |   |   |   |   |   |
| Value      of common stock issued for acquisitions                                                  |   | $                | --      |   |   | $ | -- |   |   | $ | 1,000 |   |
| Capital      expenditures included in accounts payable                                              |   | $                | 270     |   |   | $ | 53 |   |   | $ | 40 |   |

----

|   (Dollars      in thousands)                                           |   | CommonStock |   |   | AdditionalCapital |   |   | DeferredCompensation |   |   | RetainedEarnings |   |   | TotalShareholders’Equity |    |
|-----------------------------------------------------------------------------------|--------|-------------|--------|--------|-------------------|--------|--------|----------------------|--------|--------|------------------|--------|--------|--------------------------------|---------|
|                                                                              |   |        |   |   |              |   |   |                 |   |   |             |   |   |                           |    |
| Balances      at January 1, 2005                                                  |   | $           | 2,421  |   |              | $      | 21,095 |                 |   | $      | (843             | )      |   | $                              | 49,945  |   |   | $ | 72,618 |   |
|                                                                              |   |        |   |   |              |   |   |                 |   |   |             |   |   |                           |    |   |   |   |   |   |
| Common      stock issued - 31,975 shares upon exercise of stockoptions            |   |        | 3      |   |              |   | 95     |                 |   |   | --               |   |   |                           | --      |   |   |   | 98 |   |
| Common      stock issued - 269,298 shares for acquisitions                        |   |        | 27     |   |              |   | 973    |                 |   |   | --               |   |   |                           | --      |   |   |   | 1,000 |   |
| Common      stock issued - 7,000 shares as stock grants                           |   |        | 1      |   |              |   | 27     |                 |   |   | --               |   |   |                           | --      |   |   |   | 28 |   |
| Amortization      of deferred compensation                                        |   |        | 8      |   |              |   | (8     | )                    |   |   | 267              |   |   |                           | --      |   |   |   | 267 |   |
| Net      loss (Comprehensive loss)                                                |   |        | --     |   |              |   | --     |                 |   |   | --               |   |   |                           | (17,699 | ) |   |   | (17,699 | ) |
| Balance      at December 31, 2005                                                 |   |        | 2,460  |   |              |   | 22,182 |                 |   |   | (576             | )      |   |                           | 32,246  |   |   |   | 6,312 |   |
|                                                                              |   |        |   |   |              |   |   |                 |   |   |             |   |   |                           |    |   |   |   |   |   |
| Effect      of accounting change (SFAS 123R)                                      |   |        | --     |   |              |   | (576   | )                    |   |   | 576              |   |   |                           | --      |   |   |   | -- |   |
| Common      stock issued - 8,000 shares as stock grants                           |   |        | 1      |   |              |   | 19     |                 |   |   | --               |   |   |                           | --      |   |   |   | 20 |   |
| Stock      compensation expense                                                   |   |        | --     |   |              |   | 134    |                 |   |   | --               |   |   |                           | --      |   |   |   | 134 |   |
| Restricted      shares amortization                                               |   |        | 8      |   |              |   | 320    |                 |   |   | --               |   |   |                           | --      |   |   |   | 328 |   |
| Net      loss (Comprehensive loss)                                                |   |        | --     |   |              |   | --     |                 |   |   | --               |   |   |                           | (1,060  | ) |   |   | (1,060 | ) |
| Balance      at December 30, 2006                                                 |   |        | 2,469  |   |              |   | 22,079 |                 |   |   | --               |   |   |                           | 31,186  |   |   |   | 55,734 |   |
|                                                                              |   |        |   |   |              |   |   |                 |   |   |             |   |   |                           |    |   |   |   |   |   |
| Common      stock issued – 59,000 shares as stock grants                    |   |        | 6      |   |              |   | 108    |                 |   |   | --               |   |   |                           | --      |   |   |   | 114 |   |
| FAS      123R Stock Option Expense                                                |   |        | --     |   |              |   | 57     |                 |   |   | --               |   |   |                           | --      |   |   |   | 57 |   |
| Common      Stock repurchased (109,000)                                      |   |        | (11    | )      |              |   | (99    | )                    |   |   | --               |   |   |                           | (81     | ) |   |   | (191 | )  |
| Common      stock returned in settlement of pre-acquisition      contingency |   |        | (12    | )      |              |   | (186   | )                    |   |   | --               |   |   |                           | --      |   |   |   | (198 | ) |
| Amortization      of Deferred Compensation                                        |   |        | 38     |   |              |   | 693    |                 |   |   | --               |   |   |                           | --      |   |   |   | 731 |   |
| Net      loss (Comprehensive Loss)                                                |   |        | --     |   |              |   | --     |                 |   |   | --               |   |   |                           | (16,212 | ) |   |   | (16,212 | ) |
| Balance      at December 29, 2007                                                 |   | $           | 2,490  |   |              | $      | 22,652 |                 |   | $      | --               |   |   | $                              | 14,893  |   |   | $ | 40,035 |   |

----

| A. | Summary      of Significant Accounting Policies |
|----|-------------------------------------------------|

