ex99_1.htm

Exhibit 99.1

Pomeroy IT Solutions, Inc.	Contact:
1020 Petersburg Road	Craig J. Propst, Vice President,
Hebron, KY 41048	Treasurer, and Interim CFO
859-586-0600	859-586-0600 x 1838
www.pomeroy.com	cpropst@pomeroy.com

Pomeroy IT Solutions, Inc. Reports Second Quarter 2008 Results

Hebron, KY – August 6, 2008 – Pomeroy IT Solutions, Inc. (NASDAQ:PMRY) an information technology ("IT") solutions provider with a comprehensive portfolio of hardware, software, technical staffing services, as well as infrastructure and lifecycle services, today reported second quarter revenue of $155.0 million and net income of $1.5 million, or $0.12 per fully diluted share.

"We are very pleased to achieve our first quarterly profit in the last year. The positive results reflect improved gross margins in each of our product, technical staffing and infrastructure services segments combined with the cost reductions achieved through the first stage of resizing our workforce to match our current business environment. Additional cost reduction efforts are now nearly complete and we expect to see the benefits of those efforts in the second half of the year. We believe that the Company is now positioned to return to consistent quarterly operating profitability." said Keith Coogan, CEO and President of Pomeroy IT Solutions.

CONSOLIDATED FINANCIAL RESULTS

Second Quarter Financial Results

Total Net Revenues: Total net revenues increased $16.7 million or 12.1% in the second quarter of fiscal 2008 as compared to the second quarter of fiscal 2007. For the second quarters of fiscal 2008 and fiscal 2007, the net revenues were $155.0 million and $138.3 million, respectively.

Product revenue was $92.7 million and $91.6 million, respectively, for the second quarters of fiscal 2008 and fiscal 2007. Product revenue increased $1.1 million, an increase of 1.2% in the second quarter of fiscal 2008 as compared to the second quarter of fiscal 2007. This increase was due primarily to growth in our state, local and education customers and also in our commercial healthcare, retail and financial services accounts offset by continued delays in product deployment.

Service revenue was $62.3 million in the second quarter of fiscal 2008 compared to $46.7 million in the second quarter of fiscal 2007, an increase of $15.6 million or 33.5% from fiscal 2007. The Company groups services revenue into Technical Staffing and Infrastructure Services. Technical Staffing Services support clients’ project requirements, ensures regulatory and customer compliance requirements and promotes success of the staffing projects. Infrastructure Services help clients optimize the various elements of distributed computing environments. Encompassing the complete IT lifecycle, these services include desktop and mobile computing, server and network environments.

Technical Staffing revenue was $31.6 million and accounted for approximately 50.6% of total service revenues in the second quarter of fiscal 2008, compared to $18.9 million and 40.5% in for the second quarter of fiscal 2007. This increase is primarily the result of recognizing revenue for the gross billings on subcontractor personnel which historically have been recorded as fee based services in our vendor management business. Overall, volume in our staffing business was relatively consistent.

We anticipate technical staffing revenue to decrease in subsequent quarters as a result of the announcement made in June 2008 that we elected to not renew a technical staffing services contract with a major customer because the terms they required meant this business would not be profitable for our company.

Infrastructure Service revenue was $30.7 million and $27.8 million, respectively, for the second quarter of fiscal 2008 and 2007. Infrastructure Service revenues were approximately 49.4% of total service revenues in the second quarter of fiscal 2008, compared to 59.5% for the second quarter of fiscal 2007. The increase in revenue is primarily the result of new service engagements started at the beginning of 2008.

Gross Profit: Gross profit was $19.3 million in the second quarter of fiscal 2008, compared to $15.6 million in the second quarter of 2007. Gross profit, as a percentage of revenue, was 12.4% in second quarter of fiscal 2008, compared to 11.3% in the second quarter of fiscal 2007.

Product gross profit was $9.2 million for the second quarter of fiscal 2008, compared to $7.3 million for the same period of fiscal 2007. Product gross profit as a percentage of product revenue increased to 9.9% in the second quarter of fiscal 2008, compared to 8.0% for the same period of fiscal 2007. The increase in product gross margin is due primarily to margin improvements as a result of increased rebates from improved tracking of OEM partner promotional initiatives and targeting more profitable growth segments such as networking, server, storage and peripherals.

