UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)


þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended January 3, 2010.


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

For the transition period from to .

Commission file number 000-27792

COMSYS IT PARTNERS, INC.

(Exact name of Registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		56-1930691 (I.R.S. Employer Identification Number)

4400 Post Oak Parkway, Suite 1800
Houston, TX 77027
(Address, including zip code, of

principal executive offices)

(713) 386-1400
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class		Name of Each Exchange on Which Registered
Common Stock $0.01 Par Value per Share		The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o	Accelerated filer þ	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The aggregate market value of the voting common stock held by non-affiliates of the registrant as of June 28, 2009, (the last business day of the registrant’s most recently completed second fiscal quarter) was $90,888,591. For the purpose of calculating this amount only, all stockholders with more than 10% of the total voting power, all directors and all executive officers have been treated as affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. The registrant does not have any non-voting common stock.

The number of shares of the registrant’s common stock outstanding as of February 26, 2010, was 21,293,875.

DOCUMENTS INCORPORATED BY REFERENCE

None.

TABLE OF CONTENTS


	Page
Cautionary Note Regarding Forward-Looking Statements		1

PART I
Item 1. Business		2

Item 1A. Risk Factors		11

Item 1B. Unresolved Staff Comments		20

Item 2. Properties		20

Item 3. Legal Proceedings		20

Item 4. Reserved		20

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		21

Item 6. Selected Financial Data		22

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		23

Item 7A. Quantitative and Qualitative Disclosures about Market Risk		36

Item 8. Financial Statements and Supplementary Data		37

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		64

Item 9A. Controls and Procedures		64

Item 9B. Other Information		67

PART III
Item 10. Directors, Executive Officers and Corporate Governance		67

Item 11. Executive Compensation		69

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		83

Item 13. Certain Relationships and Related Transactions, and Director Independence		87

Item 14. Principal Accounting Fees and Services		89

PART IV
Item 15. Exhibits and Financial Statement Schedules		89

Signatures		90

Exhibit 21.1
Exhibit 23.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K, including information incorporated by reference, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. Forward-looking statements give our current expectations and projections relating to the financial condition, results of operations, plans, objectives, future performance and business of COMSYS IT Partners, Inc. and its subsidiaries. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. All statements other than statements of historical facts included in, or incorporated into, this report that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements.

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

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the timing and success of the exchange offer and acquisition of us by Manpower Inc.

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the risk that our business will be adversely impacted during the pendency of the exchange offer and proposed merger with Manpower Inc.

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economic declines that affect our business, including our profitability, liquidity or the ability to comply with applicable loan covenants;

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the financial stability of our lenders and their ability to honor their commitments related to our credit agreements;

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regulatory changes that impose additional regulations or licensing requirements in such a manner as to increase our costs of doing business or restrict access to qualified technology workers;

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the risk of increased tax rates;

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adverse changes in credit and capital markets conditions that may affect our ability to obtain financing or refinancing on favorable terms or that may warrant changes to existing credit terms;

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the financial stability of our customers and other business partners and their ability to pay their outstanding obligations or provide committed services;

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

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the impact of changes in demand for our services or competitive pressures on our ability to maintain or improve our operating margins, including pricing pressures;

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the risk in an uncertain economic environment of increased incidences of employment disputes, employment litigation and workers’ compensation claims;

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our success in attracting, training, retaining and motivating billable consultants and key officers and employees;

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our ability to shift a larger percentage of our business mix into IT solutions, project management and business process outsourcing and, if successful, our ability to manage those types of business profitably;

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weakness or reductions in corporate information technology spending levels;

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our ability to maintain existing client relationships and attract new clients in the context of changing economic or competitive conditions;

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the entry of new competitors into the U.S. staffing services and consulting markets due to the limited barriers to entry or the expansion of existing competitors in that market;

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increases in employment-related costs such as healthcare and unemployment taxes;

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the possibility of our incurring liability for the activities of our billable consultants or for events impacting our billable consultants on our clients’ premises;

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the risk that we may be subject to claims for indemnification under our customer contracts;

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the risk that cost cutting or restructuring activities could cause an adverse impact on certain of our operations; and

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adverse changes to management’s periodic estimates of future cash flows that may affect our assessment of our ability to fully recover our goodwill.

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

PART I


ITEM 1.		BUSINESS

Unless otherwise indicated or the context otherwise requires, all references in this report to “COMSYS,” the “Company,” “us,” “our” or “we” are to COMSYS IT Partners, Inc., a Delaware corporation formed in July 1995, and its consolidated subsidiaries. Except as otherwise specified, references to “Old COMSYS” are to COMSYS Holding, Inc., its subsidiaries and their respective predecessors prior to its merger with VTP, Inc., a wholly-owned subsidiary of Venturi Partners, Inc., on September 30, 2004, which we refer to as the “Comsys/Venturi merger.” Venturi Partners, Inc. was the surviving entity in the Comsys/Venturi merger and changed its name to “COMSYS IT Partners, Inc.” References to “Venturi” are to Venturi Partners, Inc., its subsidiaries and their respective predecessors prior to the Comsys/Venturi merger, except those subsidiaries relating to Venturi’s commercial staffing business, which were sold simultaneously with the Comsys/Venturi merger on September 30, 2004.

Pending Exchange Offer and Merger with Manpower Inc.

On February 1, 2010, we entered into an agreement and plan of merger (the “Merger Agreement”) with Manpower Inc. (“Manpower”) and a wholly-owned subsidiary of Manpower (“Merger Sub”). The Merger Agreement provides that, subject to the terms and conditions of the Merger Agreement, Merger Sub will commence an exchange offer to purchase all of the outstanding shares of COMSYS’ common stock (the “Offer”) and, following the completion of the Offer, merge with and into COMSYS, with COMSYS surviving as a direct or indirect wholly owned subsidiary of Manpower (the “Merger”). The Merger Agreement provides that the Offer will be commenced within five business days following the filing of this Annual Report on Form 10-K.

Pursuant to and subject to the terms and conditions of the Merger Agreement, in both the Offer and the Merger, each share of COMSYS common stock accepted by Merger Sub will be exchanged for either (at the stockholder’s election) $17.65 in cash or $17.65 in fair market value of shares of Manpower common stock, where fair market value is the average trading price of Manpower’s common stock during the ten trading days ending on and including the second trading day prior to the closing of the Offer. At the effective time of the Merger, any remaining outstanding shares of COMSYS common stock not tendered in the Offer, other than shares owned by Manpower or any direct or indirect wholly-owned subsidiary of Manpower or COMSYS, will be acquired for cash and Manpower common stock.

The aggregate amount of cash and Manpower common stock available for election at the closing of the Offer and of the Merger will be determined on a 50/50 basis, such that if the holders of more than 50% of the shares tendered in the Offer, or more than 50% of the shares converted in the Merger, elect more than the cash or Manpower common stock available in either case, they will receive on a pro rata basis the other kind of consideration to the extent the kind of consideration they elect to receive is oversubscribed. For example, if the holders of more than 50% of COMSYS Common Stock who tender in the Offer elect cash then such holders in the aggregate will receive all of the cash available for payment in the Offer (50% of the total consideration payable to all stockholders who tender in the Offer) but also will receive some Manpower common stock on a pro rata basis, since there would have been an oversubscription for cash payment. Manpower has the right, at any time not less than two business days prior to the expiration of the Offer, to elect to convert the transaction into an all-cash deal and to pay $17.65 in cash for all shares of COMSYS common stock tendered in the Offer and acquired in the Merger.

The Offer is subject to satisfaction or waiver of a number of conditions set forth in the Merger Agreement, including the expiration or termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and the tender to Merger Sub and no withdrawal of at least a majority of the shares of COMSYS common stock (the “Minimum Condition”). The Minimum Condition may not be waived by Merger Sub without the prior written consent of COMSYS. Subject to certain conditions and limitations, COMSYS has granted Manpower and Merger Sub an option to purchase from COMSYS, following the completion of the Offer, a number of additional shares of COMSYS common stock that, when added to the shares already owned by Manpower and Merger Sub, will constitute one share more than 90% of the shares of COMSYS common stock entitled to vote on the Merger. If Manpower and Merger Sub acquire more than 90% of the outstanding shares of COMSYS common stock including through exercise of the aforementioned option, it will complete the Merger through the “short form” procedures available under Delaware law.

The Merger Agreement contains certain termination rights for each of Manpower and COMSYS, and if the Merger Agreement is terminated under certain circumstances, COMSYS is required to pay Manpower a termination fee of $15.2 million and/or reimburse Manpower for its out-of-pocket transaction-related expenses up to $2.5 million.

The Merger Agreement includes customary representations, warranties and covenants of COMSYS, Manpower and Merger Sub. In addition to certain other covenants, COMSYS has agreed not to (i) encourage, solicit, initiate or facilitate any takeover proposal from a third party; (ii) enter into any agreement relating to a takeover proposal or any agreement, arrangement or understanding requiring COMSYS to abandon, terminate or fail to consummate the Offer, the Merger, the Merger Agreement or the transactions contemplated by the Merger Agreement; (iii) grant any waiver or release under any standstill agreement relating to COMSYS common stock; or (iv) enter into discussions or negotiations with a third party in connection with, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or could reasonably be expected to lead to, a takeover proposal, in each case subject to certain exceptions set forth in the Merger Agreement.

In connection with the Merger Agreement, Manpower entered into a tender and voting agreement, dated as of February 1, 2010, with certain of COMSYS stockholders who beneficially own in the aggregate approximately 29.5% of COMSYS common stock on a fully diluted basis, pursuant to which each such stockholder has agreed to tender all of the shares of COMSYS common stock beneficially owned by such stockholder in the Offer and to vote any shares of COMSYS common stock not tendered in the Offer in favor of the Merger.

Company Overview

We were incorporated in Delaware in 1995 and are headquartered in Houston, Texas. We completed the Comsys/Venturi merger on September 30, 2004, and created one of the leading IT staffing and consulting companies in the United States. In connection with the Comsys/Venturi merger, we changed the name of our corporation from “Venturi Partners, Inc.” to “COMSYS IT Partners, Inc.” Concurrent with the Comsys/Venturi merger, we also completed the sale of Venturi’s commercial staffing services division, Venturi Staffing Partners, Inc., to CBS Personnel Services, Inc. (formerly known as Compass CS Inc.).

We are a leading information technology (“IT”) services company and provide a full range of specialized IT staffing and project implementation services, including website development and integration, application programming and development, client/server development, systems software architecture and design, systems engineering and systems integration. We also provide services that complement our core IT staffing services, such as vendor management, process solutions and permanent placement of IT professionals. Our TAPFIN Process Solutions division offers total human capital fulfillment and management solutions within three core service areas: vendor management services, services procurement management and recruitment process outsourcing. These additional services provide us opportunities to build relationships with new clients and enhance our service offerings to our existing clients. We operate through the following wholly-owned subsidiaries:

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COMSYS Services, LLC (“COMSYS Services”), an IT staffing services provider,

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COMSYS Information Technology Services, Inc. (“COMSYS IT”), an IT staffing services provider,

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Pure Solutions, Inc. (“Pure Solutions”), an information technology services company,

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Econometrix, LLC (“Econometrix”), a vendor management systems software provider,

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Plum Rhino Consulting LLC (“Plum Rhino”), a specialty staffing services provider to the financial services industry,

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TAPFIN, LLC (“TAPFIN”), a provider of vendor management services, recruitment process outsourcing services and human resources consulting, and

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ASET International Services, LLC (“ASET”), a globalization, localization and interactive language services provider.

Our comprehensive service offerings allow our clients to focus their resources on their core businesses rather than on recruiting, training and managing IT professionals. In using our staffing services, our clients benefit from:

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our extensive recruiting channels, providing our clients ready access to highly-skilled and specialized IT professionals, often within 48 hours of submitting a request;

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access to a flexible workforce, allowing our clients to manage their labor costs more effectively without compromising their IT goals; and

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our knowledge of the market for IT resources, providing our clients with qualified candidates at competitive prices.

We contract with our customers to provide both short- and long-term IT staffing services primarily at client locations throughout the United States. Our consultants possess a wide range of skills and experience, including website development and integration, application programming and development, client/server development, systems software architecture and design, systems engineering and systems integration.

We had 4,596 consultants on assignment as of January 3, 2010. We recruit our consultants through our internal proprietary database that contains information about more than one million candidates, and also through the Internet, local and national advertising and trade shows, as well as through sub-contractors. We have a specialized selection, review and reference process for our IT consultant candidates. This process is an integral part of maintaining the delivery of high quality service to our clients.

We serve a broad and diversified customer base with nearly 1,000 corporate and government clients, including some of the largest users of IT services in the United States. These clients operate across a wide range of industry sectors, including financial services, telecommunications, manufacturing, information technology, government, pharmaceutical, biotechnology and transportation. Our customer base includes approximately 29% of the Fortune 500 companies and approximately 60% of the Fortune 50 companies. We have long-standing relationships with many of our clients, including relationships of more than a decade with many of our large customers. In 2009 our 15 largest customers represented approximately 39% of our revenues.

Our operations have a coast-to-coast presence in the United States, with 52 offices across the country as well as offices in Puerto Rico, Canada and the United Kingdom. This coverage allows us to meet the needs of our clients on a national basis and provides us with a competitive advantage over certain regional and local IT staffing providers.

Our consolidated financial information is reviewed by the chief decision makers, the business is managed under one operating strategy, and we operate under one reportable segment. Our principal operations are located in the United States, and the results of operations and long-lived assets in geographic regions outside of the United States are not material. During the years 2009, 2008 and 2007, no individual customer accounted for more than 10% of the Company’s consolidated revenues.

Our Services

Staffing Services

We provide a wide range of IT staffing services to companies in diversified markets, including financial services, telecommunications, manufacturing, information technology, federal, state and local government, pharmaceutical, biotechnology and transportation. We deliver qualified consultants and project managers for contract assignments and full-time employment across a number of technology disciplines. In light of the time- and location-sensitive nature of our core IT staffing services, offshore application development and maintenance centers have not to date proven critical to our operations or our competitive position. In addition, we provide expanded professional project-based consultants, staff augmentation resources and recruiting support to the functional lines of business within the financial services industry. We deliver professional resources with subject-matter expertise for projects of any size, type or length.

Our staffing services are generally provided on a time-and-materials basis, meaning that we bill our clients for the number of hours worked in providing services to the client. Hourly bill rates are typically determined based on the level of skill and experience of the consultants assigned and the supply and demand in the current market for those qualifications. Alternatively, the bill rates for some assignments are based on a mark-up over compensation and other direct and indirect costs. Assignments generally range from 30 days to over a year, with an average duration of eight months. Certain of our contracts are awarded on the basis of competitive proposals, which can be periodically re-bid by the client.

We maintain a variable cost model in which we compensate most of our consultants only for those hours that we bill to our clients. The consultants who perform IT services for our clients consist of our consultant employees as well as independent contractors and subcontractors. With respect to our consultant employees, we are responsible for all employment-related costs, including medical and health care costs, workers’ compensation and federal social security and state unemployment taxes.

Managed Solutions

We complement our core competency in IT staffing and consulting services by offering our clients specialized project services that include project managers, project teams and turn-key deliverable-based solutions in the application development, integration and re-engineering, maintenance and testing practice areas. We have a number of specialty practice areas, including business intelligence, statistical analysis solutions (“SAS”), enterprise resource applications (“ERP”), infrastructure data solutions and application services. We provide these solutions through a defined IT implementation methodology. We deliver these solutions through teams deployed at a client’s site, offsite at development centers located in Kalamazoo, Michigan; Richmond, Virginia; Somerset, New Jersey and San Francisco, California. Most of our project solutions work is also on a time-and-materials basis, but we do provide services from time to time on a fixed-price basis.

Business Process Outsourcing

Vendor Management Services. Vendor management services (“VMS”) allow our clients to automate and manage their procurement of and expenditures for temporary IT, clerical, finance and accounting personnel services. The largest users of contingent workers may rely on dozens of suppliers to meet their labor needs. VMS provides a mechanism for clients to reduce their expenditures for temporary personnel services by automating and consolidating management of the contracting processes, standardizing pay rates for similar positions and reducing the number of suppliers providing these services. VMS gives our clients the ability to leverage their purchasing power for these temporary personnel services by standardizing their requisition, contract and procurement processes. Clients also benefit from working with only one supplier, receiving a consolidated invoice and having a single point of contact while retaining access to a full range of resources offered by a diverse portfolio of suppliers.

We use third-party software products and a proprietary software program to provide our VMS. Our VMS implementation processes have been ISO 9001:2000 certified since December 2003, which means that our processes comply with a comprehensive set of international quality standards. We believe that we are one of the few companies in our industry providing vendor management services to have this ISO certification.

Services Procurement Management. Similar to VMS, services procurement management (“SPM”) allows our clients to automate and manage their procurement of and expenditures around various project and deliverable based services, including IT, clerical, finance, accounting and other professional categories. Generally, this spend includes services provided by vendors under a statement of work or service level agreement contract. SPM provides a mechanism for clients to manage their expenditures for these services by automating and consolidating management of the procurement and contracting processes, tracking deliverables and service level agreements and reducing the number of suppliers providing these services. SPM gives our clients the ability to leverage their purchasing power for these services by standardizing their requisition, contract and procurement processes. Clients also benefit from working with only one supplier, receiving a consolidated invoice and having a single point of contact while retaining access to a full range of resources offered by a diverse portfolio of suppliers.

Recruitment Process Outsourcing. We provide recruitment and human resource outsourcing services that enable companies to build competitive advantage through workforce recruitment and retention. With a focus on human capital solutions, we work as an extension of our clients’ internal HR department, providing a wide range of services that include full recruitment process outsourcing (“RPO”), on-demand and project recruitment services, executive search and human resource consulting.

We operate our VMS, SPM and RPO businesses under the brand name TAPFIN^SM. TAPFIN^SM provides a structured approach consisting of process management and a web-based software tool to help organizations more effectively fulfill and manage their workforce, whether that workforce is full-time employees, temporary contractors, or resources working under a statement of work or service level agreement.

Global Enterprise Content Management. We provide a full life-cycle of content management and translation services. Our content management services provide a technology-based approach to centralizing and standardizing the management of an organization’s data, particularly data that is presented externally. We also provide translation services across more than 100 different languages, including localizing such translation to specific regions or dialects. Our global content management and translation services can be engaged under a discrete statement of work, or can include the entire outsourcing of the business processes around this discipline.

Permanent Placement

We also assist our clients in locating IT professionals for full-time positions within their organizations. We assist in recruitment efforts and screening potential hires. If a customer hires our candidate, we are generally compensated based on a percentage of the candidate’s first-year cash compensation. Billing is contingent on the candidate beginning their employment.

Industry Overview

We believe the demand for IT staffing in the United States is highly correlated to economic conditions. We believe overall employment trends and demand will increase with an improving economy. Conversely, demand may contract during a constricting economy. After contraction in the IT staffing industry from late 2000 to 2002 caused by corporate overspending on IT initiatives during the late 1990s and subsequent poor economic conditions, the industry expanded from the later half of 2003 until 2007, growing by approximately 10% in 2005, 9% in 2006 and 8% in 2007, then contracted by 3.5% in 2008 according to a December 2009 report by Staffing Industry Analysts, Inc. (“SIA”), an independent, industry-recognized research group. Like us, we believe most of our public-company competitors experienced declining revenue in 2008 and 2009. Industry analysts are projecting the industry contracted by 20% for 2009 and will experience growth of 8% in 2010 as the economy shows signs of improvement.

SIA estimates North America IT staffing revenue in 2009 to be approximately $15.8 billion. The IT staffing industry is fragmented and highly competitive. Based on SIA data for 2008, only one provider accounted for more than 10% of total IT staffing industry revenues. The top five IT staffing providers accounted for approximately 25% of total industry revenues. We believe the larger competitors in our industry are better positioned to increase their respective market share due, in part, to the fact that many large companies increasingly source their IT staffing and service needs from a list of preferred service providers that meet specific criteria. The criteria typically include the service provider’s (i) geographic coverage relative to the client’s locations, (ii) size and market share, which is often measured by total revenues, (iii) proven ability to quickly fill client requests with qualified candidates, and (iv) pricing structure, including discounts and rebates. As a result, we believe that further consolidation of our industry will continue.

We believe that key elements of successfully competing in the industry include maintaining a strong base of qualified IT professionals to enable quick responses to client requests (often within 48 hours) and ensuring that the candidates are an appropriate fit with the cultural and technical requirements of each assignment. Other key success factors include accurate evaluation of candidates’ technical skills, strong account management to develop and maintain client relationships and efficient and consistent administrative processes to assist in the delivery of quality services.

Our Competitive Strengths

We believe our competitive strengths differentiate us from our competitors and have allowed us to successfully create a sustainable and scalable national IT staffing services business. Our competitive strengths include:

Proven Track Record with a National Footprint. We believe our experienced, tenured workforce, high-quality consultant base and broad geographic presence give us a competitive advantage as corporate and governmental clients continue to consolidate their use of IT staffing providers. We offer a wide range of IT staffing expertise, including website development and integration, application programming and development, client/server development, systems software architecture and design, systems engineering and systems integration. Our coast-to-coast presence of 52 offices allows us to meet the needs of our clients on a national basis, as well as build local relationships. For our large customers that have multiple IT centers in the United States, our geographic coverage allows us to provide consistent high-quality service through a single point of contact.

Focus on IT Staffing Services. We believe the IT staffing industry offers a greater opportunity for higher profitability than many other commercial staffing segments because of the value-added nature of IT personnel. Unlike many of our competitors that offer several types of staffing services such as IT, finance, accounting, light industrial and clerical, we are focused on the IT sector. As a result, we are able to commit our resources and capital towards our goal of building the leading IT staffing services business in the U.S.

Diversified Revenue Base With Long-Term Customer Relationships. We have nearly 1,000 corporate and government clients, including approximately 29% of the Fortune 500 companies and approximately 60% of the Fortune 50 companies. During 2009, our 15 largest clients represented approximately 39% of our revenues. Our clients operate across a broad spectrum of markets, with our four largest end-markets consisting of financial services, telecommunications, information technology and pharmaceutical and biotechnology. We have long-standing relationships with many of our clients, including relationships of more than a decade with many of our large customers.

Extensive Recruiting Channels and Effective Hiring Process. We believe our recruiting tools and processes and our depth of knowledge of the markets in which we operate provide us with a competitive advantage in meeting the demanding time-to-market requirements for placement of IT consultants. The placement of highly skilled personnel requires operational and technical knowledge to effectively recruit and screen personnel, match them to client needs, and develop and manage the resulting relationships. To find and place the best candidate with the applicable skill-set, we maintain a proprietary database that contains information about more than one million candidates. We also recruit through the internet, local and national advertising and trade shows and we maintain a national recruiting center. All of these resources assist us in locating qualified candidates quickly, often within 48 hours of a client request.

Complementary Service Offerings. We believe our complementary service offerings help us to build and facilitate expansion of our relationships with new and existing clients. In addition to our core business of IT staffing, we offer our customers vendor management services, project solutions and permanent placement of IT professionals through our business process outsourcing group. We began offering vendor management services in 2000 and now provide these services to 48 clients. We believe we are one of the leading vendor management businesses in the United States. We also evaluate opportunities to expand our service offerings based on customer demand and technology needs.

Scalable Infrastructure. We have a scalable information technology and transaction processing infrastructure. Our back-office functions, including payroll, billing, accounts payable, collections and financial reporting, are consolidated in our customer service center in Phoenix, Arizona, which operates on a PeopleSoft platform. We also have a proprietary, web-enabled front-office system, which facilitates the identification, qualification and placement of consultants in a timely manner. In addition, we maintain a centralized call center for scheduling sales appointments and a centralized proposals and contract services department. We believe this infrastructure will facilitate our internal growth strategy and allow us to continue to integrate acquisitions rapidly.

Sales and Marketing

We employ a centralized sales and marketing strategy that focuses on both national and local accounts. The marketing strategy is implemented on both national and local levels through each of our branch offices. At the national level, we focus on attaining preferred supplier status with Fortune 500 companies, a status that would make us one of a few approved service providers to those companies. An integral part of our marketing strategy at the national level is the use of our account management professionals who generally have over five years of experience in our industry. Their industry experience makes them capable of understanding our clients’ business strategies and IT staffing requirements. We are also supported by:

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centralized proposals and contract services departments;

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a strategic accounts group;

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a candidate sourcing operation for larger, high-volume clients that obtain contract IT professionals primarily through procurement departments;

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a centralized outbound call center for scheduling sales appointments with key contacts at prospective clients;

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a project solutions sales force;

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a vendor management sales force; and

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national recruiting centers for sourcing IT professionals located in the United States.

All of these assist in the development of responses to requests for proposals from large accounts and support our efforts in new client development activity.

Local accounts are targeted through account managers at the branch office level, permitting us to capitalize on the established local expertise and relationships of our branch office employees. These accounts are solicited through personal sales presentations, telephone and e-mail marketing, direct-mail solicitation, referrals and advertising in a variety of local and national media. Although local offices retain flexibility with regard to local customer and employee issues, these offices adhere to company-wide policies and procedures and a set of best practices designed to ensure quality standards throughout the organization. Local employees are encouraged to be active in civic organizations and industry trade groups to facilitate the development of new customer relationships and develop local contacts with technology user groups for referral of specific technology skills.

Local office employees report to a managing director who is responsible for day-to-day operations and the profitability of the office. Managing directors report to regional vice presidents. Regional vice presidents have substantial autonomy in making decisions regarding the operations in their respective regions, although sales activities directed toward strategic accounts are coordinated at a national level.

Our company-wide compensation program for account managers and recruiters is intended to provide incentives for higher-margin business. One component of compensation for account managers and recruiters is commissions, which increase significantly for placements with higher gross profit contribution.

Employees and Consultants

Of our 4,596 consultants on assignment at January 3, 2010, approximately 67% were employee consultants and approximately 33% were subcontractors and independent contractors. In addition, as of January 3, 2010, we had 832 permanent staff employees consisting primarily of management, administrative staff, account managers and recruiters. None of our employees are covered by collective bargaining agreements, and management believes that our relationships with our employees are good.

We recruit our consultants through both centralized and decentralized recruiting programs. Our recruiters use our internal proprietary database, the Internet, local and national advertisements and trade shows. Our front office system maintains a current database containing information about more than one million candidates, including their skills, education, desired work location and other employment-related information. The system enables us to scan, process and store thousands of resumes, making it easier for recruiters to identify, qualify and place consultants in a timely manner. It also allows billable consultants to electronically review and apply for job openings. In addition, we use our national recruiting center in Houston, Texas for sourcing IT professionals located in the United States. This center enhances our local recruitment effort by providing additional resources to meet clients’ critical timeframes and broadening our capability to deliver resources in areas of the country where no local office exists. We also recruit qualified candidates through our candidate referral program, which pays a referral fee to eligible individuals responsible for attracting new recruits that are successfully placed by us on an assignment.

We have a specialized selection, review and reference process for our IT consultant candidates that is an integral part of maintaining the delivery of high quality service to our clients. This process includes interviewing each candidate to allow us to assess whether that individual will be an appropriate match for a client’s business culture and performing reference checks. We also conduct a technical competency review of each candidate to determine whether the consultant candidate has the technical capabilities to successfully complete the client assignment. Our technical assessment will often include a formal technology skills assessment through an automated software product. We also undertake additional reviews, including more detailed background checks, at the request of our clients.

In an effort to attract a broad spectrum of qualified billable consultants, we offer a wide variety of employment options and training programs. Through our training and development department, we offer an online training platform to our consultants. This program includes over 2,600 self-paced IT and business-related courses and over 100 technical certification paths in course areas such as software development, enterprise data systems, internet and network technologies, web design, project management, operating systems, server technologies and business-related skills. We believe these training initiatives improve consultant recruitment and retention, increase the technical skills of our personnel and result in better service for our clients. We also provide consultant resource managers to assist our consultants in their career development and help maintain a positive work environment.

Competition

We operate in a highly competitive and fragmented industry. There are relatively few barriers to entry into our markets, and the IT staffing industry is served by thousands of competitors, many of which are small, local operations. There are also numerous large national and international competitors that directly compete with us, including TEKsystems, Inc., Ajilon Consulting, Kforce Inc., Spherion Corporation, CDI Corp., Computer Task Group, Inc., RCM Technologies, Inc. and Robert Half International. Some of our competitors may have greater marketing and financial resources than us.

The competitive factors in obtaining and retaining clients include, among others, an understanding of client-specific job requirements, the ability to provide appropriately skilled IT consultants in a timely manner, the monitoring of job performance quality and the price of services. The primary competitive factors in obtaining qualified candidates for temporary IT assignments are wages, the technologies that will be utilized, the challenges that an assignment presents, the timing of availability of assignments and the types of clients and industries that will be serviced. We believe our nationwide presence, strength in recruiting and account management and the broad range of customers and industries to which we provide services make us highly competitive in obtaining and retaining clients and recruiting highly qualified consultants.

Regulation

We are subject to various types of government regulations, including: employer/employee relationship between a firm and its employees, including tax withholding or reporting, social security or retirement, benefits, workplace compliance, wage and hour, anti-discrimination, immigration and workers’ compensation, registration, licensing, record keeping and reporting requirements; and federal contractor compliance.

Trademarks

We endeavor to protect our intellectual property rights and maintain certain trademarks, trade names, service marks and other intellectual property rights. We also license certain other proprietary rights in connection with our businesses. We are not currently aware of any infringing uses or other conditions that would be reasonably likely to materially and adversely affect our use of our proprietary rights.

Seasonality

Our business is affected by seasonal fluctuations in corporate IT expenditures. Generally, expenditures are lowest during the first quarter of the year when our clients are finalizing their IT budgets. In addition, our quarterly results may fluctuate depending on, among other things, the number of billing days in a quarter and the seasonality of our clients’ businesses. Our business is also affected by the timing of holidays and seasonal vacation patterns, generally resulting in lower revenues and gross margins in the fourth quarter of each year. Extreme weather conditions may also affect demand in the first and fourth quarters of the year as certain of our clients’ facilities are located in geographic areas subject to closure or reduced hours due to inclement weather. In addition, we experience an increase in our cost of sales and a corresponding decrease in gross profit and gross margin in the first fiscal quarter of each year as a result of resetting certain state and federal employment tax rates and related salary limitations.

Available Information

Our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are made available free of charge on the Investor Relations page of our website at www.COMSYS.com as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”). Information contained on our website, or on other websites linked to our website, is not incorporated by reference into this Annual Report on Form 10-K and should not be considered part of this report or any other filing that we make with the SEC.

EXECUTIVE OFFICERS

Information regarding the executive officers of COMSYS is as follows:


Name	Age	Position
Larry L. Enterline	57	Chief Executive Officer
Michael H. Barker	55	Executive Vice President and Chief Operating Officer
Ken R. Bramlett, Jr.	50	Senior Vice President, General Counsel and Corporate Secretary
David L. Kerr	57	Senior Vice President—Corporate Development
Amy Bobbitt	48	Senior Vice President and Chief Accounting Officer

Larry L. Enterline. Mr. Enterline was re-appointed as our Chief Executive Officer effective February 2, 2006. Mr. Enterline had previously served as our Chief Executive Officer from December 2000, when our company was known as Venturi Partners, Inc., until September 30, 2004, when we completed our merger with COMSYS Holding, Inc. He has served as a member of our Board since December 2000 and served as Chairman of the Board from December 2000 until the Comsys/Venturi merger. Prior to joining our company, Mr. Enterline served in a number of senior management positions at Scientific-Atlanta, Inc. from 1989 to 2000, the last of which was Corporate Senior Vice President for Worldwide Sales and Service. He also held management positions in the marketing, sales, engineering and products areas with Bailey Controls Company and Reliance Electric Company from 1974 to 1989. He also serves on the boards of directors of Raptor Networks Technology Inc. and Concurrent Computer Corporation.

Michael H. Barker. Mr. Barker has served as our Executive Vice President and Chief Operating Officer since October 2006. Mr. Barker served as our Executive Vice President — Field Operations from the completion of the Comsys/Venturi merger in September 2004 until October 2006. Prior to the merger, Mr. Barker had served as the President of Division Operations of Venturi since January 2003. From January 2001 through January 2003, Mr. Barker served as President of Venturi’s Technology Division. Prior to that time, Mr. Barker served as President of Divisional Operations of Venturi from October 1999 to January 2001 and as President of its Staffing Services Division from January 1998 until October 1999. Prior to joining Venturi, from 1995 to 1997 Mr. Barker served as the Chief Operations Officer for the Computer Group Division of IKON Technology Services, a diversified technology company.

Ken R. Bramlett, Jr. Mr. Bramlett was re-appointed as our Senior Vice President, General Counsel and Corporate Secretary effective January 3, 2006. Mr. Bramlett had previously served in a number of senior management positions with our company from 1996, when our company was known as Venturi Partners, Inc., until September 30, 2004, when we completed our merger with COMSYS Holding, Inc. His last position prior to the merger was Senior Vice President, General Counsel and Secretary. Prior to rejoining the Company, Mr. Bramlett was a partner in the business law department of Kennedy Covington Lobdell & Hickman LLP, a Charlotte, North Carolina law firm, from March 2005 to December 2005. Mr. Bramlett also serves on the boards of directors of World Acceptance Corporation and Raptor Networks Technology, Inc.