| ·   | Staffing:  Serving large,      high-volume accounts, our staffing services are focused on      providing reasonably priced resources to volume buyers on      demand.   |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Professional      Services:  Serving mid-market clients in targeted      geographic regions, our professional services are designed to      provide professional resources such as developers, project managers,      business analysts and other highly-skilled resources that can assist our      clients in achieving their business objectives;  and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Solutions:  providing      network services, infrastructure, application integration, IP telephony      and hardware solutions to middle marketclients. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|   | a) | Compensation      expense for all stock-based compensation awards granted prior to December      31, 2005, which were not fully vested as of December 31, 2005, based on      the grant date fair value estimated in accordance with the original      provisions of SFAS No. 123, Accounting for Stock-Based      Compensation; and |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | Compensation      expense for all stock-based compensation awards granted subsequent to      December 31, 2005, based on the grant-date fair value estimated in      accordance with the provisions of SFAS No.123R. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                    |   | Year      EndedDecember      31, 2005 |    |
|---------------------------------------------------------------------------------------------------------|--------|---------------------------------------|---------|
|                                                                                                    |   |                                  |    |
| Net      loss, as reported                                                                              |   | $                                     | (17,699 | ) |
| Deduct:      Stock-based compensation expense determined under fair value method for      all awards(1) |   |                                  | (1,055  | ) |
|                                                                                                    |   |                                  |    |   |
| Net      loss, pro forma                                                                                |   | $                                     | (18,754 | ) |
|                                                                                                    |   |                                  |    |   |
| Earnings      per share:                                                                                |   |                                  |    |   |
| Basic      - as reported                                                                                |   | $                                     | (.72    | ) |
| Basic      - pro forma                                                                                  |   |                                  | (.77    | ) |
|                                                                                                    |   |                                  |    |   |
| Diluted      - as reported                                                                              |   | $                                     | (.72    | ) |
| Diluted      - pro forma                                                                                |   |                                  | (.77    | ) |

----

|                                                 |   |   Options |      |   | Weighted      Average Exercise Price Per Share |   |   | Weighted      Average Remaining Contractual Term (in      years) |   |   |  Aggregate      Intrinsic Value |   |
|------------------------------------------------------|--------|---------------------|-----------|--------|------------------------------------------------|--------|--------|-----------------------------------------------------------------------|--------|--------|--------------------------------------|--------|
|                                                 |   |                |      |   |                                           |   |   |                                                                  |   |   |                                 |   |
| Outstanding      on December 30, 2006                |   |                | 2,114,889 |   |                                           | $      | 5.94   |                                                                  |   |   | 5.75                                 |   |   | $ | -- |   |
| Granted                                              |   |                | 690,321   |   |                                           |   | 1.72   |                                                                  |   |   |                                 |   |   |   |   |   |
| Exercised                                            |   |                | 0         |   |                                           |   | 0      |                                                                  |   |   |                                 |   |   |   |   |   |
| Forfeited/Cancelled                                  |   |                | (884,609  | )      |                                           |   | 4.75   |                                                                  |   |   |                                 |   |   |   |   |   |
| Outstanding      on December 29, 2007                |   |                | 1,920,601 |   |                                           | $      | 4.97   |                                                                  |   |   | 5.98                                 |   |   |   | -- |   |
|                                                 |   |                |      |   |                                           |   |   |                                                                  |   |   |                                 |   |   |   |   |   |
| Vested      or expected to vest at December 29, 2007 |   |                | 1,875,586 |   |                                           | $      | 5.04   |                                                                  |   |   | 5.91                                 |   |   | $ | -- |   |
| Exercisable      on December 29, 2007                |   |                | 1,396,586 |   |                                           | $      | 6.17   |                                                                  |   |   | 4.64                                 |   |   | $ | -- |   |

|                                                     |   | The      Twelve-Month Period Ended |                         |
|----------------------------------------------------------|--------|------------------------------------|------------------------------|
|  Black-Scholes Option Valuation      Assumptions(1) |   |                               | December      29, 2007  |   |   |   | December      30, 2006  |   |   |   | December      31, 2006  |   |
|                                                     |   |                               |                         |   |   |   |   |   |   |   |   |   |
| Risk-free      interest rate(2)                          |   |                               | 3.2      – 4.2         |  % |   |   | 4.7      – 5.0 | % |   |   | 3.9      – 4.5 | % |
| Expected      dividend yield                             |   |                               | 0                            |   |   |   | 0 |   |   |   | 0 |   |
| Expected      stock price volatility(3)                  |   |                               | 43.2      – 71.0       |   |   |   | 43.0      - 74.3 |   |   |   | 45.1      – 76.0 |   |
| Expected      life of stock options (in years)(4)        |   |                               | 4.1                          |   |   |   | 5.8 |   |   |   | 6.4 |   |

|   | (1) | Forfeitures      are estimated and based on historical experience.                                                  |
|--------|-----|---------------------------------------------------------------------------------------------------------------------|
|   | (2) | Based      on the U.S. Treasury zero-coupon bond with a term consistent with the      expected life of the options. |
|   | (3) |  Expected      stock price volatility is based on historical  experience.                                      |
|   | (4) |  Expected      life of stock options is based upon historical  experience.                                     |

----

|                                 |   | Shares |    |   | Weighted      AverageGrant      DateFair      Value |   |
|--------------------------------------|--------|--------|---------|--------|-----------------------------------------------------|--------|
| Non-vested      at December 30, 2006 |   |   | 383,334 |   |                                                | $      | 2.49 |   |
| Granted                              |   |   | 120,071 |   |                                                |   | 1.92 |   |
| Vested                               |   |   | 442,334 |   |                                                |   | 1.87 |   |
| Forfeited                            |   |   | (38,597 | )      |                                                |   | 1.91 |   |
| Non-vested      at December 29, 2007 |   |   | 22,474  |   |                                                | $      | 1.91 |   |

| B. | Property      and Equipment |
|----|-----------------------------|

| (In      thousands)                   |   | December      29,2007 |    |   | December      30,2006 |   |
|---------------------------------------|--------|-----------------------|---------|--------|-----------------------|--------|
|                                  |   |                  |    |   |                  |   |
| Leasehold      improvements           |   | $                     | 2,395   |   |                  | $      | 2,293 |   |
| Office      furniture & equipment |   |                  | 15,567  |   |                  |   | 15,571 |   |
|                                  |   |                  | 17,962  |   |                  |   | 17,864 |   |
| Accumulated      depreciation         |   |                  | (15,251 | )      |                  |   | (14,939 | ) |
|                                  |   | $                     | 2,711   |   |                  | $      | 2,925 |   |