Service gross profit was $10.1 million for the second quarter of fiscal 2008, compared to $8.3 million in the second quarter of fiscal 2007. Service gross profit as a percentage of service revenue decreased to 16.2% in the second quarter of fiscal 2008, compared to 17.8% for the same period of fiscal 2007.

Gross profit from Technical Staffing Services was $3.6 million for the second quarter of fiscal 2008, compared to $3.2 million for the second quarter of fiscal 2007. This increase of $0.4 million is primarily due to increased use of higher-margin Pomeroy employees on staffing projects. Gross profit as a percentage of technical staffing revenues decreased to 11.5% in the second quarter of fiscal 2008 from 17.1% in the second quarter of fiscal 2007. This decrease in gross margin is primarily the result of recognizing revenue for billings on subcontractor personnel which historically have been recorded as fee based services in our vendor management business at very low incremental margin.

Gross profit from Infrastructure Services was $6.5 million for the second quarter of fiscal 2008 compared to $5.1 million for the second quarter of fiscal 2007. Gross profit as a percentage of infrastructure service revenues increased to 21.1% in the second quarter of fiscal 2008 from 18.2% in the second quarter of fiscal 2007. This increase in gross profit and margin is primarily a result of driving higher utilization of personnel, reduction of work force in the Infrastructure Services technical resources and as a result of renegotiation and termination of unprofitable contracts.

Operating Expenses

Total operating expenses were $17.7 million in the second quarter of 2008, compared to $17.0 million in the second quarter of 2007, an increase of $0.7 million. This increase is primarily driven by an increase of $1.0 million in personnel-related expenditures, and related general and administrative expenses, to support our product and service businesses and investments to improve customer, vendor and back office support functions; severance charges of $0.3 million; offset by a decrease of $0.6 million related to professional and outside service provider fees.

Operating expenses as a percentage of revenue were 11.5% for the second quarter of fiscal 2008 compared to 12.3% for the second quarter of fiscal 2007.

Income (Loss) from Operations

Income from operations was $1.6 million in the second quarter of 2008, as compared to a loss of $1.4 million for the same period of 2007. This increase is a result of the increase in gross profit offset by the increase in operating expenses in the second quarter of 2008, as described above.

Net Interest Income (Expense)

Net interest expense was $77 thousand during the second quarter of 2008 as compared to income of $90 thousand during the second quarter of 2007. During the second quarter of 2008, the Company had amounts outstanding under its credit facility due to the timing of payments of accounts payables and payroll and collections of receivables.

Income Tax

For the second quarter of 2008, the Company had no income tax expense or income tax benefit. During the second quarter of fiscal 2008, the Company decreased its tax valuation allowance by $0.6 million for a total allowance of $15.9 million at July 5, 2008. The tax valuation allowance results from the future uncertainty of the Company’s ability to utilize its deferred tax assets. For the second quarter of fiscal 2008, the $0.6 million decrease in tax valuation reserve offset what would have been an income tax expense; the effective income tax rate would have been 43.4% prior to recording the tax valuation reserve. The effective income tax rate for the second quarter of fiscal 2007 was 35.4%.

Net Income (Loss)

Net income was $1.5 million in the second quarter of 2008 as compared to a net loss of $0.9 million in the second quarter of 2007, resulting from the factors described above.

Other Second Quarter Financial Information

o	Working Capital	$	77.1 million
o	Cash Flow Generated by Operating Activities	$	16.4 million
o	Cash, Cash Equivalents and CD’s	$	10.3 million
o	Capital Expenditures	$	1.1 million
o	Purchases of Company stock	$	0.9 million
o	Outstanding Debt	$	-

July 5, 2008 YTD versus July 5, 2007 YTD

Total Net Revenues: Total net revenues increased $19.9 million or 7.1% in the first six months of fiscal 2008 as compared to the same period of fiscal 2007. For the first six months of fiscal 2008 and fiscal 2007, the net revenues were $300.2 million and $280.3 million, respectively.

Product revenue was $174.2 million and $183.8 million, respectively, for the first six months of fiscal 2008 and fiscal 2007. Product revenue decreased $9.6 million, a decrease of 5.3% in the first six months of fiscal 2008 as compared to the first six months of fiscal 2007. This decrease was due primarily to continued delays of product deployments.