David L. Kerr. Mr. Kerr has served as our Senior Vice President — Corporate Development since the completion of the merger in September 2004. Prior to the merger, Mr. Kerr had served as Senior Vice President — Corporate Development of Old COMSYS since July 2004. Mr. Kerr joined Old COMSYS in October 1999 and served as its Chief Financial Officer and a Senior Vice President until December 2001. Old COMSYS retained Mr. Kerr as an independent consultant from January 2002 to July 2004, during which time Old COMSYS sought his advice and counsel on a number of business matters related to the IT staffing industry, including corporate development, mergers and acquisitions, divestitures, sales operations and financial transactions. Prior to joining Old COMSYS, Mr. Kerr was the Founder, Principal Officer, Shareholder and Managing Director of Omni Ventures LLC and Omni Securities LLC. Mr. Kerr was previously a partner with KPMG where he specialized in merger and acquisition transactions.

Amy Bobbitt. Ms. Bobbitt has served as our Senior Vice President and Chief Accounting Officer since September 2007. Prior to that, Ms. Bobbitt served as our Vice President of Finance since June 2006. Previously, Ms. Bobbitt was employed by Amkor Technology, Inc. from February 2005 to June 2006, where she served as Vice President and Corporate Controller. Prior to that, she served as Chief Accounting Officer and Corporate Controller at Rockford Corporation from December 2003 to February 2005. Ms. Bobbitt was the Vice President and Chief Financial Officer of Pima Capital Development Company for approximately eight years and was formerly an audit manager with Deloitte & Touche. Ms. Bobbitt received her Bachelor of Science in Business Administration, majoring in Accounting, from The Ohio State University and also maintains her Certified Public Accountant license.


ITEM 1A.		RISK FACTORS

In addition to the other information included in this report, the following risk factors should be considered in evaluating our business and future prospects. The risk factors described below are not necessarily exhaustive and you are encouraged to perform your own investigation with respect to our company and our business. You should also read the other information included in this report, including our financial statements and the related notes.

Risks Related to the Pending Acquisition of COMSYS by Manpower Inc.

Failure to complete the pending exchange offer and merger with Manpower could materially and adversely affect our results of operations and our stock price.

On February 1, 2010, we entered into the Merger Agreement with Manpower and its wholly-owned subsidiary, Merger Sub. The Merger Agreement provides that, subject to the terms and conditions of the Merger Agreement, Merger Sub will commence the Offer to purchase all of the outstanding shares of COMSYS’ common stock and, following the completion of the Offer, complete the Merger by merging Merger Sub with and into COMSYS, with COMSYS surviving as a direct or indirect wholly owned subsidiary of Manpower.

Consummation of the Offer is subject to customary closing conditions, regulatory approvals, including antitrust approvals, and the tender in the Offer of at least a majority of the shares of COMSYS common stock outstanding. We cannot assure you that these conditions will be satisfied or waived, that the necessary approvals will be obtained, or the Offer and the Merger will be successfully completed as contemplated under the Merger Agreement or at all.

If for any reason the proposed Offer and Merger are not consummated:

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our investors may not receive $17.65 in cash or $17.65 in fair market value of shares of Manpower common stock that Manpower has agreed to provide in the Offer and the Merger, and our stock price would likely decline unless some other party were to offer an equivalent or higher price for our shares (and we have no expectation that there is any other party willing to offer an equivalent or higher price);

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under some circumstances, we may have to pay a termination fee to Manpower of $15.2 million and/or reimburse Manpower for its out-of-pocket transaction-related expenses up to $2.5 million;

In addition, the pendency of the Offer and the Merger could adversely affect our operations because:

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the attention of our management and our employees may be diverted from day-to-day operations as they focus on the Offer and the Merger;

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our clients may seek to modify or terminate existing agreements, or prospective clients may delay entering into new agreements or purchasing our services as a result of the announcement of the Offer and the Merger, which could cause our revenues to materially decline or any anticipated increases in revenue to be lower than expected;

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our ability to attract new employees and billable consultants and retain our existing employees and billable consultants may be harmed by uncertainties associated with the Offer and the Merger, and we may be required to incur substantial costs to recruit replacements for lost personnel or consultants; and

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stockholder lawsuits could be filed against us challenging the Offer and the Merger. If this occurs, even if the lawsuits are groundless and we ultimately prevail, we may incur substantial legal fees and expenses defending these lawsuits, and the Offer and the Merger could be prevented or delayed.

The occurrence of any of these events individually or in combination could have a material adverse affect on our results of operations and our stock price.

Risks that May Impact Future Operating Results Pending Completion of the Offer and the Merger or if the Offer and the Merger are not Consummated

Any economic downturn, or the perception that such a downturn is possible, may cause our revenues to decline and may adversely affect our results of operations, cash flows and financial condition.

Our results of operations are affected by the level of business activity of our clients, which in turn is affected by local, regional and global economic conditions. Since demand for staffing services is sensitive to changes, as well as perceived changes, in the level of economic activity, our business may suffer during economic downturns. As economic activity slows down, or companies believe that a decline in economic activity is possible, companies frequently cancel, reduce or defer capital investments in new technology systems and platforms and tend to reduce their use of temporary employees and permanent placement services before undertaking layoffs of their regular employees, resulting in decreased demand for staffing services. Also, as businesses reduce their hiring of permanent employees, revenue from our permanent placement services is adversely affected. As a result, any significant economic downturn, or the perception that a downturn is possible, could reduce our revenues and adversely affect our results of operations, cash flow and financial condition.

Our dependence on large customers and the risks we assume under our contracts with them could have a material adverse effect on our revenues and results of operations.

We depend on several large customers for a significant portion of our revenues. Our 15 largest customers represented approximately 39% of our revenues in 2009. Generally, we do not provide services to our customers under long-term contracts. If one or more of our large customers terminated an existing contract or substantially reduced the services they purchase from us, our revenues and results of operations would be adversely affected.

In addition, many customers, including those with preferred supplier arrangements, increasingly have been seeking pricing discounts, rebates or other pricing concessions in exchange for higher volumes of business or maintaining existing levels of business. Furthermore, we may be required to accept less favorable terms regarding risk allocation, including assuming obligations to indemnify our clients for damages sustained in connection with the provision of our services. Additionally, we regularly evaluate the creditworthiness of all our customers and continuously monitor accounts but typically we do not require collateral. Our allowance for doubtful accounts is based on an evaluation of the collectibility of specific accounts and on historical experience. These factors may potentially adversely affect our revenues and results of operations.

Our profitability will suffer if we are not able to maintain sufficient levels of billable hours and bill rates and control our costs or if we are unable to pass bill rate decreases to our consultants.

Our profit margins, and therefore our profitability, are largely dependent on the number of hours billed for our services, utilization rates, the bill rates we charge for these services and the pay rates of our consultants.

Accordingly, if we are unable to maintain these amounts at current levels, our profit margin and our profitability will suffer. Our bill rates are affected by a number of considerations, including:

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our clients’ perception of our ability to add value through our services;

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competition, including pricing policies of our competitors; and

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general economic conditions.

Our billable hours are affected by various factors, including:

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the demand for IT staffing services;

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the number of billing days in any period;

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the quality and scope of our services;

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seasonal trends, primarily as a result of holidays, vacations and inclement weather;

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our ability to recruit new consultants to fill open orders;

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our ability to transition consultants from completed assignments to new engagements;

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our ability to forecast demand for our services and thereby maintain an appropriately balanced and sized workforce; and

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our ability to manage consultant turnover.

Our pay rates are affected primarily by the supply of and demand for skilled U.S.-based consultants. During periods when demand for consultants exceeds the supply, pay rates may increase. In addition, large customers many times put pressure on us to absorb bill rate decreases and not reduce related pay rates. Competitive pressures impact this process.

Some of our costs, such as office rents, are fixed in the short term, which limits our ability to reduce costs in periods of declining revenues. Our current and future cost-management initiatives may not be sufficient to maintain our margins as our revenue varies.

We compete in a highly competitive market with limited barriers to entry and significant pricing pressures. There can be no assurance that we will continue to successfully compete.

The U.S. IT staffing services market is highly competitive and fragmented. We compete in national, regional and local markets with full-service and specialized staffing agencies, systems integrators, computer systems consultants, search firms and other providers of staffing and consulting services. Although the majority of our competitors are smaller than we are, a number of competitors have greater marketing and financial resources than us. In addition, there are relatively few barriers to entry into our markets and we have faced, and expect to continue to face, competition from new entrants into our markets. We expect that the level of competition will remain high in the future, which could limit our ability to maintain or increase our market share or maintain or increase gross margins, either of which could have a material adverse effect on our financial condition and results of operations. In addition, from time to time we experience pressure from our clients to reduce price levels, and during these periods we may face increased competitive pricing pressures. Competition may also affect our ability to recruit the personnel necessary to fill our clients’ needs. We also face the risk that certain of our current and prospective clients will decide to provide similar services internally. There can be no assurance that we will continue to successfully compete.

We may be unable to attract and retain qualified billable consultants, which could have an adverse effect on our business, financial condition and results of operations.

Our operations depend on our ability to attract and retain the services of qualified billable consultants who possess the technical skills and experience necessary to meet our clients’ specific needs. We are required to continually evaluate, upgrade and supplement our staff in each of our markets to keep pace with changing client needs and technologies and to fill new positions. The IT staffing industry in particular has high turnover rates and is affected by the supply of and demand for IT professionals. This has resulted in intense competition for IT professionals, and we expect such competition to continue. Our customers may also hire our consultants, and direct hiring by customers adversely affects our turnover rate as well. In addition, our consultants’ loyalty to us may be harmed by our decreasing pay rates in order to preserve our profit margin during a market downturn, which may adversely affect our competitive position. Certain of our IT operations recruit consultants who require H-1B visas, and U.S. immigration policy currently restricts the number of new H-1B petitions that may be granted in each fiscal year. Our failure to attract and retain the services of consultants, or an increase in the turnover rate among our consultants, could have a material adverse effect on our business, operating results or financial condition. If a supply of qualified consultants, particularly IT professionals, is not available to us in sufficient numbers or on economic terms that are, or will continue to be, acceptable to us, our business, operating results or financial condition could be materially adversely affected.

We depend on key personnel, and the loss of the services of one or more of our senior management or a significant portion of our local management personnel could weaken our management team and our ability to deliver quality services and could adversely affect our business.

Our operations historically have been, and continue to be, dependent on the efforts of our executive officers and senior management. In addition, we are dependent on the performance and productivity of our respective regional operations executives, local managing directors and field personnel. The loss of one or more of our senior management or a significant portion of our management team could have an adverse effect on our operations, including our ability to maintain existing client relationships and attract new clients in the context of changing economic or competitive conditions. Our ability to attract and retain business is significantly affected by local relationships and the quality of services rendered by branch managerial personnel. If we are unable to attract and retain key employees to perform these services, our business, financial condition and results of operations could be materially adversely affected.

Our failure to shift more of our business into the IT solutions area could adversely impact our growth rate and profitability.

As market factors continue to pressure our revenue growth and margins in the IT staffing area, we have attempted to shift more of our business mix into the higher growth and higher margin solutions areas to complement our core business. We have committed resources and management attention to our TAPFIN Process Solutions group, which currently offers vendor management services, service procurement management, recruitment process outsourcing and other consulting services. There can be no assurance that we will succeed in shifting more of our business mix into these areas, or into other areas within the solutions sector of the IT services industries, and our failure to do so could adversely impact our growth rate and profitability.

We may suffer losses due to the conduct of our employees or our clients’ employees during staffing assignments.

We employ and place people generally in the workplaces of other businesses. Attendant risks of this activity include possible claims of discrimination and harassment, employment of illegal aliens, violations of wage and hour requirements, errors and omissions of temporary employees, particularly of professionals, misuse of client proprietary information, misappropriation of funds, other criminal activity or torts and other similar claims. In some instances we have agreed to indemnify our clients against some or all of the foregoing matters. We will be responsible for these indemnification obligations, to the extent they remain in effect, and may in the future agree to provide similar indemnities to some of our prospective clients. In certain circumstances, we may be held responsible for the actions at a workplace of persons not under our direct control. Although historically we have not suffered any material losses in this area, there can be no assurance that we will not experience such losses in the future or that our insurance, if any, will be sufficient in amount or scope to cover any such liability. The failure of any of our employees or personnel to observe our policies and guidelines, relevant client policies and guidelines, or applicable federal, state or local laws, rules and regulations, and other circumstances that cannot be predicted, could have a material adverse effect on our business, operating results and financial condition.

Additional government regulation and rising health care and unemployment insurance costs and taxes, including increased state and local taxes, could have a material adverse effect on our business, operating results and financial condition.

We are required to pay a number of federal, state and local payroll taxes and related costs, including unemployment and other taxes and insurance, workers’ compensation, FICA and Medicare, among others, for our employees. We also provide various benefits to our employees, including health insurance. Significant increases in the effective rates of any payroll-related costs would likely have a material adverse effect on our results of operations unless we can pass them along to our customers. Our costs could also increase if health care reforms expand the scope of mandated benefits or employee coverage or if regulators impose additional requirements and restrictions related to the placement of personnel. Historically, during an economic downturn, we have seen an increase in our state and local taxes. These increases result from legislation passed by various taxing jurisdictions which have traditionally increased tax rates or decreased our ability to use our net operating loss carryforwards.

We generally seek to increase fees charged to our clients to cover increases in health care, unemployment and other direct costs of services, but our ability to pass these costs to our clients over the last several years has diminished. There can be no assurance that we will be able to increase the fees charged to our clients in a timely manner and in a sufficient amount if these expenses continue to rise. There is also no assurance that we will be able to adapt to future regulatory changes made by the Internal Revenue Service, the Department of Labor or other state and federal regulatory agencies. Our inability to increase our fees or adapt to future regulatory changes could have a material adverse effect on our business, operating results and financial condition.

Due to inherent limitations, there can be no assurance that our system of disclosure and internal controls and procedures will be successful in preventing all errors and fraud, or in making all material information known in a timely manner to management.

Our management, including our Chief Executive Officer and Chief Accounting Officer, does not expect that our disclosure controls and internal controls will prevent all errors and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within COMSYS have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, a control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected that could have a material adverse effect on our business, results of operations and financial condition.

Our strategic decision not to pursue a broad-based offshore strategy may adversely impact our revenue growth and profitability.

In the past few years, more companies are using, or are considering using, low cost “offshore” outsourcing centers, particularly in India, to perform technology related work and projects. This trend has contributed to the slowing growth in domestic IT staff augmentation revenue as well as on-site solutions oriented projects. We have strategic alliances with Indian suppliers to provide our clients with a low cost offshore alternative, but have not, to date, pursued a broad-based offshore strategy. Our strategic decision not to pursue such a broad-based offshore strategy may adversely impact our revenue growth and profitability.

We have substantial intangible assets, have incurred significant impairment charges in the past and may incur further charges if there are significant adverse changes to our operating results, outlook or market conditions.

Our intangible assets consist of goodwill and customer list intangibles resulting from acquisitions of businesses from unrelated third parties for cash and other consideration. We have accounted for these acquisitions using the purchase method of accounting, with the assets and liabilities of the businesses acquired recorded at their estimated fair values as of the dates of the acquisitions. The excess of purchase price over fair value of the net assets acquired was recorded as goodwill. Our other intangible assets consist mainly of customer lists.

ASC Topic 350, “Intangibles-Goodwill and Other,” prohibits the amortization of goodwill and requires that goodwill and other intangible assets be tested annually for impairment. We perform these tests on an annual basis or more frequently if events or changes in circumstances indicate the asset might be impaired, and any significant adverse changes in our expected future operating results or outlook would likely result in impairment of the affected intangible assets that could have a material adverse impact on our results of operations and financial condition.

The annual test requires estimates and judgments by management to determine a valuation for the reporting unit. Although we believe our assumptions and estimates are reasonable and appropriate, different assumptions and estimates could materially affect our reported financial results. Different assumptions related to future cash flows, operating margins, growth rates and discount rates could result in additional future impairment charges, which would be recognized as a non-cash charge to operating income and a reduction in asset values and shareholders’ equity on the balance sheet.

We recorded a non-cash, goodwill impairment charge of $86.8 million during the fourth quarter of 2008. The impairment was the result of the decline in our trading stock price during the fourth quarter of 2008 due to market conditions. Neither our operating trends nor our financial results for the fourth quarter of 2008 were factors that led to the charge. The non-cash charge had no impact on our existing cash balances, working capital, debt balances, revolver availability or normal business operations. There was no impairment to goodwill during 2009. Declines in our trading stock price as well as other factors could result in additional impairment charges.

Adverse results in tax audits could require significant cash expenditures or expose us to unforeseen liabilities.

We are subject to periodic federal, state and local income tax audits for various tax years. Although we attempt to comply with all taxing authority regulations, adverse findings or assessments made by the taxing authorities as the result of an audit could have a material adverse affect on our business, financial condition, cash flows and results of operations.

We may be subject to lawsuits and claims, which could have a material adverse effect on our financial condition and results of operations.

A number of lawsuits and claims are pending against us, and additional claims and lawsuits may arise in the future. Litigation is inherently uncertain. If an unfavorable ruling or outcome were to occur, such event could have a material adverse effect on our financial condition, cash flows and results of operations.

Concentration of services in metropolitan areas may adversely affect our revenues in the event of extraordinary events.

A significant portion of our revenues is derived from services provided in major metropolitan areas. A terrorist attack, such as that of September 11, 2001, or other extraordinary events in any of these markets could have a material adverse effect on our revenues and results of operations.

We depend on the proper functioning of our information systems.

We are dependent on the proper functioning of information systems in operating our business. Critical information systems are used in every aspect of our daily operations, most significantly in the identification and matching of staffing resources to client assignments and in the customer billing and consultant payment functions. Our systems are vulnerable to natural disasters, fire, terrorist acts, power loss, telecommunications failures, physical or software break-ins, computer viruses and other similar events. If our critical information systems fail or are otherwise unavailable, we would have to accomplish these functions manually, which could temporarily impact our ability to identify business opportunities quickly, maintain billing and client records reliably and bill for services efficiently. In addition, we depend on third party vendors for certain functions whose future performance and reliability we cannot control.

Risks Related to our Indebtedness

We have substantial debt obligations that could restrict our operations and adversely affect our business and financial condition.

As of January 3, 2010, our total debt was approximately $38.1 million, all of which was issued under a revolving line of credit.

Our indebtedness could have adverse consequences, including:

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increasing our vulnerability to adverse economic and industry conditions;

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limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and

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limiting our ability to borrow additional funds.

Our outstanding debt is subject to a borrowing base, and our lenders have substantial discretion to impose various reserves against it from time to time. Our outstanding debt bears interest at a variable rate, subjecting us to interest rate risk. Further, we use a substantial portion of our operating cash flow to pay interest on our debt instead of other corporate purposes. If our cash flow and capital resources are insufficient to fund our debt obligations, we may be forced to sell assets, seek additional equity or debt capital or restructure our debt. Our cash flow and capital resources may not be sufficient for payment of interest and principal on our debt in the future, and any such alternative measures may not be successful or may not permit us to meet scheduled debt service obligations. Any failure to meet our debt obligations could harm our business and financial condition.

We will require a significant amount of cash to service our indebtedness and satisfy our other liquidity needs. Our ability to generate cash depends on many factors beyond our control.

Our ability to make payments on our indebtedness and to fund our working capital requirements and other liquidity needs will depend on our ability to generate cash in the future. To a certain extent, this ability is subject to economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under our revolving line of credit or otherwise in an amount sufficient to enable us to successfully execute our business strategy, pay our indebtedness and fund our other liquidity needs.

If we are not able to repay our debt obligations on or prior to their maturity, we may need to refinance all or a portion of our indebtedness. Our revolving line of credit will mature in March 2012 and, thus, we may be required to refinance any outstanding amounts under our credit facilities. We cannot assure you that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all. If we are unable to generate sufficient cash flow to pay our indebtedness or to refinance our debt obligations on commercially reasonable terms, our business, financial condition and results of operations could be adversely affected.

Restrictive financing covenants limit the discretion of our management and may inhibit our operating flexibility.

Our credit facilities contain a number of covenants that, among other things, restrict our ability to:

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incur additional indebtedness;

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pay more than $10 million in the aggregate for stock repurchases and dividends;

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incur liens;

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make certain capital expenditures;

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make certain investments or acquisitions;

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repay debt; and

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dispose of property.

In addition, our credit facilities have springing financial covenants that would require us to satisfy a minimum fixed charge coverage ratio and a maximum total leverage ratio if our excess availability falls below $25 million. A breach of any covenants governing our debt would permit the acceleration of the related debt and potentially other indebtedness under cross-default provisions, which could harm our business and financial condition. These restrictions may place us at a disadvantage compared to our competitors that are not required to operate under such restrictions or that are subject to less stringent restrictive covenants.

If we default on our obligations to pay our indebtedness, or fail to comply with the covenants and restrictions contained in the agreements governing our indebtedness, our financial condition may be adversely affected by the consequences of any such default.

If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to make required payments on our revolving line of credit or any future debt which we may incur, or if we fail to comply with the various covenants and restrictions contained in the agreements governing our indebtedness, we could be in default under the terms of such agreements governing our indebtedness.

In the event of a default under any of our debt agreements that is not cured or waived, the holders of such indebtedness could elect to declare all amounts outstanding thereunder to be immediately due and payable. In addition, upon an event of default under our credit facilities that is not cured or waived, we would no longer be able to borrow funds under our credit facilities, which would make it difficult to operate our business. Moreover, because our credit facilities contain, and any future debt agreements into which we may enter may contain, customary cross-default provisions, an event of default under our credit facilities or any future debt agreements into which we may enter, if not cured or waived, could also permit some or all of our lenders to declare all outstanding amounts to be immediately due and payable.

If the amounts outstanding under any of our debt agreements are accelerated, we cannot assure you that our assets will be sufficient to repay in full the money owed to our lenders or to our other debt holders. If we are unable to repay or refinance such accelerated amounts, lenders having secured obligations, such as the lenders under our revolving line of credit, could proceed against the collateral securing the debt, and we could be forced into bankruptcy or liquidation.

Other Risks Related to Investment in Our Common Stock

Shares of our common stock have been thinly traded in the past and the prices at which our common stock will trade in the future could fluctuate significantly.

As of February 26, 2010, there were 21,293,875 shares of our common stock issued and outstanding. Although our common stock is listed on The NASDAQ Global Market and a trading market exists, the trading volume has not been significant and there can be no assurance that an active trading market for our common stock will develop or be sustained in the future. Our average daily trading volume during the twelve months ended February 1, 2010, was approximately 45,584 shares (which excludes the trading volume since the announcement of the pending Offer and Merger on February 2, 2010). As a result of the thin trading market, or “float,” for our stock, the market price for our common stock may fluctuate significantly more than the stock market as a whole. Without a large float, our common stock is less liquid than the stock of companies with broader public ownership and, as a result, the trading prices of our common stock may be more volatile. In addition, in the absence of an active public trading market, investors may be unable to liquidate their investment in our stock. Trading of a relatively small volume of our common stock may have a greater impact on the trading price for our stock than would be the case if our public float were larger. The prices at which our common stock will trade in the future could fluctuate significantly.

Ownership of our common stock is concentrated among a small number of major stockholders that have the ability to exercise significant control over us, and whose interests may differ from the interests of other stockholders.

As of February 26, 2010, there were seven beneficial owners of more than 5% of our outstanding common stock, excluding the effect of outstanding warrants and/or cash-settled equity swaps. A listing of these beneficial owners and information regarding their beneficial ownership is included in Part III, Item 12 of this Form 10-K.

As a practical matter, Wachovia Investors acting alone or these stockholders acting collectively will be able to exert significant influence over, or determine, the direction taken by us and the outcome of future matters submitted to our stockholders, including the terms of any proposal to acquire us, subject to some limited protections afforded to minority stockholders under our charter.

Concentrated ownership of large blocks of our common stock may affect the value of shares held by others and our ability to access public equity markets.

Our current degree of share ownership concentration may reduce the market value of common stock held by other investors for several reasons, including the perception of a “market overhang,” which is the existence of a large block of shares readily available for sale that could lead the market to discount the value of shares held by other investors.

We may need to access the public equity markets to secure additional capital to repay debt, pursue our acquisition strategy or meet other financial needs. Our registration obligations to our significant stockholders could limit our ability or make it more difficult for us to raise funds through common stock offerings upon desirable terms or when required. Our failure to raise additional capital when required could:

•

restrict growth, both internally and through acquisitions;

•

inhibit our ability to invest in technology and other products and services that we may need; and

•

adversely affect our ability to compete in our markets.

Future sales of shares may adversely affect the market price of our shares.

Future sales of our shares, or the availability of shares for future sale, may have an adverse effect on the market price of our shares. Sales of substantial amounts of our shares in the public market, or the perception that such sales could occur, could adversely affect the market price of our shares and may make it more difficult for you to sell your shares at a time and price that you deem appropriate.

The market price and marketability of our shares may from time to time be significantly affected by numerous factors beyond our control, which may adversely affect our ability to raise capital through future equity financings or our ability to use equity in acquisitions.

The market price of our shares may fluctuate significantly. In addition to lack of liquidity, many factors that are beyond our control may affect the market price and marketability of our shares and may adversely affect our ability to raise capital through equity financings or our ability to use equity in acquisitions. These factors include the following:

•

general price and volume fluctuations in the stock markets;

•

changes in our earnings or variations in operating results;

•

any shortfall in revenue or net income or any increase in losses from levels expected by securities analysts;

•

changes in regulatory policies or tax laws;

•

operating performance of companies comparable to us;

•

general economic trends and other external factors; and

•

loss of a major funding source.

We do not intend to pay cash dividends on our common stock in the foreseeable future, and therefore only appreciation of the price of our common stock will provide a return to our stockholders.

We have not historically paid cash dividends on our common stock, and we currently anticipate that we will retain all future earnings, if any, to finance the growth and development of our business. We do not intend to pay cash dividends in the foreseeable future. Any payment of cash dividends will depend upon our financial condition, capital requirements, earnings and other factors deemed relevant by our board of directors. In addition, the terms of our credit facilities prohibit us from paying dividends and making other distributions. As a result, only appreciation of the price of our common stock, which may not occur, will provide a return to our stockholders. Also, holders of warrants to purchase our common stock and holders of unvested restricted stock also participate in dividend payments. As a result, any dividend payments must be allocated to warrant holders and unvested restricted stock holders, as well as common stock holders.

Our certificate of incorporation contains certain provisions that could discourage an acquisition or change of control of COMSYS.

Our certificate of incorporation authorizes the issuance of preferred stock without stockholder approval. Our board of directors has the power to determine the price and terms of any preferred stock. The ability of our board of directors to issue one or more series of preferred stock without stockholder approval could deter or delay unsolicited changes of control by discouraging open market purchases of new common stock or a non-negotiated tender or exchange offer for our common stock. Discouraging open market purchases may be disadvantageous to our stockholders who may otherwise desire to participate in a transaction in which they would receive a premium for their shares.


ITEM 1B.		UNRESOLVED STAFF COMMENTS

None.


ITEM 2.		PROPERTIES

We are headquartered in Houston, Texas and maintain 52 offices in the United States, one in Puerto Rico, one in Toronto, Canada and one in the United Kingdom. Additionally, we have a customer service center in Phoenix, Arizona. We generally lease our office space under leases with initial terms of five to ten years. These leases typically contain such terms and conditions as are customary in each geographic market. Our offices are usually in office buildings, and occasionally in retail buildings, and our headquarters facilities and regional offices are in similar facilities. We believe that our offices are well maintained and suitable for their intended purpose. The lease on our corporate headquarters was renewed in August 2006 for ten years and will expire on February 28, 2017. The lease on our customer service center was entered into in October 2007 for ten years and will expire on April 30, 2018. As of January 3, 2010, we leased approximately 366,000 square feet.


ITEM 3.		LEGAL PROCEEDINGS

From time to time we are involved in certain disputes and litigation relating to claims arising out of our operations in the ordinary course of business. Further, we are periodically subject to government audits and inspections. In the opinion of our management, based on the advice of in-house and external legal counsel, matters presently pending, except as noted below, will not, individually or in the aggregate, have a material adverse effect on our business, financial position, results of operations or cash flows.

In connection with the Comsys/Venturi merger and the sale of Venturi’s commercial staffing business in 2004, we placed $2.5 million of cash and 187,556 shares of our common stock in separate escrows pending the final determination of certain state tax and unclaimed property assessments. The shares were released from escrow on September 30, 2006, in accordance with the Comsys/Venturi merger agreement, while the cash remains in escrow. The cash escrow account was scheduled to terminate on December 31, 2009, but prior to December 31 the purchaser of Venturi’s staffing business made a claim against the escrow account pursuant to the indemnification provisions in the purchase agreement. We have disputed this claim, but as a result of the dispute the termination of the cash escrow will not occur until either the parties reach an agreement as to the matters that are the subject of the dispute or the receipt of a court order. Following the termination of the escrow, we will be paid the balance of the escrow account. We have recorded liabilities for amounts that management believes are adequate to resolve all of the matters these escrows were intended to cover, but management cannot ascertain at this time what the final outcome of these assessments (or the outcome of the dispute with the purchaser of Venturi’s staffing business) will be in the aggregate, and it is possible that management’s estimates could change. The escrowed cash is included in restricted cash on the Consolidated Balance Sheets.


ITEM 4.		RESERVED

This item is not applicable.

PART II


ITEM 5.		MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Price Range of Common Stock

Our common stock is traded on the NASDAQ Global Market under the symbol “CITP.” The following table includes the high and low sales prices for our common stock as reported on the NASDAQ Global Market for each quarter during the period from December 31, 2007, through January 3, 2010.


	High		Low
2008
First Quarter	$	14.80	$	7.37
Second Quarter		12.92		7.82
Third Quarter		12.98		8.12
Fourth Quarter		10.74		1.56
2009
First Quarter	$	3.28	$	1.80
Second Quarter		6.84		1.82
Third Quarter		8.56		5.36
Fourth Quarter		9.55		5.73

As of February 26, 2010, the closing price of our common stock was $17.48, there were 21,293,875 shares of our common stock outstanding and there were 538 holders of record of our common stock.

Dividend Policy

Because our policy has been to retain earnings for use in our business, we have not historically paid cash dividends on our common stock. We currently intend to retain all available funds and any future earnings. Our credit facilities restrict our ability to pay cash dividends. Under the credit facilities, we may make up to $10.0 million in dividend payments and/or stock repurchases in the aggregate, subject to certain terms and conditions. Also, holders of warrants to purchase our common stock and holders of unvested restricted stock also participate in dividend payments. As a result, any dividend payments must be allocated to warrant holders and unvested restricted stock holders, as well as common stock holders.

Purchases of Restricted Stock and Common Shares

The following table provides information relating to our purchase of shares of our common stock in the fourth quarter of 2009. These purchases reflect shares withheld upon vesting of restricted stock, to satisfy statutory minimum tax withholding obligations.


					Total number of		Maximum dollar
					shares purchased		value of shares that
	Total number				as part of		may yet be
	of shares		Average price		publicly		purchased under the
Period	purchased (1)		paid per share		announced plan		plan (2)
September 28, 2009 – October 25, 2009		—	$	—		—
October 26, 2009 – November 22, 2009		868	$	7.04		—
November 23, 2009 – January 3, 2010		—	$	—		—

		868	$	7.04		—	$	5,000,000


(1)		We intend to continue to satisfy minimum tax withholding obligations in connection with the vesting of outstanding restricted stock through the withholding of shares.

(2)		On April 30, 2009, we announced that our Board of Directors authorized the repurchase of up to $5.0 million of our common stock from time to time on the open market or in privately negotiated transactions. The timing and amount of any shares repurchased will be determined by our management based on their evaluation of market conditions and other factors. No repurchases were made during 2009. The repurchase program may be suspended or discontinued at any time until its termination on April 27, 2010.


ITEM 6.		SELECTED FINANCIAL DATA

You should read the following selected consolidated financial data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes appearing elsewhere in this report.

The consolidated statements of operations data for the fiscal years ended January 3, 2010, December 28, 2008, and December 30, 2007, and the consolidated balance sheets data at January 3, 2010, and December 28, 2008, are derived from the audited consolidated financial statements appearing elsewhere in this report. The historical data presented below is not indicative of future results. We did not pay any cash dividends on our common stock during any of the periods set forth in the following table.


Consolidated Statements of Operations Data:	January 3,		December 28,			December 30,		December 31,			January 1,
(In thousands, except per share data)	2010		2008			2007		2006			2006
Revenues from services	$	649,307	$	727,108		$	743,265	$	736,645		$	661,657
Cost of services		490,864		550,189			558,074		557,598			505,233

Gross profit		158,443		176,919			185,191		179,047			156,424

Operating costs and expenses:
Selling, general and administrative		132,139		136,648			135,423		135,651			120,357
Restructuring costs		3,895		637			—		—			4,780
Depreciation and amortization		8,086		8,115			6,426		8,717			9,067
Goodwill impairment		—		86,800			—		—			—

		144,120		232,200			141,849		144,368			134,204

Operating income (loss)		14,323		(55,281	)		43,342		34,679			22,220
Interest expense and other expenses, net		4,036		5,253			7,714		15,208			17,061
Loss on early extinguishment of debt		—		—			—		3,191			2,227
Income tax expense (benefit)		881		4,654			2,279		(4,767	)		783

Net income (loss)	$	9,406	$	(65,188	)	$	33,349	$	21,047		$	2,149


Basic net income (loss) per common share	$	0.45	$	(3.19	)	$	1.67	$	1.10		$	0.14
Diluted net income (loss) per common share	$	0.45	$	(3.19	)	$	1.66	$	1.10		$	0.14

Weighted average basic and diluted shares outstanding:
Basic		19,801		19,599			19,255		18,449			15,492
Diluted		19,801		19,599			20,100		19,137			15,809

						As of
Consolidated Balance Sheets Data:	January 3,		December 28,			December 30,		December 31,			January 1,
(In thousands)	2010		2008			2007		2006			2006
Total assets	$	318,450	$	351,180		$	402,469	$	375,034		$	366,921
Other debt, including current maturities		38,101		69,692			71,903		98,542			142,273
Stockholders’ equity		96,369		83,485			144,632		94,770			71,096


ITEM 7.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis provides a narrative on our financial performance and condition that should be read in conjunction with the consolidated financial statements, selected financials data, and related notes appearing elsewhere in this report. This discussion contains forward-looking statements reflecting our current expectations and estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” and elsewhere in this report. The historical data presented below is not indicative of future results.

