We offer our clients a full range of information technology consulting, software development and other services. Our service offerings include Full Service Staffing, which provides high demand resources for supporting a client’s IT staffing needs and Solutions Services, which provides IP Communications, network infrastructure, application integration, customization and administration and IT Outsourcing services, Managed IT Services and Government Solutions. The Company partners with best-in-class IT organizations, allowing access to a wide range of expertise, resources and expansive geographical reach.
Approximately 90 percent of Analysts International’s revenue is from services provided to its existing customer base, which consists primarily of Fortune 500 ® companies. This high percentage of repeat business demonstrates our emphasis on customer satisfaction and development of long-term relationships with customers who have an ongoing need for the services we provide.
During 2002, we established a wholly-owned subsidiary, Medical Concepts Staffing, Inc., through which we have begun to offer staffing services to the medical industry.
As part of our effort to grow the services offered by our solutions practices, in January 2005, the Company acquired the assets of WireSpeed Networks, LLC (“WireSpeed”). WireSpeed was a Cincinnati-based company specializing in IP telephony and wireless networking. WireSpeed's assets, employees and service offerings have been integrated into Analysts International's Technology Integration Services group, extending and enhancing the Company's offerings in this rapidly growing area.
In April 2005, the Company also acquired the assets of Redwood Solutions Corporation (“Redwood”). Redwood was an information technology services company based in Livonia, Michigan, specializing in integrating hardware and software solutions for data storage and retrieval systems. Redwood's assets, employees and service offerings became part of Analysts International's Storage Solutions Group.
Major clients
International Business Machines Corporation
We provide services through many of our area offices to various divisions of International Business Machines Corporation (“IBM”), a major client of the Company. The services we provide to IBM are predominantly in the area of IT staffing. Analysts International’s contract with IBM was renewed as a National Technical Services (“NTS”) Core Supplier for a three-year period on July 8, 2005 and extended for one additional year on December 30, 2006. The expiration of this contract is October 31, 2009.
IBM requires Analysts International and other participating vendors to use a predetermined rate matrix for their hourly rates in return for the opportunity to do a greater volume of business with IBM. Generally, the rates we can charge for services provided are lower than the rates we would normally charge for the same services. IBM business accounted for approximately 19% and 13% of our total revenue for fiscal years 2006 and 2005, respectively.
Lexmark International, Inc.
For over twelve years, Analysts International has provided IT staffing services for Lexmark International, Inc., a Lexington, Kentucky-based company that is a leading developer, manufacturer and supplier of laser and inkjet printers, multifunction products, associated supplies and services. In fiscal 2003, Lexmark chose Analysts International as one of three prime vendors to continue to provide IT staffing services. Analysts International’s professional services agreement for staffing was renewed on August 5, 2005 and expires on August 4, 2007.
Also in 2003, Lexmark engaged Analysts International’s Managed Services Group to implement a Vendor Management System (“VMS”), a web-based application for managing temporary labor resources. Under this agreement, Analysts International provides consolidated billing for all of Lexmark’s IT contract suppliers and training and process management for the VMS tool and system. Analysts International’s professional services agreement with Lexmark for the services of the Managed Services Group was renewed on July 25, 2005 and expires on July 24, 2007. Lexmark has the right to extend this agreement for up to two (2) consecutive periods of one (1) year each.
Revenue from services provided to Lexmark was approximately 6% of our total revenue during fiscal year 2006 and 2005.
Revenue by Industry
Analysts International provides its services to a wide range of industries. Its revenue for fiscal 2006 was derived from services rendered to customers in the following industry groups:
|
Approximate
Percent of
FY
2006 Revenue
|
||||
|
Services
|
36.5
|
%
|
||
|
Electronics/Manufacturing
|
25.1
|
%
|
||
|
Transportation
|
7.7
|
%
|
||
|
Oil
and Chemical
|
7.0
|
%
|
||
|
Financial
|
6.7
|
%
|
||
|
Health
Care
|
5.2
|
%
|
||
|
Government
|
4.5
|
%
|
||
|
Merchandising
|
3.6
|
%
|
||
|
Telecommunications
|
2.7
|
%
|
||
|
Other
|
1.0
|
%
|
||
Analysts International provided services to more than 1,000 clients during 2006. Consistent with its practices in prior years, the Company rendered these services predominantly on a time and materials hourly rate basis under which invoices for services rendered were submitted no less frequently than monthly with payment generally due in 30 to 60 days.
O rganization and Marketing
Analysts International provides its services through area sales and customer service offices, and for larger accounts, through national account teams. Each area sales office and national account team is staffed with sales, recruiting and technical personnel and is managed by a regional manager, who has primary responsibility for the profitability of the area. The regional manager has broad authority to conduct the operation of the office, subject to adherence to corporate policies.
During the year ended December 30, 2006, the Company maintained a business presence in the following locations: Austin, TX; Boca Raton, FL; Charlotte, NC; Chicago, IL; Cincinnati, OH; Columbia, SC; Dallas, TX; Denver, CO; Detroit, MI; Houston, TX; Indianapolis, IN; Kansas City, MO; Lansing, MI; Las Vegas, NV; Lexington, KY; Livonia, MI; Minneapolis, MN; New York, NY; Norcross, GA; Omaha, NE; Phoenix, AZ; Raleigh/Durham, NC; Richmond, VA; Rochester, MN; Rochester, NY; St. Louis, MO; San Francisco, CA; Seattle, WA; Silicon Valley, CA; Tampa, FL; Toledo, OH; and Toronto, Canada.
Analysts International utilizes its own direct sales force to sell its services. At December 30, 2006, the Company employed approximately 60 sales representatives. The ability to recruit and hire experienced technical personnel with backgrounds and experience suitable for customer requirements is an important factor in the Company’s business. At December 30, 2006, the Company employed approximately 60 recruiters.
Competition
Analysts International competes with the computer consulting and/or IT staffing divisions of several large companies (including Adecco, Kelly Services, MPS Group (Modis), TEKsystems and Spherion) on a national basis. These organizations and their applicable divisions are substantially larger than the Company in terms of sales volume and personnel and have substantially greater financial resources.
Analysts International also competes with other national IT services companies such as Computer Task Group, Comforce, Ciber, Inc., Keane, Inc., Comsys IT Partners, Tech Team Global and RCM Technologies, Inc.
Analysts International’s area and customer service offices compete in local markets with numerous regional and local software services firms. Most of these competitors are approximately the same size as or smaller than the Company’s local office, although in certain market areas they are larger than the Company’s local office.
Principal competitive factors in the IT services business include technical expertise, responsiveness to customers' staffing needs, reputation and credibility, service delivery models and tools and hourly rates. Analysts International believes it is competitive in these respects.
Personnel
As of December 30, 2006, Analysts International had approximately 2,277 systems analysts, computer programmers and other business/technology personnel all of whose services are billable to clients. Several years of relevant experience is generally a prerequisite to employment with the Company.
Available Information
We maintain our company website at www.analysts.com and make available, free of charge, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to those reports, in the Investor Relations section of the website as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the Securities and Exchange Commission.
Other Matters
The Company’s principal office is identified in
