8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): April 27, 2007

Analysts International Corporation
(Exact name of registrant as specified in its charter)
Minnesota	0-4090		41-0905408
(State or other jurisdiction of Incorporation)	(Commission File Number)		(IRS Employer Identification Number)
3601 West 76th Street, Minneapolis, Minnesota		55435-3000
(Address for principal executive offices)		(Zip Code)
Registrant’s telephone number, including area code: (952) 835-5900

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-14(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On April 27, 2007, Analysts International Corporation, a Minnesota corporation (the “Company”), reported earnings for its first quarter ended on March 31, 2007. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report.

The information in this Form 8-K (including Exhibits 99.1 and 99.2) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 7.01 Regulation FD Disclosure

On April 27, 2007, the Company is holding a conference call in which management will deliver prepared remarks concerning the Company’s financial results for the first quarter ended on March 31, 2007. The full text of the prepared remarks to be delivered during the conference call is furnished as Exhibit 99.2 to this Current Report. Instructions for listening to the conference call or its replay are set forth in the Company’s press release issued on April 27, 2007 and furnished as Exhibit 99.1 to this Current Report.

The information in this Form 8-K (including Exhibits 99.1 and 99.2) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Cautionary Statement for the Purpose of Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995

The Transcript of the prepared remarks for the Company’s April 27, 2007 earnings conference call contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  In some cases, forward-looking statements can be identified by words such as “believe,” “expect,” “anticipate,” “plan,” “potential,” “continue” or similar expressions.  Forward-looking statements also include the assumptions underlying or relating to any of the foregoing statements.  Such forward-looking statements are based upon current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.  Statements made in the prepared remarks for the conference call by the Company, its President and CEO, Michael J. LaVelle, and its CFO, David J. Steichen, regarding: (i) the Company’s new business plan/strategy and specific actions, including but not limited to reduction of costs and making investments in growth; (ii) the new plan’s effect on improving the Company’s operating results, including but not limited to revenue growth, reduced SG&A costs and higher gross margins, and increasing or maximizing shareholder value/return; (iii) increased opportunities and demand for labor in the information technology staffing market generally and for the Company in particular; (iv) the Company’s general expectation to return to profitability or specifically in early 2008; (v) expectations as to billable headcount; (vi) working capital and the Company’s credit facility; (vii) capitalizing on technology partner relationships; and (viii) increasing productivity and geographic expansion are forward-looking statements. These statements are not guarantees of future performance, involve certain risks, uncertainties and assumptions that are difficult to predict, and are based upon assumptions as to future events that may not prove accurate.  Therefore, actual outcomes and results may differ materially from what is expressed herein.  In any forward-looking statement in which the Company, Mr. LaVelle or Mr. Steichen expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement or expectation or belief will result or be achieved or accomplished.  The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: (i) the Company cannot, or finds it inadvisable, to implement all or some aspects of its new business plan/strategy; (ii) the Company’s expectations as to growth/demand for labor in the information technology staffing and solutions market do not materialize; (iii) inability to identify and/or retain management personnel with the skills and experience the Company believes the plan requires; (iv) productivity initiatives and growth investments do not provide the expected returns; (v) geographic areas selected for expansion of the Company’s presence in middle market clients do not produce expected growth; (vi) significant changes, reductions or loss in a client or technology partner relationship; and (vii) other economic, business, competitive and/or regulatory factors affecting the Company’s business generally, including those set forth in the Company’s filings with the SEC, including its Annual Report on Form 10-K for its most recent fiscal year, especially in the Management’s Discussion and Analysis section, its most recent Quarterly Report on Form 10-Q and its Current Reports on Form 8-K.  All forward-looking statements included in the conference call are based on information available to the Company on the date of the earnings conference call. The Company undertakes no obligation (and expressly disclaims any such obligation) to update forward-looking statements made in the conference call to reflect events or circumstances after the date of the conference call or to update reasons why actual results would differ from those anticipated in such forward-looking statements.

Item 9.01 Financial Statements and Exhibits

(c) Exhibits.

Exhibit Number	Description
99.1	Press release entitled “Analysts International Reports Results for First Quarter 2007” issued by Analysts International Corporation on April 27, 2007.
99.2	Transcript of prepared remarks for Analysts International Corporation’s earnings conference call held on April 27, 2007.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:	April 27, 2007	ANALYSTS INTERNATIONAL CORPORATION
		/s/ Colleen M. Davenport
		Colleen M. Davenport
		Secretary and General Counsel

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EXHIBIT INDEX

Exhibit Number	Description
99.1	Press release entitled “Analysts International Reports Results for First Quarter 2007” issued by Analysts International Corporation on April 27, 2007.
99.2	Transcript of prepared remarks for Analysts International’s earnings conference call held on April 27, 2007.