Pending Exchange Offer and Merger with Manpower Inc.

Pursuant to the Merger Agreement, and subject to the terms and conditions of the Merger Agreement, in both the Offer and the Merger, each share of COMSYS common stock accepted by Merger Sub will be exchanged for either (at the stockholder’s election) $17.65 in cash or $17.65 in fair market value of shares of Manpower common stock, where fair market value is the average trading price of Manpower’s common stock during the ten trading days ending on and including the second trading day prior to the closing of the Offer. At the effective time of the Merger, any remaining outstanding shares of COMSYS common stock not tendered in the Offer, other than shares owned by Manpower or any direct or indirect wholly-owned subsidiary of Manpower or COMSYS, will be acquired for cash and Manpower common stock.

In connection with the Merger Agreement, Manpower entered into a tender and voting agreement, dated as of February 1, 2010, with certain of COMSYS stockholders who beneficially own in the aggregate approximately 29.5% of COMSYS common stock on a fully diluted basis, pursuant to which each such stockholder agreed to tender all of the shares of COMSYS common stock beneficially owned by such stockholder in the Offer and to vote any shares of COMSYS common stock not tendered in the Offer in favor of the Merger.

Our Business

COMSYS IT Partners, Inc. and our wholly-owned subsidiaries (collectively, “us,” “our” or “we”) provide a full range of specialized IT staffing and project implementation services, including website development and integration, application programming and development, client/server development, systems software architecture and design, systems engineering and systems integration. We also provide services that complement our IT staffing services, such as vendor management, project solutions, process solutions and permanent placement of IT professionals. Our TAPFIN Process Solutions division offers total human capital fulfillment and management solutions within three core service areas: vendor management services, services procurement management and recruitment process outsourcing. We operate through the following wholly-owned subsidiaries:

•

COMSYS Services, LLC (“COMSYS Services”), an IT staffing services provider,

•

COMSYS Information Technology Services, Inc. (“COMSYS IT”), an IT staffing services provider,

•

Pure Solutions, Inc. (“Pure Solutions”), an information technology services company,

•

Econometrix, LLC (“Econometrix”), a vendor management systems software provider,

•

Plum Rhino Consulting LLC (“Plum Rhino”), a specialty staffing services provider to the financial services industry,

•

TAPFIN, LLC (“TAPFIN”), a provider of vendor management services, recruitment process outsourcing services and human resources consulting, and

•

ASET International Services, LLC (“ASET”), a globalization, localization and interactive language services provider.

Industry trends that affect our business include:

•

rate of technological change;

•

rate of growth in corporate IT and professional services budgets;

•

penetration of IT and professional services staffing in the general workforce;

•

outsourcing of the IT and professional services workforce; and

•

consolidation of supplier bases.

The success of our business depends primarily on the volume of assignments we secure, the bill rates for those assignments, the costs of the consultants that provide the services and the quality and efficiency of our recruiting, sales and marketing and administrative functions. Our experienced, tenured workforce, our proven track record, our recruiting and candidate screening processes, our strong account management team and our efficient and consistent administrative processes are factors that we believe are key to the success of our business. Factors outside of our control, such as the demand for IT and other professional services, general economic conditions and the supply of qualified professionals, also affect our success.

Our revenue is primarily driven by bill rates and billable hours. Most of our billings for our staffing and project solutions services are on a time-and-materials basis, which means we bill our customers based on pre-agreed bill rates for the number of hours that each of our consultants works on an assignment. Hourly bill rates are typically determined based on the level of skill and experience of the consultants assigned and the supply and demand in the current market for those qualifications. General economic conditions, macro IT and profession service expenditure trends and competition may create pressure on our pricing. Increasingly, large customers, including those with preferred supplier arrangements, have been seeking pricing discounts in exchange for higher volumes of business or maintaining existing levels of business. Billable hours are affected by numerous factors, such as the quality and scope of our service offerings and competition at the national and local levels. We also generate fee income by providing vendor management and permanent placement services.

Our principal operating expenses are cost of services and selling, general and administrative expenses. Cost of services is comprised primarily of the costs of consultant labor, including employees, subcontractors and independent contractors, and related employee benefits. Approximately 67% of our consultants are employees and the remainder are subcontractors and independent contractors. We compensate most of our consultants only for the hours that we bill to our clients, which allows us to better match our labor costs with our revenue generation. With respect to our consultant employees, we are responsible for employment-related taxes, medical and health care costs and workers’ compensation. Labor costs are sensitive to shifts in the supply and demand of professionals, as well as increases in the costs of benefits and taxes.

The principal components of selling, general and administrative expenses are salaries, selling and recruiting commissions, advertising, lead generation and other marketing costs and branch office expenses. Our branch office network allows us to leverage certain selling, general and administrative expenses, such as advertising and back office functions.

Our back office functions, including payroll, billing, accounts payable, collections and financial reporting, are consolidated in our customer service center in Phoenix, Arizona, which operates on a PeopleSoft platform. We also have a proprietary, web-enabled front-office system that facilitates the identification, qualification and placement of consultants in a timely manner. We maintain a national recruiting center, a centralized call center for scheduling sales appointments and a centralized proposals and contract services department. We believe this scalable infrastructure allows us to provide high quality service to our customers and will facilitate our internal growth strategy and allow us to continue to integrate acquisitions rapidly.

Our fiscal year ends on the Sunday closest to December 31^st. Therefore, the fiscal year-ends for 2009, 2008 and 2007 were January 3, 2010, December 28, 2008, and December 30, 2007, respectively. Fiscal 2009 contained 53 weeks, while fiscal 2008 and 2007 each contained 52 weeks.

Overview of 2009 Results

Our stated priorities for 2009 were organic growth, efficiency improvements, further debt reductions and improved working capital management and expansion of our operations through acquisitions. We made the following progress against each during the year.

Our revenues declined 10.7% in 2009 from 2008; however, we started to see improvement in our trends late in the third quarter and this continued into the fourth quarter. We ended the year with 4,596 billable consultants, which was up 80 from the end of 2008. As the global economy worsened during 2009, we experienced larger-than-normal bill rate pressures from several clients. As a result, average bill rates in 2009 decreased slightly from 2008 rates. Our focus on sales, marketing and recruiting efforts to our core customers and on adding new customers has helped as certain sectors have had difficulties. We did start to see improvement in the financial services sector in the third and fourth quarters of 2009. We put increased focus on managing pay rates and pursuing high margin business to preserve our gross margin percentages.

We continued to see the benefits of our efficiency improvements throughout 2009, and these improvements allowed us to redirect resources closer to the point of sale. As part of our continuing efforts to focus on operational efficiencies and process improvements, we consolidated certain administrative functions into the Phoenix customer service center in 2008 and 2009. This restructuring was a continuation of our plan to centralize certain operations to enhance our customer service and improve our internal processes.

Due to our ability to generate cash from operations and improved working capital management, our net debt balance declined to $38.1 million at the end of 2009 from $49.7 million at the end of 2008. The 2008 amount was net of $20.0 million cash held in a separate cash account, which we borrowed on our revolver in October 2008 to insure access to liquidity, then used to pay down the balance in 2009. During 2009, we generated $17.0 million of cash flow from operations and used $3.7 million for acquisitions. Our cash flow generation was impacted by the decline in revenue and our decision to preserve infrastructure during the recession.

Future Outlook

In connection with the Offer and merger, Manpower intends to file a Registration Statement on Form S-4 and a Tender Offer Statement on Schedule TO with the SEC, and COMSYS intends to file a Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC. The Offer has not yet commenced and such documents are not currently available. When these documents become available, COMSYS stockholders are urged to read them carefully before making any decisions, as they will contain important information about the transaction.

Due to the Offer and proposed merger with Manpower, we are not providing revenue or earnings per share guidance at this time.

Results of Operations

The following table sets forth the percentage relationship to revenues of certain items included in our Consolidated Statements of Operations, in thousands, except percentages and headcount amounts:


										Percent of Revenues from Services									Percent Change
	January 3,			December 28,			December 30,			January 3,			December 28,			December 30,			2009 vs.			2008 vs.
	2010			2008			2007			2010			2008			2007			2008			2007
Revenues from services	$	649,307		$	727,108		$	743,265			100.0	%		100.0	%		100.0	%		-10.7	%		-2.2	%
Cost of services		490,864			550,189			558,074			75.6	%		75.7	%		75.1	%		-10.8	%		-1.4	%

Gross profit		158,443			176,919			185,191			24.4	%		24.3	%		24.9	%		-10.4	%		-4.5	%

Operating costs and expenses:
Selling, general and administrative		132,139			136,648			135,423			20.4	%		18.8	%		18.2	%		-3.3	%		0.9	%
Restructuring costs		3,895			637			—			0.6	%		0.1	%		0.0	%		N/A			N/A
Depreciation and amortization		8,086			8,115			6,426			1.2	%		1.1	%		0.9	%		-0.4	%		26.3	%
Goodwill impairment		—			86,800			—			0.0	%		11.9	%		0.0	%		N/A			N/A

		144,120			232,200			141,849			22.2	%		31.9	%		19.1	%		-37.9	%		63.7	%

Operating income (loss)		14,323			(55,281	)		43,342			2.2	%		-7.6	%		5.8	%		-125.9	%		-227.5	%
Interest expense, net		4,185			5,457			8,250			0.6	%		0.7	%		1.1	%		-23.3	%		-33.9	%
Other income, net		(149	)		(204	)		(536	)		0.0	%		0.1	%		-0.1	%		-27.0	%		-61.9	%

Income (loss) before income taxes		10,287			(60,534	)		35,628			1.5	%		-8.3	%		4.8	%		-117.0	%		-269.9	%
Income tax expense (benefit)		881			4,654			2,279			0.1	%		0.6	%		0.2	%		-81.1	%		104.2	%

Net income (loss)	$	9,406		$	(65,188	)	$	33,349			1.4	%		-9.0	%		4.5	%		-114.4	%		-295.5	%


Billable headcount at end of period		4,596			4,516			4,986

Year Ended January 3, 2010, Compared to Year Ended December 28, 2008

We recorded operating income of $14.3 million and net income of $9.4 million in 2009 compared to an operating loss of $55.3 million and a net loss of $65.2 million in 2008. In 2008, we recorded a goodwill impairment charge of $86.8 million, or $86.0 million net of related tax effects. The decrease in operating income in 2009, excluding the goodwill impairment, was due primarily to lower revenue experienced during the recession and the higher selling, general and administrative expenses as a percent of revenue resulting from our decision to maintain infrastructure.

Revenues. Revenues for 2009 and 2008 were $649.3 million and $727.1 million, respectively, representing a decrease of 10.7%. We continued to see bill rate pressures from our clients, particularly among Fortune 500 clients early in 2009, but these pressures leveled off in the second half of the year.

In 2009, our revenue decline was driven primarily by our clients in the financial services and pharmaceutical sectors, offset somewhat by growth in the healthcare and information technology sectors. Revenues from the financial services and pharmaceutical sectors decreased by 17.4% and 18.9%, respectively, in 2009 from 2008. These decreases were partially offset by revenue increases of 29.1% and 11.3% from the healthcare and information technology sectors, respectively, over the same period. Vendor management related fee revenue decreased 9.4% to $21.5 million in 2009 from $23.7 million in 2008 due to declining fee rates at several clients, a change in the mix of our clients, and clients’ reduced spend. Reimbursable expense revenue decreased to $12.1 million in 2009 from $17.1 million in 2008, primarily in relation to reduced revenue. This decrease had no impact on gross margin dollars as the related reimbursable expense was recognized in the same period.


							Percent of Revenues from Services						Percent Change
	January 3,			December 28,			January 3,			December 28,			2009 vs.
	2010			2008			2010			2008			2008
Staffing revenue	$	616,259		$	686,530			94.9	%		94.4	%		-10.2	%
Vendor management fees		21,489			23,723			3.3	%		3.3	%		-9.4	%
Reimbursable expense revenue		12,136			17,133			1.9	%		2.4	%		-29.2	%
Pass-through fees		7,345			5,493			1.1	%		0.8	%		33.7	%
Permanent placement fees		2,641			6,087			0.4	%		0.8	%		-56.6	%
Other non-staffing revenue		1,183			1,176			0.2	%		0.2	%		0.6	%

Gross revenue		661,053			740,142			101.8	%		101.8	%		-10.7	%
Less: Discounts and rebates		(11,746	)		(13,034	)		-1.8	%		-1.8	%		-9.9	%

Revenues from services	$	649,307		$	727,108			100.0	%		100.0	%		-10.7	%

Cost of Services. Cost of services for 2009 and 2008 were $490.9 million and $550.2 million, respectively, representing a decrease of 10.8%, which is consistent with the change in revenue over the same period. Cost of services as a percentage of revenue decreased to 75.6% in 2009 from 75.7% in 2008. We were able to hold this percentage flat by managing pay rates.


					Percent of Revenues from Services						Percent Change
	January 3,		December 28,		January 3,			December 28,			2009 vs.
	2010		2008		2010			2008			2008
Labor costs	$	235,523	$	255,971		36.3	%		35.2	%		-8.0	%
Subcontractor costs		210,013		247,799		32.3	%		34.1	%		-15.2	%
Payroll burden costs		26,313		23,398		4.1	%		3.2	%		12.5	%
Reimbursable expenses		12,113		17,333		1.9	%		2.4	%		-30.1	%
Other costs of services		6,902		5,688		1.1	%		0.8	%		21.3	%

Cost of services	$	490,864	$	550,189		75.6	%		75.7	%		-10.8	%

Selling, General and Administrative. Selling, general and administrative expenses in 2009 and 2008 were $132.1 million and $136.6 million, respectively, representing a decrease of 3.3%. The decrease was primarily due to savings from the cost optimization of our restructuring and other efficiency initiatives, partially offset by spending on strategic initiatives. Included in these amounts are $3.5 million and $4.4 million of stock-based compensation in 2009 and 2008, respectively. As a percentage of revenue, selling, general and administrative expenses increased to 20.4% in 2009 from 18.8% in 2008 primarily due to lower revenue in 2009.


					Percent of Revenues from Services						Percent Change
	January 3,		December 28,		January 3,			December 28,			2009 vs.
	2010		2008		2010			2008			2008
Compensation	$	83,143	$	83,606		12.8	%		11.5	%		-0.6	%
Stock-based compensation		3,514		4,438		0.5	%		0.6	%		-20.8	%
Payroll burden costs		13,788		15,057		2.1	%		2.1	%		-8.4	%
Premises expense		8,752		9,283		1.3	%		1.3	%		-5.7	%
Other selling, general and administrative		22,942		24,264		3.5	%		3.3	%		-5.4	%

Selling, general and administrative	$	132,139	$	136,648		20.4	%		18.8	%		-3.3	%

Restructuring Costs. Restructuring costs for 2009 were $3.9 million, or 0.6% of revenue compared to $0.6 million in 2008. These employee termination benefits and lease abandonment costs for both years related primarily to the relocation of certain administrative functions into our Phoenix customer service center facility. During 2009, we entered into a sublease for one of the closing facilities, and thus reversed $1.0 million previously accrued expense, which was partially offset by $0.5 million estimated and actual leasehold improvements which were expensed in 2009.

Interest Expense, Net. Interest expense, net was $4.2 million and $5.5 million in 2009 and 2008, respectively, a decrease of 23.3%. The decrease was due to our overall debt reduction.

Provision for Income Taxes. Our 2009 income tax expense was lower than the statutory rates given that income tax expense was in large part offset by a decrease in our valuation allowance. The total provision for federal, state and foreign income taxes was $0.9 million for 2009. Additionally, in accordance with the adoption of provisions of ASC Topic 805, Business Combinations, (formerly FAS 141R-1) on January 1, 2009, we were required to change the way in which we historically accounted for change in reserves related to tax assets acquired in purchase accounting, which resulted in a decrease in tax expense in 2009.

Our future effective tax rates could be adversely affected by changes in the valuation of our deferred tax assets or liabilities or changes in tax laws or interpretations thereof. We continue to evaluate quarterly our estimates of the recoverability of our deferred tax assets based on our assessment of whether it is more likely than not any portion of these fully reserved are recoverable through future taxable income. At such time that we no longer have a reserve for our deferred tax assets, we will begin to provide for taxes at the full statutory rate. In addition, we are subject to the examination of our income tax returns by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.

As of January 3, 2010, we had federal and state net operating loss carryforwards of approximately $96.7 million and $96.5 million, respectively, an alternative minimum tax credit carryforward of $0.6 million, and had recorded a reserve against the assets for net operating loss carryforwards due to the uncertainty related to the realization of these amounts.

Year Ended December 28, 2008, Compared to Year Ended December 30, 2007

We recorded an operating loss of $55.3 million and a net loss of $65.2 million in 2008. In 2008, we recorded a goodwill impairment charge of $86.8 million, or $86.0 million net of related tax effects. The decrease in operating income, excluding the goodwill impairment, was due primarily to a decrease in revenues as a result of lower billable headcount, slightly lower margins and an increase in selling, general and administrative.

Revenues. Revenues for 2008 and 2007 were $727.1 million and $743.3 million, respectively, representing a decrease of 2.2%. We continued to see bill rate pressures from our customers, particularly among Fortune 500 clients. Our revenue growth was driven primarily by our clients in the pharmaceutical and biotechnology and government sectors in 2008. Revenues from the pharmaceutical and biotechnology and government sectors increased by 17.4% and 34.7%, respectively, in 2008 from 2007. These increases were partially offset by revenue decreases of 21.1% and 21.9% from the telecommunications and financial services sectors, respectively, over the same period. Vendor management related fee revenue decreased 16.3% to $23.7 million in 2008 from $28.3 million in 2007 due to declining fee rates at several customers and a change in the mix of our customers. Reimbursable expense revenue increased to $17.1 million in 2008 from $11.1 million in 2007, primarily due to an increase in our services procurement management service offerings. This increase had no impact on gross margin dollars as the related reimbursable expense was recognized in the same period.

Cost of Services. Cost of services for 2008 and 2007 were $550.2 million and $558.1 million, respectively, representing a decrease of 1.4%. Cost of services as a percentage of revenue increased to 75.7% in 2008 from 75.1% in 2007. The increase in cost of services as a percentage of revenue was primarily due to lower revenues being spread over the fixed costs related to consultant labor such as state unemployment taxes and health care expenses.

Selling, General and Administrative. Selling, general and administrative expenses in 2008 and 2007 were $136.6 million and $135.4 million, respectively, representing an increase of 0.9%. The increase was due primarily to the additional selling, general and administrative expenses at the businesses acquired in December 2007 and June 2008, including a non-cash charge of approximately $3.4 million in 2008 for additional employee compensation relating to the Praeos purchase in December 2007. Additionally, the 2007 amount included $1.0 million in bad debt expense related to the bankruptcy of VMS provider Chimes. Included in these amounts are $4.4 million and $4.5 million of stock-based compensation in 2008 and 2007, respectively. Excluding the 2008 Praeos compensation charge and the 2007 Chimes bad debt charge, selling, general and administrative expenses decreased by 0.8% in 2008 from 2007. As a percentage of revenue, selling, general and administrative expenses increased to 18.8% in 2008 from 18.2% in 2007 primarily due to lower revenue in 2008.

Restructuring Costs. Restructuring costs for 2008 were $0.6 million, or 0.1% of revenue. These costs related primarily to the relocation of certain administrative functions from the Washington DC area and Portland, Oregon into our new Phoenix customer service center facility, employee termination benefits and lease termination costs.

Depreciation and Amortization. Depreciation and amortization expense consists primarily of depreciation of our fixed assets and amortization of our customer list intangible assets. For 2008 and 2007, depreciation and amortization expense was $8.1 million and $6.4 million, respectively, representing an increase of 26.3% between periods. The increase in depreciation and amortization expense was primarily due to the depreciation of our enterprise software system and the amortization of the Plum Rhino, TWC and ASET customer list intangibles and the TWC assembled methodology intangible.

Goodwill Impairment. We recorded a non-cash, pre-tax goodwill impairment charge in 2008 of $86.8 million. The impairment was the result of the decline in our stock price during the fourth quarter of 2008 due to market conditions. Neither the 2008 operating trends nor our financial results for the fourth quarter of 2008 were factors that led to the charge.

Interest Expense, Net. Interest expense, net was $5.5 million and $8.3 million in 2008 and 2007, respectively, a decrease of 33.9%. The decrease was due to our overall debt reduction as well as a reduction in our related interest rates.

Provision for Income Taxes. Our 2008 income tax expense was lower than the statutory rates given that income tax expense was in large part offset by an increase in our valuation allowance. The income tax expense of $4.7 million for 2008 contains the following amounts: current expenses in the amount of $0.3 million for federal alternative minimum tax; $1.1 million for the Texas Margin tax, Michigan Gross Receipts tax, California Corporate Income and other miscellaneous state and foreign income tax expenses and a deferred expense in the amount of $3.3 million resulting from the release of a portion of the valuation allowance on Venturi’s acquired net deferred assets from the Comsys/Venturi merger. Although our net deferred tax asset is substantially offset with a valuation allowance, a portion of our fully-reserved deferred tax assets that became realized through operating profits is recognized as a reduction to goodwill to the extent it relates to benefits acquired in the Comsys/Venturi merger. This results in deferred tax expense as the assets are utilized. This portion of deferred tax expense represents the consumption of pre-merger deferred tax assets that were acquired with zero basis. In accordance with the provisions of ASC Topic 740 “Income Taxes,” we calculated a goodwill bifurcation ratio in the year of the Comsys/Venturi merger to determine the amount of deferred tax expense that should be offset to goodwill prospectively.

As of December 28, 2008, we had federal and state net operating loss carryforwards of approximately $100 million and $97 million, respectively, an alternative minimum tax credit carryforward of $0.5 million, and had recorded a reserve against the assets for net operating loss carryforwards due to the uncertainty related to the realization of these amounts.

Liquidity and Capital Resources

Overview

In March 2009, we extended the maturity of our senior credit agreement from March 2010 until March 31, 2012, as discussed below under “Credit Agreement.” Management felt it was important to extend the senior credit agreement prior to its expiration in March 2010 in order to give us the financial flexibility to make appropriate investments in our business and maintain our infrastructure through the duration of the recession.

We typically finance our operations through cash flow from operations and borrowings under our credit facilities. Due to the requirements of our senior credit agreement, as discussed in more detail below under the “Cash Flows” section, we do not maintain a significant cash balance in our primary domestic cash accounts. Excess borrowing availability under our existing revolving credit facility at January 3, 2010, was $71.0 million. Our borrowing availability is impacted by the timing of cash receipts and disbursements. Timing of receipts and disbursements in our vendor management business can have a material impact on the debt levels we report at any date; therefore, in 2008 we began reporting average daily debt for each quarter, as discussed below in “Credit Agreement.”

Should the Company not complete the Merger with Manpower (as discussed above in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Pending Exchange Offer and Merger with Manpower Inc.) we believe our cash flow provided by operating activities coupled with availability under our revolving credit facility will be sufficient to fund our working capital, debt service and purchases of fixed assets through fiscal 2010. In the event that we make future acquisitions, we may need to seek additional capital from our lenders or the capital markets; there can be no assurance that additional capital will be available when we need it, or, if available, that it will be available on favorable terms.

The performance of our business is dependent on many factors and subject to risks and uncertainties. See “Risk Factors” in Part I, Item 1A of this report.

Working Capital

Accounts receivable are a significant component of our working capital. We monitor our accounts receivable through a variety of metrics, including days sales outstanding (“DSO”). We calculate our consolidated DSO by determining average daily revenue based on an annualized three-month analysis and dividing it into the gross accounts receivable balance as of the end of the period. Accounts receivable, net, were $197.5 million and $202.3 million as of January 3, 2010, and December 28, 2008, respectively. Our consolidated DSO was 42 and 43 days as of January 3, 2010 and December 28, 2008, respectively. As a result of the timing of vendor management receipts and the seasonality in our operations, our consolidated DSO may materially fluctuate.

Additionally, we separately calculate a DSO for vendor management services (“VMS DSO”) by determining average daily vendor management service gross revenue based on an annualized three-month analysis and dividing it into the gross vendor management accounts receivable balance as of the end of the period. Vendor management accounts receivable were $92.3 million and $96.7 million as of January 3, 2010, and December 28, 2008, respectively. As of January 3, 2010, our VMS DSO was 34 days as compared to 35 days as of December 28, 2008.

Our total accounts payable were $137.4 million and $156.5 million as of January 3, 2010, and December 28, 2008, respectively. Included in the accounts payable balance, our vendor management services accounts payable and other liabilities were $90.8 million and $104.1 million as of January 3, 2010, and December 28, 2008, respectively.

Credit Agreement

In March 2009, we entered into a Ninth Amendment to our senior credit agreement (the “Amendment”). Among other things, the Amendment provided for (i) a decrease in our borrowing capacity under our existing revolving credit facility from $160.0 million to $110.0 million, (ii) an extension of the maturity date for the facility of an additional two years to March 31, 2012, and (iii) increases in the applicable interest rates under the facility to LIBOR plus a margin of 3.75% or, at our option, the prime rate plus a margin of 2.75%. The Amendment also permits us to make up to $10.0 million in stock repurchases and/or dividend payments in the aggregate subject to the terms and conditions specified.

We pay a quarterly commitment fee of 0.75% per annum on the unused portion of the revolver. We and certain of our subsidiaries guarantee the loans and other obligations under the senior credit agreement. The obligations under the senior credit agreement are secured by a perfected first priority security interest in substantially all of the assets of us and our U.S. subsidiaries, as well as the shares of capital stock of our direct and indirect U.S. subsidiaries and certain of the capital stock of our foreign subsidiaries. Pursuant to the terms of the senior credit agreement, we maintain a zero balance in our primary domestic cash accounts. Any excess cash in those domestic accounts is swept on a daily basis and applied to repay borrowings under the revolver, and any cash needs are satisfied through borrowings under the revolver.

Borrowings under the revolver are limited to 85% of eligible accounts receivable, as defined in the senior credit agreement, as amended, reduced by the amount of outstanding letters of credit and designated reserves. At January 3, 2010, these designated reserves were:

•

a $5.0 million minimum availability reserve, and

•

a $0.9 million reserve for outstanding letters of credit.

At January 3, 2010, we had outstanding borrowings of $38.1 million under the revolver at interest rates ranging from 3.99% to 6.00% per annum (weighted average rate of 4.00%) and excess borrowing availability under the revolver of $71.0 million for general corporate purposes. Fees paid on outstanding letters of credit are equal to the LIBOR margin then applicable to the revolver, which at January 3, 2010, was 3.75%. At January 3, 2010, outstanding letters of credit totaled $0.9 million. Our average daily net debt balances during 2009 were as follows, in thousands:


	2009
First quarter	$	57,871
Second quarter		59,777
Third quarter		55,793
Fourth quarter		51,840

Debt Compliance

Our credit facilities contain a number of covenants that, among other things, restrict our ability to:

•

incur additional indebtedness;

•

pay more than $10 million in the aggregate for stock repurchases and dividends;

•

incur liens;

•

make certain capital expenditures;

•

make certain investments or acquisitions;

•

repay debt; and

•

dispose of property.

The senior credit agreement contains various events of default, including failure to pay principal and interest when due, breach of covenants, materially incorrect representations, default under other agreements, bankruptcy or insolvency, the occurrence of specified ERISA events, entry of enforceable judgments against us in excess of $2.0 million not stayed and the occurrence of a change of control. In the event of a default, all commitments under the revolver may be terminated and all of our obligations under the senior credit agreement could be accelerated by the lenders, causing all loans and borrowings outstanding (including accrued interest and fees payable thereunder) to be declared immediately due and payable. In the case of bankruptcy or insolvency, acceleration of our obligations under our senior credit agreement is automatic.

Cash Flows

The following table summarizes our cash flow activity for 2009, 2008 and 2007, in thousands:


	Year ended
	January 3,			December 28,			December 30,
	2010			2008			2007
Net cash provided by operating activities	$	17,032		$	37,351		$	58,810
Net cash used in investing activities		(5,189	)		(13,675	)		(34,022	)
Net cash used in financing activities		(33,916	)		(2,128	)		(24,881	)
Effect of exchange rates on cash		67			(447	)		82

Net increase (decrease) in cash and cash equivalents	$	(22,006	)	$	21,101		$	(11	)

Cash provided by operating activities was $17.0 million, $37.4 million and $58.8 million in 2009, 2008 and 2007, respectively. The decrease in 2009 was primarily a result of lower net income due to the impact of the recession on our revenue and our decision to maintain infrastructure, as discussed above in the Overview of 2009 Results. The decrease in 2008 was primarily due to a decrease in net income and a use of cash from working capital. In addition to cash provided by earnings, cash flows from operating activities are affected by the timing of cash receipts and disbursements, including the timing of cash receipts and disbursements of our vendor management services, and the working capital requirements of the business.

Cash used in investing activities was $5.2 million, $13.7 million and $34.0 million in 2009, 2008 and 2007, respectively. Our cash flows associated with investing activities in 2009, 2008 and 2007 included capital expenditures of $1.5 million, $5.8 million and $3.1 million, respectively, and cash paid for acquisitions of $3.7 million, $7.9 million and $30.9 million, respectively. The increase in 2008 capital expenditures over 2007 was related primarily to the upgrade of our enterprise software system, leasehold improvements related to our new customer service center and the purchase of computer hardware, while in 2009, the capital expenditures were lower due to the completion of these projects as well as a planned reduction in capital projects.

Cash used in financing activities was $33.9 million, $2.1 million and $24.9 million in 2009, 2008 and 2007, respectively. Cash flows associated with financing activities in 2009, 2008 and 2007 primarily represent borrowings and payments on our revolving credit facility, plus $2.3 million used in 2009 for financing costs related to the Amendment to our senior credit agreement.

Pursuant to the terms of the senior credit agreement, we maintain a zero balance in our primary domestic cash accounts. Any excess cash in our accounts is swept on a daily basis and applied to repay borrowings under the revolver, and any cash needs are satisfied through borrowings under the revolver. Cash and cash equivalents recorded on our Consolidated Balance Sheet at January 3, 2010, and December 28, 2008, in the amount of $0.7 million and $22.7 million, respectively, represented cash balances at our Toronto and United Kingdom subsidiaries and at December 28, 2008, included $20.0 million we had invested in a US Treasury money market fund which was used to repay a portion of our senior credit agreement during the first quarter of 2009.

Seasonality

Off-Balance Sheet Risk Disclosure

At January 3, 2010, and December 28, 2008, we did not have any transactions, agreements or other contractual arrangements constituting an “off-balance sheet arrangement” as defined in Item 303(a)(4) of Regulation S-K.

Contractual and Commercial Commitments

The following table summarizes our contractual obligations and commercial commitments at January 3, 2010, in thousands:


			Payments Due by Period
			Less than						More than
Contractual Obligations	Total		One Year		1-3 Years		3-5 Years		5 Years
Long-term debt (1)	$	38,101	$	—	$	38,101	$	—	$	—
Notes payable (2)		1,000		1,000		—		—		—
Operating leases (5)		25,314		6,647		8,779		5,300		4,588
Purchase obligations (3)		1,783		1,601		182		—		—
Deferred compensation		1,088		150		300		300		338

Total contractual cash obligations	$	67,286	$	9,398	$	47,362	$	5,600	$	4,926


			Commitment Expiration per Period
			Less than						More than
Other Commercial Commitments	Total		One Year		1-3 Years		3-5 Years		5 Years
Letters of Credit (4)	$	871	$	871	$	—	$	—	$	—


(1)		Long-term debt obligations included in the above table consist solely of principal repayments related to our senior credit agreement. We are also obligated to make interest payments at the applicable interest rates as discussed in Note 4 in the Notes to Consolidated Financial Statements included elsewhere in this report.

(2)		Notes payable included in the above table consist solely of principal repayments related to our acquisition of ASET. We are also obligated to make interest payments at the applicable interest rates on these notes.

(3)		Purchase obligations included in the above table consist of purchase commitments primarily related to telecom service agreements and online advertising.

(4)		Letters of credit secure certain office leases and insurance programs.

(5)		Amounts are presented net of sub-lease income.

Critical Accounting Policies and Estimates

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

We believe the following accounting policies are critical to our business operations and the understanding of our operations and include the more significant judgments and estimates used in the preparation of our consolidated financial statements. The consolidated financial statements include the accounts of COMSYS IT Partners, Inc. and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

Revenue Recognition

We recognize revenue and record sales, net of related discounts, when all of the following criteria are met:

•

Persuasive evidence of an arrangement exists;

•

Ownership has transferred to the customer;

•

The price to the customer is fixed or determinable; and

•

Collectibility is reasonably assured.

Our core staffing revenues vary from period to period based on several factors that include: 1) the billable headcount during the period; 2) the number of billing days during the period; and 3) the average bill rate during the period.