----

| C. | Other      Intangible Assets |
|----|------------------------------|

|                      |   | December      29, 2007     |   |   | December      30, 2006        |   |
|---------------------------|--------|----------------------------|--------|--------|-------------------------------|--------|
|  (In      thousands) |   | Gross      Carrying Amount |   |   | Accumulated      Amortization |   |   | Other      Intangibles, Net |   |   | Gross      Carrying Amount |   |   | Accumulated      Amortization |   |   | Other      Intangibles, Net |   |
|                      |   |                       |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Client      List          |   | $                          | 13,169 |   |                          | $      | (6,128 | ) |   | $ | 7,041 |   |   | $ | 15,075 |   |   | $ | (5,417 | ) |   | $ | 9,658 |   |
| Trade      Name           |   |                       | 90     |   |                          |   | -- |   |   |   | 90 |   |   |   | 1,720 |   |   |   | (133 | ) |   |   | 1,587 |   |
|                      |   |                       |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      |   | $                          | 13,259 |   |                          | $      | (6,128 | ) |   | $ | 7,131 |   |   | $ | 16,795 |   |   | $ | (5,550 | ) |   | $ | 11,245 |   |

----

| D. | Deferred      Compensation |
|----|----------------------------|

| E. | Line      of Credit |
|----|---------------------|

| F. | Shareholder      Rights Plan |
|----|------------------------------|

----

| G. | Income      Taxes |
|----|-------------------|

|                                                       |   | Fiscal      Year |   |
|------------------------------------------------------------|--------|------------------|--------|
| (In      thousands)                                        |   | 2007             |   |   | 2006 |   |   | 2005 |   |
|                                                       |   |             |   |   |   |   |   |   |   |
| Currently      payable:                                    |   |             |   |   |   |   |   |   |   |
| Federal                                                    |   | $                | --     |   |   | $ | -- |   |   | $ | -- |   |
| State                                                      |   |             | 10     |   |   |   | 41 |   |   |   | 50 |   |
|                                                       |   |             |   |   |   |   |   |   |   |   |   |   |
| Deferred:                                                  |   |             |   |   |   |   |   |   |   |   |   |   |
| Federal                                                    |   |             | (4,703 | ) |   |   | (169 | ) |   |   | (5,360 | )  |
| State                                                      |   |             | (692   | ) |   |   | (25 | ) |   |   | (788 | ) |
|                                                       |   |             | (5,395 | ) |   |   | (194 | ) |   |   | (6,148 | ) |
| Additional      valuation allowance for deferred tax asset |   |             | 7,991  |   |   |   | 194 |   |   |   | 6,148 |   |
|                                                       |   |             | 2,596  |   |   |   | -- |   |   |   | -- |   |
|                                                       |   |             |   |   |   |   |   |   |   |   |   |   |
| Total:                                                     |   | $                | 2,606  |   |   | $ | 41 |   |   | $ | 50 |   |

| (In      thousands)                           |   | December      29,2007 |    |   | December      30,2006 |   |
|-----------------------------------------------|--------|-----------------------|---------|--------|-----------------------|--------|
|                                          |   |                  |    |   |                  |   |
| Deferred      compensation                    |   | $                     | 1,090   |   |                  | $      | 986 |   |
| Accrued      vacation and compensatory time   |   |                  | 439     |   |                  |   | 388 |   |
| Accrued      reorganization costs             |   |                  | 795     |   |                  |   | 212 |   |
| Self      insured healthcare reserves         |   |                  | 245     |   |                  |   | 101 |   |
| Allowance      for doubtful accounts          |   |                  | 602     |   |                  |   | 622 |   |
| Depreciation                                  |   |                  | 1,111   |   |                  |   | 1,105 |   |
| Capital      loss carry-forward               |   |                  | --      |   |                  |   | 1,148 |   |
| Goodwill      and other intangibles           |   |                  | 6,115   |   |                  |   | 3,822 |   |
| State      net operating loss carry forwards  |   |                  | 1,387   |   |                  |   | 767 |   |
| Federal      net operating loss carry forward |   |                  | 7,365   |   |                  |   | 5,712 |   |
| Non-income      tax accrual                   |   |                  | 303     |   |                  |   | 248 |   |
| A/P      accruals                             |   |                  | 219     |   |                  |   | 224 |   |
| Prepaid      insurance                        |   |                  | (85     | )      |                  |   | (103 | ) |
| Charitable      contributions                 |   |                  | 78      |   |                  |   | 540 |   |
| Gain/loss      on disposal                    |   |                  | (434    | )      |                  |   | (420 | ) |
| Unearned      revenue (non-current)           |   |                  | 131     |   |                  |   | -- |   |
| Other                                         |   |                  | 56      |   |                  |   | 64 |   |
| Valuation      allowance                      |   |                  | (19,417 | )      |                  |   | (12,820 | ) |
|                                          |   |                  |    |   |                  |   |   |   |
| Net      deferred tax assets                  |   | $                     | --      |   |                  | $      | 2,596 |   |
|                                          |   |                  |    |   |                  |   |   |   |
| Whereof:                                      |   |                  |    |   |                  |   |   |   |
| Current                                       |   |                  | --      |   |                  | $      | 347 |   |
| Non-current                                   |   |                  | --      |   |                  |   | 2,249 |   |
|                                          |   | $                     | --      |   |                  | $      | 2,596 |   |