Service revenue was $126.0 million in the first six months of fiscal 2008 compared to $96.4 million in the first six months of fiscal 2007, an increase of $29.6 million or 30.7% from fiscal 2007. The Company groups services revenue into Technical Staffing and Infrastructure Services. Technical Staffing Services support clients’ project requirements, ensures regulatory and customer compliance requirements and promotes success of the staffing projects. Infrastructure Services help clients optimize the various elements of distributed computing environments. Encompassing the complete IT lifecycle, these services include desktop and mobile computing, server and network environments.

Technical Staffing revenue was $64.1 million and accounted for approximately 50.8% of total service revenues in the first six months of fiscal 2008, compared to $39.3 million and 40.8% in for the first six months of fiscal 2007. This increase is primarily the result of recognizing revenue for billings on subcontractor personnel which historically have been recorded as fee based services in our vendor management business.

Infrastructure Service revenue was $61.9 million and $57.1 million, respectively, for the first six months of fiscal 2008 and 2007. Infrastructure Service revenues were approximately 49.2% of total service revenues in the first six months of fiscal 2008, compared to 59.2% for the first six months of fiscal 2007. The increase in revenue is primarily the result of new service engagements started at the beginning of 2008.

Gross Profit: Gross profit was $34.5 million in the first six months of fiscal 2008, compared to $32.8 million in the first six months of 2007. Gross profit, as a percentage of revenue, was 11.5% in the first six months of fiscal 2008, compared to 11.7% in the first six months of fiscal 2007.

Product gross profit was $17.2 million for the first six months of fiscal 2008, compared to $15.2 million for the same period of fiscal 2007. Product gross profit as a percentage of product revenue increased to 9.9% in the first six months of fiscal 2008, compared to 8.3% for the same period of fiscal 2007. The increase in product gross margin is due primarily to margin improvements as a result of the increased rebates from improved tracking of OEM partner promotional initiatives and targeting more profitable growth segments such as networking, server, storage and peripherals.

Service gross profit was $17.4 million for the first six months of fiscal 2008, compared to $17.6 million in the first six months of fiscal 2007 for a decline in service gross profit of $0.2 million. Service gross profit as a percentage of service revenue decreased to 13.8% in the first six months of fiscal 2008, compared to 18.2% for the same period of fiscal 2007.

Gross profit from Technical Staffing Services was $6.2 million for the first six months of fiscal 2008, compared to $6.7 million for the first six months of fiscal 2007. Gross profit as a percentage of technical staffing revenues decreased to 9.7% in the first six months of fiscal 2008 from 17.1% in the first six months of fiscal 2007. This decrease in gross margin is primarily the result of recognizing revenue for billings on subcontractor personnel which historically have been recorded as fee based services in our vendor management business at very low incremental margin.

Gross profit from Infrastructure Services was $11.2 million for the first six months of fiscal 2008 compared to $10.9 million for the first six months of fiscal 2007 due to the increase in revenue related to new service engagements started at the beginning of 2008. Gross profit as a percentage of infrastructure service revenues decreased to 18.0% in the first six months of fiscal 2008 from 19.0% in the first six months of fiscal 2007. This decrease in gross profit margin is primarily the result of unprofitable customer contracts during the first quarter that were exited during the second quarter and reduced utilization and productivity of infrastructure services technical resources in the first quarter of 2008.

Operating Expenses

Total operating expenses were $37.1 million in the first six months of 2008, compared to $31.4 million in the first six months of 2007, an increase of $5.7 million. This increase is primarily driven by an increase of $0.9 million in sales and marketing costs, primarily related to increased commissions relating to improved product margins; an increase of $2.5 million in personnel-related expenditures, and related general and administrative expenses, to support our product and service businesses and investments to improve customer, vendor and back office support functions; a net charge of approximately $0.9 million to reserve against the collection of amounts incorrectly billed by subcontractors in our technical staffing business for years 2005 and 2006, as a result of an audit by our largest staffing customer; an increase related to severance charges of $0.9 million; an increase of $0.3 million for start up expenses related to new engagements; and an increase of $0.2 million related to costs for the retirement of directors.

Operating expenses as a percentage of revenue were 12.4% for the first six months of fiscal 2008 compared to 11.2% for the first six months of fiscal 2007.