Revenues from services are shown net of rebates and discounts relating primarily to volume-related discount structures and prompt-payment discounts under contracts with our clients.

We report revenues from vendor management services net of the related pass-through labor costs. “Vendor management services” are services that allow our clients to automate and consolidated management of their temporary personnel contracting processes. We also report revenues net for payrolling activity. “Payrolling” is defined as a situation in which we accept a client-identified consultant for payroll processing in exchange for a fee. Permanent placement fee revenues are usually determined based on a percentage of the employee’s first year cash compensation and are recorded when candidates begin their employment.

Reimbursable expenses are expenses we pay to our consultants that are reimbursed by our clients. We record reimbursable expenses in revenue with the associated cost recorded in cost of services.

Goodwill and Other Intangible Assets

Goodwill. Goodwill and other intangible assets with indefinite lives are tested annually for impairment, unless an event occurs or circumstances change during the year that reduce or may reduce the fair value of the reporting unit below its book value, in which event an impairment charge may be required during the year. We have selected the last day of the second-to-last month of our fiscal year as the date on which we will perform our annual goodwill impairment test. We performed our annual impairment test as of November 29, 2009 and determined that the fair value of the reporting unit exceeded the carrying value and we did not have an impairment.

At January 3, 2010, and December 28, 2008, total goodwill was $89.3 million and $89.1 million, respectively.

The annual test requires estimates and judgments by management to determine a valuation for the reporting unit. Although we believe our assumptions and estimates are reasonable and appropriate, different assumptions and estimates could materially affect our reported financial results. If the merger with Manpower does not commence we could come to a different fair value that could result in additional future impairment charges, which would be recognized as a non-cash charge to operating income and a reduction in asset values and shareholders’ equity on the balance sheet.

Other intangible assets. Our intangible assets other than goodwill primarily represent acquired customer lists and are amortized over the respective contract terms or estimated life of the customer list, ranging from one to eight years. At January 3, 2010, and December 28, 2008, net intangible assets were $8.9 million and $12.0 million, respectively. In the event that facts and circumstances indicate intangibles or other long-lived assets may be impaired, we evaluate the recoverability and estimated useful lives of such assets. This process requires the use of estimates and assumptions, which are subject to a high degree of judgment. If these assumptions change in the future, we may be required to record impairment charges in the future. We performed an impairment test as of November 29, 2009, and concluded that no impairment charge was required. We believe that all of our long-lived assets are fully realizable as of January 3, 2010.

Collectibility of Accounts Receivable

Accounts receivable are reduced by an allowance for amounts that may become uncollectible in the future. Estimates are used in determining our allowance for doubtful accounts and are based on our historical level of write-offs and judgments management makes about the creditworthiness of significant customers based on ongoing credit evaluations. Further, we monitor current economic trends that might impact the level of credit losses in the future. Since we cannot predict with certainty future changes in the financial stability of our customers, actual future losses from uncollectible accounts may differ from our estimates. Additional allowances may be required if the economy or the financial condition of our customers deteriorates. If we determined that a smaller or larger allowance was appropriate, we would record a credit or a charge to selling, general and administrative expense in the period in which we made such a determination. As of January 3, 2010, and December 28, 2008, the allowance for uncollectible accounts receivable was $3.3 million and $3.2 million, respectively.

Stock-Based Compensation

We record share-based payment awards exchanged for employee services at fair value on the date of grant and expense the awards in the consolidated statements of operations over the requisite employee service period. Stock-based compensation expense includes an estimate for forfeitures and is generally recognized over the expected term of the award on a straight-line basis. At January 3, 2010, we had two types of stock-based employee compensation: stock options and restricted stock, though we have only awarded restricted stock since January 2006.

Restricted stock. We measure the fair value of restricted shares based upon the closing market price of our common stock on the date of grant. These grants typically vest over a three-year period and any unvested awards expire at the end of the vesting period. Restricted stock awards that vest in accordance with service conditions are amortized over their applicable vesting period using the straight-line method adjusted for estimated forfeitures. For nonvested share awards partially or wholly subject to performance conditions, we are required to assess the probability that such performance conditions will be met. If the likelihood of the performance condition being met is deemed probable, we will recognize the expense using the straight-line attribution method. If such performance conditions are not met, no performance-based compensation expense will be recognized and any previously recognized compensation expense will be reversed. We have not historically issued any restricted stock awards subject to market conditions.

Stock options. The fair value of our stock option awards or modifications of these awards is estimated at the date of grant or modification using the Black-Scholes option pricing model. The Black-Scholes valuation requires us to estimate key assumptions such as future stock price volatility, expected terms, risk-free rates and dividend yield. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates. Our estimates may be impacted by certain variables including, but not limited to, stock price volatility, employee stock option exercise behaviors, additional stock option grants, estimates of forfeitures, the company’s performance, and related tax impacts.

We had approximately $4.0 million of total unrecognized compensation costs related to nonvested option and restricted stock awards at January 3, 2010, that are expected to be recognized over a weighted-average period of 23 months.

Income Tax Assets and Liabilities

We follow the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are determined based on differences between the financial statement and income tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

Beginning in 2009, we changed our accounting for the remaining reserved deferred tax assets that previously would have been treated as reductions to goodwill. This resulted in a decline in our reported income tax expense (see “Recent Accounting Pronouncements” below).

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

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

Our future effective tax rates could be adversely affected by changes in the valuation of our deferred tax assets or liabilities or changes in tax laws or interpretations thereof. If we continue to be profitable, we will continue to evaluate each quarter our estimates of the recoverability of our deferred tax assets based on our assessment of whether any portion of these fully reserved assets become more likely than not recoverable through future taxable income. At such time, if any, that we no longer have a reserve for our deferred tax assets, we will begin to provide for taxes at the full statutory rate. In addition, we are subject to the examination of our income tax returns by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.

Recent Accounting Pronouncements

Recent Accounting Pronouncements are included in “Item 7. Financial Statements and Supplementary Data” Note 2 to the consolidated financial statements, “Significant Accounting Policies.”


ITEM 7A.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following assessment of our market risks does not include uncertainties that are either nonfinancial or nonquantifiable, such as political, economic, tax and credit risks.

We are exposed to market risks, primarily related to interest rate, foreign currency and equity price fluctuations. Our use of derivative instruments has historically been insignificant.

Interest Rate Risks

Outstanding debt under our senior credit agreement at January 3, 2010, was approximately $38.1 million. Interest on borrowings under the agreement is based on the prime rate or LIBOR plus a variable margin. Based on the outstanding balance at January 3, 2010, a change of 1% in the interest rate would cause a change in interest expense of approximately $0.4 million on an annual basis.

Foreign Currency Risks

Our primary exposures to foreign currency fluctuations are associated with transactions and related assets and liabilities related to our operations in Canada and the United Kingdom. Changes in foreign currency exchange rates impact translations of foreign denominated assets and liabilities into U.S. dollars and future earnings and cash flows from transactions denominated in different currencies. Revenues and expenses denominated in foreign currencies are translated into U.S. dollars at the monthly average exchange rates prevailing during the period. The assets and liabilities on our non-U.S. subsidiaries are translated into U.S. dollars at the exchange rate in effect at the end of a reporting period. The resulting translation adjustments are recorded in Stockholders’ Equity, as a component of accumulated other comprehensive income (loss), in our Consolidated Balance Sheets. These operations are not material to our overall business.

Equity Market Risks

The trading price of our common stock has been and is likely to continue to be highly volatile and could be subject to wide fluctuations. Such fluctuations could impact our decision or ability to utilize the equity markets as a potential source of our funding needs in the future.


ITEM 8.		FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


	Page
Report of Independent Registered Public Accounting Firm		38

Consolidated Balance Sheets		39

Consolidated Statements of Operations		40

Consolidated Statements of Comprehensive Income (Loss)		41

Consolidated Statements of Stockholders’ Equity		42

Consolidated Statements of Cash Flows		43

Notes to Consolidated Financial Statements		44

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
COMSYS IT Partners, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of COMSYS IT Partners, Inc. and Subsidiaries (the “Company”) as of January 3, 2010, and December 28, 2008, and the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended January 3, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of COMSYS IT Partners, Inc. and Subsidiaries at January 3, 2010, and December 28, 2008, and the consolidated results of their operations and their cash flows for each of the three years in the period ended January 3, 2010, in conformity with U.S. generally accepted accounting principles.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), COMSYS IT Partners, Inc.’s internal control over financial reporting as of January 3, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2010, expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

Phoenix, Arizona
March 1, 2010

COMSYS IT Partners, Inc. and Subsidiaries

Consolidated Balance Sheets


	January 3,			December 28,
(In thousands, except share and par value amounts)	2010			2008
Assets
Current assets:
Cash and cash equivalents	$	689		$	22,695
Accounts receivable, net of allowance of $3,321 and $3,232, respectively		197,537			202,297
Prepaid expenses and other		2,716			3,116
Restricted cash		2,486			2,489

Total current assets		203,428			230,597

Fixed assets, net		12,966			16,596
Goodwill		89,256			89,064
Other intangible assets, net		8,926			11,962
Deferred financing costs, net		2,463			1,175
Restricted cash		308			308
Other assets		1,103			1,478

Total assets	$	318,450		$	351,180


Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	137,357		$	156,528
Payroll and related taxes		32,679			25,975
Interest payable		237			337
Other current liabilities		9,002			9,728

Total current liabilities		179,275			192,568

Long-term debt		38,101			69,692
Other liabilities		4,705			5,435

Total liabilities		222,081			267,695


Commitments and contingencies

Stockholders’ equity:
Preferred stock, no par value; 5,000,000 shares authorized; none issued		—			—
Common stock, par value $.01; 95,000,000 shares authorized; 21,061,592 and 20,465,028 shares issued and outstanding in 2009 and 2008, respectively		210			203
Common stock warrants		1,734			1,734
Accumulated other comprehensive loss		(79	)		(90	)
Additional paid-in capital		230,820			227,360
Accumulated deficit		(136,316	)		(145,722	)

Total stockholders’ equity		96,369			83,485

Total liabilities and stockholders’ equity	$	318,450		$	351,180

See notes to consolidated financial statements

COMSYS IT Partners, Inc. and Subsidiaries

Consolidated Statements of Operations


	Year ended
	January 3,			December 28,			December 30,
(In thousands, except per share amounts)	2010			2008			2007
Revenues from services	$	649,307		$	727,108		$	743,265
Cost of services		490,864			550,189			558,074

Gross profit		158,443			176,919			185,191

Operating costs and expenses:
Selling, general and administrative		132,139			136,648			135,423
Restructuring costs		3,895			637			—
Depreciation and amortization		8,086			8,115			6,426
Goodwill impairment		—			86,800			—

		144,120			232,200			141,849

Operating income (loss)		14,323			(55,281	)		43,342
Interest expense, net		4,185			5,457			8,250
Other income, net		(149	)		(204	)		(536	)

Income (loss) before income taxes		10,287			(60,534	)		35,628
Income tax expense		881			4,654			2,279

Net income (loss)	$	9,406		$	(65,188	)	$	33,349


Basic net income (loss) per common share	$	0.45		$	(3.19	)	$	1.67
Diluted net income (loss) per common share	$	0.45		$	(3.19	)	$	1.66

Weighted average basic and diluted shares outstanding:
Basic		19,801			19,599			19,255
Diluted		19,801			19,599			20,100

See notes to consolidated financial statements

COMSYS IT Partners, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)


	Year Ended
	January 3,		December 28,			December 30,
(In thousands)	2010		2008			2007
Net income (loss)	$	9,406	$	(65,188	)	$	33,349
Foreign currency translation adjustments		11		(147	)		69

Total comprehensive income (loss)	$	9,417	$	(65,335	)	$	33,418

See notes to consolidated financial statements

COMSYS IT Partners, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity


					Accumulated
			Common		Other			Additional						Total
	Common		Stock		Comprehensive			Paid-in			Accumulated			Stockholders’
(In thousands, except share data)	Stock		Warrants		Income (Loss)			Capital			Deficit			Equity
Balance as of December 31, 2006	$	191	$	1,734	$	(12	)	$	206,740		$	(113,883	)	$	94,770
Net income		—		—		—			—			33,349			33,349
Foreign currency translations		—		—		69			—			—			69
Issuance of 501,413 shares of common stock for acquisitions		5		—		—			10,560			—			10,565
Issuance of 244,000 shares of restricted common stock		3		—		—			(3	)		—			—
Forfeiture of 28,807 vested shares of restricted common stock		—		—		—			(428	)		—			(428	)
Options exercised for 185,683 shares of common stock		2		—		—			1,777			—			1,779
Stock issuance costs		—		—		—			(19	)		—			(19	)
Stock-based compensation		—		—		—			4,547			—			4,547

Balance as of December 30, 2007	$	201	$	1,734	$	57		$	223,174		$	(80,534	)	$	144,632

Net loss		—		—		—			—			(65,188	)		(65,188	)
Foreign currency translations		—		—		(147	)		—			—			(147	)
Issuance of 342,878 shares of restricted common stock		2		—		—			(2	)		—			—
Forfeiture of 25,132 vested shares of restricted common stock		—		—		—			(332	)		—			(332	)
Options exercised for 8,200 shares of common stock		—		—		—			83			—			83
Stock-based compensation		—		—		—			4,437			—			4,437

Balance as of December 28, 2008	$	203	$	1,734	$	(90	)	$	227,360		$	(145,722	)	$	83,485

Net income		—		—		—			—			9,406			9,406
Foreign currency translations		—		—		11			—			—			11
Issuance of 709,000 shares of restricted common stock		7		—		—			(7	)		—			—
Forfeiture of 11,004 vested shares of restricted common stock		—		—		—			(47	)		—			(47	)
Stock-based compensation		—		—		—			3,514			—			3,514

Balance as of January 3, 2010	$	210	$	1,734	$	(79	)	$	230,820		$	(136,316	)	$	96,369

See notes to consolidated financial statements

COMSYS IT Partners, Inc. and Subsidiaries

Consolidated Statements of Cash Flows


	Year ended
	January 3,			December 28,			December 30,
(In thousands)	2010			2008			2007
Cash flows from operating activities
Net income (loss)	$	9,406		$	(65,188	)	$	33,349
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		8,086			8,115			6,426
Goodwill impairment		—			86,800			—
Restructuring costs		1,703			472			—
Provision for doubtful accounts		1,013			725			1,158
Stock-based compensation		3,514			4,437			4,547
Amortization of deferred financing costs		1,036			869			876
Other noncash expense, net		881			4,654			2,279
Loss on asset disposal		378			—			8
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable		3,835			(11,523	)		4,260
Prepaid expenses and other		412			556			395
Accounts payable		(16,635	)		7,084			13,742
Payroll and related taxes		6,654			(442	)		(4,062	)
Other liabilities and other assets		(3,251	)		792			(4,168	)

Net cash provided by operating activities		17,032			37,351			58,810

Cash flows from investing activities
Capital expenditures		(1,494	)		(5,791	)		(3,088	)
Cash paid for acquisitions, net of cash acquired		(3,695	)		(7,884	)		(30,934	)

Net cash used in investing activities		(5,189	)		(13,675	)		(34,022	)

Cash flows from financing activities
Borrowings (payments) under revolving credit facility, net		(31,591	)		2,789			(21,639	)
Repayments of long-term debt		—			(5,000	)		(5,000	)
Exercise of stock options and warrants		—			83			1,777
Stock issuance costs		—			—			(19	)
Cash paid for financing costs		(2,325	)		—			—

Net cash used in financing activities		(33,916	)		(2,128	)		(24,881	)

Effect of exchange rates on cash		67			(447	)		82

Net increase (decrease) in cash and cash equivalents		(22,006	)		21,101			(11	)
Cash and cash equivalents, beginning of period		22,695			1,594			1,605

Cash and cash equivalents, end of period	$	689		$	22,695		$	1,594


Supplemental disclosure of cash flow information
Interest paid	$	2,988		$	4,531		$	7,503
Income tax payments	$	1,607		$	728		$	757

Supplemental disclosure of non-cash investing activities
Stock issued for acquisitions	$	—		$	—		$	10,560

See notes to consolidated financial statements

COMSYS IT Partners, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

1. Description of Business

COMSYS IT Partners, Inc. and its wholly-owned subsidiaries (“COMSYS” or the “Company”) provide a full range of specialized IT staffing and project implementation services, including website development and integration, application programming and development, client/server development, systems software architecture and design, systems engineering and systems integration. The Company also provides services that complement its IT staffing services, such as vendor management, project solutions, process solutions and permanent placement of IT professionals. The Company’s TAPFIN Process Solutions division offers total human capital fulfillment and management solutions within three core service areas: vendor management services, services procurement management and recruitment process outsourcing.

The Company’s fiscal year ends on the Sunday closest to December 31st and its first three fiscal quarters are 13 calendar weeks each (and each also ends on a Sunday). References to 2009, 2008 and 2007 refer to the fiscal years ending January 3, 2010, December 28, 2008 and December 30, 2007, respectively. The year ended January 3, 2010 included 53 weeks, and the years ended December 28, 2008 and December 30, 2007, each included 52 weeks.

The Company’s consolidated financial information is reviewed by the chief decision makers, the business is managed under one operating strategy, and the Company operates under one reportable segment. The Company’s principal operations are located in the United States, and the results of operations and long-lived assets in geographic regions outside of the United States are not material. During the years 2009, 2008 and 2007, no individual customer accounted for more than 10% of the Company’s consolidated revenues.

Subsequent events have been evaluated through March 1, 2010, the date of the issuance of the financial statements. There were no recognized subsequent events requiring recognition in the financial statements. See below and in Note 11 to the Consolidated Financial Statements for the required disclosures of non-recognized subsequent events.

Pending Exchange Offer and Merger with Manpower Inc.

On February 1, 2010, the Company entered into an agreement and plan of merger (the “Merger Agreement”) with Manpower Inc. (“Manpower”) and a wholly-owned subsidiary of Manpower (“Merger Sub”). The Merger Agreement provides that, subject to the terms and conditions of the Merger Agreement, Merger Sub will commence an exchange offer to purchase all of the outstanding shares of COMSYS’ common stock (the “Offer”) and, following the completion of the Offer, merge with and into COMSYS, with COMSYS surviving as a direct or indirect wholly owned subsidiary of Manpower (the “Merger”). The Merger Agreement provides that the Offer will be commenced within five business days following the filing of this Annual Report on Form 10-K.

Accounting Standards Codification

During 2009, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update No. 2009-01, “Amendments based on Statement of Financial Accounting Standards No. 168 — The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles” (the “Codification”). The Codification became the single source of authoritative GAAP in the United States, other than rules and interpretive releases issued by the United States Securities and Exchange Commission (“SEC”). The Codification reorganized GAAP into a topical format that eliminates the previous GAAP hierarchy and instead established two levels of guidance - authoritative and nonauthoritative. All non-grandfathered, non-SEC accounting literature that was not included in the Codification became nonauthoritative. The adoption of the Codification did not change previous GAAP, but rather simplified user access to all authoritative literature related to a particular accounting topic in one place. Accordingly, the adoption had no impact on the Company’s consolidated financial position or results of operations. All references to previous GAAP in the Company’s consolidated financial statements were updated for the new references under the Codification.

2. Significant Accounting Policies

Principles of Consolidation

The accompanying financial statements present on a consolidated basis the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions have been eliminated.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with a remaining maturity of three months or less at the time of purchase to be cash equivalents. At December 28, 2008, the Company maintained, in a separate cash account, an additional $20 million it borrowed on its revolver in October 2008 to insure access to liquidity. The Company invested these additional funds in a US Treasury money market fund and considered this money market fund to be a cash equivalent; the funds were used during 2009 to pay down the balance on the revolver.

Fixed Assets

Fixed assets are recorded at cost less accumulated depreciation. Depreciation is provided on all furniture, equipment and related software using the straight-line method over the estimated useful lives of the related assets, which range from three to seven years. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated useful lives of the related assets. Maintenance and repairs are expensed as incurred.

The Company capitalizes certain internal and external costs related to the acquisition and development of internal use software during the application development stages of projects. Such costs consist primarily of custom-developed and packaged software and the direct labor costs of internally-developed software. Capitalized costs are amortized using the straight-line method over the estimated lives of the software, which range from three to five years. The costs capitalized in the application development stage include the costs of design, coding, installation of hardware and testing. The Company capitalizes costs incurred during the development phase of the project as permitted. Costs incurred during the preliminary project or the post-implementation/operation stages of the project are expensed as incurred.

Leases

The Company currently leases all of its administrative facilities under operating lease agreements. Most lease agreements contain tenant improvements allowances, rent holidays and/or rent escalation clauses. In instances where one or more of these items are included in a lease agreement, the Company records or adjusts deferred rent liability on the Consolidated Balance Sheets to reflect rent expense on a straight-line basis over the term of the lease. Rental deposits are provided for lease agreements that specify payments in advance or scheduled rent decreases over the lease term. Lease terms generally range from five to ten years with one to two renewal options for extended terms. Management expects that as these leases expire, they will be renewed or replaced by other leases in the normal course of business. For leases with renewal options, the Company records rent expense and amortizes the leasehold improvements on a straight-line basis over the initial non-cancelable lease term (in instances where the lease term is shorter than the economic life of the asset) as the Company does not believe that the renewal of the option is reasonably assured. The Company is also required to make additional payments under operating lease terms for taxes, insurance and other operating expenses incurred during the operating lease period.

Allowance for Doubtful Accounts

Accounts receivable are reduced by an allowance for amounts that may become uncollectible in the future. Estimates are used in determining the allowance for doubtful accounts and are based on the Company’s historical level of write-offs and judgments management makes about the creditworthiness of significant customers based on ongoing credit evaluations. Further, the Company monitors current economic trends that might impact the level of credit losses in the future. As of January 3, 2010, and December 28, 2008, the allowance for uncollectible accounts receivable was $3.3 million and $3.2 million, respectively.

Goodwill and Other Intangible Assets

Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired companies. Goodwill is not amortized but instead is tested for impairment annually or more frequently if events or changes in circumstances indicate the asset might be impaired.

The Company’s other intangible assets represent customer list intangibles. Other intangible assets are amortized over the respective contract terms or estimated life of the customer list, ranging from one to eight years. In the event that facts and circumstances indicate intangibles or other long-lived assets may be impaired, the Company evaluates the recoverability and estimated useful lives of such assets.

Long-Lived Assets

In the event that facts and circumstances indicate intangibles or other long-lived assets may be impaired, the Company evaluates the recoverability and estimated useful lives of such assets. The estimated future undiscounted cash flows associated with the assets are compared to the assets’ carrying amount to determine if a write-down to market is necessary. The Company believes all long-lived assets are fully realizable as of January 3, 2010.

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The company utilizes a fair value hierarchy, which maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The fair value hierarchy has three levels of inputs that may be used to measure fair value:

Level 1		Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2		Quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3		Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable.

The Company uses fair value measurements in areas that include, but are not limited to: the allocation of purchase price consideration to acquired tangible and identifiable intangible assets, impairment testing of goodwill and long-lived assets and stock-based compensation arrangements. The carrying values of cash, accounts receivable, restricted cash, accounts payable, and payroll and related taxes approximate their fair values due to the short-term maturity of these instruments. The carrying value of the Company’s revolving line of credit, senior term loan and interest payable approximates fair value due to the variable nature of the interest rates under the Company’s senior credit agreement. However, considerable judgment is required in interpreting data to develop the estimates of fair value.

Revenue Recognition

The Company recognizes revenue and records sales, net of related discounts, when all of the following criteria are met:

•

Persuasive evidence of an arrangement exists;

•

Ownership has transferred to the customer;

•

The price to the customer is fixed or determinable; and

•

Collectibility is reasonably assured.

The Company’s core staffing revenues vary from period to period based on several factors that include: 1) the billable headcount during the period; 2) the number of billing days during the period; and 3) the average bill rate during the period.

Revenues under time-and-materials contracts are recorded at the time services are performed. Hourly bill rates are typically determined based on the level of skill and experience of the consultants assigned and the supply and demand in the current market for those qualifications. Alternatively, the bill rates for some assignments are based on a mark-up over compensation and other direct and indirect costs. Service contract revenue is recorded as earned per the contract. Revenue from fixed price contracts, which accounts for a small percentage of our business, is recognized as we complete milestones in the contract.

Revenues from services are shown net of rebates and discounts primarily to volume-related discounts and prompt-payment discounts under contracts with the Company’s clients. Such rebates and discounts totaled $11.7 million (1.8% of gross revenues), $13.1 million (1.8% of gross revenues) and $12.0 million (1.5% of gross revenues) for 2009, 2008 and 2007, respectively.

Revenues from vendor management services are recorded net of the related pass-through labor costs. “Vendor management services” are services that allow the Company’s clients to automate and consolidate management of their temporary personnel contracting processes. Revenues are also reported net for payrolling activity. “Payrolling” is defined as a situation in which the Company accepts a client-identified consultant for payroll processing in exchange for a fee. Permanent placement fee revenues are usually determined based on a percentage of the employee’s first year cash compensation and are recorded when candidates begin their employment.

Reimbursable expenses are expenses the Company pays to its consultants that are reimbursed by the Company’s clients. The Company records reimbursable expenses in revenue with the associated cost recorded in cost of services.

Accrued Bonuses

The Company generally pays bonuses to certain executive management, field management and corporate employees based on, or after giving consideration to, a variety of financial performance measures or individual objectives. Executive management, field management, and certain corporate employees’ bonuses are accrued throughout the year for payment during the first quarter of the following year, based in part upon anticipated annual results compared to annual budgets or individual objective criteria.

Commissions

The Company’s associates make placements and earn commissions as a percentage of gross profit pursuant to the associate’s individual commission plan. The amount of commissions paid as a percentage of gross profit increases as volume increases. The Company accrues commissions for actual gross profit at a percentage equal to the percent of total expected commissions payable to total gross profit for the year.

Stock-Based Compensation

The Company recognizes stock-based compensation expense as a component of selling, general and administrative expense. At January 3, 2010, the Company had two types of stock-based employee compensation: stock options and restricted stock. The Company measures the fair value of restricted shares based upon the closing market price of the Company’s common stock on the date of grant. These grants either vest over a three-year period or are based on a combination of service and performance criteria. Restricted stock awards that vest in accordance with service conditions are amortized over their applicable vesting period using the straight-line method adjusted for estimated forfeitures. For nonvested share awards subject to service and performance conditions, the Company is required to assess the probability that such performance conditions will be met. If the likelihood of the performance condition being met is deemed probable, the Company will recognize the expense either using the straight-line attribution method or a method that reflects how the shares are “earned”. If such performance conditions are not met, no performance-based compensation expense will be recognized and any previously recognized compensation expense will be reversed. No excess tax benefit has been recognized related to the Company’s stock-based compensation since none were realized due to the Company’s loss carryforwards. The Company’s stock compensation plans are discussed more fully in Note 9.

Self-Insurance

The Company offers employee benefits, including workers compensation and health insurance, to eligible employees, for which it is self-insured for a portion of the cost. The Company retains liability up to $100,000 for each workers compensation claim and up to $275,000 annually for each health insurance participant for whom it is not insured (previously recorded at $250,000 annually for each health insurance participant for whom it is not insured through 2008). These self-insurance costs are accrued using estimates based on historical data to approximate the liability for reported claims and claims incurred but not reported.

Income Taxes

The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are determined based on differences between the financial statement and income tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Beginning in 2009, in connection with adoption of provisions of ASC Topic 805, Business Combinations, we changed our accounting for the remaining reserved deferred tax assets that previously would have been treated as reductions to goodwill. This resulted in a decline in our reported income tax expense (see “Recent Accounting Pronouncements” below).

The Company records an income tax valuation allowance when it is more likely than not that certain deferred tax assets will not be realized. The Company carried a valuation allowance against most of its deferred tax assets as of January 3, 2010. These deferred tax items represent expenses or operating losses recognized for financial reporting purposes, which will result in tax deductions over varying future periods. The judgments, assumptions and estimates that may affect the amount of the valuation allowance include estimates of future taxable income, timing or amount of future reversals of existing deferred tax liabilities and other tax planning strategies that may be available to the Company. If the Company continues to be profitable, the Company will continue to evaluate each quarter its estimates of the recoverability of its deferred tax assets based on its assessment of whether any portion of these fully reserved assets become more likely than not recoverable through future taxable income. At such time, if any, that the Company no longer has a reserve for its deferred tax assets, it will begin to provide for taxes at the full statutory rate.

Presentation of Governmental Taxes Other Than Income Taxes

The Company’s business activities are subject to various tax regulations in several taxing jurisdictions. Governmental taxes assessed on the Company’s activities, other than income taxes, are presented in the Consolidated Statements of Operations on a net basis. Upon conclusion of a taxable transaction, the amount of tax collected is accrued in a liability account in the Consolidated Balance Sheets and is subsequently remitted to the taxing jurisdiction.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Net income available to common shareholders is calculated using the two-class method, which is an earnings allocation method for computing earnings per share when an entity’s capital structure includes common stock and participating securities. The two-class method determines earnings per share based on dividends declared on common stock and participating securities (i.e., distributed earnings) and participation rights of participating securities in any undistributed earnings. The application of the two-class method is required since the Company’s unvested restricted stock and warrants contain participation features. See further discussion below. Diluted net income (loss) per share is computed on the basis of the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method.

Dilutive securities at January 3, 2010, include 248,654 warrants to purchase the Company’s common stock (Note 8). The warrant holders are entitled to participate in dividends declared on common stock as if the warrants were exercised for common stock. As a result, for purposes of calculating basic net income (loss) per common share, income (loss) attributable to warrant holders has been excluded from net income (loss).

Additionally, dilutive securities include 972,124 unvested restricted stock shares at January 3, 2010. The unvested restricted stock holders are entitled to participate in dividends declared on common stock as if the shares were fully vested. As a result, for purposes of calculating basic net income (loss) per common share, income (loss) attributable to unvested restricted stock holders has been excluded from net income (loss).

The computation of basic and diluted net income (loss) per share is as follows, in thousands, except per share amounts:


	Year ended
	January 3,		December 28,			December 30,
	2010		2008			2007
Net income (loss) attributable to common stockholders — basic	$	8,867	$	(62,468	)	$	32,161
Net income (loss) attributable to unvested restricted stock holders		429		(1,938	)		782
Net income (loss) attributable to warrant holders		110		(782	)		406

Total net income (loss)	$	9,406	$	(65,188	)	$	33,349


Weighted average common shares outstanding — basic		19,801		19,599			19,255
Add: dilutive restricted stock, stock options and warrants		—		—			845

Diluted weighted average common shares outstanding		19,801		19,599			20,100

Basic net income (loss) per common share	$	0.45	$	(3.19	)	$	1.67
Diluted net income (loss) per common share	$	0.45	$	(3.19	)	$	1.66

For 2009, 2008 and 2007 there were 1,273,020, 683,369 and 1,289 shares, respectively, attributable to outstanding stock options, warrants and restricted stock excluded from the calculation of diluted net income (loss) per share because their inclusion would have been antidilutive.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The more significant areas requiring the use of management estimates include estimates for uncollectible accounts, useful asset lives for depreciation and amortization, deferred taxes and valuation allowances and stock-based compensation. The Company believes that its estimation processes are adequate and its estimates in these areas have consistently been similar to actual results. However, estimates in these areas are highly subjective and future results could be materially different.

Recent Accounting Pronouncements

In June 2009, the FASB approved the FASB Accounting Standards Codification (“the Codification”) as the single source of authoritative nongovernmental GAAP. All existing accounting standard documents, such as the FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and other related literature, excluding guidance from the SEC, will be superseded by the Codification. All non-grandfathered, non-SEC accounting literature not included in the Codification will become non-authoritative. The Codification does not change GAAP, but instead introduces a new structure that will combine all authoritative standards into a comprehensive, topically organized online database. The Codification was effective for interim and annual periods ending after September 15, 2009. The Company adopted the Codification during the fourth quarter of fiscal 2009. The Codification impact is limited to financial statement disclosures, as all references to authoritative accounting literature are referenced in accordance with the Codification.

In May 2009, the FASB issued ASC 855, Subsequent Events (“ASC 855”). ASC 855 defines subsequent events as events or transactions that occur after the balance sheet date, but before the financial statements are issued. It defines two types of subsequent events: recognized subsequent events, which provide additional evidence about conditions that existed at the balance sheet date, and non-recognized subsequent events, which provide evidence about conditions that did not exist at the balance sheet date, but arose before the financial statements were issued. Recognized subsequent events are required to be recognized in the financial statements, and non-recognized subsequent events are required to be disclosed. The statement requires entities to disclose the date through which subsequent events have been evaluated, and the basis for that date. ASC 855 is consistent with the Company’s current practice and does not have any impact on the Company’s results of operations, financial condition or liquidity. See Note 1 and Note 11 for the required disclosure.

In October 2009 the FASB issued Accounting Standards Update No. 2009-13, “Multiple-Deliverable Revenue Arrangements” (“ASU No. 2009-13”). ASU No. 2009-13 provides principles for allocation of consideration among its multiple-elements, allowing more flexibility in identifying and accounting for separate deliverables under an arrangement. The statement also introduces an estimated selling price method for valuing the elements of a bundled arrangement if vendor-specific objective evidence or third-party evidence of selling price is not available, and significantly expands related disclosure requirements. ASU No. 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company adopted this accounting standard in first quarter of 2010 using the prospective method and the adoption did not have a material impact on the Company’s consolidated financial statements.