----

|                                                |   | Fiscal      Year |   |
|-----------------------------------------------------|--------|------------------|--------|
| (In      thousands)                                 |   | 2007             |   |   | 2006 |   |   | 2005 |   |
|                                                |   |             |   |   |   |   |   |   |   |
| Income      (benefit) tax at statutory federal rate |   | $                | (4,620 | ) |   | $ | (346 | ) |   | $ | (6,177 | ) |
| State      and local taxes, net of federal benefit  |   |             | (670   | ) |   |   | (34 | ) |   |   | (459 | )  |
| Valuation      allowance for deferred tax asset     |   |             | 7,991  |   |   |   | 194 |   |   |   | 6,148 |   |
| Meals      and Entertainment                        |   |             | 123    |   |   |   | 176 |   |   |   | 192 |   |
| Goodwill                                            |   |             | (22    | ) |   |   | (22 | ) |   |   | (23 | ) |
| Cash      surrender value of life insurance         |   |             | 20     |   |   |   | (19 | )  |   |   | 26 |   |
| Other                                               |   |             | (216   | ) |   |   | 92 |   |   |   | 343 |   |
|                                                |   |             |   |   |   |   |   |   |   |   |   |   |
| Total      tax provision                            |   | $                | 2,606  |   |   | $ | 41 |   |   | $ | 50 |   |

| H. | Commitments |
|----|-------------|

|  (In      thousands)                      |   |   |   |
|------------------------------------------------|--------|--------|--------|
|                                           |   |   |   |
| Year      ending December                      |   | $      | 3,170  |   |
|        2008 |   |   | 2,833  |   |
|        2009 |   |   | 2,748  |   |
|        2010 |   |   | 2,531  |   |
|        2011 |   |   | 1,334  |   |
|        2012 |   |   | 645    |   |
| Later                                          |   |   |   |   |
|  Less:      sublease contracts            |   |   | (129   | )  |
|                                           |   |   |   |   |
| Total      minimum obligation                  |   | $      | 13,132 |   |

----

| I. | Restructuring      and Other Severance Related Costs |
|----|------------------------------------------------------|

| (In      thousands)                              |   | WorkforceReduction |   |    | Office      Closure/Consolidation |   |   | Total   |   |
|--------------------------------------------------|--------|--------------------|--------|---------|-----------------------------------|--------|--------|---------|--------|
|                                             |   |               |   |    |                              |   |   |    |   |
| Balance      at January 1, 2005                  |   | $                  | --     |    |                              | $      | 318    |    |   | $ | 318 |   |
| Additional      restructuring charge             |   |               | 1,656  |    |                              |   | 2,258  |    |   |   | 3,914 |   |
| Cash      expenditures                           |   |               | (1,612 | )  |                              |   | (429   | )  |   |   | (2,041 | )  |
|  Write-off      of deferred leasehold costs |   |               | --     |    |                              |   | (578   | )       |   |   | (578 | )  |
| Non-cash      charges                            |   |               | --     |    |                              |   | (61    | )  |   |   | (61 | ) |
|                                             |   |               |   |    |                              |   |   |    |   |   |   |   |
| Balance      at December 31, 2005                |   | $                  | 44     |    |                              | $      | 1,508  |    |   | $ | 1,552 |   |
| Cash      expenditures                           |   |               | (44    | )  |                              |   | (896   | )       |   |   | (940 | ) |
| Non-cash      charges                            |   |               | --     |    |                              |   | (67    | )       |   |   | (67 | ) |
|                                             |   |               |   |    |                              |   |   |    |   |   |   |   |
| Balance      at December 30, 2006                |   | $                  | --     |    |                              | $      | 545    |    |   | $ | 545 |   |
| Additional      restructuring charge             |   |               | 1,698  |    |                              |   | 341    |    |   |   | 2,039 |   |
| Cash      expenditures                           |   |               | --     |    |                              |   | (546   | )       |   |   | (546 | ) |
| Balance      at December 29, 2007                |   | $                  | 1,698  |    |                              | $      | 340    |    |   | $ | 2,038 |   |

----

| K. | Business      Acquisitions |
|----|----------------------------|

----

| /s/      Deloitte & Touche LLP |   |
|------------------------------------|--------|
| Minneapolis,      Minnesota        |   |
| March      4, 2008                 |   |

----

| /s/      Deloitte & Touche LLP |   |
|------------------------------------|--------|
| Minneapolis,      Minnesota        |   |
| March      4, 2008                 |   |

----

| Dated:      March 4, 2008 | By:    | /s/      Elmer N. Baldwin                  |   |
|---------------------------|--------|--------------------------------------------|--------|
|                      |   | Elmer      N. Baldwin                      |   |
|                      |   | President      and Chief Executive Officer |   |
|                      |   |                                       |   |
| Dated:      March 4, 2008 | By:    | /s/      David J. Steichen                 |   |
|                      |   | David      J. Steichen                     |   |
|                      |   | Chief      Financial Officer               |   |

----

| Dated:      March 4, 2008 | By:    | /s/      Elmer N. Baldwin                  |   |
|---------------------------|--------|--------------------------------------------|--------|
|                      |   | Elmer      N. Baldwin                      |   |
|                      |   | President      and Chief Executive Officer |   |
|                      |   |                                       |   |
| Dated:      March 4, 2008 | By:    | /s/      David J. Steichen                 |   |
|                      |   | David      J. Steichen                     |   |
|                      |   | Chief      Financial Officer               |   |

----

| Item 9. | Changes      in and Disagreements with Accountants on Accounting and Financial      Disclosure. |
|---------|-------------------------------------------------------------------------------------------------|

| Item 9A. | Controls      and Procedures. |
|----------|-------------------------------|

| (a) | Evaluation      of Disclosure Controls andProcedures |
|-----|------------------------------------------------------|

| (b) | Management’s      Report on Internal Control Over Financial  Reporting |
|-----|------------------------------------------------------------------------------|

| Item 9B. | Other      Information. |
|----------|-------------------------|

----

Item10

| Elmer      N. Baldwin  |  47 |        President & Chief Executive Officer         |
|------------------------|----------|-----------------------------------------------------------------------|
| Robert      Woods      |  55 |        Senior Vice President, General Counsel and Secretary |
| David      J. Steichen |  43 |        Chief Financial Officer, Treasurer                        |

| Craig      Andrie       |  46 |        Vice President - Professional Services - Western Region      |
|-------------------------|----------|--------------------------------------------------------------------------|
| Michael      Gange      |  44 |        Vice Preisdent - Professional Services - Eastern Region      |
| Brittany      McKinney  |  36 |        Vice President - Planning & Operations                   |
| Walter      P. Michels  |  41 |        Controller                                                   |
| Michael      Souders    |  53 |        Senior Vice President Solutions                              |
| Elizabeth      Trammell |  54 |        Vice President Staffing                                      |
| Michael      Vacanti    |  47 |        Vice President - Professional Services - Central Region |
| Alan      Wise          |  53 |        Vice President solutions                                     |