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EX-99.1

EXHIBIT 99.1

Media Contacts:

Adam Friedman

Partner

Adam Friedman Associates LLC

Phone: 212-981-2529, ext. 18

adam@adam-friedman.com

Analysts International Reports Results for First Quarter 2007

MINNEAPOLIS — April 27, 2007— Analysts International (NASDAQ: ANLY) today reported the results for its first quarter ended March 31, 2007. Revenues totaled $89.1 million for the quarter, compared to $86.8 million for the comparable quarter a year ago. For the quarter, the Company reported a net loss of $(2.0) million, or $(.08) per diluted share, compared to net income of $254,000 or $.01 per diluted share for the first quarter of 2006. Included in the reported operating loss for the first quarter of 2007 are $1.2 million of severance payments and consulting fees.

"We are committed to restoring the Company to profitability" said Mike LaVelle, President and CEO of Analysts International. "We continue to believe that we have a sound business in a growing market that offers us significant opportunities for growth. To that end, we intend to focus on four key strategies going forward: align our operations and services with selected markets; provide services and benefits to customers that enhance their talent resources, productivity and profitability; leverage our growth off a strong base of customers; position the company as a best-in-class technology and resource solutions provider to mid-market IT customers. We believe that effective implementation of these strategies will enable us to meet our goals," he added.

Analysts will host a conference call tomorrow at 9:30 a.m. CT to discuss these results in detail and answer questions participants may have. Interested parties may access the call by dialing 1-888-459-5609 or 1-973-321-1024 for international participants a few minutes before the scheduled start and ask for the Analysts International conference call moderated by Company President and CEO, Mike LaVelle. The call may also be accessed via the internet at www.analysts.com, where it will be archived. Interested parties can also hear a replay of the call from 12:30 p.m. CDT April 27, 2007 until 10:59 p.m. CDT on May 4, 2007, by calling 1-877-519-4471 and using access code 8675085. The Company will also file an 8-K with the Securities and Exchange Commission that will provide a full transcript of the prepared remarks delivered on the call.

About Analysts International

Founded in 1966, Analysts International (NASDAQ: ANLY) is a diversified IT services company with three distinct lines of business: IT Staffing, representing about two thirds of revenues, assists companies by recruiting and retaining technical contract professionals through a national recruiting network; Solutions Services helps clients leverage their information technology assets by integrating and implementing a broad range of applications and hardware; Managed Services is a flexible set of services that support a customer’s supply chain management, ranging from resource allocation through billing and payment of suppliers.

Analysts International partners with world class IT organizations that bring clients access to a wide range of expertise and resources. Analysts International’s client base includes the Fortune 100 global companies as well as mid-sized businesses in healthcare, financial services, manufacturing and government. For more information, visit www.analysts.com.

Cautionary Statement for the Purpose of Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995

This Press Release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by words such as “believe,” “expect,” “anticipate,” “plan,” “potential,” “continue” or similar expressions. Forward-looking statements also include the assumptions underlying or relating to any of the foregoing statements. Such forward-looking statements are based upon current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Statements made in this Press Release by the Company or its President and CEO, Michael J. LaVelle, regarding: (i) the Company becoming profitable; (ii) the Company’s growth opportunities; and (iii) that successful implementation of the Company’s new business plan/strategy will result in meeting of its goals are forward looking statements. These statements are not guarantees of future performance, involve certain risks, uncertainties and assumptions that are difficult to predict, and are based upon assumptions as to future events that may not prove accurate. Therefore, actual outcomes and results may differ materially from what is expressed herein. In any forward-looking statement in which the Company or Mr. LaVelle expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement or expectation or belief will result or be achieved or accomplished. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: (i) growth opportunities may not be made available to the Company or the Company’s strategy for capturing any growth opportunities will not be successful; (ii) unsuccessful implementation or execution of the Company’s new business plan/strategy; and (iii) other economic, business, competitive and/or regulatory factors affecting the Company's business generally, including those set forth in Analysts' filings with the SEC, including its Annual Report on Form 10-K for the 2006 fiscal year, especially in the Management's Discussion and Analysis section, its most recent Quarterly Report on Form 10-Q and its Current Reports on Form 8-K. All forward-looking statements included in this Press Release are based on information available to the Company on the date of the Press Release. The Company undertakes no obligation (and expressly disclaims any such obligation) to update forward-looking statements made in the Press Release to reflect events or circumstances after the date of the Press Release or to update reasons why actual results would differ from those anticipated in such forward-looking statements.