In April 2008, the FASB issued amendments to ASC 350, “Intangibles — Goodwill and Other.” These provisions amend the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset. The intent of the position is to improve the consistency between the determination of the useful life of a recognized intangible asset and the period of expected cash flows used to measure the fair value of the asset. The amended guidance is effective for fiscal years beginning after December 15, 2008. The Company adopted these provisions during the fiscal year ending January 3, 2010; there was no impact to the Company’s consolidated financial statements.

In December 2007, the FASB issued guidance included in ASC Topic 805, “Business Combinations” (formerly FASB Staff Position SFAS No. 141R-1), which amends and clarifies SFAS No. 141R, “Business Combinations”). The new provisions of ASC Topic 805 require the acquiring entity in a business combination to record all assets acquired and liabilities assumed at their respective acquisition-date fair values if fair value can be reasonably estimated, changes the recognition of assets acquired and liabilities assumed arising from contingencies, changes the recognition and measurement of contingent consideration, and requires the expensing of acquisition-related costs as incurred. If fair value cannot be reasonably estimated, the asset or liability would generally be recognized in accordance with ASC Topic 450, “Contingencies”. ASC Topic 805 also requires additional disclosure of information surrounding a business combination, such that users of the entity’s financial statements can fully understand the nature and financial impact of the business combination. The new provisions of ASC Topic 805 applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, which is the Company’s fiscal 2009; the Company adopted the new provisions of ASC Topic 805 in fiscal 2009. For business combinations completed on or subsequent to the adoption date, the application of the new provisions of this topic could have a significant impact on the Company’s consolidated statement of operations and financial condition, the magnitude of which will depend on the specific terms and conditions of the transactions. Additionally, the adoption of the new provisions of ASC Topic 805 will have a material impact on the Company’s income tax provision. Any future release of the Company’s existing tax valuation allowance related to acquired tax benefits in a purchase business combination when reversed, will be reflected as an income tax benefit in its Consolidated Statement of Operations. Under the previous accounting standards, the reversal would have been recorded to goodwill as well as income tax expense. As a result, the Company’s reported income tax expense declined in 2009.

3. Selected Balance Sheet Accounts

Accounts Receivable

Receivables consist of the following, in thousands:


	January 3,			December 28,
	2010			2008
Trade receivables	$	199,791		$	204,532
Other receivables		1,067			997

		200,858			205,529
Less allowance for doubtful accounts		(3,321	)		(3,232	)

Accounts receivable, net	$	197,537		$	202,297

Bad debt expense was $1.0 million, $0.7 million and $1.2 million in 2009, 2008 and 2007, respectively. Write-offs, net of recoveries, were $0.7 million, $1.1 million and $1.0 million in 2009, 2008 and 2007, respectively.

Fixed Assets

Fixed assets consist of the following, in thousands:


	January 3,			December 28,
	2010			2008
Computer hardware and software	$	37,842		$	58,371
Furniture and equipment		6,527			10,159
Leasehold improvements		4,179			4,437

		48,548			72,967
Less accumulated depreciation and amortization		(35,582	)		(56,371	)

Fixed assets, net	$	12,966		$	16,596

Depreciation and amortization expense related to fixed assets amounted to $4.8 million, $4.8 million and $4.1 million in 2009, 2008 and 2007, respectively. During 2009, the Company disposed of $26.0 million of fixed assets that were substantially fully depreciated.

Goodwill

The Company assesses recoverability of goodwill and other intangible assets in accordance with ASC Topic 350, “Intangibles — Goodwill and Other,” which requires goodwill and other intangible assets with indefinite lives to be tested annually for impairment, unless an event occurs or circumstances change during the year that reduce or may reduce the fair value of the reporting unit below its book value, in which event an impairment charge may be required during the year. The Company has selected the last day of the second-to-last month of our fiscal year as the date on which it will perform the annual goodwill impairment test. The Company performed its annual impairment test as of November 29, 2009 and determined that the fair value of the reporting unit exceeded the carrying value and there was no impairment.

For the year ending December 28, 2008, the implied goodwill was less than the carrying value of goodwill, resulting in a non-cash, pre-tax impairment charge of $86.8 million in the fourth quarter of 2008.

The change in the carrying value of goodwill is set forth below, in thousands:


Balance as of December 31, 2006	$	154,984
Adjustments to previously reported purchase price		(3,497	)
Adjustments related to acquisitions, net		22,673

Balance as of December 30, 2007		174,160
Adjustments to previously reported purchase price		(3,488	)
Adjustments related to acquisitions, net		5,192
Goodwill impairment		(86,800	)

Balance as of December 28, 2008		89,064
Adjustments to previously reported purchase price		155
Adjustments related to acquisitions, net		37

Balance as of January 3, 2010	$	89,256

The increase in 2007 was due primarily to the Company’s purchases of Plum Rhino, Praeos and TWC and the earnout payments related to the purchase of Pure Solutions partially offset by the determination of certain tax and unclaimed property claim amounts related to the merger. The decrease in 2008 was primarily due to the non-cash impairment charge partially offset by the purchase of ASET and earnout payments related to the purchases of Pure Solutions and ASET.

Other Intangible Assets

The Company’s intangible assets other than goodwill consisted of the following, in thousands:


	January 3,			December 28,			Estimated
	2010			2008			Useful Life
							(in years)
Gross carrying amount:
Customer list—Venturi	$	6,407		$	6,407			5
Customer list—Pure Solutions		6,571			6,571			8
Customer list—Plum Rhino		3,207			3,207			8
Customer list—TWC		2,774			2,774			5
Assembled methodology—TWC		200			200			8
Customer list—ASET		2,082			2,082			5
Customer list—Symmetry		200			217			5
Customer list—Addilex		100			—			1
Customer list—KVG		150			—			1
Customer list—blueRADIAN		68			—			1

		21,759			21,458

Accumulated Amortization:
Customer list—Venturi		(6,407	)		(5,446	)
Customer list—Pure Solutions		(3,430	)		(2,607	)
Customer list—Plum Rhino		(1,036	)		(635	)
Customer list—TWC		(1,110	)		(555	)
Assembled methodology—TWC		(50	)		(25	)
Customer list—ASET		(625	)		(208	)
Customer list—Symmetry		(60	)		(20	)
Customer list—Addilex		(42	)		—
Customer list—KVG		(50	)		—
Customer list—blueRADIAN		(23	)		—

		(12,833	)		(9,496	)

Total other intangible assets, net	$	8,926		$	11,962

Aggregate amortization expense for intangibles other than goodwill amounted to $3.3 million, $3.3 million and $2.3 million in 2009, 2008 and 2007, respectively.

Estimated amortization expense after 2009 is as follows, in thousands:


2010	$	2,464
2011		2,261
2012		2,261
2013		1,323
2014		425
Thereafter		192

	$	8,926

Restructuring Costs

In November 2008, the Company announced a restructuring plan designed to improve operational efficiencies by relocating certain administrative functions primarily from the Washington, DC area and Portland, Oregon into its Phoenix customer service center facility. All of these charges are expected to result in future cash expenditures. These charges primarily relate to miscellaneous employee termination benefits and lease-related costs.

The change in the liability for restructuring costs is set forth below, in thousands:


	Employee
	severance			Lease costs			Total
Balance as of December 31, 2006	$	—		$	1,077		$	1,077
Adjustments		—			—			—
Charges		—			—			—
Cash payments		—			(722	)		(722	)

Balance as of December 30, 2007		—			355			355
Adjustments		—			—			—
Charges		453			64			517
Cash payments		(41	)		(177	)		(218	)

Balance as of December 28, 2008		412			242			654
Adjustments		—			(971	)		(971	)
Charges		407			3,562			3,969
Cash payments		(771	)		(791	)		(1,562	)

Balance as of January 3, 2010	$	48		$	2,042		$	2,090

The Company recorded additional restructuring charges related to lease abandonment costs in 2009 related to its reduction in space at the Company’s Washington, DC area facility. The Company entered into a sublease on the Washington, DC-area facility in the fourth quarter of 2009, and thus reversed $1.0 million previously accrued expense, which was partially offset by $0.5 million estimated and actual leasehold improvements which were expensed and not recorded in the liability account. These lease charges will be paid from 2010 through 2014.

4. Long-Term Debt

Long-term debt as of January 3, 2010 and December 28, 2008, consists of amounts outstanding under the Company’s senior credit agreement revolving credit facility in the amount of $38.1 million and $69.7 million, respectively. The full balance as of January 3, 2010 is due March 31, 2012.

Credit Facilities

In March 2009, the Company entered into a Ninth Amendment to its senior credit agreement (the “Amendment”). Among other things, the Amendment provided for (i) a decrease in the Company’s borrowing capacity under its existing revolving credit facility from $160.0 million to $110.0 million, (ii) an extension of the maturity date for the facility for an additional two years to March 31, 2012, and (iii) increases in the applicable interest rates under the facility to LIBOR plus a margin of 3.75% or, at the Company’s option, the prime rate plus a margin of 2.75%. The Amendment also permits the Company to make up to $10.0 million in stock redemptions and/or dividend payments in the aggregate subject to the terms and conditions specified.

The Company pays a quarterly commitment fee of 0.75% per annum on the unused portion of the revolver. The Company and certain of its subsidiaries guarantee the loans and other obligations under the senior credit agreement. The obligations under the senior credit agreement are secured by a perfected first priority security interest in substantially all of the assets of the Company and its U.S. subsidiaries, as well as the shares of capital stock of its direct and indirect U.S. subsidiaries and certain of the capital stock of its foreign subsidiaries. Pursuant to the terms of the senior credit agreement, the Company maintains a zero balance in its primary domestic cash accounts. Any excess cash in those domestic accounts is swept on a daily basis and applied to repay borrowings under the revolver, and any cash needs are satisfied through borrowings under the revolver.

•

a $5.0 million minimum availability reserve, and

•

a $0.9 million reserve for outstanding letters of credit.

At January 3, 2010, the Company had outstanding borrowings of $38.1 million under the revolver at interest rates ranging from 3.99% to 6.00% per annum (weighted average rate of 4.00%) and excess borrowing availability under the revolver of $71.0 million. Fees paid on outstanding letters of credit are equal to the LIBOR margin then applicable to the revolver, which at January 3, 2010, was 3.75%. At January 3, 2010, outstanding letters of credit totaled $0.9 million.

The Company’s credit facilities contain a number of covenants that, among other things, restrict its ability to:

•

incur additional indebtedness;

•

pay more than $10 million in the aggregate for stock repurchases and dividends;

•

incur liens;

•

make certain capital expenditures;

•

make certain investments or acquisitions;

•

repay debt; and

•

dispose of property.

In addition, under the credit facilities, there are springing financial covenants that would require the Company to satisfy a minimum fixed charge coverage ratio and a maximum total leverage ratio if the excess availability falls below $25 million. A breach of any covenants governing the Company’s debt would permit the acceleration of the related debt and potentially other indebtedness under cross-default provisions. As of January 3, 2010, the Company was in compliance with these requirements.

The senior credit agreement contains various events of default, including failure to pay principal and interest when due, breach of covenants, materially incorrect representations, default under other agreements, bankruptcy or insolvency, the occurrence of specified ERISA events, entry of enforceable judgments against the Company in excess of $2.0 million not stayed and the occurrence of a change of control. In the event of a default, all commitments under the revolver may be terminated and all of the Company’s obligations under the senior credit agreement could be accelerated by the lenders, causing all loans and borrowings outstanding (including accrued interest and fees payable thereunder) to be declared immediately due and payable. In the case of bankruptcy or insolvency, acceleration of obligations under the Company’s senior credit agreement is automatic.

5. Income Taxes

The related components of the provision for income taxes are as follows, in thousands:


	Year Ended
	January 3,			December 28,			December 30,
	2010			2008			2007
Current income taxes:
Federal	$	34		$	280		$	300
State		840			1,035			254
Foreign		(13	)		13			113

Total current		861			1,328			667


Deferred income taxes:
Federal		—			3,330			2,047
State		20			(4	)		(435	)

Total deferred		20			3,326			1,612

Provision for income taxes	$	881		$	4,654		$	2,279

The provision for income taxes differs from the tax computed using the statutory U.S. federal income tax rate as a result of the following items, in thousands:


	Year Ended
	January 3,			December 28,			December 30,
	2010			2008			2007
Income tax expense (benefit) computed at the federal statutory income tax rate	$	3,601		$	(21,187	)	$	12,470
State income tax expense (benefit) net of federal benefit		890			(1,192	)		988
Effect of permanent differences		479			11,733			518
Tax benefit allocated to goodwill		—			3,326			2,303
Effect of increase (decrease) in valuation allowance		(4,089	)		11,682			(13,884	)
Other		—			292			(116	)

Provision for income taxes	$	881		$	4,654		$	2,279

In the table above, ‘tax benefit allocated to goodwill’ and ‘effect of increase (decrease) in valuation allowance’ include both federal and state tax attributes. The total provision for federal, state and foreign income taxes was $0.9 million for 2009. Additionally, beginning in 2009, in connection with adoption of provisions of ASC Topic 805, Business Combinations, we changed our accounting for the remaining reserved deferred tax assets that previously would have been treated as reductions to goodwill. This resulted in a decline in our reported income tax expense.

The 2008 income tax expense contains current expenses in the amount of $0.3 million for federal alternative minimum tax; $1.1 million for the Texas Margin tax, Michigan Gross Receipts tax, California Corporate Income and other miscellaneous state and foreign income tax expenses and a deferred expense in the amount of $3.3 million resulting from the release of a portion of the valuation allowance on Venturi’s acquired net deferred assets from the Comsys/Venturi merger.

In 2008, the Company recognized a non-cash, pre-tax goodwill impairment charge in the amount of $86.8 million. The Company recorded a deferred tax asset related to the deductible portion of the goodwill impairment in the amount of $21.5 million and a corresponding valuation allowance. The tax benefit for the impairment will be realized when the valuation allowance is released, resulting in a benefit recorded to the Consolidated Statement of Operations. The non-deductible portion of the goodwill impairment charge resulted in a permanent difference of $12.7 million. The impairment charge created a reduction in income tax expense in the amount of $0.8 million. The Company’s deferred tax assets increased due to the goodwill impairment charge; therefore, the Company did not utilize Venturi non-NOL deferred tax assets. If the Company had utilized Venturi non-NOL deferred tax assets, a tax expense for the goodwill bifurcation discussed above would have been necessary.

The 2007 income tax expense contains current expenses in the amount of $0.3 million for federal alternative minimum tax; $0.3 million for the Texas Margin tax and other miscellaneous state income tax expenses and $0.1 million for foreign income taxes related to the Company’s profitable United Kingdom subsidiary, a deferred expense in the amount of $2.3 million resulting from the release of a portion of the valuation allowance on Venturi’s acquired net deferred assets from the Comsys/Venturi merger and a deferred state tax benefit of $0.7 million related to the conversion of the Company’s Texas net operating loss carryforwards into the new Texas Margin tax credit.

Deferred tax assets and liabilities result primarily from temporary differences in book versus tax basis accounting as well as net operating loss carryforwards. Deferred tax assets and liabilities, which are included in Other non-current Assets on the accompanying balance sheets, consist of the following, in thousands:


	January 3,			December 28,
	2010			2008
Deferred tax assets:
Goodwill and other intangibles	$	16,959		$	21,856
Accrued expenses and other reserves		1,879			1,257
Bad debt allowances		1,277			1,035
Accrued benefits		2,063			1,109
Net operating loss carry forwards		38,875			40,267
Other		1,214			1,143

Total gross deferred tax assets		62,268			66,667
Valuation allowance		(59,260	)		(63,349	)

Total net deferred tax assets		3,008			3,318
Deferred tax liabilities:
Depreciation expense and property basis differences		(2,166	)		(2,456	)

Total deferred tax liabilities		(2,166	)		(2,456	)

Net deferred tax assets	$	841		$	862

As of January 3, 2010, the Company had $60.1 million in total net deferred tax assets and had recorded a valuation allowance of $59.3 million against those assets, since the Company has concluded that it is more likely than not that these deferred tax assets will not be realized based upon the Company’s assessments using the criteria required for accounting for income taxes. The decrease in the valuation allowance from December 28, 2008, resulted primarily from pre-tax book income and utilization of net deferred tax assets during the year. The change in the tax valuation allowance for 2009, 2008 and 2007, is as follows, in thousands:


	January 3,			December 28,			December 30,
	2010			2008			2007
Balance at beginning of period	$	63,349		$	53,785		$	72,381
Additions		—			11,682			—
Deductions		(4,089	)		—			(13,884	)
Adjustments		—			(2,118	)		(4,712	)

Balance at end of period	$	59,260		$	63,349		$	53,785

At January 3, 2010, the Company had federal and state net operating loss carryforwards of approximately $96.7 million and $96.5 million, respectively. The federal net operating losses begin to expire in 2023 and the state net operating losses began to expire in 2005. On February 9, 2007, the Company experienced an ownership change as defined by the Internal Revenue Code due to third party beneficial ownership changes. This subjects the utilization of the Company’s net operating loss carryforwards to an annual limitation, which may cause the carryforwards to expire before they are used. The Company’s ability to use its federal and state net operating loss carryforwards to reduce future taxable income are subject to restrictions attributable to equity transactions that have resulted in a change of ownership as defined by Internal Revenue Code Section 382. The entire amount of the $96.7 million federal net operating loss carryforwards is subject to the limitations of Internal Revenue Code 382.

The Company has not paid United States federal income tax on the undistributed foreign earnings of its foreign subsidiaries as it is the Company’s intent to reinvest such earnings in its foreign subsidiaries. Pre-tax income attributable to the Company’s profitable foreign operations amounted to $0, $0.1 million and $0.6 million in 2009, 2008 and 2007, respectively.

The Company files U.S. federal and state tax returns and foreign tax returns. As of January 3, 2010, open years for U.S. federal and state tax returns subject to examination by the IRS or state taxing authorities are 2005 through 2008. The Company believes that its income tax filing positions and deductions would be sustained on audit and does not anticipate any adjustments that will result in a material adverse effect on the Company’s financial condition, results of operations or cash flow.

The Company may, from time to time, be assessed interest or penalties by major tax jurisdictions, although any such assessments historically have been minimal and immaterial to its financial results. In the event it has received an assessment for interest and/or penalties, it has been classified in the financial statements as selling, general and administrative expense. For 2009, 2008 and 2007, the Company has not recorded any interest or penalties.

6. Commitments and Contingencies

The Company leases various office space and equipment under noncancelable operating leases expiring through 2018. Certain leases include free rent periods, rent escalation clauses and renewal options. Rent expense is recorded on a straight-line basis over the term of the lease. Rent expense was $7.2 million, $8.2 million and $7.4 million for 2009, 2008 and 2007, respectively. Sublease income was $1.0 million, $0.7 million and $0.6 million for the years 2009, 2008 and 2007, respectively.

Future minimum annual payments for noncancelable operating leases are as follows, in thousands:


2010	$	7,389
2011		5,847
2012		4,880
2013		4,147
2014		3,235
Thereafter		4,650

		30,148
Sublease income		(4,834	)

	$	25,314

In connection with the Comsys/Venturi merger and the sale of Venturi’s commercial staffing business in 2004, the Company placed $2.5 million of cash and 187,556 shares of its common stock in separate escrows pending the final determination of certain state tax and unclaimed property assessments. The shares were released from escrow on September 30, 2006, in accordance with the Comsys/Venturi merger agreement, while the cash remains in escrow. The cash escrow account was scheduled to terminate on December 31, 2009, but prior to December 31 the purchaser of Venturi’s staffing business made a claim against the escrow account pursuant to the indemnification provisions in the purchase agreement. The Company has disputed this claim, but as a result of the dispute, the termination of the cash escrow will not occur until either the parties reach an agreement as to the matters that are the subject of the dispute or the receipt of a court order. Following the termination of the escrow, the Company will be paid the balance of the escrow account. The Company has recorded liabilities for amounts that management believes are adequate to resolve all of the matters these escrows were intended to cover, but management cannot ascertain at this time what the final outcome of these assessments (or the outcome of the dispute with the purchaser of Venturi’s staffing business) will be in the aggregate, and it is possible that management’s estimates could change. The escrowed cash is included in restricted cash on the Consolidated Balance Sheets.

Chimes, a vendor management services (“VMS”) company, filed for bankruptcy under Chapter 7 on January 9, 2008. The Company has filed a proof of claim in the bankruptcy case. Like a number of other Chimes vendors, the Company is the subject of a number of preference lawsuits demanding the return of payments made to the Company by Chimes during the 90 days leading up to the filing of the bankruptcy petition. The Company believes that none of the payments it received were preferences as defined by bankruptcy law and intends to vigorously defend itself against these claims. However, no assurance can be made as to the outcome of these legal proceedings.

The Company has agreed to indemnify members of its board of directors and its corporate officers against any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that the individual is or was a director or officer of the Company. The individuals will be indemnified, to the fullest extent permitted by law, against related expenses, judgments, fines and any amounts paid in settlement. The Company also maintains directors and officers insurance coverage in order to mitigate exposure to these indemnification obligations. No assets are held as collateral and no specific recourse provisions exist related to these indemnifications. There was no amount recorded for these indemnification obligations at January 3, 2010 and December 28, 2008. Due to the nature of these obligations, it is not possible to make a reasonable estimate of the maximum potential loss or range of loss.

The Company has entered into employment agreements with certain of its executives covering, among other things, base compensation, incentive bonus determinations and payments in the event of termination or a change of control of the Company.

The Company is a defendant in various lawsuits and other claims arising in the normal course of business and is defending them vigorously. While the results of litigation cannot be predicted with certainty, management believes the final outcome of such litigation will not have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company. Any cost to settle litigation will be included in selling, general and administrative expense on the Consolidated Statements of Operations.

7. Defined Contribution Plan

The Company maintains a voluntary defined contribution 401(k) plan for certain qualifying employees, which provides for employee contributions. Participating employees may elect to defer and contribute a percentage of their compensation to the plan, not to exceed the dollar limit set by the Internal Revenue Code. For the years ended December 31, 2009, 2008 and 2007, the maximum deferral amount was 50%, subject to limitations set by the Internal Revenue Code. The Company may, at its discretion, make a year-end profit-sharing contribution. No discretionary contributions were made in 2009, 2008 or 2007. Total net expense under the plan amounted to approximately $0.1 million, $1.4 million and $1.5 million in 2009, 2008 and 2007, respectively.

The Company suspended the matching contribution to its 401(k) plan effective April 1, 2009. Future matching contributions will be made at the Company’s discretion.

Additionally, Pure Solutions maintains a voluntary defined contribution 401(k) plan for certain qualifying employees, which provides for employee contributions. Participating employees may elect to defer and contribute a percentage of their compensation to the plan, not to exceed the dollar limit set by the Internal Revenue Code. Pure Solutions has the discretion under the plan to match participant deferrals. For 2009, 2008 and 2007, Pure Solutions elected to forego a matching contribution.

During 1999, Venturi established a Supplemental Employee Retirement Plan (the “SERP”) for its then Chief Executive Officer. When this officer retired in February 2000, the annual benefit payable under the SERP was fixed at $150,000 through March 2017. As of January 3, 2010, approximately $0.9 million was accrued for the SERP.

8. Warrants

In the Comsys/Venturi merger, the Company assumed outstanding warrants to purchase 768,997 shares of Venturi (now COMSYS) common stock. The warrants were originally issued on April 14, 2003, in connection with the comprehensive financial restructuring with Venturi’s subordinated note holders. The warrants are exercisable in whole or in part over a 10-year period, and the exercise price is $7.8025 per share. The warrants may be exercised on a cashless basis at the option of the holder. The holders of the warrants are also entitled to participate in dividends declared on common stock as if the warrants were exercised for common stock. In connection with the purchase accounting for the merger, the warrants were recorded at fair value as a component of shareholders’ equity. At January 3, 2010, warrants to purchase 248,654 shares of the Company’s common stock were outstanding.

9. Stock Compensation Plans

The Company has four stock-based compensation plans with outstanding equity awards: the 1995 Equity Participation Plan (“1995 Plan”), the 2003 Equity Incentive Plan (“2003 Equity Plan”), the Amended and Restated COMSYS IT Partners, Inc. 2004 Stock Incentive Plan (“2004 Equity Plan”) and the 2004 Management Incentive Plan (“2004 Incentive Plan”).

Plan Descriptions

In 2003, Venturi terminated the 1995 Plan in connection with its financial restructuring. As a result of the Comsys/Venturi merger, all outstanding options under the 1995 Plan were vested and are exercisable. Although the 1995 Plan has been terminated and no future option issuances will be made under it, the remaining outstanding stock options will continue to be exercisable in accordance with their terms.

In 2003, Venturi adopted the 2003 Equity Plan under which the Company may grant non-qualified stock options, incentive stock options and other stock-based awards in the Company’s common stock to officers and other key employees. On the date of the Comsys/Venturi merger, all outstanding options under the 2003 Equity Plan at that time vested and became exercisable. Options granted under the 2003 Equity Plan have a term of 10 years.

In connection with the Comsys/Venturi merger, the Company’s Board of Directors adopted and the stockholders approved the 2004 Equity Plan, which was subsequently amended and restated in 2007 and further amended in 2009. Under the 2004 Equity Plan, the Company may grant non-qualified stock options, incentive stock options, restricted stock and other stock-based awards in its common stock to officers, employees, directors and consultants. Options granted under this plan generally vest over a three-year period from the date of grant and have a term of 10 years.

Effective January 1, 2004, Old COMSYS adopted the 2004 Incentive Plan. The 2004 Incentive Plan was structured as a stock issuance program under which certain executive officers and key employees might receive shares of Old COMSYS nonvoting Class D Preferred Stock in exchange for payment at the then current fair market value of these shares. Effective July 1, 2004, 1,000 shares of Class D Preferred Stock were issued by Old COMSYS under the 2004 Incentive Plan. Effective with the Comsys/Venturi merger, these shares were exchanged for a total of 1,405,844 shares of restricted common stock of COMSYS. Of these shares, one-third vested on the date of the Comsys/Venturi merger, one-third vested over a three-year period subsequent to merger, and one-third vested over a three-year period subject to specific performance criteria being met. Effective June 1, 2007, the Compensation Committee of the Company’s Board of Directors (the “Committee”) made certain modifications to the 2004 Incentive Plan after concluding that the performance vesting targets appeared to be unattainable, as noted below. Although there will be no future restricted stock issuances under the 2004 Incentive Plan, the remaining outstanding restricted stock awards will continue to vest in accordance with their terms. In accordance with the terms of the 2004 Incentive Plan, any shares forfeited by participants will be distributed to certain stockholders of Old COMSYS in 2010 after the completion of the 2009 audit.

Stock Options

A summary of the activity related to stock options granted under the 1995 Plan, the 2003 Equity Plan and the 2004 Equity Plan is as follows:


													Weighted-Average
	1995			2003			2004						Exercise Price
	Plan			Equity Plan			Equity Plan			Total			Per Share
Outstanding at December 31, 2006		2,113			540,198			435,584			977,895		$	9.98
Granted		—			—			—			—
Exercised		—			(95,198	)		(90,485	)		(185,683	)	$	9.46
Forfeited		(863	)		—			(14,833	)		(15,696	)	$	27.54

Outstanding at December 30, 2007		1,250			445,000			330,266			776,516		$	9.75
Granted		—			—			—			—
Exercised		—			—			(8,200	)		(8,200	)	$	8.55
Forfeited		(527	)		(1,387	)		(18,336	)		(20,250	)	$	17.94

Outstanding at December 28, 2008		723			443,613			303,730			748,066		$	9.54
Forfeited		(389	)		(1,387	)		(19,500	)		(21,276	)	$	11.94

Outstanding at January 3, 2010		334			442,226			284,230			726,790		$	9.47

Exercisable at January 3, 2010		334			442,226			284,230			726,790		$	9.47

Available for issuance at January 3, 2010		—			55,809			1,139,964			1,195,773

The following table summarizes information related to stock options outstanding and exercisable at January 3, 2010:


	Options Outstanding						Options Exercisable
			Weighted-		Weighted-				Weighted-
			Average		Average				Average
Range of	Options		Contractual		Exercise Price		Options		Exercise Price
Exercise Prices	Outstanding		Years Remaining		per Share		Exercisable		per Share
$7.80		219,000		3.27	$	7.80		219,000	$	7.80
$8.55 to $8.88		213,961		4.58	$	8.57		213,961	$	8.57
$11.05 to $11.98		293,495		4.88	$	11.32		293,495	$	11.32
$63.25 to $132.75		334		0.52	$	63.25		334	$	63.25

$7.80 to $132.75		726,790		4.31	$	9.47		726,790	$	9.47

The aggregate intrinsic value of options outstanding at January 3, 2010 was $10,865.

During 2007, the Company entered into a modification agreement with Mr. Michael H. Barker, its Chief Operating Officer, effective June 1, 2007, amending the vesting schedule for a portion of Mr. Barker’s 100,000 share stock option award dated October 1, 2004. The Committee determined that the performance targets for the 49,990 shares that were originally scheduled to vest over three years would not be met. Therefore, these shares were rescheduled to vest as follows: two-thirds were rescheduled to vest in substantially equal annual installments over the three-year period ending January 1, 2010, and one-third were rescheduled to vest over the same three-year period based on the attainment of the Company’s annual EBITDA target under its management incentive plan. The purpose of these modifications was to retain the services of the executive and provide an incentive for the executive to contribute to the Company’s long-term success after October 1, 2007, when the initial three-year vesting schedule for these options was originally scheduled to expire. All other terms of the original award remained unchanged. On October 1, 2008, the Committee concluded that the annual EBITDA bonus target for its 2008 management incentive plan (the “Original EBITDA Target”) was unattainable, and replaced the annual target with a new EBITDA bonus target for the final six months of 2008 (the “New EBITDA Target”) that was lower on an annualized basis than the Original EBITDA Target by approximately 22%, therefore, the awards issued to Mr. Barker subject to 2008 performance vesting criteria were reduced by approximately 25% at the date of the modification. If the New EBITDA Target was met, 50% of the original awards would vest. If the New EBITDA Target was exceeded, up to 75% of the original awards would vest. On February 13, 2009, the Committee determined that the New EBITDA Target was met; therefore, 50% of the original awards vested and the remaining 25% were forfeited.

The fair value of options modified in 2008 and 2007 was estimated on the date of modification using the Black-Scholes option pricing model based on the assumptions noted in the following table. There were no new options granted in 2009, 2008 or 2007.


	2008			2007
Expected life (in years)		6.0			6.0
Risk-free interest rate		3.00	%		4.75	%
Expected volatility		55.6	%		46.8	%
Dividend yield		0.0	%		0.0	%
Weighted average fair value of options modified	$	6.31		$	17.29

Option valuation models, including the Black-Scholes model used by the Company, require the input of assumptions, including expected life and expected stock price volatility. Due to the limited trading history of the Company’s common stock following the Comsys/Venturi merger, expected stock price volatility for stock option grants or modifications prior to 2007 was based on an analysis of the actual realized historical volatility of the Company’s common stock as well as that of its peers. Beginning in 2007, the expected volatility assumption for stock option grants or modifications was based on actual historical volatility of the Company’s common stock from the period after its December 2005 common stock offering through the quarter ended prior to the grant or modification date. The Company uses historical data to estimate option exercises and employee forfeitures within the valuation model. The expected life is derived from an analysis of historical exercises and remaining contractual life of stock options and represents the period of time that options granted are expected to be outstanding. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The Company has never paid cash dividends, and does not currently intend to pay cash dividends, and thus has assumed a 0% dividend yield.

Cash received from option exercises was $0, $0.1 million and $1.8 million in 2009, 2008 and 2007, respectively, and was included in financing activities in the accompanying Consolidated Statements of Cash Flows. The total intrinsic value of options exercised during 2009, 2008 and 2007 was $0, $24,300 and $2.3 million, respectively. The Company has historically used newly issued shares to satisfy option exercises and restricted stock grants and expects to continue to do so in future periods.

Restricted Stock Awards

Restricted stock awards are grants that entitle the holder to shares of common stock as the awards vest. The Company measures the fair value of restricted shares based upon the closing market price of the Company’s common stock on the date of grant. Restricted stock awards that vest in accordance with service conditions are amortized over their applicable vesting period using the straight-line method. For nonvested share awards subject partially or wholly to performance conditions, the Company is required to assess the probability that such performance conditions will be met. If the likelihood of the performance condition being met is deemed probable, the Company will recognize the expense using the straight-line attribution method.

Certain executive officers have existing provisions in their employment contracts regarding change in control.

A summary of the activity related to restricted stock granted under the 2004 Equity Plan and the 2004 Incentive Plan is as follows:


				Weighted-
				Average
				Grant Date
	Shares			Fair Value
Nonvested balance at December 31, 2006		353,550		$	15.56
Granted		244,000		$	21.70
Vested		(87,748	)	$	16.63
Forfeited		(19,167	)	$	13.09

Nonvested balance at December 30, 2007		490,635		$	18.34
Granted		342,878		$	11.09
Vested		(147,227	)	$	17.35
Forfeited		(79,443	)	$	17.30

Nonvested balance at December 28, 2008		606,843		$	14.62
Granted		709,000		$	4.60
Vested		(239,318	)	$	15.59
Forfeited		(104,401	)	$	6.65

Nonvested balance at January 3, 2010		972,124		$	7.92

The shares issued to employees under the 2004 Equity Plan and 2004 Incentive Plan are subject to a three-year time-based vesting requirement, except as noted below, and the compensation expense associated with these shares is amortized using the straight-line method. The aggregate intrinsic value of restricted stock outstanding at January 3, 2010 was $1.8 million.