Executive Compensation

Security Ownership of Certain Beneficial Owners and 
Management

Certain Relationships and Related Transactions and Director
Independence

Independent Audit Fees

----

| Item 15. | Exhibits      and Financial Statement Schedules. |
|----------|--------------------------------------------------|

| (a).(1) | Consolidated Financial      Statements |
|---------|----------------------------------------|

| Description                                                                                                                                     |   | Page      Herein |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|
|                                                                                                                                            |   |             |
| Consolidated      balance sheets at December 29, 2007 and December 30, 2006.                                                                    |   | 22               |
|                                                                                                                                            |   |             |
| Consolidated      statements of operations for the years ended December 29, 2007, December      30, 2006, and December 31, 2005.                |   | 23               |
|                                                                                                                                            |   |             |
| Consolidated      statements of cash flows for the years ended December 29, 2007, December      30, 2006, and December 31, 2005.                |   | 24               |
|                                                                                                                                            |   |             |
| Consolidated      statements of shareholders’ equity for the years ended December 29, 2007,      December 30, 2006, and December 29, 2005 |   | 25               |
|                                                                                                                                            |   |             |
| Notes      to Consolidated Financial Statements                                                                                                 |   | 26-37            |
|                                                                                                                                            |   |             |
| Reports      of Independent Registered Public Accounting Firm                                                                                   |   | 38-39            |
|                                                                                                                                            |   |             |
| Report      of Management                                                                                                                       |   | 40               |
|                                                                                                                                            |   |             |
| Management’s      Report on Internal Control Over Financial Reporting                                                                     |   | 41               |

| (a).(2) | Consolidated Financial      Statement Schedules |
|---------|-------------------------------------------------|

| Description                                                  |   | Page      Herein |
|--------------------------------------------------------------|--------|------------------|
|                                                         |   |             |
| Report      of Independent Registered Public Accounting Firm |   | 38               |
|                                                         |   |             |
| Schedule      II. Valuation and Qualifying Accounts          |   | 49               |

|  Exhibit      No. |   |  Description                                                                                                                                                                                                            |
|------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                   |   |                                                                                                                                                                                                                         |
| ^       3-a       |   | Articles      of Incorporation, as amended (Exhibit 3-a to Annual Report on Form 10-K      for fiscal year 1988, Commission File No. 0-4090, incorporated by      reference).                                                |
|                   |   |                                                                                                                                                                                                                         |
| ^       3-b       |   | Restated      Bylaws (Exhibit 3-b to Annual Report on Form 10-K for fiscal year 2000,      Commission File No. 0-4090, incorporated by reference).                                                                           |
|                   |   |                                                                                                                                                                                                                         |
| ^       3-c       |   | Amendment      to Articles of Incorporation to increase authorized shares to 40 million      (Exhibit A to Definitive Proxy Statement dated September 5, 1996,      Commission File No. 0-4090, incorporated by  reference). |

----

| ^       3-d        |   | Amendment      to Articles of Incorporation to increase authorized shares to 60 million      (Exhibit 3-d to Annual Report on Form 10-K for fiscal year 1998,      Commission File No. 0-4090, incorporated by reference).                                                                                                                       |
|-------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                    |   |                                                                                                                                                                                                                                                                                                                                             |
| ^       3-e        |   | Amendment      to Articles of Incorporation to increase authorized shares to 120 million      (Exhibit A to Definitive Proxy Statement dated September 8, 1998,      Commission File No. 0-4090, incorporated by reference).                                                                                                                     |
|                    |   |                                                                                                                                                                                                                                                                                                                                             |
| ^       4-a        |   | Specimen      Common Stock Certificate (Exhibit 4(a) to Annual Report on Form 10-K for      fiscal year 1989, Commission File No. 0-4090, incorporated by      reference).                                                                                                                                                                       |
|                    |   |                                                                                                                                                                                                                                                                                                                                             |
| ^4-b                    |   | Amended      and Restated Rights Agreement dated as of February 27, 2008 between      Analysts International Corporation and Wells Fargo Bank N.A. and the form      of Rights Certificate (Exhibits 4.1 and 4.1 to the Registrant’s Form      8-A12B dated February 27, 2008, Commission File No. 0-4090, incorporated      by reference. |
|                    |   |                                                                                                                                                                                                                                                                                                                                             |
| *^       10-a      |   | Deferred      Compensation Plan (Exhibit 10-g to Annual Report on Form 10-K for fiscal      year 1984, Commission File No. 0-4090, incorporated by      reference).                                                                                                                                                                              |
|                    |   |                                                                                                                                                                                                                                                                                                                                             |
| *^       10-b      |   | 1994      Stock Option Plan (Exhibit A to Definitive Proxy Statement dated September      6, 1994 for registrant's 1994 Annual Meeting of Shareholders, Commission      File No. 0-4090, incorporated by reference).                                                                                                                             |
|                    |   |                                                                                                                                                                                                                                                                                                                                             |
| *^       10-c      |   | 1996      Stock Option Plan for Non-employee Directors (Exhibit B to Definitive      Proxy Statement dated September 5, 1996, Commission File No. 0-4090,      incorporated by reference).                                                                                                                                                       |
|                    |   |                                                                                                                                                                                                                                                                                                                                             |
|                    |   |                                                                                                                                                                                                                                                                                                                                             |
| *^       10-d      |   | 1999      Stock Option Plan (Exhibit A to Definitive Proxy Statement dated      September 13, 1999, Commission File No. 0-4090, incorporated by      reference).                                                                                                                                                                            |
|                    |   |                                                                                                                                                                                                                                                                                                                                             |
| *^10-e                  |   | Analysts      International Corporation 2000 Non-Qualified Stock Option Plan (Exhibit      6.(d) to Quarterly Report on Form 10-Q for period ended March 31, 2001,      Commission File No. 0-4090, incorporated by reference).                                                                                                                  |
|                    |   |                                                                                                                                                                                                                                                                                                                                             |
| ^       10-f       |   | Credit      Agreement dated April 11, 2002 between Analysts International Corporation      and General Electric Capital Corporation. (Exhibit 2.1 to Current Report      on Form 8-K dated April 26, 2002, Commission File No. 0-4090, incorporated      by reference).                                                                          |
|                    |   |                                                                                                                                                                                                                                                                                                                                             |
| ^        10-g |   | First      Amendment to Credit Agreement dated as of July 24, 2002. (Exhibit 10-l to      Annual Report on Form 10-K for fiscal year 2002, Commission File No.      0-4090, incorporated by reference).                                                                                                                                          |
|                    |   |                                                                                                                                                                                                                                                                                                                                             |
| ^       10-h       |   | Waiver      and Second Amendment to Credit Agreement dated as of April 7, 2003.       (Exhibit 10-m to Annual Report on Form 10-K for fiscal year 2003,      Commission File No. 0-4090, incorporated by reference).                                                                                                                        |
|                    |   |                                                                                                                                                                                                                                                                                                                                             |
| ^       10-i       |   | Third      Amendment to Credit Agreement dated as of April 28, 2003.  (Exhibit      10-n to Annual Report on Form 10-K for fiscal year 2003, Commission File      No. 0-4090, incorporated by reference).                                                                                                                                   |
|                    |   |                                                                                                                                                                                                                                                                                                                                             |
|  ^       10-j |   | Consent      and Fourth Amendment to Credit Agreement dated as of December 31,      2003.  (Exhibit 10-o to Annual Report on Form 10-K for fiscal year      2003, Commission File No. 0-4090, incorporated by    reference).                                                                                                                |
|                    |   |                                                                                                                                                                                                                                                                                                                                             |
| *^       10-k      |   | Analysts      2004 Equity Incentive Plan.  (Exhibit 10-p to Quarterly Report on      Form 10-Q for period ended July 3, 2004, Commission File No. 0-4090,      incorporated byreference).                                                                                                                                                   |

