11-K 1 body11-k.htm 11-K 2005 11-K 2005


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 11-K

[X] Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2005

OR

[ ] Transition Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934
For the transition period from ___________ to ___________

Commission file number 0-4090



A. Full title of the plan and the address of the plan, if different from that of the issuer named below:

Analysts International Corporation Savings and Investment Plan

B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

Analysts International Corporation
3601 West 76th Street
Minneapolis, MN 55435
(952) 835-5900
 
 


ANALYSTS INTERNATIONAL CORPORATION
SAVINGS AND INVESTMENT PLAN

INDEX









Savings and Investment Plan Committee
Analysts International Corporation
Minneapolis, Minnesota

We have audited the accompanying statements of net assets available for plan benefits of the Analysts International Corporation Savings and Investment Plan (the “Plan”) as of December 31, 2005 and 2004, and the related statements of changes in net assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan’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. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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, such financial statements present fairly, in all material respects, the net assets available for plan benefits as of December 31, 2005 and 2004, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of (1) assets (held at end of year) as of December 31, 2005, and (2) reportable transactions for the year ended December 31, 2005, are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These schedules are the responsibility of the Plan’s management. Such schedules have been subjected to the auditing procedures applied in our audit of the basic 2005 financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole.


/s/ Deloitte & Touche LLP
Minneapolis, Minnesota
June 27, 2006

1

ANALYSTS INTERNATIONAL CORPORATION
SAVINGS AND INVESTMENT PLAN




   
December 31,
  
   
2005
  
2004
  
               
Participant directed investments, stated at market value
  
$
77,868,054
  
$
79,557,703
  
(See Notes F and G)
              
               
Non-participant directed investments, stated at market value
    
-
    
-
  
(See Note G)
              
               
Net assets available for plan benefits
  
$
77,868,054
  
$
79,557,703
  


See notes to financial statements.

2

ANALYSTS INTERNATIONAL CORPORATION
SAVINGS AND INVESTMENT PLAN




   
Year Ended December 31,
  
   
2005
  
2004
  
               
Net assets available for plan benefits, beginning of year
  
$
79,557,703
  
$
75,830,087
  
               
Additions:
              
Investment income
    
2,094,105
    
1,245,518
  
Contributions by employer
    
262,601
    
476,774
  
Contributions by participants
    
6,209,284
    
6,605,890
  
Net (depreciation)/appreciation in market value of investments
    
(82,134
)
  
5,714,329
  
     
8,483,856
    
14,042,511
  
Deductions:
              
Distributions to participants
    
10,173,479
    
10,312,949
  
Loan fees
    
26
    
1,946
  
     
10,173,505
    
10,314,895
  
               
Net (deductions)/additions
   
(1,689,649
)
  
3,727,616
  
               
Net assets available for plan benefits, end of year
  
$
77,868,054
  
$
79,557,703
  


See notes to financial statements.

3

ANALYSTS INTERNATIONAL CORPORATION
SAVINGS AND INVESTMENT PLAN


YEARS ENDED DECEMBER 31, 2005 AND 2004

The following description of the Analysts International Corporation (the “Company”) Savings and Investment Plan (the “Plan”) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended.

A. Summary of Significant Accounting Policies

Investments are valued by the trustee at fair market value quoted market values. Promissory notes from participants are stated at the outstanding principal balance.

The financial statements have been prepared on the accrual basis of accounting. Dividends are recorded on the ex-dividend date. All security transactions are recorded on their trade date.

Prior to May 1, 2004, the Company designated investment options for the employer matching contributions to the AIC Common Stock Fund. As such, participants did not have complete control of their assets invested in this fund. As of May 1, 2004, the employer match is still initially invested in the AIC Common Stock Fund, but participants are able to reallocate the employer match among each of the twenty-one investment options in the Plan.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of additions and deductions during the reporting period. Actual results could differ from those estimates.

The Plan invests in various securities including U.S. Government securities, mutual funds, and corporate stocks. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the participants’ accounts and statements of net assets available for plan benefits.