(Financials follow)

Analysts International Corporation

Consolidated Statements of Operations

(unaudited)

	Three Months Ended
(in thousands except per share amounts)			March 31, 2007			April 1, 2006
Professional services revenue:
Provided directly		$	62,951		$	65,459
Provided through subsuppliers			16,122			14,077
Product sales			10,034			7,305
Total revenue			89,107			86,841
Expenses:
Salaries, contracted services and direct charges			65,821			65,196
Cost of product sales			8,705			6,444
Selling, administrative and other operating costs			16,250			14,492
Amortization of intangible assets			266			253
Operating (loss) income			(1,935	)		456
Non-operating income			7			4
Interest expense			(78	)		(193	)
(Loss) income before income taxes			(2,006	)		267
Income tax expense			21			13
Net (loss) income		$	(2,027	)	$	254
Per common share:
Basic (loss) income		$	(.08	)	$	.01
Diluted (loss) income		$	(.08	)	$	.01
Average common shares outstanding			24,751			24,611
Average common and common equivalent shares outstanding			24,751			25,086

Analysts International Corporation

Consolidated Balance Sheets

(in thousands)		March 31, 2007 (unaudited)		December 30, 2006
Assets
Current assets:
Cash and cash equivalents	$	81	$	179
Accounts receivable, less allowance for doubtful accounts		65,277		64,196
Other current assets		3,834		2,484
Total current assets		69,192		66,859
Property and equipment, net		2,903		2,925
Other assets		25,863		26,447
Total assets	$	97,958	$	96,231
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	24,671	$	24,411
Salaries and vacations		5,362		7,416
Line of credit		8,283		2,661
Deferred revenue		1,029		1,267
Restructuring accrual, current portion		234		385
Self-insured health care reserves and other amounts		952		1,670
Deferred compensation		383		208
Total current liabilities		40,914		38,018
Non-current liabilities:
Deferred compensation		2,312		2,319
Restructuring accrual		116		160
Other Liabilities		160		--
Shareholders’ equity		54,456		55,734
	$	97,958	$	96,231

Analysts International Corporation

Reconciliation of non-GAAP Financial Measures

(in thousands)

	Three Months Ended
		March 31, 2007			April 1, 2006
Net (loss) income as reported	$	(2,027	)	$	254
Plus:
Severance related costs		981			--
(Loss) income before severance related costs		(1,046	)		254
Depreciation		476			608
Amortization		266			253
Net interest expense (income)		71			189
Income tax expense		21			13
Adjusted EBITDA*	$	(212	)	$	1,317

*To supplement our consolidated financial statements presented in accordance with GAAP, we use the non-GAAP financial measure of EBITDA (earnings before interest, taxes, depreciation and amortization) which is adjusted from results based on GAAP to exclude certain items. We have excluded the special costs associated with severance charges pertaining to the departure of Jeff Baker, former President and CEO, and other personnel during the first quarter to provide a meaningful comparison between current results and prior reported results. This non-GAAP financial measure is provided to enhance the user’s overall understanding of our current financial performance and our prospects for the future. This measure should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. The non-GAAP financial measure included in this press release has been reconciled to the nearest GAAP measure.

# # #

EX-99.2

                   EXHIBIT 99.2

ANALYSTS INTERNATIONAL

Moderator:  Mike LaVelle

April 27, 2007

9:30 am CT

Good morning. My name is Jennifer and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Analysts International first quarter conference call. All lines have been placed on mute to prevent any background noise.

After the speakers’ remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number 1 on your telephone keypad. If you would like to withdraw your question, press the pound key.

This conference call will contain forward-looking statements within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by words such as “believe”, “expect”, “anticipate”, “plan”, “potential”, “continue”, or similar expressions. Forward-looking statements also include the assumptions underlying any of these statements.

Such forward-looking statements include or relate to our expectations concerning quarterly and annual operating results, working capital, expected need for and uses of cash, implementation of our business plan and improvement in our gross margin and our overall performance. These forward-looking statements are based upon current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the statements. For more information concerning the risks associated with our business and economic, business, competitive and/or regulatory factors affecting our business generally, refer to the Company’s filings with the SEC, including its Annual Report on Form 10-K for its most recent fiscal year, especially in the Management’s Discussion and Analysis section, its most recent Quarterly Report on Form 10-Q and its Current Reports on Form 8-K.

All forward-looking statements included in this conference call are based on information available to the Company on the date of the earnings conference call. The Company undertakes no obligation (and expressly disclaims any such obligation) to update forward-looking statements made in this transcript to reflect events or circumstances after the date of this conference call or to update reasons why actual results would differ from those anticipated in such forward-looking statements. In addition, in this call, management will review financial measures such as EBITDA that do not conform to Generally Accepted Accounting Principles.