Effective January 2, 2009, the Committee approved equity grants to five executive officers, including the Company’s Chief Executive Officer. These shares are 100% performance-based, and will vest (if at all) at the end of the three-year period ending December 31, 2011, based on the Company’s earnings per share (“EPS”) growth as against the BMO staffing stock index during the three-year period. The shares will fully vest if the Company’s EPS growth is in the top 25% of the index. The shares will vest 50% or 25% if the Company’s EPS growth is in the second 25% or third 25% of the index, respectively. No shares will vest if the Company’s EPS growth is in the bottom 25% of the index. The vesting percentages will be prorated within individual tiers, except that no shares will vest for EPS growth in the bottom tier.

As of January 3, 2010, there was $4.0 million of total unrecognized compensation costs related to nonvested option and restricted stock awards granted under the plans, which are expected to be recognized over a weighted-average period of 23 months. The total fair value of shares and options that vested during 2009 was $4.0 million.

10. Related Party Transactions

Elias J. Sabo, a member of the Company’s board of directors, also serves on the board of directors of The Compass Group, the parent company of StaffMark. StaffMark provides commercial staffing services to the Company and its clients in the normal course of its business. During 2009, the Company and its clients purchased approximately $3.8 million of staffing services from StaffMark for services provided to the Company’s vendor management clients. At January 3, 2010, the Company had no outstanding accounts payable to StaffMark.

Frederick W. Eubank II and Courtney R. McCarthy, members of the Company’s board of directors, are affiliates of Wachovia Investors, Inc., the Company’s largest shareholder and a subsidiary of Wells Fargo & Company (together with its subsidiaries, “Wells Fargo”). The Company provides staffing services to Wells Fargo in the normal course of its business. During the year ended January 3, 2010, the Company recorded revenue of approximately $3.6 million related to Wells Fargo’s purchase of staffing services. At January 3, 2010, the Company had approximately $0.2 million in accounts receivable from Wells Fargo.

In June 2008, the Company received proceeds from a greater than 10% shareholder equal to the profits realized on sales of the Company’s stock that was purchased and sold within a six month or less time frame. Under Section 16(b) of the Securities and Exchange Act, the profits realized from these transactions by the greater than 10% shareholder must be disgorged to the Company under certain circumstances. The Company received proceeds of approximately $164,000 related to these transactions.

11. Subsequent Events

Merger Agreement

As described above in Note 1 Description of Business — Pending Exchange Offer and Merger with Manpower Inc., on February 1, 2010 the Company entered into an agreement and plan of merger with Manpower and a wholly-owned subsidiary of Manpower, pursuant to which the Company is expected to become a wholly-owned subsidiary of Manpower.

12. Summary of Quarterly Financial Information (Unaudited)

The Company’s fiscal year ends on the Sunday closest to December 31st and its first three fiscal quarters are 13 calendar weeks each (and each also ends on a Sunday). The year ended January 3, 2010 included 53 weeks, and the year ended December 28, 2008 included 52 weeks. The following table sets forth quarterly financial information for each quarter in 2009 and 2008, in thousands, except per share amounts:


	2009
	First			Second			Third		Fourth
Revenues from services	$	162,694		$	156,765		$	157,305	$	172,543
Costs of services		124,598			118,386			118,677		129,203

Gross profit		38,096			38,379			38,628		43,340

Operating costs and expenses
Selling, general and administrative expenses		33,183			32,347			32,083		34,526
Restructuring costs		3,620			321			155		(201	)
Depreciation and amortization		2,074			2,050			2,106		1,856

		38,877			34,718			34,344		36,181

Income (loss) from operations		(781	)		3,661			4,284		7,159
Interest expense, net		952			1,126			1,057		1,050
Other expense (income), net		(105	)		(67	)		45		(22	)

Income (loss) before income taxes		(1,628	)		2,602			3,182		6,131
Income tax expense		243			216			164		258

Net income (loss)	$	(1,871	)	$	2,386		$	3,018	$	5,873

Basic net income (loss) per share	$	(0.09	)	$	0.12		$	0.14	$	0.28
Diluted net income (loss) per share	$	(0.09	)	$	0.12		$	0.14	$	0.28
Basic weighted average shares outstanding		19,774			19,796			19,815		19,818
Diluted weighted average shares outstanding		19,774			19,796			19,815		19,818


	2008
	First			Second			Third		Fourth
Revenues from services	$	183,383		$	184,064		$	183,663	$	175,998
Costs of services		138,727			139,232			138,483		133,747

Gross profit		44,656			44,832			45,180		42,251

Operating costs and expenses
Selling, general and administrative expenses		34,764			34,291			34,579		33,014
Restructuring costs		—			—			—		637
Depreciation and amortization		1,820			1,898			2,185		2,212
Goodwill impairment		—			—			—		86,800

		36,584			36,189			36,764		122,663

Income (loss) from operations		8,072			8,643			8,416		(80,412	)
Interest expense, net		1,603			1,279			1,224		1,351
Other expense (income), net		(53	)		(172	)		40		(19	)

Income (loss) before income taxes		6,522			7,536			7,152		(81,744	)
Income tax expense		1,418			1,324			1,105		807

Net income (loss)	$	5,104		$	6,212		$	6,047	$	(82,551	)

Basic net income (loss) per share	$	0.25		$	0.31		$	0.30	$	(4.03	)
Diluted net income (loss) per share	$	0.25		$	0.30		$	0.30	$	(4.03	)
Basic weighted average shares outstanding		19,579			19,592			19,612		19,614
Diluted weighted average shares outstanding		20,617			20,636			20,455		19,614


ITEM 9.		CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None


ITEM 9A.		CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management has established and maintains a system of disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in the reports filed or submitted by us under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and include controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in those reports is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Accounting Officer (our principal executive officer and principal financial officer, respectively), as appropriate to allow timely decisions regarding required disclosure. As of January 3, 2010, our management, including our Chief Executive Officer and our Chief Accounting Officer, conducted an evaluation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Accounting Officer concluded that our disclosure controls and procedures were effective as of January 3, 2010.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Changes in Internal Controls over Financial Reporting

There has been no change in our internal control over financial reporting during the quarter ended January 3, 2010, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for the fair presentation of the consolidated financial statements of COMSYS IT Partners, Inc. Management is also responsible for establishing and maintaining a system of internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

	(i)		pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

	(ii)		provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of our management and directors; and

	(iii)		provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of management override or improper acts, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to management override, error or improper acts may occur and not be detected. Any resulting misstatement or loss may have an adverse and material effect on our business, financial condition and results of operations.

Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control—Integrated Framework, management concluded that our internal control over financial reporting was effective as of January 3, 2010. Management has engaged Ernst & Young LLP, the independent registered public accounting firm that audited the financial statements included in this Annual Report on Form 10-K, to attest to the Company’s internal control over financial reporting. Its report is included herein.


/s/ Larry L. Enterline Larry L. Enterline		/s/ Amy Bobbitt Amy Bobbitt
Chief Executive Officer March 1, 2010		Senior Vice President and Chief Accounting Officer March 1, 2010

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders COMSYS IT Partners, Inc. and Subsidiaries

We have audited COMSYS IT Partners, Inc. and Subsidiaries ‘s internal control over financial reporting as of January 3, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). COMSYS IT Partners, Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, COMSYS IT Partners, Inc. and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of January 3, 2010, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of COMSYS IT Partners, Inc. and Subsidiaries as of January 3, 2010, and December 28, 2008, and the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended January 3, 2010 of COMSYS IT Partners, Inc. and our report dated March 1, 2010, expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

Phoenix, Arizona
March 1, 2010


ITEM 9B.		OTHER INFORMATION

None

PART III


ITEM 10.		DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Board of Directors

Set forth below are the name, age and position of each of our directors.


Name	Age	Director Since	Position

Larry L. Enterline	57	2000	Director and Chief Executive Officer

Frederick W. Eubank II	46	2004	Chairman

Robert Fotsch	51	2006	Director

Robert Z. Hensley	52	2006	Director

Victor E. Mandel	45	2003	Director

Courtney R. McCarthy	34	2006	Director

Elias J. Sabo	39	2003	Director

Biographical information regarding each of our directors is as follows. The following paragraphs also include specific information about each director’s experience, qualifications, attributes or skills that led the Board of Directors to the conclusion that the individual should serve on the Board as of the time of this filing, in light of our business and structure:

Larry L. Enterline. Mr. Enterline was re-appointed as our Chief Executive Officer effective February 2, 2006. Mr. Enterline had previously served as our Chief Executive Officer from December 2000, when we were known as Venturi Partners, Inc., until September 30, 2004, when we completed our merger with COMSYS Holding, Inc. (the “COMSYS/Venturi merger”). He has served as a member of our Board of Directors since December 2000 and served as Chairman of the Board of Directors from December 2000 until the COMSYS/Venturi merger. Prior to joining us, Mr. Enterline served in a number of senior management positions at Scientific-Atlanta, Inc. from 1989 to 2000, the last of which was Corporate Senior Vice President for Worldwide Sales and Service. He also held management positions in the marketing, sales, engineering and products areas with Bailey Controls Company and Reliance Electric Company from 1974 to 1989. Mr. Enterline also serves on the boards of directors of Raptor Networks Technology, Inc. and Concurrent Computer Corporation.

In addition to his extensive knowledge of us, Mr. Enterline is qualified for service on the Board based on his leadership skills and long-standing senior management experience in the technology industry. His current service on the boards of directors of other public companies in the technology sector brings valuable perspective to our Board.

Frederick W. Eubank II. Mr. Eubank has served as a director since the completion of the COMSYS/Venturi merger in September 2004 and as Chairman of the Board of Directors since November 2006. Mr. Eubank joined Wachovia Capital Partners (formerly First Union Capital Partners), an affiliate of Wachovia Investors and Wells Fargo & Company, in 1989 and currently serves as its Chief Investment Officer. Prior to joining Wachovia Capital Partners, Mr. Eubank was a member of Wachovia’s specialized industries group. Mr. Eubank also serves on the board of directors of CapitalSource Inc., Nuveen Investments, Inc., and Windy City Investments, Inc.

Mr. Eubank is qualified for service on the Board due to his many years of experience in the banking and finance industry, culminating with his senior management experience as Chief Investment Officer of Wachovia Investors, which provides our Board with invaluable financial expertise. His service on the board and compensation committee of other public and private companies brings additional insight to our Board.

Robert Fotsch. Mr. Fotsch has served as a director since July 2006. Since 2008, Mr. Fotsch has served as the Chief Executive Officer of Wellman Plastics Recycling, LLC, and New Horizons Plastics Recycling, LLC, both of which are plastics recycling companies. From 1996 to 2005, Mr. Fotsch served as Chief Executive Officer of Strategic Outsourcing, Inc., a professional employer organization company. Mr. Fotsch’s prior experience also includes service as Chief Executive Officer (from 1992 until 1995) and Chief Operating Officer (from 1988 until 1992) of Home Innovations, Inc., a textile company. Prior to joining Home Innovations, Inc., Mr. Fotsch held management positions with Electronic Data Systems, Inc. and General Motors Corporation.

Mr. Fotsch is qualified for service on the Board due to his nine years of experience as Chief Executive Officer of a professional employment company. With over twenty years of senior management experience total, Mr. Fotsch brings invaluable expertise to our Board.

Robert Z. Hensley. Mr. Hensley has served as a director since November 2006. Mr. Hensley served from 1990 to 2002 as an audit partner and, from 1997 to 2002, as office managing partner, for the Nashville office of Arthur Andersen LLP. From 2002 to 2003, he was an audit partner in the Nashville office of Ernst & Young LLP. He currently serves, or served within the last five years, on the boards of directors Advocat, Inc., Spheris, Inc., HealthSpring, Inc. and Capella Healthcare, Inc. He is also a senior advisor to the transaction advisory services group of Alvarez and Marsal, LLC.

Mr. Hensley is qualified for service on the Board because of his experience with finance and accounting matters spanning more than two decades. Mr. Hensley’s service on audit and compensation committees for various companies also provides our Board with helpful perspective.

Victor E. Mandel. Mr. Mandel has served as a director since April 2003. Since 2001, Mr. Mandel has served as managing member of Criterion Capital Management, an investment company. From May 1999 to November 2000, Mr. Mandel was Executive Vice President—Finance and Development of Snyder Communications, Inc., with operating responsibility for its publicly-traded division, Circle.com. From June 1991 to May 1999, Mr. Mandel was a Vice President in the Investment Research department at Goldman Sachs & Co. covering emerging growth companies. During the past five years, Mr. Mandel served on the board of directors of Broadpoint Securities Group.

Mr. Mandel is qualified for service on the Board because of his extensive background in finance and investment banking. In particular, his familiarity with complex accounting issues and financial statements, as well as his service on the board of another public company, provide insight to our Board.

Courtney R. McCarthy. Ms. McCarthy has served as a director since July 2006. Prior to joining our Board of Directors, Ms. McCarthy served as a Board observer from the completion of the merger in September 2004 to July 2006. Ms. McCarthy joined Wachovia Capital Partners in 2000, where she currently serves as a Principal, focusing on investments in the financial services and healthcare industries. From 1997 to 2000, Ms. McCarthy served as an associate and analyst in Wachovia’s Leveraged Capital Group where she focused on mezzanine and equity investments and on “one-stop” financings for leveraged transactions.

Ms. McCarthy is qualified for service on the Board based on her extensive finance and investment experience, as well as her extensive knowledge of the staffing services industry.

Elias J. Sabo. Mr. Sabo has served as a director since April 2003. Since 1998, Mr. Sabo has served as a founding partner at Compass Group Management LLC. Prior to joining Compass, Mr. Sabo worked in the acquisition department for Colony Capital, a Los Angeles-based real estate private equity firm, from 1992 to 1996 and as a healthcare investment banker for CIBC World Markets (formerly Oppenheimer & Co.) from 1996 to 1998.

Mr. Sabo is qualified for service on the Board because of his depth of experience in private equity and investment banking, as well as his entrepreneurial experience as founder of an investment management company. Such expertise provides valuable insight to the Board.

Executive Officers

Information regarding our executive officers is contained in this report in Part I, Item I - “Business-Executive Officers” and incorporated herein by reference.

Audit Committee

Our Board of Directors has a standing Audit Committee. The Audit Committee currently consists of Messrs. Hensley, Mandel and Fotsch. Our Board of Directors has determined that each current member of the Audit Committee is independent for purposes of serving on the Audit Committee under the Nasdaq listing standards and applicable federal law. Our Board of Directors has also determined that each current member of the Audit Committee is financially literate under the Nasdaq listing standards and that Mr. Hensley, as Chairman, is an audit committee financial expert as defined by the Securities and Exchange Commission (“SEC”).

Code of Business Conduct

We have adopted a Code of Business Conduct and Ethics designed to help directors and employees resolve ethical issues and to help us conduct our business in accordance with all applicable laws, rules and regulations and with the highest ethical standards. Our Code of Business Conduct and Ethics applies to all directors and employees, including our principal executive officer, principal financial officer, principal accounting officer and all other executive officers. We also expect the consultants we retain to abide by our Code of Business Conduct and Ethics. Our Code of Business Conduct and Ethics sets forth our policies with respect to public disclosure of Company information, our financial statements and records, compliance with laws, rules and regulations, insider trading, conflicts of interest, corporate opportunities, fair dealing, confidentiality, equal employment opportunity and harassment, protection and proper use of our assets and employee complaint procedures. The Code of Business Conduct and Ethics is posted on our website at www.comsys.com under the “Corporate Governance” caption. Any amendment to, or a waiver from, a provision of our Code of Business Conduct and Ethics that is applicable to our principal executive officer, principal financial officer, principal accounting officer or controller (or persons performing similar functions) is required to be disclosed by the relevant rules and regulations of the SEC and will be posted on our website.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who beneficially own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC and to furnish us with copies of the forms they file. To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations of our officers and directors, all Section 16(a) reports for 2009 applicable to our officers and directors and such other persons were filed on a timely basis, except one late Form 4 filing each for Mr. Kerr and Mr. Barker, each covering one transaction that occurred in 2009, and one late Form 5 filing for Mr. Barker covering one transaction that occurred in 2008.


ITEM 11.		EXECUTIVE COMPENSATION

REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee of our Board of Directors has reviewed the Compensation Discussion and Analysis and discussed that analysis with management. Based on its review and discussions with management, the Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in our Annual Report on Form 10-K for 2009, the Information Statement to the Schedule 14D-9 filed in connection with the pending acquisition by Manpower Inc. and, to the extent applicable, our 2010 proxy statement. This report is provided by the following independent directors, who comprise the Compensation Committee:

THE COMPENSATION COMMITTEE

Frederick W. Eubank II, Chairman
Courtney R. McCarthy
Robert Z. Hensley

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

No current member of our Compensation Committee has ever been an officer or employee of ours. None of our executive officers serves, or has served during the past fiscal year, as a member of the Board of Directors or compensation committee of any other company that has one or more executive officers serving as a member of our Board of Directors or Compensation Committee.

RISK ANALYSIS OF COMPENSATION PROGRAMS

We have reviewed our compensation policies and practices for all employees and concluded that any risks arising from our policies and practices are not reasonably likely to have a material adverse effect on us.

COMPENSATION DISCUSSION AND ANALYSIS

The Compensation Committee of our Board of Directors is charged with administering our executive compensation programs. The Compensation Committee evaluates the performance and, based on such evaluation, sets the compensation of our Chief Executive Officer and other executive officers and administers our equity compensation plans.

Executive Compensation Policy

The objectives of our executive compensation programs are to:

	•		Attract, retain and motivate key executive personnel who possess the skills and qualities to perform successfully in the IT staffing and consulting industries and achieve our objective of maximizing stockholder value;

	•		Closely align the interests of our executives with those of our stockholders;

	•		Provide a total compensation opportunity that is competitive with our market for executive talent; and

	•		Align our executives’ compensation to our operating performance with performance-based compensation that will provide actual compensation above the market median when we deliver strong financial performance and below the market median when performance is not strong.

While we compete for talent with companies across all industries and sectors, we primarily focus on professional services companies in the IT staffing and consulting and temporary staffing industries. More specifically, we look at companies that provide temporary staffing services for professional staff and IT staff augmentation and consulting services. While we often compete for talent outside this market, these companies define our market for compensation purposes. The Compensation Committee reviews data from these companies, along with other data as it deems appropriate, to determine market compensation levels from time to time and also routinely seeks advice from outside compensation consultants.

Compensation Benchmarking

The Compensation Committee has the sole authority to hire and fire outside compensation consultants and engaged Mercer Human Resources Consulting (“Mercer”) in early 2007 to update an earlier executive compensation survey performed in 2004. Mercer compared our executive compensation program with the compensation programs at a 14-company peer group consisting of AMN Healthcare Services Inc.; CDI Corp.; Ciber Inc.; Comforce Corp.; Cross Country Healthcare Inc.; Hudson Highland Group Inc.; Keane Inc.; Kforce Inc.; Medical Staffing Network Holdings; MPS Group Inc.; On Assignment Inc.; Resources Connection Inc.; Spherion Corp.; and Westaff Inc. to ensure that our total compensation programs for our executive officers were competitive in attracting and retaining exceptional executive talent. This peer group was selected by Mercer and consists of publicly traded, professional services and/or temporary staffing companies, which focus on highly skilled or professional staff. As of the survey date, these 14 companies had 12-month sales ranging from $350 million to $1.4 billion and gross profit margins greater than 15%. We ranked within the group at 9^th and 7^th for sales and gross profit margin, respectively, based on our 2006 audited financial statements. According to this updated survey:

	•		The base salaries for our named executives, in the aggregate, were generally aligned with the market median and ranged from 7% below the median for our Chief Executive Officer to 17% above the median for our Senior Vice President of Corporate Development;

	•		The short-term incentive targets for the executives, on average, were also aligned with the market median and ranged from 17% below the median for our Chief Executive Officer to 15% above the median for our Senior Vice President of Corporate Development; and

	•		The total target cash compensation for the executives was generally aligned with the market median and ranged from 3% below the median for our Chief Executive Officer to 31% above the median for our Senior Vice President of Corporate Development.

In its analysis of this data, the Compensation Committee determined that our Senior Vice President of Corporate Development has responsibilities in addition to those performed by persons holding similar positions at the peer group companies surveyed and that such additional responsibilities warranted above-median compensation. The survey also observed that the long-term incentive awards made to our executive officers in the past had been irregular, and Mercer suggested that the Compensation Committee consider a transition towards a more structured annual grant approach in which long-term incentive awards are made annually to each executive in amounts equal to a percentage of each executive’s base salary.

The Compensation Committee considered the 2007 survey results in the development of our executive compensation programs for 2007, 2008 and 2009.

The Compensation Committee engaged Mercer in late 2009 to update its 2007 survey and provide recommendations for fiscal 2010 and future executive compensation. Mercer compared our executive compensation program to a 13-company peer group that was similar to the 2007 peer group consisting of Robert Half, Volt, MPS Group, Spherion, Ciber, CDI, Kforce, Resources Connection, Comforce, On Assignment, Computer Task Group, Analysts International and RCM Technologies. The 2009 peer group was selected by Mercer and consists of publicly traded, professional services and/or temporary staffing companies, which focus on highly skilled or professional staff. In establishing the peer group, Mercer reviewed the 2007 peer group and made changes as appropriate, including removing acquired companies and healthcare staffing companies. As of the survey date the 13 companies had 12-month sales ranging from $200 million to $3.7 billion. We ranked 8th within the group for sales. The 2009 survey was considered by the Compensation Committee in determining the January 2010 executive restricted stock grants, the vesting requirements of the January 2010 executive restricted stock grants and the February 2010 modifications to executive severance. The 2009 survey was intended to be used in setting 2010 executive salaries, but salary adjustments have not been implemented for 2010 due to the impending Merger.

The Compensation Committee uses the peer group information from Mercer and other publicly available information as a point of reference to assess whether the compensation for each executive officer is above or below the market median and within a reasonably competitive range. The Compensation Committee does not, however, rely exclusively on compensation studies or peer group information for setting executive compensation. In making decisions about executive compensation, the Compensation Committee relies primarily on its general experience and subjective considerations of various factors, including individual and corporate performance, our strategic corporate goals and Mercer’s recommendations and peer group studies.

Executive Officer Changes

There were no changes to our executive officers during 2009.

Role of Executive Officers in Determining Executive Compensation

The Chief Executive Officer evaluates the overall performance of our other executive officers and, with assistance from our Human Resource Department, makes recommendations for compensation adjustments to the Compensation Committee. In 2009, Mr. Enterline proposed, and the Compensation Committee approved, that no adjustments should be made to the executives’ base salaries. See “Compensation Components” below for additional information.

Compensation Components

The Compensation Committee primarily uses a combination of base salary, short-term incentive and long-term incentive programs to compensate our executive officers. Each element aligns the interests of our executive officers with the interests of our stockholders by focusing on both our short-term and long-term performance.

Base Salaries. We are committed to retaining talented executives capable of diverse responsibilities and, as a result, believe base salaries for executives should be maintained at rates at or slightly ahead of market rates. The Compensation Committee assesses base salaries for each position, based on the value of the individual’s experience, performance and/or specific skill set, in the ordinary course of business, but generally not less than once each year at or around the time that our annual budget is approved. Other than market adjustments that may be required from time to time, the Compensation Committee believes annual merit percentage increases for executives, if any, should generally not exceed, in any year, the average merit increase percentage earned by our non-executives. The base salaries received by our Chief Executive Officer and other named executive officers in 2009 are specified in the Summary Compensation Table. None of the named executive officers received a material increase in base salary for 2009.

Short-Term Incentives. The Compensation Committee believes that a short-term incentive based on our annual operating performance is an important part of a competitive compensation package for the executives and establishes Adjusted EBITDA goals each year when the annual operating budget is finalized. Adjusted EBITDA is a non-GAAP financial measure that consists of earnings before interest expense, taxes, depreciation and amortization and excludes stock-based compensation and other adjustments the Compensation Committee believes are not indicative of current operating performance. The Compensation Committee believes Adjusted EBITDA is a relevant indicator of management performance and the operating environment and a relevant basis for providing short-term incentives to management. Short-term incentives are paid to the executives following the issuance of our annual earnings release for the prior fiscal year.

Our Adjusted EBITDA target drives the annual incentive plan for the executives, and short-term incentives are determined at the end of each year based on our performance against that year’s target. The Compensation Committee retains the discretion to make adjustments to Adjusted EBITDA for determining achievement of performance against the annual target and typically only makes adjustments for the impact of strategic transactions or other unanticipated events that were not contemplated in the annual budget process. During 2009 the Compensation Committee included adjustments for stock-based compensation and restructuring charges in its calculation of Adjusted EBITDA.

For 2009, the Compensation Committee established a threshold Adjusted EBITDA goal of $17.4 million, a target Adjusted EBITDA goal of $19.3 million, and a maximum Adjusted EBITDA goal of $23.2 million. The goals were reduced from the prior year goals due to general economic conditions and uncertainty in early 2009 when the goals were established. Because the goals were reduced, however, the Compensation Committee also determined to reduce each named executive officer’s threshold, target and maximum cash award opportunities by 50% from the prior year. The following table reflects the threshold, target and maximum award opportunities for each of the named executive officers for 2009, expressed as percentage of base salary.


	% of Base Pay			% of Base Pay			% of Base Pay
Position	Earned at Threshold			Earned at Target			Earned at Maximum
Chief Executive Officer		19	%		38	%		75	%
Chief Accounting Officer		13	%		25	%		50	%
Chief Operating Officer		15	%		30	%		60	%
General Counsel		13	%		25	%		50	%
Senior Vice President — Corporate Development		13	%		25	%		50	%

Due to management performance and an increase in business activity, we exceeded our maximum Adjusted EBITDA goal for 2009 of $23.2 million, and, as a result, the following annual incentive plan payments were made to our named executive officers in the first quarter of 2010: Larry L. Enterline, $375,000; Amy Bobbitt, $125,000; Michael H. Barker, $210,000; David L. Kerr, $145,844; and Ken R. Bramlett, Jr., $138,362. The short-term incentives earned by our Chief Executive Officer and other named executive officers in 2009 are specified in the Summary Compensation Table.

Discretionary Annual Bonuses. The Compensation Committee has the authority to award discretionary annual cash or share bonuses to our executive officers based on individual and company performance. We believe these bonuses are an important tool in motivating and rewarding the performance of our executive officers. Performance-based cash incentive compensation is expected to be paid to our executive officers based on individual and/or overall performance standards. The Compensation Committee awarded Larry L. Enterline a 2009 discretionary bonus that was paid in the first quarter of 2010 of $100,000. This was awarded for Mr. Enterline’s leadership and management during the economic downturn.

Long-Term Incentives. The Compensation Committee also believes that a substantial portion of each executive’s annual total compensation should be a long-term incentive, both to align the interests of each executive with those or our stockholders and also to provide a retention incentive. The Compensation Committee has approved stock option and restricted stock awards to our executive officers in the past under our equity incentive plans. It is our goal to issue the executives equity grants in January of each year in order to align the executive grants with the grants to non-executives. The 2009 executive grants were approved and issued in January 2009 as discussed below.

For our Chief Executive Officer and other named executive officers, the Compensation Committee has developed target ranges for long-term incentives as percentages of each executive’s base salary. Fluctuations in our stock price may affect the number of shares granted to the executives as part of these plans. Additionally, the value of each executive’s equity award is based on a target value, calculated as a percentage of base salary. In order to determine the total amount of shares to be granted, the target value is divided by the average closing price of our trading stock for the fourth quarter.

Prior to 2007, and except for the shares awarded to certain of the executive officers under the Old COMSYS 2004 Management Incentive Plan, stock option and restricted stock awards have historically time-vested and become exercisable at the rate of 33 1/3% annually on each of the three successive anniversary dates following the grant date. Beginning in 2007, as a result of the Mercer report recommendations, a percentage of each of the executive grants has had a performance-vesting component. The Compensation Committee stated its objective to increase the performance-vesting component as a percent of each award such that by 2009 all of such awards to the executive officers would vest solely based on performance vesting criteria. In 2007, 50% of the shares granted to the executives were performance-vesting shares. In 2008, 75% of the shares granted to the executives were performance-vesting shares. In 2009, 100% of the shares granted to executives were performance-vesting shares. The updated Mercer study in 2009 indicated that long term incentives based solely on performance vesting criteria were not the normal practice among our peer group, and thus, starting in 2010, 50% of the restricted shares granted to executives are subject to performance-vesting.

Although in the past we awarded primarily stock options as part of our long-term compensation program, since 2006 restricted stock awards have become the primary equity component of our long-term compensation strategy. We have not issued stock options since January 2006. We may continue offering restricted stock awards and stock options in the future. The Compensation Committee may also decide to issue other forms of stock-based awards for our named executive officers and other eligible participants under our equity incentive plans in effect at that time.

Effective January 2, 2009 and utilizing the performance and valuation criteria above, the Compensation Committee approved equity grants to five executive officers, including our Chief Executive Officer. 100% of these shares will performance-vest at the end of the three-year period based on our earnings per share (“EPS”) growth as compared against the BMO Staffing Stock Index during the three-year period. The performance shares will fully vest if our EPS growth is in the top 25% of the index. The performance shares will vest 50% or 25% if our EPS growth is in the second 25% or third 25% of the index, respectively. No shares will vest if our EPS growth is in the bottom 25% of the index. The vesting percentages will be prorated within individual tiers, except that no shares will vest for EPS growth in the bottom tier. The value of the performance shares awarded was reduced in 2009 as compared to 2008 and 2007 due to a limited number of shares available under our 2004 Stock Incentive Plan at the time of the grants. See the “2009 Grants of Plan Based Awards” table below for the number of restricted shares granted to each named executive officer. In the contemplated Merger transaction, executive unvested shares will vest upon completion of the transaction.

Effective January 4, 2010, the Compensation Committee approved the following restricted stock grants under the Company’s 2004 Stock Incentive Plan, which was amended in 2009 to increase the number of shares available under the Plan: Mr. Enterline—100,000 shares; Mr. Barker—60,000 shares; Mr. Kerr—35,000 shares; Mr. Bramlett—35,000 shares and Ms. Bobbitt—27,500 shares. As discussed above, half of these shares will vest in equal annual installments and the remaining shares will performance vest over three years based on specific goals to be set by the Compensation Committee. The value of the 2010 restricted stock grants were increased by the Committee from historical levels based on recommendations from Mercer and to restore the value of the reduced 2009 grants caused by the share constraints under the 2004 Stock Incentive Plan at the time of the 2009 awards.

Employment Agreements and Other Perquisites. We are parties to employment agreements with each of our executive officers. The employment agreements cover base salary, annual incentive programs, perquisites, non-compete and non-solicitation covenants and change of control benefits. The Compensation Committee believes that employment agreements are critical to the attraction and retention of executive officers in a competitive market while protecting our business operations. For a detailed description of the employment agreements with our executive officers, please see “Employment Agreements and Potential Payments Upon Termination or Change of Control” below.

We entered into amended and restated employment agreements with each of our five named executive officers effective January 1, 2009. The 2009 employment agreements did not make substantive amendments to the employment terms for any of the executive officers; rather, they contained revisions primarily designed to bring these agreements into compliance with the provisions of Section 409A of the Internal Revenue Code.

On February 1, 2010, the Compensation Committee approved two changes to the severance provisions for Larry L. Enterline, Amy Bobbitt, Ken R. Bramlett, Jr., and David L. Kerr, in light of their performance during fiscal 2009 and the expectations of them in the first half of fiscal 2010. Michael H. Barker was excluded from the changes to the severance provisions as it is anticipated he will remain an employee after the Merger. First, the Compensation Committee fixed the severance bonus portion of each executive’s cash severance at their fiscal 2009 bonus amount, rather than the average of their 2008 and 2009 bonuses as specified in their employment agreements. This was due to a 50% reduction in the 2008 bonuses due to deteriorating general economic conditions and not management performance. The Compensation Committee believes the 2009 bonuses are more indicative of ongoing operations. As a result, the severance bonus amounts are expected to be: $375,000 for Enterline; $125,000 for Bobbitt; $138,362 for Bramlett; and, $145,844 for Kerr. In addition, the Committee pegged the 2010 pro rata bonus for each executive at the following specified amounts: $200,000 for Enterline; $68,000 for Bobbitt; $75,000 for Bramlett; and, $78,000 for Kerr. The pro-rata bonuses took into consideration the projected 2010 salary increases recommended by Mercer for Bobbitt, Bramlett and Kerr and a discretionary bonus for assistance from management in the pending merger. In the aggregate, these changes total approximately $400,000 over what these same amounts would have been expected to be had no changes been approved.

The Compensation Committee recognizes the necessity of a sound and continual management team. Additionally, the Compensation Committee understands the potential for a change of control of us and the possible uncertainty and questions that may arise among the executive officers, which may result in distraction or departure. As a result, all of our executive officer employment agreements contain change of control provisions, which encourage retention of the executive officers during a potential transaction. The terms of change of control provisions and potential payments to our Chief Executive Officer and other named executive officers upon termination or following a change of control event are described under the headings “Employment Agreements and Potential Payments upon Termination or Change of Control” below.

The Compensation Committee believes that executives should have modest perquisites and our executives’ perquisites generally are limited to monthly car allowances and the reimbursement of club dues. The Compensation Committee reviews employment agreements and perquisites annually in the ordinary course of business.

Broad-based Employee Benefits. Our executive officers have the opportunity to participate in company-wide benefit programs that are generally available to all of our employees, such as:

	•		healthcare plans, which include medical, vision, dental and behavioral health programs, as well as wellness and preventive care benefits;

	•		life and disability plans, which include group life insurance, accidental disability and dismemberment and short-term and long-term disability programs;

	•		a 401(k) plan; and

	•		balanced-life plans, which include adoption-assistance programs, personal-leave programs to care for ill spouse or dependents and mass-transit and parking programs.