B. The Plan

The Plan became effective January 1, 1985 under Section 401(k) of the Internal Revenue Code for the purpose of providing retirement and other benefits to eligible participants. An employee of the Company becomes eligible for the Plan upon commencement of active service.

The Plan is funded primarily by employee contributions. Eligible employees may contribute up to 50% of their gross annual wages for pre-tax saving contributions. Participants may choose to increase their contributions automatically at pre-designated intervals. Highly-compensated employees’ contributions are limited based on discrimination testing performed. In addition, the Plan allows rollover contributions from certain qualified retirement plans.

Plan participants may choose to invest their pre-tax saving contributions in one or more of twenty-one investment options offered by the Putnam, Vanguard, Neuberger Berman, Baron, Julius Baer, PIMCO companies and/or the AIC Common Stock Fund. The fund choices include the Putnam Money Market Fund, the Putnam U.S. Government Income Trust, the Putnam High Yield Trust, the Putnam Fund for Growth and Income, the Putnam Voyager Fund, the Neuberger Berman Genesis Trust, Vanguard 500 Index Admiral Shares, Baron Small Cap Fund, Julius Baer International Equity Fund, PIMCO Total Return Fund, AIC Common Stock Fund, Putnam RetirementReady Maturity, Putnam RetirementReady 2010, Putnam RetirementReady 2015, Putnam RetirementReady 2020, Putnam RetirementReady 2025, Putnam RetirementReady 2030, Putnam RetirementReady 2035, Putnam RetirementReady 2040, Putnam RetirementReady 2045 and Putnam RetirementReady 2050.
 
4
 
Effective October 2004, RetirementReady mutual funds replaced commingled trust RetirementReady options previously available in the Plan. Funds added in November 2004 include the Baron Small Cap Fund, the Julius Baer International Equity Fund, and the PIMCO Total Return Fund. Funds discontinued in November 2004 include the Putnam OTC and Emerging Growth Fund, the Putnam Global Equity Fund, the Putnam International Equity Fund, the Putnam Capital Opportunities Fund, the Janus Mercury Fund, and the Janus Growth and Income Fund.

Participant loans are made in compliance with federal regulations in effect at the time of the loan. The loan origination fee is paid directly to the trustee and is withdrawn directly from the participant’s account at the date of the loan issue. Participant loans outstanding, included in investments, amounted to $586,672 at December 31, 2005, and $690,465 at December 31, 2004.

The Plan provides for employer matching contributions where the employer matches 18% on the first 15% of employee's pre-tax saving contributions, provided the employee has been employed by the employer for one year or more and is not a highly compensated employee as defined by federal tax laws. The employer matching contributions are invested in the AIC Common Stock Fund. As of May 1, 2004, participants may move employer matching contributions out of the AIC Common Stock Fund to any of the funds available in the Plan.

A participant's interest in the employer matching contribution vests at a rate of 20% per year after one year of service with 100% vesting after five years. Any non-vested portion of employer matching contributions to the accounts of participants who withdraw from the Plan are forfeited in compliance with federal regulations and used by the employer to reduce future matching contributions. Amounts forfeited by employees that were applied to matching contributions totaled $250,006 in 2005 and $112,376 in 2004.

To receive distributions or withdrawals, participants contact Putnam and fill out a request. For participants who have terminated their employment, balances under $1,000 are automatically distributed within 90 days.

Although the Company has not expressed intent to discontinue the Plan, it may do so at any time, subject to provisions set forth in ERISA. If the Plan is terminated, no further contributions will be made and participants would become 100% vested in their entire account balance. The trustee will continue to hold the funds and make distributions as if the Plan had not terminated.

C. Trustee and Administration of the Plan

Mercer Investments has been designated as trustee. Putnam Investor Services, Inc., The Vanguard Group, Neuberger Berman Management Inc., Baron Funds, Julius Baer Funds and PIMCO Funds hold investments of the Plan on behalf of the trustee. The Company has established a Savings and Investment Plan Committee for the general administration of the Plan. The Company pays the trustee fees on behalf of the Plan.

D. Related Party Transactions
Certain Plan investments are shares of mutual funds managed by Mercer Investments. These transactions qualify as exempt party-in-interest transactions.