For a reconciliation of these measures and the Generally Accepted Accounting Principles, participants are directed to the company’s press release which is posted on its website at www.analysts.com.

Thank you. I will now turn the conference over to Mike LaVelle, President and CEO of Analysts International. Please go ahead, sir.

Mike LaVelle:

Good morning and welcome to the Analysts International first quarter Conference call. Joining me this morning is Dave Steichen, our Chief Financial Officer. Before we discuss the actual results, I would like to outline for you our plans for the future.

In my year-end conference call in February, I told you I would share with you the plans and strategies that we intend to implement which are directed at restoring the company to sustainable profitability while enhancing shareholder value.

Let me begin by saying, we continue to believe that we have a sound business in a growing market that offers significant opportunities for growth. Now, what I would like to do this morning is tell you about the strategic decisions we have made that we believe will bring us back to profitability.

In November of 2006, the Board of Directors, faced with the declining performance of our business, commissioned Alliance Management, a Minneapolis-based consulting firm, to assist us in an assessment of the business. The focus of the process was to determine a course of action for the Company that would provide the greatest return to our shareholders.

We studied various scenarios and completed these assessments in February. It was determined that fixing the operational issues and returning to profitability prior to entertaining any possible merger or acquisition activities would present the greatest value to our shareholders.

Since February we have been developing the strategies and plans to re-establish Analysts International as a leading provider of information technology resources and solutions. We completed these plans, tested them against our original scenarios and believe we are on the right course for revitalizing the company and getting the best return for our shareholders.

As a framework, I’d like to outline how we see the current market, our business and the opportunities we will pursue going forward. Over the last decade commoditization and globalization have been strong change agents eroding the earnings power of traditional IT staffing companies.

Although these realities continue to influence the I.T. staffing markets, middle management companies still have a strong need for - and are seeking greater value from - their I.T. services providers. Fortunately, we are well established in this market.

Meeting customer expectations in these markets means understanding their business and delivering quality resources that empower their growth strategies.

We believe the future of the staffing business also looks strong due to continuing economic growth and an aging workforce. It is our opinion the retirement of the Baby Boomers will create a demand for intellectual capital and a supply of workers looking for flexibility.

To position Analysts International to re-claim and expand our middle market presence and continue to serve our major clients, we have organized our company to provide information technology resources and solutions in three areas:

·   Staffing: Serving our large high-volume, major accounts. This line-of-business is focused on providing reasonably priced resources to volume buyers effectively and on demand. This is driven by a recruiting-centric approach.

·   Custom Services: Serving middle market customers in targeted geographies. This part of the business focuses on understanding the customers’ business and providing professional resources for application development and integration, project managers, business analysts and other highly-skilled resources.

·   Technology Solutions: Providing network services, infrastructure, application integration, I.P. telephony and hardware solutions to the middle market.

To execute effectively in these businesses, we intend to focus on four key strategies:

·   First - Alignment of our operations and services within selected target markets. This means we will invest primarily in developing middle market customers in targeted geographies and in building our professional resource talent pools.

·   Second - Improving our value proposition by providing services and benefits to customers which enhance their talent resources, productivity and profitability.

·   Third - Leveraging our growth off a strong base of current and past customers.

·   Finally - Positioning Analysts International as a best-in-class I.T. services provider to mid-market customers.

In order to meet these goals, we will:

·   Right size our operations, reducing operating costs by close to $4 million

·   Establish demanding performance and operational excellence standards for each line of business

·   Invest approximately $5 million primarily in building middle market presence in select geographic regions over the next two years

We are aware of the challenges ahead and obviously as with any plan there are risks of execution, but we are intent on meeting our goals by deploying skilled and experienced management and establishing stringent controls over implementation and schedules.

The projected impact on 2007 operations will be a net loss of approximately $4 million. This includes approximately $2 million of severance and consulting-related charges and $2 million of investments. We expect to return to profitability in early 2008.

Finally, we are currently interviewing potential candidates to fill the position of president and CEO. This will be a thorough process as we want to be certain that the individual is a good match for the job.

I know that many of you have follow up questions regarding my remarks and I will be pleased to answer them after Dave Steichen has reviewed the quarter’s performance.

Dave…

Dave Steichen:

Thank you, Mike.

As stated in our press release yesterday, total revenue for the first quarter was $89.1 million, up from $86.8 million in the first quarter of 2006.