----

|               |   |                                                                                                                                                                                                                                                                                                                                                  |
|--------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *^       10-l |   | Employment      contract with Jeffrey P. Baker (Exhibit 10-q to Quarterly Report on Form      10-Q for period ended July 3, 2004, Commission File No. 0-4090,      incorporated by reference).                                                                                                                                                        |
|               |   |                                                                                                                                                                                                                                                                                                                                                  |
| *       10-m  |   | Fifth      Amendment to Credit Agreement dated as of August 5, 2004.  (Exhibit      10-r to Quarterly Report on Form 10-Q for period ended October 2, 2004,      Commission File No. 0-4090, incorporated by reference).                                                                                                                         |
|               |   |                                                                                                                                                                                                                                                                                                                                                  |
| ^       10-n  |   | Consent      and Sixth Amendment to Credit Agreement dated as of January 6, 2005      (Exhibit10-t      to Annual Report on Form 10-K for fiscal year 2004, Commission File No.      0-4090, incorporated by reference).                                                                                                                              |
|               |   |                                                                                                                                                                                                                                                                                                                                                  |
| *^       10-o |   | Standard      Nonqualified Stock Option Agreement for Board Members under 2004 Equity      Incentive Plan (Exhibit 10-u to Annual Report on Form 10-K for fiscal year      2004, Commission File No. 0-4090, incorporated by    reference).                                                                                                           |
|               |   |                                                                                                                                                                                                                                                                                                                                                  |
| *^       10-p |   | Standard      Restricted Stock Agreement for Board Members under 2004 Equity Incentive      Plan (Exhibit 10-v to Annual Report on Form 10-K for fiscal year 2004,      Commission File No. 0-4090, incorporated by reference).                                                                                                                       |
|               |   |                                                                                                                                                                                                                                                                                                                                                  |
| *^       10-q |   | Standard      Nonqualified Stock Option Agreement for Certain Employees under 2004      Equity Incentive Plan (Exhibit 10-w to Annual Report on Form 10-K for      fiscal year 2004, Commission File No. 0-4090, incorporated by      reference).                                                                                                     |
|               |   |                                                                                                                                                                                                                                                                                                                                                  |
| *^       10-r |   | Standard      Restricted Stock Agreement for Certain Employees under 2004 Equity      Incentive Plan (Exhibit 10-x to Annual Report on Form 10-K for fiscal year      2004, Commission File No. 0-4090, incorporated by    reference).                                                                                                                |
|          |   |                                                                                                                                                                                                                                                                                                                                                  |
| *^       10-s |   | Standard      Incentive Stock Option Agreement for Certain Employees under 2004 Equity      Incentive Plan (Exhibit 10-y to Annual Report on Form 10-K for fiscal year      2004, Commission File No. 0-4090, incorporated by    reference).                                                                                                          |
|               |   |                                                                                                                                                                                                                                                                                                                                                  |
| *^       10-t |   | Summary      of Terms and Conditions of Accelerated Stock Options effective December      30, 2005 (contained in Current Report on Form 8-K, filed January 5, 2006,      Commission File No. 0-4090, incorporated by reference).                                                                                                                      |
|               |   |                                                                                                                                                                                                                                                                                                                                                  |
| ^      10-u        |   | Eighth      Amendment to Credit Agreement dated January 20, 2006 (contained in      Current Report on Form 8-K, filed January 26, 2006, Commission File No.      0-4090, incorporated by reference).                                                                                                                                             |
|               |   |                                                                                                                                                                                                                                                                                                                                                  |
| ^       10-v  |   | Amendment      to Lease Agreement by and between Analysts International Corporation and      Centennial Lakes III, LLC dated March 24, 2006 (Exhibit 10.1 to Form      8-K, filed March 28, 2006, Commission File No. 0-4090, incorporated by      reference).                                                                                   |
|               |   |                                                                                                                                                                                                                                                                                                                                                  |
| *^      10-w       |   | Restated      Special Executive Retirement Plan, dated December 27, 2006 (Exhibit 10-jj      to Annual Report on Form 10-K for fiscal year 2006, Commission File No.      0-4090, incorporated by reference).                                                                                                                                         |
|               |   |                                                                                                                                                                                                                                                                                                                                                  |
| ^       10-x  |   | Waiver,      Consent and Ninth Amendment to Credit Agreement, dated February 1, 2007      (Exhibit 10.2 to Current Report on Form 8-K, filed February 7, 2007,      Commission File No. 0-4090, incorporated by reference).                                                                                                                      |
|               |   |                                                                                                                                                                                                                                                                                                                                                  |
| ^      10-y        |   | Trust      Agreement between Analysts International Corporation and Wachovia Bank,      dated February 15, 2007, under the Analysts International Corporation      Restated Special Executive Retirement Plan (Exhibit 10.1 to Current Report      on Form 8-K, filed February 15, 2007, Commission File No. 0-4090,      incorporated by reference). |