At December 31, 2005 and December 31, 2004, the Plan held 1,730,580 and 1,896,815 shares, respectively, of common stock of Analysts International Corporation, the sponsoring employer, with a cost basis of $10,645,232 and $17,077,485 respectively. During the years ended December 31, 2005 and December 31, 2004 the Plan did not record dividend income from this stock.

E. Internal Revenue Service Status

The Internal Revenue Service has determined and informed the Company by a letter dated December 11, 2002, that the Plan was designed in accordance with applicable Internal Revenue Code requirements. The Plan’s sponsor is committed to correcting all operational errors, if any, to maintain the Plan's qualified tax status. Because the trust is considered exempt from income tax, no provisions for tax have been added.

5

F. Investments

Investments Greater than 5% of Plan Net Assets as of December 31, 2005
 
   
December 31,
   
2005
  
2004
Investments at market value:
            
Putnam Money Market Fund
  
$
4,988,796
  
$
5,243,886
Putnam U.S. Government Income Trust
    
4,201,305
    
4,713,480
Putnam Fund for Growth and Income
    
12,502,684
    
13,646,078
Putnam Voyager Fund
    
18,467,991
    
20,288,758
Vanguard 500 Index Admiral Shares
    
4,951,746
    
4,778,763
Neuberger Berman Genesis Trust
    
5,532,629
    
4,172,793
Baron Small Cap Fund
    
6,187,828
    
5,332,299
Julius Baer International Equity Fund
    
9,207,038
    
7,426,174
AIC Common Stock Fund
    
4,153,392
    
7,587,259
Total
  
$
70,193,409
  
$
73,189,490



The Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) (depreciated)/appreciated in value as follows:

   
December 31,
   
2005
  
2004
             
Mutual Funds
 
$
2,821,934
  
$
4,547,426
AIC Common Stock Fund
   
(2,904,068
)
  
1,166,903
             
   
$
(82,134
)
$
5,714,329

6

G. Non-Participant Directed Investments

Information about the net assets and the significant components of the changes in net assets relating to the non-participant directed investments is as follows:

   
December 31,
  
December 31,
  
   
2005*
  
2004*
  
Net assets:
             
AIC Common Stock Fund - total
  
$
4,153,392
  
$
7,587,259
  
Less: AIC Common Stock Fund - participant directed
    
(4,153,392
)
  
(7,587,259
)
               
AIC Common Stock Fund - non-participant directed
 
$
0
  
$
0
  

           
   
December 31,
  
December 31,
  
 
    
2005*  
    
2004*
  
Change in net assets:
              
Contributions by employer
  
$
262,601
  
$
476,774
  
Net (depreciation) appreciation
    
0
    
(527,139
)
Benefits paid to participants
    
0
    
(141,370
)
Forfeitures
    
250,006
    
24,750
  
Release of Funds to Participants
  
$
(512,607
)
$
(3,636,902
)
 
              
   
$
0
  
$
(3,803,887
)

* Prior to May 1, 2004, the Company designated investment options for the employer matching contributions to the AIC Common Stock Fund. As such, participants did not have complete control of their assets invested in this fund.  The balance of the AIC Common Stock Fund as of April 30, 2004 was $5,775,723 of which $3,345,405 was non-participant directed.  As of May 1, 2004, the employer matching contribution is still initially invested in the AIC Common Stock Fund, but participants are able to reallocate the match among each of the twenty-one investment options in the Plan.

H. Reconciliation Between Financial Statements and Form 5500

The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500 as of December 31: 

   
2005
  
2004
  
               
Net assets available for benefits per the financial statements
  
$
77,868,054
  
$
79,557,703
  
Less: Deemed distribution activity
    
(42,677
)
  
(57,182
)
               
Net assets available for benefits per Form 5500
 
$
77,825,377
  
$
79,500,521
  

The following is a reconciliation of deemed distributions of loans per the financial statements to the Form 5500 for the year ended December 31, 2005:
   
2005
  
         
Deemed distribution of loans per the financial statements
    
0
  
Deemed distribution activity
  
$
(42,677
)
         
Deemed distribution activity per the Form 5500
  
$
(42,677
)

Deemed distributions are recorded on the Form 5500 for active participants who defaulted on their loans and deemed to have taken a distribution of their loan amount.