Tax Implications of Executive Compensation Policy

Under Section 162(m) of the Internal Revenue Code, a public company generally may not deduct compensation in excess of $1.0 million paid to its Chief Executive Officer and the four other most highly compensated executive officers. Qualifying performance-based compensation will not be subject to the deduction limit if certain requirements are met. While we do not design our compensation programs solely for tax purposes, the Compensation Committee does strive to design our plans to be tax efficient where possible and where the design does not add an additional layer of complexity to the plans or their administration. Notwithstanding the foregoing, base salaries and other non-performance based compensation as defined in Section 162(m) in excess of $1.0 million paid to these executive officers in any year would not qualify for deductibility under Section 162(m).

Accounting Implications of Executive Compensation Policy

We are required to recognize compensation expense of all stock-based awards pursuant to the principles set forth in FASB ASC Topic 718. Non-vested shares are deemed issued and outstanding from a legal perspective; however, under U.S. generally accepted accounting principles (“GAAP”), basic net income (loss) per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Net income available to common stockholders is calculated using the two-class method, which is an earnings allocation method for computing earnings per share when an entity’s capital structure includes common stock and participating securities. The two-class method determines earnings per share based on dividends declared on common stock and participating securities (i.e., distributed earnings) and participation rights of participating securities in any undistributed earnings. The application of the two-class method is required since our unvested restricted stock and warrants contain participation features. Also, under GAAP, non-vested shares are included in diluted shares outstanding when the effect is dilutive.

Securities Trading Policy

We have an insider trading policy that covers our directors and all employees, including our named executive officers, and restricts certain employees from trading in our securities during certain specified earnings release periods or when they are in possession of material non-public information. In addition, executive officers may not engage in any transaction in which they may profit from short-term swings in our securities. These transactions include “short sales,” “put” and “call” options and any other derivatives or hedging transactions in our securities.

SUMMARY COMPENSATION TABLE

The following table provides information concerning total compensation earned during 2009, 2008, and 2007 for our Chief Executive Officer, our principal financial officer and our three other most highly paid executive officers. Our Compensation Committee has the sole authority to hire and fire outside compensation consultants.


											Non-Equity
							Stock		Option		Incentive Plan		All Other
	Fiscal		Salary		Bonus		Awards		Awards		Compensation		Compensation		Total
Name and Principal Position	Year		($)		($)		($)¹		($)¹		($)²		($)³		($)
Larry L. Enterline,		2009	$	500,000	$	100,000	$	207,400	$	—	$	375,000	$	24,001	$	1,206,401
Chief Executive Officer		2008	$	500,000	$	—	$	873,059	$	—	$	187,500	$	24,037	$	1,584,596
and Director		2007	$	500,000	$	—	$	1,257,850	$	—	$	562,500	$	26,160	$	2,346,510

Amy Bobbitt, Senior Vice		2009	$	250,000	$	—	$	54,900	$	—	$	125,000	$	5,432	$	435,332
President and Chief Accounting		2008	$	248,812	$	—	$	165,885	$	—	$	62,500	$	4,800	$	481,997
Officer (principal financial officer)		2007	$	219,604	$	15,050	$	30,315	$	—	$	92,450	$	—	$	357,419

David L. Kerr, Senior		2009	$	291,687	$	—	$	73,200	$	—	$	145,844	$	21,319	$	532,050
Vice President—		2008	$	291,687	$	—	$	253,181	$	—	$	72,922	$	22,394	$	640,184
Corporate Development		2007	$	288,439	$	—	$	551,265	$	—	$	218,765	$	16,254	$	1,074,723

Michael H. Barker,		2009	$	350,000	$	—	$	122,000	$	—	$	210,000	$	21,608	$	703,608
Executive Vice President		2008	$	350,000	$	—	$	502,009	$	—	$	105,000	$	22,553	$	979,562
and Chief Operating Officer		2007	$	339,183	$	—	$	1,607,602	$	—	$	315,000	$	22,500	$	2,284,285

Ken R. Bramlett, Jr., Senior		2009	$	276,723	$	—	$	73,200	$	—	$	138,362	$	18,240	$	506,525
Vice President, General Counsel		2008	$	276,723	$	—	$	253,181	$	—	$	69,181	$	18,000	$	617,085
and Corporate Secretary		2007	$	273,642	$	—	$	308,745	$	—	$	207,542	$	17,760	$	807,689


(1)		Included in the “Stock Awards” and “Option Awards” columns are the aggregate grant date fair values of restricted stock awards and option awards made in 2009, 2008 and 2007. The grant date fair values of the awards were computed in accordance with FASB ASC Topic 718. The grant date fair values of performance-based awards were computed based on the highest level of achievement based on our expectations as of the grant dates regarding the probable outcome of the awards.


		For a discussion of the assumptions used in calculating the grant date fair values for 2010, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 9 of the Notes to the Consolidated Financial Statements in this Form 10-K for the fiscal year ended January 3, 2010.

(2)		The “Non-Equity Incentive Plan Compensation” column reflects bonuses payable under our annual incentive plan. Bonus amounts include bonuses earned in the fiscal year specified in the table and exclude bonuses paid in such year, but earned in the preceding year. See “Compensation Discussion & Analysis – Compensation Components – Short-Term Incentives” above.

(3)		The value of perquisites and other personal benefits is provided in this column and below in this note even if the amount is less than the reporting threshold established by the SEC:


	Fiscal		Auto		Country Club		Insurance		401(k)
Name and Principal Position	Year		Allowance		Dues		Premiums⁴		Match		Total
Larry L. Enterline		2009	$	12,000	$	9,657	$	—	$	2,344	$	24,001
		2008	$	12,000	$	8,587	$	—	$	3,450	$	24,037
		2007	$	12,000	$	10,785	$	—	$	3,375	$	26,160

Amy Bobbitt		2009	$	4,800	$	632	$	—	$	—	$	5,432
		2008	$	4,800	$	—	$	—	$	—	$	4,800
		2007	$	—	$	—	$	—	$	—	$	—

David L. Kerr		2009	$	12,000	$	6,949	$	—	$	2,370	$	21,319
		2008	$	12,000	$	6,944	$	—	$	3,450	$	22,394
		2007	$	6,500	$	6,495	$	—	$	3,259	$	16,254

Michael H. Barker		2009	$	12,000	$	6,060	$	442	$	3,106	$	21,608
		2008	$	12,000	$	6,185	$	918	$	3,450	$	22,553
		2007	$	12,000	$	5,700	$	1,425	$	3,375	$	22,500

Ken R. Bramlett, Jr.		2009	$	12,000	$	6,240	$	—	$	—	$	18,240
		2008	$	12,000	$	6,000	$	—	$	—	$	18,000
		2007	$	12,000	$	5,760	$	—	$	—	$	17,760


(4)		Reflects company-paid insurance premiums for group term life insurance, long-term disability and/or short-term disability coverage. These insurance programs were discontinued after the COMSYS/Venturi merger, but all participants in these programs at that time were grandfathered under the terms of the programs until their employment with us is terminated.

2009 GRANTS OF PLAN-BASED AWARDS

The following table provides information concerning grants of plan-based awards during 2009.


															All Other
			Estimated Possible Payouts						Estimated Possible Payouts						Stock Awards:	Grant Date
			Under Non-Equity Incentive						Under Equity Incentive						Number of	Fair Value of
			Plan Awards²						Plan Awards¹						Shares of	Stock and
	Grant		Threshold		Target		Maximum		Threshold		Target		Maximum		Stock or Units	Option Awards
Name	Date		($)		($)		($)		(#)		(#)		(#)		(#)	($)³
Larry L. Enterline		1/2/2009								21,250		85,000		85,000		$	207,400
		2/13/2009	$	93,750	$	187,500	$	375,000

Amy Bobbitt		1/2/2009								5,625		22,500		22,500		$	54,900
		2/13/2009	$	31,250	$	62,500	$	125,000

David L. Kerr		1/2/2009								7,500		30,000		30,000		$	73,200
		2/13/2009	$	36,461	$	72,922	$	145,844

Michael H. Barker		1/2/2009								12,500		50,000		50,000		$	122,000
		2/13/2009	$	52,500	$	105,000	$	210,000

Ken R. Bramlett, Jr.		1/2/2009								7,500		30,000		30,000		$	73,200
		2/13/2009	$	34,590	$	69,181	$	138,362


(1)		Share amounts reflect restricted stock shares issued under the Amended and Restated 2004 Stock Incentive Plan. The shares will vest on January 2, 2012, based on our earnings per share (“EPS”) growth as against the BMO Staffing Stock Index during the three-year period. The performance shares will fully vest if our EPS growth is in the top 25% of the index. The shares will vest 50% or 25% if our EPS growth is in the second 25% or third 25% of the index, respectively. No shares will vest if our EPS growth is in the bottom 25% of the index. The vesting percentages will be prorated within individual tiers, except that no shares will vest for EPS growth in the bottom tier.

(2)		Amounts reflect potential payments under the COMSYS Annual Incentive Plan for 2009 as originally approved in February 2009. Threshold, Target and Maximum amounts are defined in the executives’ respective employment agreements or are as otherwise established by mutual agreement between the Compensation Committee and the executives. See “Employment Arrangements; Potential Payments Upon Termination or Change of Control.”

(3)		Amounts reflect the grant date fair values of the restricted stock awards computed in accordance with FASB ASC Topic 718. The grant date fair values of the performance-based awards were computed based on the highest level of achievement based on our estimate of the probable outcome of the awards as of the grant date.

OUTSTANDING EQUITY AWARDS AT 2009 FISCAL YEAR-END

The following table provides information on the holdings of stock option and restricted stock awards by the named executives as of January 3, 2010. This table includes unexercised and unvested option awards and unvested restricted stock awards. Each option grant is shown separately for each executive. The vesting schedule for each unvested grant is shown in footnote 1 following this table. The market value of the stock awards is based on the closing market price of our common stock as of December 31, 2009, which was $8.89. The market value as of January 3, 2010, shown below assumes the satisfaction of all applicable vesting criteria.


	Option Awards								Share Awards
			Equity										Equity		Equity Incentive
			Incentive										Incentive		Plan Awards:
			Plan Awards:						Number of		Market		Plan Awards:		Market or
	Number of		Number of						Shares or		Value of		Number of		Payout Value of
	Securities		Securities						Units of		Shares or		Unearned		Earned Shares,
	Underlying		Underlying	Option					Stock That		Units of		Shares, Units		Units or Other
	Unexercised		Unexercised	Exercise		Option			Have Not		Stock That		or Other Rights		Rights That
	Options (#)		Unearned	Price		Expiration			Vested		Have Not		That Have Not		Have Not
Name	Exercisable		Options (#)¹	($)		Date			(#)¹		Vested ($)		Vested (#)¹		Vested ($)
Larry L. Enterline										19,961	$	177,453		161,075	$	1,431,957
		160,000		$	7.8025		4/14/2013	^2,3
		70,000		$	11.7025		4/14/2013	^2,3
		6,000		$	8.5500		10/1/2014
Amy Bobbitt										2,551	$	22,678		31,729	$	282,071
David L. Kerr										5,380	$	47,828		50,836	$	451,932
Michael H. Barker										11,623	$	103,328		94,181	$	837,269
		10,000		$	7.8025		4/14/2013	³
		30,000		$	11.7025		4/14/2013	³
		97,226		$	8.5500		10/1/2014	⁴
Ken R. Bramlett, Jr.										5,380	$	47,828		50,836	$	451,932
		48,000		$	7.8025		4/14/2013	^3,5
		16,000		$	11.7025		4/14/2013	^3,5
		66,000		$	11.0500		1/3/2016


(1)		The following table shows the vesting schedule for the unvested stock options and unvested restricted stock grants.

Name

Option Awards

Stock Awards

Grant Date

Vesting Date

Larry L. Enterline

36,667

6/1/2007

6/1/2010

⁶

5,397

1/2/2008

1/2/2010

53,972

1/2/2008

1/2/2011

⁷

85,000

1/2/2009

1/2/2012

⁸

Amy Bobbitt

500

1/2/2007

1/4/2010

1,025

1/2/2008

1/4/2010

10,255

1/2/2008

1/2/2011

⁷

22,500

1/2/2009

1/2/2012

⁸

David L. Kerr

9,000

6/1/2007

6/1/2010

⁶

1,565

1/2/2008

1/4/2010

15,651

1/2/2008

1/2/2011

⁷

30,000

1/2/2009

1/2/2012

⁸

Michael H. Barker

21,667

6/1/2007

6/1/2010

⁶

3,103

1/2/2008

1/4/2010

31,034

1/2/2008

1/2/2011

⁷

50,000

1/2/2009

1/2/2012

⁸

Ken R. Bramlett, Jr.

9,000

6/1/2007

6/1/2010

⁶

1,565

1/2/2008

1/4/2010

15,651

1/2/2008

1/2/2011

⁷

30,000

1/2/2009

1/2/2012

⁸


(2)		This date represents the latest possible expiration date. As set forth in the terms of Mr. Enterline’s Separation Agreement with Venturi dated September 1, 2004, certain events could accelerate the expiration of these options.

(3)		Amounts shown have been adjusted to reflect the effect of the 1-for-25 reverse stock split completed August 5, 2003. Portions of these grants were issued at greater-than-market-value exercise prices at the completion of Venturi’s financial restructuring on April 14, 2003.

(4)		In connection with the revisions approved to the annual incentive plan for 2008, the portion of these equity awards held by Mr. Barker that was subject to 2008 performance vesting criteria was reduced by approximately 25%, and the performance criteria for the remainder of the award was realigned to match the New Adjusted EBITDA Target for the final six months of 2008. We met the New Adjusted EBITDA Target and as a result 50% of the performance-based portions of these equity awards were vested.

(5)		On February 9, 2007, the Compensation Committee amended the expiration date of these options. When these options were granted to Mr. Bramlett in 2003, prior to the COMSYS/Venturi merger, they were scheduled to expire in 2013. The expiration date for these options was shortened in 2004 when Mr. Bramlett left us following the COMSYS/Venturi merger. Mr. Bramlett re-joined us in January 2006, and the Compensation Committee’s action restored the expiration date for these options to the original scheduled date.

(6)		Of these restricted share amounts, one-quarter (25%) will vest on June 1, 2010. The remaining three-quarters (75%) will vest on June 1, 2010, based on our EPS growth as against the BMO Staffing Stock Index during the three-year period beginning on the grant date. The shares will fully vest if our EPS growth is in the top 25% of the index. The shares will vest 50% or 25% if our EPS growth is in the second 25% or third 25% of the index, respectively. No shares will vest if our EPS growth is in the bottom 25% of the index. The vesting percentages will be prorated within individual tiers, except that no shares will vest for EPS growth in the bottom tier.


(7)		Of these restricted share amounts, approximately ten percent (10%) will vest on January 2, 2011. The remaining ninety percent (90%) will vest on January 2, 2011, based on our EPS growth as against the BMO Staffing Stock Index during the three-year period beginning on the grant date. The shares will fully vest if our EPS growth is in the top 25% of the index. The shares will vest 50% or 25% if our EPS growth is in the second 25% or third 25% of the index, respectively. No shares will vest if our EPS growth is in the bottom 25% of the index. The vesting percentages will be prorated within individual tiers, except that no shares will vest for EPS growth in the bottom tier.

(8)		These shares will vest on January 2, 2012, based on our earnings per share (“EPS”) growth as against the BMO Staffing Stock Index during the three-year period. The performance shares will fully vest if our EPS growth is in the top 25% of the index. The shares will vest 50% or 25% if our EPS growth is in the second 25% or third 25% of the index, respectively. No shares will vest if our EPS growth is in the bottom 25% of the index. The vesting percentages will be prorated within individual tiers, except that no shares will vest for EPS growth in the bottom tier.

2009 OPTION EXERCISES AND STOCK VESTED

The following table provides certain information for the named executive officers on stock option exercises during 2009, including the number of shares acquired upon exercise and the value realized, and the number of shares acquired upon the vesting of restricted stock awards.


	Option Awards				Stock Awards
	Number of Shares				Number of Shares
	Acquired on		Value Realized on		Acquired on		Value Realized on
	Exercise		Exercise		Vesting		Vesting
Name	(#)		($)		(#)		($)¹
Larry L. Enterline		—	$	—		97,898	$	266,277
Amy Bobbitt		—	$	—		4,859	$	22,421
David L. Kerr		—	$	—		35,782	$	192,157
Michael H. Barker		—	$	—		12,687	$	46,025
Ken R. Bramlett, Jr.		—	$	—		3,816	$	16,038


(1)		Values represent fair market value of stock at the date of vesting.

EMPLOYMENT AGREEMENTS AND POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL

We are parties to employment agreements with each of our executive officers. Each agreement is substantially identical in form and is subject to automatic extensions for a one-year period at the end of the term of each such agreement, unless the agreement is terminated in accordance with its terms. The employment agreements cover base salary, annual incentive programs, perquisites, non-compete and non-solicitation covenants and change of control benefits.

On February 1, 2010, the Compensation Committee of the Board approved two changes to the severance provisions for Larry L. Enterline, Amy Bobbitt, Ken R. Bramlett, Jr., and David L. Kerr, in light of their performance during fiscal 2009 and the expectations of them in the first half of fiscal 2010. Michael H. Barker was excluded from the changes to the severance provisions as it is anticipated he will remain an employee after the Merger. First, the Compensation Committee fixed the severance bonus portion of each executive’s cash severance at their fiscal 2009 bonus amount, rather than the average of their 2008 and 2009 bonuses as specified in their employment agreements. This was due to a 50% reduction in the 2008 bonuses due to deteriorating general economic conditions and not management performance. The Compensation Committee believes the 2009 bonuses are more indicative of ongoing operations. As a result, the severance bonus amounts are expected to be: $375,000 for Enterline; $125,000 for Bobbitt; $138,362 for Bramlett; and, $145,844 for Kerr. In addition, the Compensation Committee pegged the 2010 pro rata bonus for each executive at the following specified amounts: $200,000 for Enterline; $68,000 for Bobbitt; $75,000 for Bramlett; and, $78,000 for Kerr. The pro-rata bonuses took into consideration the projected 2010 salary increases recommended by Mercer for Bobbitt, Bramlett and Kerr and a discretionary bonus for assistance from management in the transaction. In the aggregate, these changes total approximately $400,000 over what these same amounts would have been expected to be had no changes been approved.

Compensation and Benefits Payable Under the Employment Agreements

Base Salary. The base salary is set for each executive in their respective employment agreements. The base salary may be adjusted from time to time as determined by the Compensation Committee. See the Summary Compensation Table above for the base salary information for each of our named executive officers.

Annual Incentive Plan. Under the terms of the employment agreements, each executive is eligible to participate in our annual incentive plan. Under the incentive plan, each executive is eligible for an annual bonus, stated as a percentage of base salary, referred to as the bonus target, based upon the achievement of an annual Adjusted EBITDA target established each year by the Compensation Committee. Except as otherwise approved in any year, the standard percentage bonuses range as follows:


	% of Base Pay			% of Base Pay
Position	Earned at EBITDA Target			Earned at Maximum
Chief Executive Officer		75	%		150	%
Chief Accounting Officer		50	%		100	%
Chief Operating Officer		60	%		120	%
General Counsel		50	%		100	%
Senior Vice President — Corporate Development		50	%		100	%

Except as otherwise approved in any year, each 1% incremental increase over the established Adjusted EBITDA target for each year will result in an additional 10% incremental increase in the bonus payable for the year. No incentive is provided unless a minimum of 90% of the Adjusted EBITDA target is achieved and no additional bonus potential will be earned for any Adjusted EBITDA above 110% of the target. These amounts are subject to annual review by the Compensation Committee. For 2009, the Compensation Committee made certain revisions to the annual incentive plan as described above under “Compensation Discussion and Analysis—Compensation Components — Short-Term Incentives.”

Additional Benefits. Under the terms of the employment agreements, each executive is eligible to receive benefits consistent with all our employees, such as: medical benefits and paid time off. See “Compensation Discussion & Analysis—Compensation Components—Broad-based Employee Benefits” for additional information.

Benefits Payable Upon Termination Without a Change of Control

In the event we do not renew the executive officer’s employment agreement, he is terminated other than for cause, he resigns for good reason, or his employment is terminated due to death or disability, the following benefits are payable under the terms of the employment agreements:

Severance. Severance equal to 150% of the executive officer’s base compensation except for Mr. Enterline, whose employment agreement provides for fixed severance of $750,000.

Annual Incentive Plan. Each executive officer would be entitled to receive a pro rata portion of his current-year bonus, such bonus to be made when the other annual bonus payments are made. In addition, the executive would receive an amount equal to the average annual bonus earned by the executive officer during each of the two years prior to his termination, payable in a lump sum or, in certain circumstances, over a 24-month period.

Insurance and Benefits. Each executive officer would be entitled to receive continued insurance and benefits for a 42-month period following such a termination.

Benefits Payable With a Change of Control

As defined in the employment agreements, a “Change of Control” of us means: (1) the consummation of a Merger Transaction if (a) we are not the surviving entity or (b) as a result of the Merger Transaction, 50% or less of the combined voting power of the then-outstanding securities of the other party to the Merger Transaction, immediately after the date of Change of Control, are held in the aggregate by the holders of Voting Stock immediately prior to the date of Change of Control; (2) the consummation of a Sale Transaction; (3) any Person, other than Permitted Holders, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the outstanding Voting Stock; (4) our stockholders approve our dissolution; and (5) during any period of twenty-four (24) consecutive months, the replacement of a majority of the members of the Board who were members of the Board at the beginning of such period, and such new members shall not have been (a) nominated or appointed to the Board pursuant to the terms of an agreement with us, (b) nominated for election or selected as a director by a duly constituted nominating committee (or a subcommittee thereof) of the Board or (c) approved by a vote of at least a majority of the members of the Board then still in office who either were members of the Board at the beginning of such period or whose election as a member of the Board was so previously approved.

If the executive officer is terminated for any reason other than for cause, or resigns for good reason, during the two-year period following a change of control of us, the benefits set forth above under “Benefits Payable Upon Termination Without a Change of Control,” as well as the following additional benefits, are payable under the terms of the employment agreements:

Special Severance Payment. Each executive officer would also be entitled to receive a special severance payment equal to 50% of the executive officer’s base compensation except for Mr. Enterline, whose employment agreement provides for fixed special severance of $250,000.

Acceleration of Equity Award Vesting. All vesting restrictions related to equity awards previously made to the executive officer will lapse and all such awards shall become fully vested without any requirement for further action on the executive officer’s part.

Gross-Up Payment. In the event it shall be determined that any payment or distribution to or for the benefit of the executive officer upon a change of control would be subject to the excise tax imposed by Section 280G of the Internal Revenue Code or any interest or penalties with respect to such excise tax, then each executive officer will be entitled to receive an additional payment (“gross-up payment”), in an amount such that after payment by the executive of all taxes (including any interest or penalties imposed with respect to such taxes), including any excise tax imposed upon the gross-up payment, the executive retains an amount of the gross-up payment equal to the excise tax imposed upon the payments.

Estimated Payments in the Event of Termination without Cause, Resignation for Good Reason, Termination due to
Death or Disability and Change of Control

The following table shows the amounts that would have been payable to each of the named executive officers assuming a termination as described in the executives’ employment agreements. The table assumes that the relevant triggering event occurred on January 3, 2010 (the “Termination Date”).


	Termination without Cause,								Additional Payments upon Termination without
	Resignation for Good Reason,								Cause or Resignation for Good Reason within Two
	Disability or Death								Years of a Change of Control
									Special				Tax		Pro Rata		Total Change
	Severance		Bonus		Insurance				Severance		Stock-Based		Gross-Up		2009		of Control
Executive	Payments¹		Payments²		Benefits³		Total		Payment⁴		Compensation⁵		Payment⁶		Bonus⁷		Payments

Larry L. Enterline	$	750,000	$	281,250	$	13,249	$	1,044,499	$	250,000	$	1,609,410	$	1,109,293	$	375,000	$	4,388,203
Amy Bobbitt	$	375,000	$	93,750	$	17,695	$	486,445	$	125,000	$	304,749	$	371,975	$	125,000	$	1,413,169
Michael H. Barker	$	525,000	$	157,500	$	38,989	$	721,489	$	175,000	$	940,598	$	747,694	$	210,000	$	2,794,781
Ken R. Bramlett, Jr.	$	415,085	$	103,771	$	36,942	$	555,797	$	138,362	$	499,760	$	519,355	$	138,362	$	1,851,636
David L. Kerr	$	437,531	$	109,383	$	37,146	$	584,060	$	145,844	$	499,760	$	451,286	$	145,844	$	1,826,794


(1)		Amounts are equal to 1.5 times the highest base salary in effect during the 12 months immediately prior to the Termination Date, except for Mr. Enterline, whose agreement provides for fixed severance of $750,000.

(2)		Amounts are equal to 1 times the average annual bonus earned by the executive under our annual incentive plan for the two years ending prior to the Termination Date.

(3)		Amounts are equal to the present value of 42 months of continued insurance and benefits at rates in effect during 2009.

(4)		Amounts are equal to 0.5 times the highest base salary in effect during the 12 months immediately prior to the Termination Date, except for Mr. Enterline, whose agreement provides for fixed special severance of $250,000.

(5)		Amounts are based on the value realized from accelerated vesting and exercise of restricted stock and options as of the last day of the fiscal year at $8.89 per share. See “Compensation Tables—Outstanding Equity Awards at 2009 Fiscal Year End” for more detail on executive holdings.

(6)		Amounts assume a combined federal and state income and Medicare tax rate of 38.2% for Mr. Enterline, 36.7% for Mr. Kerr, 40.6% for Ms. Bobbitt, 40.7% for Mr. Barker and 43.5% for Mr. Bramlett.

(7)		Amounts are equal to bonuses earned under our annual incentive plan for fiscal 2009.

DIRECTOR COMPENSATION

The following table provides certain information with respect to the 2009 compensation of our directors who served in such capacity during the year. The 2009 compensation of those directors who are also our named executive officers is disclosed in the Summary Compensation Table above.


	Fees Earned
	or Paid in						All Other
	Cash		Stock Awards		Option Awards		Compensation		Total
Name	($)		($)¹		($)		($)		($)
Frederick W. Eubank II²	$	—	$	—	$	—	$	—	$	—
Robert Fotsch	$	49,000	$	14,040	$	—	$	—	$	63,040
Robert Z. Hensley	$	68,000	$	14,040	$	—	$	—	$	82,040
Victor E. Mandel	$	48,000	$	14,040	$	—	$	—	$	62,040
Courtney R. McCarthy²	$	—	$	—	$	—	$	—	$	—
Elias J. Sabo²	$	—	$	—	$	—	$	—	$	—


(1)		This column reflects the grant date fair value for restricted stock grants made during 2009. All grants to non-employee members of the Board of Directors are fully vested at the time of grant; therefore, the full fair value of the grant is recognized on the grant date.

(2)		Directors who are employed by us or our principal stockholders receive no additional compensation for serving on our Board of Directors. Therefore, Mr. Eubank, Ms. McCarthy and Mr. Sabo were not eligible for payments during 2009.

We refer to our directors who are neither employed by us nor by our principal stockholders as outside directors. Compensation for our outside directors consists of equity and cash as described below. Our outside directors as of the date of this statement are Robert Fotsch, Robert Z. Hensley and Victor E. Mandel.

Equity Compensation

Our outside directors typically receive an initial grant of 5,000 shares of our common stock when they join our Board, and each of the existing directors received an annual grant of 3,000 shares of our common stock during 2009. All of our director share grants are 100% vested on the grant date.

Cash Compensation

We also pay our outside directors an annual retainer of $25,000, plus meeting fees of $2,000 per meeting of the Board of Directors attended in person and $1,000 per meeting attended by telephone or other electronic means. All directors are also entitled to reimbursement of expenses. Outside directors serving in specified committee positions also receive the following additional annual retainers:


Chairman of the Audit Committee	$	15,000
Chairman of the Compensation Committee	$	7,500
Audit Committee Member	$	5,000

Each committee member receives $2,000 for each meeting of a committee of the Board of Directors attended in person and $1,000 for each committee meeting attended by telephone or other electronic means.

Our outside director fees are payable in cash or, at the election of each director, which is made on an annual basis, in shares of stock determined by the current market price of the stock at the time of each payment.

Determining Director Compensation

The Board of Directors makes all decisions regarding the compensation of the Board of Directors. The Chief Executive Officer makes periodic recommendations regarding director compensation based on his subjective judgment and review of available survey data, and the Board of Directors may exercise its discretion in modifying or approving any adjustments or awards to the directors.


ITEM 12.		SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table provides information about the beneficial ownership of our common stock as of February 26, 2010. We have listed each person known to us that beneficially owns more than 5% of our outstanding common stock, each of our directors, each of our executive officers identified in the Summary Compensation Table below (the “named executive officers”), and all directors and current executive officers as a group.

Beneficial ownership is determined in accordance with the rules of the SEC. The percentage ownership is based on 21,293,875 shares of common stock outstanding as of February 26, 2010. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options and warrants held by that person that are currently exercisable or exercisable within 60 days of February 26, 2010 are deemed outstanding. These shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. The amounts set forth below do not give effect to the accelerated vesting of options to purchase our common stock that will result from the consummation of the Merger.

Except as indicated in the footnotes to this table and as provided pursuant to applicable community property laws, each stockholder named in the table has sole voting and investment power with respect to the shares set forth opposite such stockholder’s name. Unless otherwise indicated, the address for each of the individuals listed below is c/o COMSYS IT Partners, Inc., 4400 Post Oak Parkway, Suite 1800, Houston, Texas 77027.


	Shares of Common Stock Beneficially Owned
Name of Beneficial Owner	Number			Percent¹
Wachovia Investors, Inc., et. al.		3,222,917	²		15.1	%
301 South College Street, 12^th Floor
Charlotte, North Carolina 28288
Amalgamated Gadget, L.P.		2,015,507	³		9.4	%
City Center Tower II
301 Commerce Street, Suite 2975
Fort Worth, Texas 76102
Credit Suisse AG		1,506,842	⁴		7.1	%
Uetilbergstrasse 231, P.O. Box 900, CH 8070
Zurich, Switzerland
Bank of America Corporation et. al.		1,434,389	⁵		6.7	%
100 North Tryon Street
Floor 25, Bank of America Corporate Center
Charlotte, North Carolina 28255
Barclays PLC		1,320,516	⁶		6.2	%
1 Churchill Place
London, England E14 5HP
Links Partners, L.P. and Inland Partners, L.P. et. al.		1,147,637	⁷		5.4	%
61 Wilton Avenue, 2^nd Floor
Westport, Connecticut 06880
Larry L. Enterline		733,157	⁸		3.4	%
Amy Bobbitt		69,765	⁹			*
David L. Kerr		311,019	¹⁰		1.5	%
Michael H. Barker		342,062	¹¹		1.6	%
Ken R. Bramlett, Jr.		248,220	¹²		1.2	%
Frederick W. Eubank II		45,000				*
Robert Fotsch		12,480	¹³			*
Robert Z. Hensley		12,000				*
Victor E. Mandel		32,000	¹⁴			*
Courtney R. McCarthy		45,000				*
Elias J. Sabo		1,197,637	¹⁵		5.6	%
Directors and Executive Officers as a Group (11 persons)		3,048,340			14.3	%


*		Less than one percent.

(1)		These calculations are based on an aggregate of 21,293,875 shares issued and outstanding as of February 26, 2010. Warrants and options to purchase shares held by a person that are exercisable or become exercisable within the 60-day period after February 26, 2010, are deemed to be outstanding for the purpose of calculating the percentage of outstanding shares owned by that person but are not deemed to be outstanding for the purpose of calculating the percentage owned by any other person.


(2)		The amount and nature of the shares beneficially owned are based on a Schedule 13D/A filed on February 2, 2010 by Wachovia Investors, Inc. and Wells Fargo & Company. Wachovia Investors, Inc. and Wells Fargo & Company have reported shared voting and dispositive power over the shares. Wachovia Investors, Inc. is party to the Tender and Voting Agreement with Manpower Inc. but disclaims beneficial ownership of any shares held by the other parties to the Tender and Voting Agreement.

(3)		The amount and nature of the shares beneficially owned are based on a Schedule 13G/A filed on February 12, 2010. This amount includes 163,412 shares of common stock issuable upon exercise of warrants, all of which are currently exercisable. An additional 5,224,071 shares are subject to cash-settled equity swaps, which have no effect on beneficial ownership. Amalgamated Gadget, L.P., an investment manager for R2 Investments, LDC, has sole voting and dispositive power over the reported shares and R2 Investments LDC has no beneficial ownership of such shares. R2 Investments, LDC was a senior secured lender under Venturi Partners, Inc.’s credit facility, which was paid off on September 30, 2004. Amalgamated Gadget, L.P. is controlled by Scepter Holdings, Inc., its general partner, and Mr. Geoffrey Raynor, the President and the sole shareholder of Scepter Holdings, Inc. As the sole general partner of Amalgamated Gadget, L.P., Scepter Holdings, Inc. has sole voting and dispositive power over the reported shares. As the President of Scepter Holdings, Inc., Mr. Raynor has sole voting and dispositive power over the reported shares.

(4)		The amount and nature of the shares beneficially owned are based on a Schedule 13G/A filed on February 16, 2010 by Credit Suisse AG. Credit Suisse AG reported shared voting and dispositive power over the shares shown in the table.