Income (Loss) from Operations

Loss from operations was $2.6 million in the first six months of 2008, as compared to income of $1.4 million for the same period of 2007. This decrease is primarily the result of an increase in operating expenses for the first six months of fiscal 2008, as described above.

Net Interest Income (Expense)

Net interest expense was $147 thousand during the first six months of 2008 as compared to income of $261 thousand during the first six months of 2007. During the first six months of 2008, the Company had amounts outstanding under its credit facility due to the timing of payments of accounts payables and payroll and collections of receivables.

Income Tax

For the first six months of 2008, the Company had no income tax expense or income tax benefit. During the first six months of fiscal 2008, the Company increased its tax valuation allowance by $931 thousand for a total allowance of $15.9 million at July 5, 2008. The tax valuation allowance results from the future uncertainty of the Company’s ability to utilize its deferred tax assets. For the first six months of fiscal 2008, the $931 thousand increase in tax valuation reserve offset what would have been an income tax benefit; the effective income tax rate would have been 34.3% prior to recording the tax valuation reserve. The effective income tax rate for the first quarter of fiscal 2007 was 42.5%.

Net Income (Loss)

Net loss was $2.7 million in the first six months of 2008 as compared to net income of $1.0 million in the first six months of 2007, resulting from the factors described above.

CONFERENCE CALL

To participate in a conference call and questions and answer session with senior management regarding the second quarter of fiscal 2008 results, call 1-877-842-7108, using pass code 59151724 at 4:30 p.m. (ET) on Wednesday, August 6, 2008. For your convenience, a replay will be available shortly after the call by dialing 1-800-642-1687.

ABOUT POMEROY IT SOLUTIONS, INC.

Pomeroy IT Solutions, Inc. is a leading provider of IT infrastructure solutions focused on enterprise, network and end-user technologies. Leveraging its core competencies in IT Outsourcing and Professional Services, Pomeroy delivers consulting, deployment, operational, staffing and product sourcing solutions through the disciplines of Six-Sigma, program and project management, and industry best practices. Pomeroy's consultative approach and adaptive methodology enables Fortune 2000 corporations, government entities, and mid-market clients to realize their business goals and objectives by leveraging information technology to simplify complexities, increase productivity, reduce costs, and improve profitability. For more information, go to www.pomeroy.com.

FORWARD-LOOKING STATEMENTS

Certain of the statements in the preceding paragraphs regarding financial results constitute forward-looking statements. These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our markets' actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements, expressed or implied by such forward-looking statements. These risks, and other factors you should specifically consider, include but are not limited to: changes in customer demands or industry standards; existing market and competitive conditions, including the overall demand for IT products and services; the nature and volume of products and services anticipated to be delivered; the mix of the products and services businesses; the type of services delivered; the ability to fully utilize personnel and increase the use of higher-margin service employees; the ability to successfully attract and retain customers, sell additional products and services to existing customers; the ability to timely bill and collect receivables; the ability to avoid non-profitable service contracts; the ability to maintain a broad customer base to avoid dependence on any single customer; the need to successfully attract and retain outside consulting services; new acquisitions by the Company; terms of vendor agreements and certification programs and the assumptions regarding the ability to perform there under; the ability to implement the Company's best practices strategies; the ability to manage costs and expenses; the ability to manage risks associated with customer projects; adverse or uncertain economic conditions; loss of key personnel; litigation; and the ability to attract and retain technical and other highly skilled personnel. In some cases, you can identify forward-looking statements by such terminology as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", "continue", "projects", "intends", "prospects", "priorities", or negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.

POMEROY IT SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands)
	July 5, 2008		January 5, 2008
ASSETS

Current Assets:
Cash and cash equivalents	$	9,158	$	13,282
Certificates of deposit		1,128		1,113

Accounts receivable:
Trade, less allowance of $3,283 and $3,522, respectively		133,988		140,167
Vendor, less allowance of $1,138 and $562, respectively		13,257		11,352
Net investment in leases		336		756
Other		284		1,288
Total receivables		147,865		153,563

Inventories		15,665		15,811
Other		6,734		10,196
Total current assets		180,550		193,965

Equipment and leasehold improvements:
Furniture, fixtures and equipment		17,556		15,180
Leasehold Improvements		7,262		7,262
Total		24,818		22,442

Less accumulated depreciation		14,849		12,645
Net equipment and leasehold improvements		9,969		9,797