7

SUPPLEMENTAL SCHEDULES FURNISHED PURSUANT TO
THE REQUIREMENTS OF FORM 5500


ANALYSTS INTERNATIONAL CORPORATION
SAVINGS AND INVESTMENT PLAN
EIN 41-0905408, PLAN# 001

SCHEDULE OF ASSETS (HELD AT END OF YEAR)

   
Number of
      
Current
  
   
Shares
  
Cost
  
Value
  
Mutual Funds:
                    
Putnam Money Market Fund *
    
4,988,796
  
$
4,988,796
  
$
4,988,796
  
Putnam U.S. Government Income Trust *
    
319,978
    
4,163,237
    
4,201,305
  
Putnam High Yield Trust *
    
473,737
    
4,400,159
    
3,761,470
  
Putnam Fund for Growth and Income *
    
633,689
    
11,284,805
    
12,502,684
  
Putnam Voyager Fund *
    
1,061,379
    
18,383,407
    
18,467,991
  
Putnam RetirementReady Maturity *
    
2,875
    
164,638
    
162,721
  
Putnam RetirementReady 2010 *
    
4,387
    
255,152
    
255,590
  
Putnam RetirementReady 2015 *
    
7,869
    
499,695
    
511,557
  
Putnam RetirementReady 2020 *
    
5,801
    
365,508
    
378,078
  
Putnam RetirementReady 2025 *
    
5,813
    
413,681
    
414,875
  
Putnam RetirementReady 2030 *
    
7,122
    
467,088
    
483,156
  
Putnam RetirementReady 2035 *
    
4,638
    
302,634
    
318,375
  
Putnam RetirementReady 2040 *
    
2,420
    
160,586
    
169,917
  
Putnam RetirementReady 2045 *
    
2,130
    
143,148
    
149,816
  
Putnam RetirementReady 2050
   
766
    
41,893
    
42,173
  
Vanguard 500 Index Admiral Shares
Neuberger Berman Genesis Trust
    
43,089
113,957
    
4,367,652
4,521,045
    
4,951,746
5,532,629
  
Baron Small Cap Fund
    
267,062
    
5,505,085
    
6,187,828
  
Julius Baer International Equity Fund
    
259,792
    
7,845,930
    
9,207,038
  
PIMCO Total Return Fund
    
41,836
    
446,172
    
439,282
  
Pending Account
    
--
    
963
    
963
  
AIC Common Stock*
    
1,730,580
    
10,645,232
    
4,153,392
  
                     
Promissory notes from participants*
          
586,672
    
586,672
  
Interest rates ranging from 4.5% to 7.0% with maturity dates through April 2008
                    
         
$
79,953,178
  
$
77,868,054
  


* Known to be a party-in-interest.

8

ANALYSTS INTERNATIONAL CORPORATION
SAVINGS AND INVESTMENT PLAN

SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 2005


Identity of Party Involved
  
Description of Transaction
  
Purchase Price
  
Selling Price
  
Cost of Asset
  
Current Value of Assets on Transaction Date
  
Net Loss
  
                                       
Mercer Investments*
    
Purchases of AIC Stock
  
$
818,408
        
$
818,408
  
$
818,408
        
                                       
Mercer Investments*
    
Sales of AIC Stock
        
$
1,348,207
  
$
1,705,547
  
$
1,348,207
  
$
(357,340
)

*Known to be a party-in-interest.

9


PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1934, the trustees (or other persons who administer the Plan) have duly caused this annual report to be signed by the undersigned thereunto duly authorized.


   
ANALYSTS INTERNATIONAL CORPORATION
   
SAVINGS AND INVESTMENT PLAN
     
Date: June 29, 2006
By:
/s/ David J. Steichen
   
David J. Steichen, Chief Financial Officer

10



Exhibit No.
  
Description
     
23
  
Consent of Independent Registered Public Accounting Firm
 
 
11