From a profitability standpoint, our first quarter, which included $1.2 million dollars of severance payments and consulting fees, resulted in a net loss of $(2.0) million or $.08 per share. This compares to a net income of $.01 per share during the first quarter of 2006. For the quarter we reported an adjusted EBITDA loss of $(212,000). This compared to positive EBITDA of $1.3 million from the comparable quarter last year.

First quarter direct revenue, which excludes product and subsupplier revenue was $63 million, compared to $65.5 million for the comparable period last year.

Although our average bill rates increased slightly, in the first quarter we saw a decline in the number of billable staff deployed. Compared to the first quarter of 2006, the average number of billable staff, excluding consultants billing through us as subsuppliers and nurses billing through our medical staffing subsidiary, declined from 2,378 last year to 2,219 this year. This decline in headcount resulted from a slowdown in the number of placements made at our clients during the first quarter. Such a slowdown is typical for the first quarter of our fiscal year. We do not expect the decline in our billable headcount to continue.

Our average gross margin on direct business offerings, excluding product sales, was 20.1% during the first quarter. This compares to 21.1% in the fourth quarter of 2006. Traditionally, our first quarter margins are lower than the previous quarter. This is primarily due to the beneficial impact fourth quarter holidays and vacations have on margins associated with fixed monthly rate contracts. In the current year, the first quarter decline in margins was magnified by an increase in our accrual for benefits and lower than expected utilization in certain of our solutions businesses.

As we make progress in implementing the strategies Mike has just described, we expect gradual improvement in our gross margins for the balance of 2007.

Product revenue during the first quarter was $10.0 million, compared to $7.3 million in the comparable quarter of 2006. During the first quarter one of our technology partners changed their approach to selling in the Michigan and Wisconsin marketplace. We were well positioned with this partner, and were able to take advantage of the change to significantly increase revenue from this relationship. Also during the first quarter, by taking advantage of another partner’s incentive programs, we were able to drive higher than anticipated margin on product sales, driving our overall product margin to 13.2% during the first quarter compared to 11.8% in the comparable period last year. While we intend to continue our efforts to capitalize on our technology partnerships, results in this area will fluctuate from quarter to quarter.

First quarter subsupplier revenue was $16.1 million, compared to $14.1 million in the comparable quarter last year. During the first quarter we completedthe transition of a new account in Symmetry Workforce Solutions, our vendor management subsidiary formerly referred to as the Managed Services Group. This new client accounts for the increase in subsupplier revenue.

At the end of the first quarter, excluding subsupplier consultants and nurses, total company headcount was 2,561. Billable technical headcount dropped by 107 during the first quarter. As I indicated some slowdown in the first quarter of the year is normal for our company. Billable headcount continues to represent 86% of our total staff.

As Mike has described, late in the first quarter, and moving into the second quarter, we instituted several programs designed to drive greater productivity throughout our organization. We look forward to these programs having a positive impact on the third quarter and beyond.

Our first quarter SG&A expense amounted to $16.3 million or 18.2% of total revenue. Included in this total was approximately $1.2 million of severance expenses related to the departure of several sales and management level personnel, and expenses paid to outside consultants engaged by the Board of Directors. Absent these expenses, SG&A during the first quarter was $15.1 million or 16.9% of total revenue. This compares to 16.7% reported for the first quarter of 2006. As a result of the cost reduction actions taken during the first quarter, we expect SG&A costs to decline during the second quarter. As Mike pointed out, however, beyond the second quarter, we expect to invest additional dollars in certain areas of our company to reinvigorate revenue growth.

From a balance sheet perspective, our accounts receivable balance of $65.3 million at the end of the first quarter was up compared to $64.2 million reported at the end of the fourth quarter.

Days sales outstanding of 63 days compared favorably to 69 days at the end of the fourth quarter.

We finished the quarter with $8.3 million of outstanding debt, up from $2.7 million at the end of the fourth quarter. This increase was primarily due to the quarter ending at the end of a payroll cycle.

Our credit facility had total availability of $38.4 million at the end of the quarter, leaving us with unused capacity of $30.1 million. The level of available borrowings under this facility will continue to fluctuate as our receivables collateral base fluctuates. We believe our unused credit facility can support the operating needs of our company.

As we move into the second quarter of 2007, we expect to continue our focus on gross margin improvement. In addition, we intend to reinvigorate growth through increased productivity and targeted geographic investments. With these changes, we look forward to improving operating results.

With that I’ll turn the call back over to Mike.

Mike LaVelle:

Thank you Dave, now we’ll take your questions.

   * * *

Mike LaVelle (at conclusion of question and answer session):

That concludes the call. In closing, I’d like to thank you all for participating in the call this morning. I’m excited about the plans we have for the Company and I will keep you posted.