----

| *^10-z        |   | Analysts      International Corp. 2004 Equity Incentive Plan, as amended May 25, 2006      (Exhibit 10.1 to Quarterly Report on Form 10-Q for period ended July 1,      2006, Commission File No. 0-4090, incorporated by    reference).                                                                                           |
|---------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |   |                                                                                                                                                                                                                                                                                                                               |
| *^10-aa       |   | Form      of incentive stock option agreement for long term incentive option grants      for fiscal year 2007 (Exhibit 10-kk to Annual Report on Form 10-K for      fiscal year 2006, Commission File No. 0-4090, incorporated by      reference).                                                                                 |
|          |   |                                                                                                                                                                                                                                                                                                                               |
| *^10-bb       |   | Form      of restricted stock award agreement for long-term incentive restricted      stock awards in January 2007 for fiscal year 2007 (Exhibit-ll to Annual      Report on Form 10-K for fiscal year 2006, Commission File No. 0-4090,      incorporated by reference).                                                          |
|          |   |                                                                                                                                                                                                                                                                                                                               |
| *^10-cc       |   | Summary      of terms and conditions of employment of Michael J. LaVelle as interim      President and CEO (contained in Current Report on Form 8-K filed February      21, 2007, Commission File No. 0-4090, incorporated by      reference).                                                                                     |
|          |   |                                                                                                                                                                                                                                                                                                                               |
| ^10-dd        |   | Waiver      and Tenth Amendment to Credit Agreement, dated May 1, 2007 (Exhibit 10.1      to Current Report on Form 8-K, filed May 7, 2007, Commission File No.      0-4090, incorporated by reference).                                                                                                                           |
|          |   |                                                                                                                                                                                                                                                                                                                               |
| ^10-ee        |   | Waiver      and Eleventh Amendment to Credit Agreement, dated July 26, 2007 (Exhibit      10.1 to Current Report on Form 8-K, filed August 1, 2007, Commission File      No. 0-4090, incorporated by reference).                                                                                                                   |
|          |   |                                                                                                                                                                                                                                                                                                                               |
| *^10-ff  |   | Employment      Agreement between Analysts International Corporation and Elmer Baldwin      (with Change of Control Agreement attached as Exhibit A), effective      November 1, 2007 (Exhibit 10.1 to Current Report on Form 8-K, filed      November 5, 2007, Commission File No. 0-4090, incorporated by      reference).  |
|          |   |                                                                                                                                                                                                                                                                                                                               |
| *^10-gg       |   | Elmer      Baldwin Incentive Stock Option Agreement (Analysts International Corp.      2004 Equity Incentive Plan), effective November 1, 2007 (Exhibit 10.2 to      Current Report on Form 8-K, filed November 5, 2007, Commission File No.      0-4090, incorporated by reference).                                              |
|          |   |                                                                                                                                                                                                                                                                                                                               |
| *^10-hh       |   | Elmer      Baldwin Nonqualified Stock Option Agreement (Analysts International Corp.      2004 Equity Incentive Plan), effective November 1, 2007 (Exhibit 10.3 to      Current Report on Form 8-K, filed November 5, 2007, Commission File No.      0-4090, incorporated by reference).                                           |
|          |   |                                                                                                                                                                                                                                                                                                                               |
| *^10-ii       |   | Elmer      Baldwin Nonqualified Stock Option Agreement (Analysts International      Corporation 2000 Nonqualified Stock Option Plan), effective November 1,      2007 (Exhibit 10.3 to Current Report on Form 8-K, filed November 5, 2007,      Commission File No. 0-4090, incorporated by reference).                            |
|          |   |                                                                                                                                                                                                                                                                                                                               |
| *^10-jj       |   | Summary      of Terms and Conditions of Severance Policy for executive officers and      other senior management personnel (contained in Current Report on Form      8-K, filed October 25, 2007, Commission File No. 0-4090, incorporated by      reference).                                                                     |
|          |   |                                                                                                                                                                                                                                                                                                                               |
| *^10-kk       |   | Severance      Agreement and Release of Claims between Analysts International Corporation      and Colleen M. Davenport dated January 4, 2008 (Exhibit 10.4 to Current      Report on Form 8-K, filed January 8, 2008, Commission File No. 0-4090,      incorporated by reference).                                                |