(5)		The amount and nature of the shares beneficially owned are based on a Schedule 13G/A filed on February 1, 2010 by Bank of America Corporation, Bank of America, NA, Columbia Management Advisors, LLC, IQ Investment Advisors LLC and Merrill Lynch, Pierce, Fenner & Smith, Inc. Bank of America reported shared voting power over 1,423,272 shares and shared dispositive power over 1,434,389 shares. Bank of America, NA reported sole voting and dispositive power over 147 shares, shared voting power over 21,706 shares and shared dispositive power over 32,823 shares. Columbia Management Advisors, LLC reported sole voting power over 21,598 shares, sole dispositive power over 32,542 shares and shared dispositive power over 173 shares. IQ Investment Advisors LLC reported shared voting and dispositive power over 2,300 shares. Merrill Lynch, Pierce, Fenner & Smith, Inc. reported sole voting and dispositive power over 1,399,119 shares.

(6)		The amount and nature of the shares beneficially owned are based on a Schedule 13G filed on February 16, 2010 by Barclays PLC. Barclays PLC reported sole voting and dispositive power over the shares shown in the table.

(7)		The amount and nature of the shares beneficially owned are based on a Schedule 13D/A filed on February 4, 2010 by Links Partners, L.P., Inland Partners, L.P., Coryton Management Ltd., Mr. Arthur Coady, Mr. Elias Sabo and Mr. Joe Massoud. Links Partners and Inland Partners have reported shared voting and dispositive power with respect to 587,759 and 559,878 shares, respectively. All other parties reporting in this amendment have reported shared voting and dispositive powers with respect to all shares reported. The number of shares of common stock shown in the table includes 85,242 shares subject to warrants that are currently exercisable. Links Partners, L.P. and Inland Partners, L.P. are parties to the Tender and Voting Agreement with Manpower Inc.

(8)		Includes 236,000 shares subject to stock options that are currently exercisable, as well as 275,639 unvested shares of restricted stock.

(9)		Includes 60,255 unvested shares of restricted stock

(10)		Includes 89,651 unvested shares of restricted stock

(11)		Includes 137,226 shares subject to stock options that are currently exercisable, as well as 162,701 unvested shares of restricted stock. Mr. Barker may be deemed to be the beneficial owner of an aggregate of 2,000 shares of our common stock held by two of his adult children. Mr. Barker disclaims the beneficial ownership of such shares

(12)		Includes 130,000 shares subject to stock options that are currently exercisable, as well as 89,561 unvested shares of restricted stock.

(13)		Mr. Fotsch may be deemed to be the beneficial owner of an aggregate of 480 shares of our common stock held by four of his minor children. Mr. Fotsch disclaims the beneficial ownership of such shares.

(14)		Includes 7,000 shares subject to stock options that are currently exercisable.

(15)		The amount and nature of the shares beneficially owned are based on a Schedule 13D/A filed on February 4, 2010 by Links Partners, L.P., Inland Partners, L.P., Coryton Management Ltd., Mr. Arthur Coady, Mr. Elias Sabo and Mr. Joe Massoud and a Form 4 filed on March 2, 2009 by Elias Sabo. Mr. Sabo has reported shared voting and dispositive power over 1,147,637 shares and sole voting and dispositive power over 50,000 shares. The number of shares of common stock shown in the table also includes 85,242 shares subject to warrants that are currently exercisable.

Wachovia Investors, Inc., Links Partners, L.P, Inland Partners, L.P. and each of the individuals listed in the above table is a party to the Tender and Voting Agreement with Manpower Inc. and, therefore, may be considered a “group” that beneficially owns 6,271,257, or 29.5%, of our common stock. Such amount includes 595,468 shares subject to options and warrants.

Equity Compensation Plan Information

We currently have options outstanding under the 1995 Equity Participation Plan, the 2003 Equity Incentive Plan and the 2004 Stock Incentive Plan. Each of these plans was approved by our stockholders. The 1995 Equity Participation Plan was terminated in connection with our financial restructuring in 2003. The following table provides information about the common stock that may be issued under these plans as of January 3, 2010.

Number of Securities

to be Issued Upon

Weighted Average

Exercise of

Exercise Price of

Number of Securities

Outstanding Options

Remaining Available

Plan Category

and Warrants¹

and Warrants

for Future Issuance

Equity compensation plans approved by security holders

726,790

9.47

1,195,773

Equity compensation plans not approved by security holders

None

Total

726,790

9.47

1,195,773


(1)		No warrants were outstanding under these plans as of January 3, 2010.

Description of Benefit Plans

2004 Stock Incentive Plan

In connection with the Comsys/Venturi merger, our Board of Directors adopted the 2004 Stock Incentive Plan, which was approved by our stockholders on September 27, 2004, and became effective as of September 30, 2004. The plan was subsequently amended and restated by the Board of Directors on April 13, 2007 and approved by our stockholders as of May 23, 2007. The plan was further amended by our Board of Directors on April 1, 2009 and approved by our stockholders on April 13, 2009. Under the 2004 Stock Incentive Plan, the Company may grant non-qualified stock options, incentive stock options, restricted stock and other stock-based awards in its common stock to officers, employees, directors and consultants. Options granted under this plan generally vest over a three-year period from the date of grant and have a term of 10 years.

As of February 26, 2010, options to purchase 284,230 shares of our common stock were outstanding and 1,777,378 shares of our restricted stock have been granted under the Amended and Restated 2004 Stock Incentive Plan since the plan’s inception. As of February 26, 2010, 1,139,964 shares of our common stock remained authorized for issuance and are reserved for future grants under this plan. The weighted average exercise price of the options outstanding under this plan is $10.13 per share.

2003 Equity Incentive Plan

Our 2003 Equity Incentive Plan was approved by our stockholders on July 24, 2003. As of February 26, 2010, options to purchase 442,226 shares of our common stock with a weighted average exercise price of $9.01 were outstanding under our 2003 Equity Incentive Plan and 55,809 shares of our common stock were available for future grants under our 2003 Equity Incentive Plan. No awards were granted to the named executive officers under the 2003 Equity Incentive Plan in 2009.

1995 Equity Participation Plan

Our 1995 Equity Participation Plan was terminated in connection with our financial restructuring in 2003, and all of our officers and directors at the time and most of our employees forfeited their options issued under that plan. Although the 1995 Plan has been terminated and no future option issuances will be made under it, the remaining outstanding stock options will continue to be exercisable in accordance with their terms. As of February 26, 2010, options to purchase 334 shares of our common stock were outstanding under the 1995 Equity Participation Plan. The weighted average exercise price of these options is $63.25.

COMSYS Annual Incentive Plan

The COMSYS Annual Incentive Plan outlines the general terms of our annual bonus program for our employees, including the Chief Executive Officer and our other executive officers. These general terms are supplemented for the executive officers by the terms of these officers’ employment agreements and by Compensation Committee action as taken from time to time.

Old COMSYS 2004 Management Incentive Plan

Effective January 1, 2004, Old COMSYS adopted the 2004 Incentive Plan. The 2004 Incentive Plan was structured as a stock issuance program under which certain executive officers and key employees might receive shares of Old COMSYS nonvoting Class D Preferred Stock in exchange for payment at the then current fair market value of these shares. Effective July 1, 2004, 1,000 shares of Class D Preferred Stock were issued by Old COMSYS under the 2004 Incentive Plan. Effective with the Comsys/Venturi merger, these shares were exchanged for a total of 1,405,844 shares of restricted common stock of COMSYS. Of these shares, one-third vested on the date of the Comsys/Venturi merger, one-third vested over a three-year period subsequent to merger, and one-third vested over a three-year period subject to specific performance criteria being met. Although there will be no future restricted stock issuances under the 2004 Incentive Plan, the remaining outstanding restricted stock awards will continue to vest in accordance with their terms. In accordance with the terms of the 2004 Incentive Plan, any shares forfeited by participants will be distributed to certain stockholders of Old COMSYS in 2010 after the completion of the 2009 audit.

401(k) Plans

We maintain the COMSYS 401(k) Plan covering eligible employees of our Company and its subsidiaries, as defined in the plan document. This plan is a voluntary defined contribution profit-sharing plan. Participating employees can elect to defer and contribute a percentage of their compensation to the plan, not to exceed the dollar limit set by the Internal Revenue Code. For the years ended December 31, 2009, 2008 and 2007, the maximum deferral amount was 50%, subject to limitations set by the Internal Revenue Code. The Company may, at its discretion, make a year-end profit-sharing contribution. No discretionary contributions were made in 2009, 2008 or 2007. Total net expense under the plan amounted to approximately $0.1 million, $1.4 million and $1.5 million in 2009, 2008 and 2007, respectively.

We have suspended the matching contribution to our 401(k) plan effective April 1, 2009. Future matching contributions will be made at our discretion.

Our wholly-owned subsidiary, Pure Solutions, maintains a voluntary defined contribution 401(k) plan for certain qualifying employees which provides for employee contributions. Participating employees may elect to defer and contribute a percentage of their compensation to the plan, not to exceed the dollar limit set by the Internal Revenue Code. For the years ended December 31, 2009, 2008 and 2007, the maximum deferral amount was 50%, subject to limitations set by the Internal Revenue Code. Pure Solutions has the discretion under the plan to match participant deferrals. For 2009, 2008 and 2007, Pure Solutions elected to forego a matching contribution.

During 1999, we established a Supplemental Employee Retirement Plan, or SERP, for our then Chief Executive Officer. When this officer retired in February 2000, the annual benefit payable under the SERP was fixed at $150,000 through March 2017. As of January 3, 2010, approximately $0.9 million was accrued under the SERP.


ITEM 13.		CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Certain Relationships and Related Person Transactions

Review and Approval of Related Person Transactions

Our Board of Directors recognizes that related person transactions present a heightened risk of conflicts of interest and therefore has adopted a written policy to be followed in connection with all related persons transactions involving us. This policy is reviewed periodically and updated as needed. In accordance with this policy, we review all relationships and transactions in which we and our directors, director nominees and executive officers or their immediate family members, as well as holders of more than 5% of any class of our voting securities and their family members, have a direct or indirect material interest. Our legal staff is primarily responsible for the development and implementation of processes and controls to obtain information from these directors, director nominees, executive officers and stockholders with respect to related person transactions and for then determining, based on the facts and circumstances, whether we or a related person has a direct or indirect material interest in the transaction. As required under SEC rules, transactions that are determined to be directly or indirectly material to us or a related person are disclosed in our proxy statement. In addition, the Audit Committee reviews and approves or ratifies any related person transaction that is required to be disclosed. Any member of the Audit Committee who is a related person with respect to a transaction under review may not participate in the deliberations or vote respecting approval or ratification of the transaction; provided, however, that such director may be counted in determining the presence of a quorum at a meeting of the committee that considers the transaction.

Related Person Transactions

Mr. Elias J. Sabo, a member of our Board of Directors, also serves on the board of directors of The Compass Group, the parent company of Venturi Staffing Partners (“VSP”), a former Venturi subsidiary. VSP provides commercial staffing services to us and our clients in the normal course of business. During 2009, we and our clients purchased approximately $3.8 million of staffing services from VSP for services provided to our vendor management clients. At January 3, 2010, we had no amounts payable to VSP.

Frederick W. Eubank II and Courtney R. McCarthy, members of our Board of Directors, are employees of Wachovia Investors, Inc., our largest stockholder and a subsidiary of Wells Fargo & Company (“Wells Fargo”). We and our wholly-owned subsidiary, Plum Rhino, provide commercial staffing services to Wells Fargo in the normal course of its business. During the year ended January 3, 2010, we recorded revenue of approximately $3.6 million related to Wells Fargo’s purchase of staffing services. At January 3, 2010, we had approximately $0.2 million in accounts receivable from Wells Fargo.

Registration Rights Agreements

In connection with the COMSYS/Venturi merger, we filed a “shelf” registration statement with the SEC pursuant to a registration rights agreement we had with a number of our large stockholders. This shelf registration statement, which was declared effective by the SEC on July 20, 2005, was filed on Form S-3 and generally permits delayed or continuous offerings of all of our common stock issued to stockholders in the COMSYS/Venturi merger. Under the registration rights agreement, which we amended as of April 1, 2005, our obligation to keep this registration statement effective has expired, but we have elected to keep it effective for the convenience of the affected stockholders for the maximum period of time permitted by applicable rules and regulations.

Under this registration rights agreement, the stockholders are entitled to an unlimited number of additional shelf registrations, except that we are not obligated to effect any shelf registration within 120 days after the effective date of a previous registration statement (other than registrations on Form S-4 for exchange offers and Form S-8 for employee benefit plans, or forms for similar purposes).

In addition, under the registration rights agreement, Wachovia Investors, Inc. and any of its permitted transferees are entitled to demand a total of three registrations, and another group of institutional stockholders of Old COMSYS (and their permitted transferees) are entitled to demand one registration.

If we receive a request for a demand registration and our Board of Directors determines that it would be in our best interest to have an underwritten primary registration of our securities, we may satisfy the demand registration by having a primary registration of our common stock for our own account, so long as we offer the stockholders party to the registration rights agreement “piggyback” rights to join in our registration.

We are obligated to pay all expenses incurred in connection with registrations pursued under the terms of the registration rights agreement, whether or not these registrations are completed. The selling stockholders are obligated to pay all underwriting discounts and commissions with respect to the shares they are selling for their own accounts. Under the registration rights agreement, we also agreed to indemnify the stockholders and their affiliated and controlling parties for violations of federal and state securities laws and regulations, including material misstatements and omissions in the offering documents with respect to any registration, except with respect to any information furnished in writing to us by a stockholder expressly for use in the registration statement or any holder’s failure to deliver a prospectus timely supplied by us that corrected a previous material misstatement or omission. In the event indemnification is unavailable to a party, or insufficient to hold the party harmless, we have further agreed to contribute to the losses incurred by the party.

Also in connection with the COMSYS/Venturi merger, we made conforming amendments to our existing registration rights agreement with the holders of our common stock and warrants received in connection with our April 2003 restructuring, as further amended effective April 1, 2005. Under this agreement, we were obligated to register approximately 5,785,000 shares of our common stock. The holders of such registration rights also participated in our shelf registration that was declared effective by the SEC on July 20, 2005.

Director Independence

Board of Directors

Our Corporate Governance Policy provides that a majority of our directors must be “independent” as provided by the Nasdaq listing standards. Our Board of Directors has determined that all directors, except for Mr. Enterline, meet the standards regarding independence set forth in the Nasdaq listing standards and our Corporate Governance Policy. In conducting its review of director independence, the Board of Directors reviewed the following transactions, relationships or arrangements.


Name		Matter Considered
Elias Sabo		Staffing services purchased by us from Venturi Staffing Partners in the normal course of business
Frederick Eubank and Courtney McCarthy		Staffing services provided to Wachovia in the normal course of business

Audit Committee

Our Audit Committee currently consists of Messrs. Hensley, Mandel and Fotsch. Our Board of Directors has determined that each current member of the Audit Committee is independent for purposes of serving on the Audit Committee under the Nasdaq listing standards and applicable federal law.

Compensation Committee

Our Compensation Committee currently consists of Mr. Eubank, Ms. McCarthy and Mr. Hensley. Our Board of Directors has determined that each current member of the Compensation Committee is independent for purposes of serving on such committee under the Nasdaq listing standards.

Our Board of Directors has also determined that each current member of the Compensation Committee is an “outside director” in accordance with Section 162(m) of the Internal Revenue Code and that Mr. Eubank, Ms. McCarthy and Mr. Hensley currently qualify as “non-employee directors” in accordance with Rule 16b-3 of the Exchange Act.

Governance and Nominating Committee

Our Governance and Nominating Committee currently consists of Mr. Eubank, Ms. McCarthy and Mr. Sabo and has two vacancies created by the resignations of two former directors. Our Board of Directors has determined that each current member of the Governance and Nominating Committee is independent for purposes of serving on such committee under the Nasdaq listing standards.


ITEM 14.		PRINCIPAL ACCOUNTING FEES AND SERVICES

Ernst & Young LLP has served as our independent registered public accounting firm since October 21, 2004. Prior to this engagement, Ernst & Young LLP served as the independent registered public accounting firm for Old COMSYS. Since its engagement, Ernst & Young LLP has provided certain services related to the audits of our consolidated financial statements, our periodic filings made with the SEC, services related to various registration statements filed by us with the SEC and other services as described below.

The following is a summary of the fees billed to us by Ernst & Young LLP for professional services rendered for 2009 and 2008:


	January 3,		December 28,
	2010		2008
Audit fees	$	1,280,187	$	1,194,255
Audit-related services		—		3,000
Tax fees		12,909		56,914
All other fees		—		—

Total fees	$	1,293,096	$	1,254,169

	•		Audit Fees—fees for audit services, which relate to the fiscal year consolidated audits for 2009 and 2008, the review of the financial statements included in our quarterly reports on Form 10-Q for the first three fiscal quarters of 2009 and 2008 and related earnings releases, and other services that are normally provided by the independent registered public accounting firm in connection with our statutory and regulatory filings.

	•		Audit-Related Services—fees for audit-related services, which consist of assurance and related services in connection with acquisitions and the audit of our employee benefit plans.

	•		Tax Services—fees for tax services, consisting of tax compliance services and tax planning and advisory services.

The Audit Committee has considered whether the non-audit services provided to us by Ernst & Young LLP impaired the independence of Ernst & Young LLP and concluded that they did not.

The Audit Committee has adopted a pre-approval policy that provides guidelines for the audit, audit-related, tax and other non-audit services that may be provided to us by the independent registered public accounting firm. The policy: (a) identifies the guiding principles that must be considered by the Audit Committee in approving services to ensure that independent registered public accounting firm’s independence is not impaired; (b) describes the audit, audit-related, tax and other services that may be provided and the non-audit services that are prohibited; and (c) sets forth pre-approval requirements for all permitted services. Under the policy, all services to be provided by our independent registered public accounting firm must be pre-approved by the Audit Committee. The Audit Committee pre-approved all of the fees listed above that we incurred for services rendered by our independent registered public accounting firm in 2009 and 2008.

PART IV


ITEM 15.		EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)

The following documents are filed as part of this Annual Report on Form 10-K:

	1.		Financial Statements:

			Report of Independent Registered Public Accounting Firm

			Consolidated Balance Sheets—As of January 3, 2010 and December 28, 2008

			Consolidated Statements of Operations—Years ended January 3, 2010, December 28, 2008 and December 30, 2007

			Consolidated Statements of Comprehensive Income (Loss)—Years ended January 3, 2010, December 28, 2008 and December 30, 2007

			Consolidated Statements of Stockholders’ Equity—Years ended January 3, 2010, December 28, 2008 and December 30, 2007

			Consolidated Statements of Cash Flows—Years ended January 3, 2010, December 28, 2008 and December 30, 2007

			Notes to Consolidated Financial Statements

			Report of Independent Registered Public Accounting Firm

	2.		Financial Statement Schedules: Schedules not filed herewith are either not applicable, the information is not material or the information is set forth in the Consolidated Financial Statements or notes thereto.

	3.		Exhibits: The exhibits identified in the accompanying Exhibit Index are filed with this report or incorporated herein by reference. Exhibits designated with an “*” are attached. Exhibits designated with a “+” are identified as management contracts or compensatory plans or arrangements. Exhibits previously filed as indicated below are incorporated by reference.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Date: March 1, 2010	COMSYS IT PARTNERS, INC.
	By:	/s/ Amy Bobbitt
		Name:	Amy Bobbitt
		Title:	Senior Vice President and Chief Accounting Officer

POWER OF ATTORNEY

The undersigned directors and officers of COMSYS IT Partners, Inc. hereby constitute and appoint Ken R. Bramlett, Jr. and Amy Bobbitt, and each of them, with the power to act without the other and with full power of substitution and resubstitution, our true and lawful attorneys-in-fact and agents with full power to execute in our name and behalf in the capacities indicated below any and all amendments to this report and to file the same, with all exhibits and other documents relating thereto and hereby ratify and confirm all that such attorneys-in-fact, or either of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Exchange Act, this report has been signed by the following persons in the capacities indicated on March 1, 2010:


/s/ Larry L. Enterline Larry L. Enterline		Chief Executive Officer and Director (principal executive officer)

/s/ Amy Bobbitt Amy Bobbitt		Senior Vice President and Chief Accounting Officer (principal financial and accounting officer)

/s/ Frederick W. Eubank II Frederick W. Eubank II		Director

/s/ Courtney R. McCarthy Courtney R. McCarthy		Director

/s/ Victor E. Mandel Victor E. Mandel		Director

/s/ Robert Z. Hensley Robert Z. Hensley		Director

/s/ Robert Fotsch Robert Fotsch		Director

/s/ Elias J. Sabo Elias J. Sabo		Director

INDEX TO EXHIBITS

Incorporated by Reference

Exhibit

Number

Exhibit Description

Form

Number

Filing Date

2.1

Agreement and Plan of Merger, dated as of February 1, 2010, among Comsys IT Partners, Inc., Manpower Inc., and Taurus Merger Sub, Inc.

8-K

2.1

February 2, 2010

2.2

Tender and Voting Agreement, dated as of February 1, 2010, among Manpower Inc., and the persons listed on Schedule I attached thereto.

8-K

2.2

February 2, 2010

3.1

Amended and Restated Certificate of Incorporation of COMSYS IT Partners, Inc.

8-K

3.1

October 4, 2004

3.2

Amended and Restated Bylaws of COMSYS IT Partners, Inc.

8-K

3.2

October 4, 2004

3.3

First Amendment to the Amended and Restated Bylaws of COMSYS IT Partners, Inc.

8-K

3.1

May 4, 2005

4.1

Registration Rights Agreement, dated as of September 30, 2004, between COMSYS IT Partners, Inc. and certain of the old COMSYS Holdings stockholders party thereto

8-A/A

4.2

November 2, 2004

4.2

Amendment No. 1 to Registration Rights Agreement dated April 1, 2005 between COMSYS IT Partners, Inc., and certain of the old COMSYS Holdings stockholders party thereto

10-Q

4.2

May 6, 2005

4.3

Amended and Restated Registration Rights Agreement, dated as of September 30, 2004, between COMSYS IT Partners, Inc. and certain of the old Venturi stockholders party thereto

8-A/A

4.3

November 2, 2004

4.4

Amendment No. 1 to Amended and Restated Registration Rights Agreement dated April 1, 2005 between COMSYS IT Partners, Inc., and certain of the old Venturi stockholders party thereto

10-Q

4.4

May 6, 2005

4.7

Common Stock Purchase Warrant dated as of April 14, 2003, issued by the Company in favor of BNP Paribas

8-K

99.16

April 25, 2003

4.8

Specimen Certificate for Shares of Common Stock

10-K

4.6

April 1, 2005

10.1

Credit Agreement dated as of December 14, 2005, among COMSYS Services LLC, COMSYS Information Technology Services, Inc. and Pure Solutions, Inc., as borrowers, COMSYS IT Partners, Inc. and PFI LLC, as guarantors, COMSYS Services LLC acting in its capacity as borrowing agent and funds administrator for the borrowers, Merrill Lynch Capital, as administrative agent, a lender, sole bookrunner and sole lead arranger, ING Capital LLC, as co-documentation agent and as a lender, Allied Irish Banks PLC, as co-documentation agent and as a lender, GMAC Commercial Finance LLC, as syndication agent and as a lender, and the lenders from time to time party thereto

8-K

10.1

December 15, 2005

10.1

Consent and First Amendment to Credit Agreement, dated as of March 31, 2006, among COMSYS Services LLC, COMSYS Information Technology Services, Inc. and Pure Solutions, Inc., as borrowers, COMSYS IT Partners, Inc. and PFI LLC, as guarantors, COMSYS Services LLC, acting in its capacity as borrowing agent and funds administrator for the borrowers, Merrill Lynch Capital, as administrative agent, a lender, sole bookrunner and sole lead arranger, ING Capital LLC, as co-documentation agent and as a lender, Allied Irish Banks PLC, as co-documentation agent and as a lender, GMAC Commercial Finance LLC, as syndication agent and as a lender, and the lenders from time to time party thereto

8-K

10.1

September 15, 2006

10.1b

Consent, Waiver and Second Amendment to Credit Agreement, dated as of September 15, 2006, among COMSYS Services LLC, COMSYS Information Technology Services, Inc. and Pure Solutions, Inc., as borrowers, COMSYS IT Partners, Inc., PFI LLC and COMSYS IT Canada, Inc. as guarantors, COMSYS Services LLC, acting in its capacity as borrowing agent and funds administrator for the borrowers, Merrill Lynch Capital, as administrative agent, a lender, sole bookrunner and sole lead arranger, ING Capital LLC, Allied Irish Banks PLC, and BMO Capital Markets Financing, Inc., as co-documentation agents and as lenders, GMAC Commercial Finance LLC, as syndication agent and as a lender, and the lenders from time to time party thereto

8-K

10.2

September 15, 2006

Incorporated by Reference

Exhibit

Number

Exhibit Description

Form

Number

Filing Date

10.1c

Consent and Third Amendment to Credit Agreement, dated as of December 15, 2006, among COMSYS Services LLC, COMSYS Information Technology Services, Inc. and Pure Solutions, Inc., as borrowers, COMSYS IT Partners, Inc., PFI LLC and COMSYS IT Canada, Inc., as guarantors, COMSYS Services LLC, acting in its capacity as borrowing agent and funds administrator for the borrowers, Merrill Lynch Capital, as administrative agent, a lender, sole bookrunner and sole lead arranger, ING Capital LLC, Allied Irish Banks PLC and BMO Capital Markets Financing, Inc., as co-documentation agents and as lenders, GMAC Commercial Finance LLC, as syndication agent and as a lender, and the lenders from time to time party thereto

8-K

10.1

December 18, 2006

10.1d

Consent and Fourth Amendment to Credit Agreement, dated as of March 15, 2007, among COMSYS Services LLC, COMSYS Information Technology Services, Inc. and Pure Solutions, Inc., as borrowers, COMSYS IT Partners, Inc., PFI LLC and COMSYS IT Canada, Inc., as guarantors, COMSYS Services LLC, acting in its capacity as borrowing agent and funds administrator for the borrowers, Merrill Lynch Capital, as administrative agent, a lender, sole bookrunner and sole lead arranger, ING Capital LLC, Allied Irish Banks PLC and BMO Capital Markets Financing, Inc., as co-documentation agents and as lenders, GMAC Commercial Finance LLC, as syndication agent and as a lender, and the lenders from time to time party thereto

10-Q

10.1

May 9, 2007

10.1e

Consent and Fifth Amendment to Credit Agreement, dated as of May 31, 2007, among COMSYS Services LLC, COMSYS Information Technology Services, Inc. and Pure Solutions, Inc., as borrowers, COMSYS IT Partners, Inc., PFI LLC, COMSYS IT Canada, Inc. and Econometrix, LLC, as guarantors, COMSYS Services LLC, acting in its capacity as borrowing agent and funds administrator for the borrowers, Merrill Lynch Capital, as administrative agent, a lender, sole bookrunner and sole lead arranger, ING Capital LLC, Allied Irish Banks PLC and BMO Capital Markets Financing, Inc., as co-documentation agents and as lenders, GMAC Commercial Finance LLC, as syndication agent and as a lender, and the lenders from time to time party thereto

10-Q

10.1

August 10, 2007

10.1f

Consent and Sixth Amendment to Credit Agreement, dated as of December 12, 2007, among COMSYS Services LLC, COMSYS Information Technology Services, Inc. and Pure Solutions, Inc., as borrowers, COMSYS IT Partners, Inc., PFI LLC, COMSYS IT Canada, Inc., Econometrix, LLC, and Plum Rhino Consulting, LLC, as guarantors, COMSYS Services LLC, acting in its capacity as borrowing agent and funds administrator for the borrowers, Merrill Lynch Capital, as administrative agent, a lender, sole bookrunner and sole lead arranger, ING Capital LLC, Allied Irish Banks PLC and BMO Capital Markets Financing, Inc., as co-documentation agents and as lenders, GMAC Commercial Finance LLC, as syndication agent and as a lender, and the lenders from time to time party thereto

10-K

10.1f

March 12, 2008

10.1g

Consent and Seventh Amendment to Credit Agreement, dated as of December 19, 2007, among COMSYS Services LLC, COMSYS Information Technology Services, Inc. and Pure Solutions, Inc., as borrowers, COMSYS IT Partners, Inc., PFI LLC, COMSYS IT Canada, Inc., Econometrix, LLC, and Plum Rhino Consulting, LLC, as guarantors, COMSYS Services LLC, acting in its capacity as borrowing agent and funds administrator for the borrowers, Merrill Lynch Capital, as administrative agent, a lender, sole bookrunner and sole lead arranger, ING Capital LLC, Allied Irish Banks PLC and BMO Capital Markets Financing, Inc., as co-documentation agents and as lenders, GMAC Commercial Finance LLC, as syndication agent and as a lender, and the lenders from time to time party thereto

10-K

10.1g

March 12, 2008

10.1h

Consent and Eighth Amendment to Credit Agreement, dated as of June 13, 2008, among COMSYS Services LLC, COMSYS Information Technology Services, Inc., Pure Solutions, Inc., Plum Rhino Consulting, LLC, Praeos Technologies, LLC, and TWC Group Consulting, LLC, as borrowers, COMSYS IT Partners, Inc., PFI LLC, COMSYS IT Canada, Inc., Econometrix, LLC, as guarantors, COMSYS Services LLC, acting in its capacity as borrowing agent and funds administrator for the borrowers, GE Business Financial Services, Inc., as administrative agent, a lender, sole bookrunner and sole lead arranger, ING Capital LLC, Allied Irish Banks PLC and BMO Capital Markets Financing, Inc., as co-documentation agents and as lenders, GMAC Commercial Finance LLC, as syndication agent and as a lender, and the lenders from time to time party thereto

10-Q

10.1

August 6, 2008


			Incorporated by Reference
Exhibit				Exhibit
Number		Exhibit Description	Form	Number		Filing Date
10.1	i	Consent and Ninth Amendment to Credit Agreement, dated as of March 23, 2009, among COMSYS Services LLC, COMSYS Information Technology Services, Inc., Pure Solutions, Inc., Plum Rhino Consulting, LLC, Praeos Technologies, LLC, ASET International Services Corporation, and TAPFIN LLC, as borrowers, COMSYS IT Partners, Inc., PFI LLC, COMSYS IT Canada, Inc., Econometrix, LLC, as guarantors, COMSYS Services LLC, acting in its capacity as borrowing agent and funds administrator for the borrowers, GE Business Financial Services, Inc., as administrative agent, a lender, sole bookrunner and sole lead arranger, ING Capital LLC, Allied Irish Banks PLC and BMO Capital Markets Financing, Inc., as co-documentation agents and as lenders, GMAC Commercial Finance LLC, as syndication agent and as a lender, and the lenders from time to time party thereto	8-K		10.1	March 24, 2009

10.5		Guaranty, dated as of December 14, 2005, among COMSYS IT Partners, Inc. and PFI LLC, as guarantors, in favor of Merrill Lynch Capital, in its capacity as administrative agent	8-K		10.2	December 15, 2005

10.6		Guaranty, dated as of June 15, 2006, by COMSYS IT Canada, Inc. in favor of Merrill Lynch Capital, in its capacity as administrative agent	8-K		10.3	September 15, 2006

10.7	+	2004 Stock Incentive Plan, as Amended	Proxy Statement	Appendix A		April 13, 2009

10.8	+	2003 Equity Incentive Plan	Proxy Statement	Annex C		June 24, 2003

10.9	+	Old COMSYS 2004 Management Incentive Plan	10-K		10.10	April 1, 2005

10.10	+	Second Amended and Restated Employment Agreement dated January 1, 2009, between COMSYS IT Partners, Inc. and Michael H. Barker	10-K		10.10	March 11, 2009

10.11	+	First Amended and Restated Employment Agreement dated January 1, 2009, between COMSYS IT Partners, Inc. and Amy Bobbitt	10-K		10.11	March 11, 2009
10.12	+	First Amended and Restated Employment Agreement dated January 1, 2009, between COMSYS IT Partners, Inc. and Ken R. Bramlett, Jr.	10-K		10.12	March 11, 2009

10.13	+	First Amended and Restated Employment Agreement dated January 1, 2009, between COMSYS IT Partners, Inc. and Larry L. Enterline	10-K		10.13	March 11, 2009

10.14	+	Second Amended and Restated Employment Agreement dated January 1, 2009, between COMSYS IT Partners, Inc. and David L. Kerr	10-K		10.14	March 11, 2009

10.25	+	Form of Indemnification Agreement between COMSYS IT Partners, Inc. and each of the Company’s directors and executive officers	8-K		10.1	May 4, 2005

21.1	*	List of Subsidiaries of the Company

23.1	*	Consent of Independent Registered Public Accounting Firm

24.1	*	Power of Attorney (included on signature page)

31.1	*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	*	Certification of Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32	*	Certification of Chief Executive Officer and Chief Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


#		This exhibit is substantially identical to Common Stock Purchase Warrants issued by the Company on the same date to each of Bank of America, N.A. and Bank One, N.A., and to Common Stock Purchase Warrants, reflecting a transfer of a portion of such Common Stock Purchase Warrants, issued by the Company (i) as of the same date to each of Inland Partners, L.P., Links Partners L.P., MatlinPatterson Global Opportunities Partners L.P. and R2 Investments, LDC and (ii) on August 6, 2003 to Mellon HBV SPV LLC.

COMSYS IT PARTNERS INC 10-K