----

|              |   |                                                                                                                                                                                                                                                                              |
|-------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *^10-ll           |   | Severance      Agreement and Release of Claims between Analysts International Corporation      and David J. Steichen dated January 22, 2008 (Exhibit 10.1 to Current      Report on Form 8-K, filed January 8, 2008, Commission File No. 0-4090,      incorporated by reference). |
|              |   |                                                                                                                                                                                                                                                                              |
| *+10-mm           |   | Amendment      to Restated Special Executive Retirement Plan as of September 1,      2007.                                                                                                                                                                                        |
|              |   |                                                                                                                                                                                                                                                                              |
| +       21   |   | Subsidiaries      of Registrant.                                                                                                                                                                                                                                                  |
|              |   |                                                                                                                                                                                                                                                                              |
| +       23   |   | Consent      of Independent Registered Public Accounting Firm.                                                                                                                                                                                                                    |
|              |   |                                                                                                                                                                                                                                                                              |
| +       24   |   | Powers      of Attorney.                                                                                                                                                                                                                                                          |
|              |   |                                                                                                                                                                                                                                                                              |
| +       31.1 |   | Certification      of CEO under section 302 of the Sarbanes-Oxley Act of  2002.                                                                                                                                                                                                   |
|              |   |                                                                                                                                                                                                                                                                              |
| +       31.2 |   | Certification      of CFO under section 302 of the Sarbanes-Oxley Act of  2002.                                                                                                                                                                                                   |
|              |   |                                                                                                                                                                                                                                                                              |
| ++       32  |   | Certification      of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to      section 906 of the Sarbanes-Oxley Act of2002.                                                                                                                                   |

| *      |   | Denotes      a management contract or compensatory plan or arrangement required to be      filed as an exhibit to this annual report pursuant to Item 15(b) of Form      10-K. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                           |
| ^      |   | Denotes      an exhibit previously filed with the Securities and Exchange Commission      and incorporated herein by reference.                                                |
|   |   |                                                                                                                                                                           |
| +      |   | Filed      herewith.                                                                                                                                                           |
|   |   |                                                                                                                                                                           |
| ++     |   | Furnished      herewith.                                                                                                                                                       |

----

|                                       | Additions                              |   |
|--------------------------------------------|----------------------------------------|--------|
|   Description                    | Balance      atbeginning      ofperiod |   | Charged      tocosts      andexpenses |   | Write-offs,net      ofrecoveries |   | Balance      atend      ofperiod |   |
|                                       |                                   |   |   |   |   |   |   |   |
| Allowance      for doubtful accounts:      |                                   |   |   |   |   |   |   |   |
| Twelve months ended December      29, 2007 |                                   | $      | 1,423.000 |   |   | $ | 835,000 |   |   | $ | 713,000 |   |   | $ | 1.545.000 |   |
|                                       |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Twelve      months ended December 30, 2006 |                                   | $      | 2,106,000 |   |   | $ | 750,000 |   |   | $ | 1,433,000 |   |   | $ | 1,423,000 |   |
|                                       |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Twelve      months ended December 31, 2005 |                                   | $      | 1,809,000 |   |   | $ | 1,615,000 |   |   | $ | 1,318,000 |   |   | $ | 2,106,000 |   |
|                                       |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                     | ANALYSTS      INTERNATIONAL CORPORATION |
|--------------------------|-----------------------------------------|
|                     |                                    |   |
| Date:      March 4, 2008 | By:                                     | /s/      Elmer N. Baldwin |
|                     |                                    | Elmer      N. Baldwin, President and Chief Executive  Officer |

| Signature                   |   | Title                                           |   | Date               |
|-----------------------------|--------|-------------------------------------------------|--------|--------------------|
|                        |   |                                            |   |               |
| /s/      Elmer N. Baldwin   |   | President      and Chief Executive Officer      |   | March      4, 2008 |
| Elmer      N. Baldwin       |   | (Principal      Executive Officer)              |   |               |
|                        |   |                                            |   |               |
| /s/      David J. Steichen  |   | Chief      Financial Officer and Treasurer      |   | March      4, 2008 |
| David      J. Steichen      |   | (Principal      Finance and Accounting Officer) |   |               |
|                        |   |                                            |   |               |
|                        |   | Director                                        |   |               |
| Brigid      A. Bonner*      |   |                                            |   |               |
|                        |   |                                            |   |               |
|                        |   | Director                                        |   |               |
| Krzysztof      K. Burhardt* |   |                                            |   |               |
|                        |   |                                            |   |               |
|                        |   | Director                                        |   |               |
| Willard      W. Brittain*   |   |                                            |   |               |
|                        |   |                                            |   |               |
|                        |   | Director                                        |   |               |
| Joseph      T. Dunsmore*    |   |                                            |   |               |
|                        |   |                                            |   |               |
|                        |   | Director                                        |   |               |
| Michael      B. Esstman*    |   |                                            |   |               |
|                        |   |                                            |   |               |
|                        |   | Director                                        |   |               |
| Michael      J. LaVelle*    |   |                                            |   |               |
|                        |   |                                            |   |               |
|                        |   | Director                                        |   |               |
| Margaret      A. Loftus*    |   |                                            |   |               |
|                        |   |                                            |   |               |
|                        |   | Director                                        |   |               |
| Robb      L. Prince*        |   |                                            |   |               |

|   |                                                          |
|--------|---------------------------------------------------------------|
|   | Elmer      N. Baldwin, President and Chief Executive  Officer |

----

| Exhibit      10-mm | Amendment      to Restated Special Executive Retirement Plan                                                                                    |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|
|               |                                                                                                                                            |
| Exhibit      21    | Subsidiaries      of Registrant                                                                                                                 |
|               |                                                                                                                                            |
| Exhibit      23    | Consent      of Independent Registered Public Accounting Firm                                                                                   |
|               |                                                                                                                                            |
| Exhibit      24    | Powers      of Attorney                                                                                                                         |
|               |                                                                                                                                            |
| Exhibit      31.1  | Certification      of CEO pursuant to Section302 of the Sarbanes-Oxley Act of      2002                                                         |
|               |                                                                                                                                            |
| Exhibit      31.2  | Certification      of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of      2002                                                        |
|               |                                                                                                                                            |
| Exhibit      32    | Certification      of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to      Section 906 of the Sarbanes-Oxley Act of 2002 |
|               |                                                                                                                                            |

----