Intangible assets, net		1,732		2,017
Other assets		727		805
Total assets	$	192,978	$	206,584

POMEROY IT SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands)
	July 5, 2008		January 5, 2008
LIABILITIES AND EQUITY

Current Liabilities:
Accounts payable:
Floor plan financing	$	19,698	$	26,328
Trade		56,346		57,016
Total accounts payable		76,044		83,344

Deferred revenue		1,657		1,949
Employee compensation and benefits		9,487		10,248
Accrued facility closing cost and severance		1,653		1,678
Other current liabilities		14,581		15,542
Total current liabilities		103,422		112,761

Accrued facility closing cost and severance		340		1,056

Equity:
Preferred stock, $.01 par value; authorized 2,000 shares, (no shares issued or outstanding)		-		-
Common stock, $.01 par value; authorized 20,000 shares, (13,611 and 13,513 shares issued, respectively)		141		140
Paid in capital		92,808		91,399
Accumulated other comprehensive income		39		20
Retained earnings		11,489		14,200
		104,477		105,759
Less treasury stock, at cost (1,683 and 1,323 shares, respectively)		15,261		12,992
Total equity		89,216		92,767
Total liabilities and equity	$	192,978	$	206,584

POMEROY IT SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(UNAUDITED)

(in thousands, except per share data)	Three Months Ended
	July 5, 2008			July 5, 2007


Net revenues:
Product	$	92,678		$	91,599
Service		62,315			46,662
Total net revenues		154,993			138,261

Cost of revenues:
Product		83,489			84,280
Service		52,207			38,373
Total cost of revenues		135,696			122,653

Gross profit		19,297			15,608

Operating expenses:
Selling, general and administrative		16,512			15,870
Depreciation and amortization		1,218			1,149
Total operating expenses		17,730			17,019

Income (loss) from operations		1,567			(1,411	)

Interest income		42			220
Interest expense		(119	)		(130	)
Interest income (expense)		(77	)		90

Income (loss) before income tax		1,490			(1,321	)
Income tax expense (benefit)		-			(468	)
Net income (loss)	$	1,490		$	(853	)

Weighted average shares outstanding:
Basic		11,946			12,330
Diluted (1)		12,343			12,330

Earnings (loss) per common share:
Basic	$	0.12		$	(0.07	)
Diluted (1)	$	0.12		$	(0.07	)

(1) Dilutive loss per common share for the 3 months ended July 5, 2007 would have been anti-dilutive if the number of weighted average shares outstanding were adjusted to reflect the dilutive effect of outstanding stock options and unearned restricted shares.

POMEROY IT SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(UNAUDITED)

(in thousands, except per share data)	Six Months Ended
	July 5, 2008			July 5, 2007


Net revenues:
Product	$	174,155		$	183,809
Service		126,007			96,445
Total net revenues		300,162			280,254

Cost of revenues:
Product		156,987			168,560
Service		108,629			78,845
Total cost of revenues		265,616			247,405

Gross profit		34,546			32,849

Operating expenses:
Selling, general and administrative		34,677			29,149
Depreciation and amortization		2,434			2,269
Total operating expenses		37,111			31,418

Income (loss) from operations		(2,565	)		1,431

Interest income		127			530
Interest expense		(274	)		(269	)
Interest income (expense)		(147	)		261

Income (loss) before income tax		(2,712	)		1,692
Income tax expense		-			719
Net income (loss)	$	(2,712	)	$	973

Weighted average shares outstanding:
Basic		12,027			12,339
Diluted (1)		12,027			12,647

Earnings (loss) per common share:
Basic	$	(0.23	)	$	0.08
Diluted (1)	$	(0.23	)	$	0.08

(1) Dilutive loss per common share for the 6 months ended July 5, 2008 would have been anti-dilutive if the number of weighted average shares outstanding were adjusted to reflect the dilutive effect of outstanding stock options and unearned restricted shares.

POMEROY IT SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)
	Six Months Ended
Cash Flows from Operating Activities:	July 5, 2008			July 5, 2007
Net income (loss)		(2,712	)		973
Adjustments to reconcile net income (loss) to net cash flows from (used in) operating activities:
Depreciation and amortization		2,499			2,525
Stock option, restricted stock compensation and employee purchase plan expense		1,237			226
Facility closing cost and severance		889			-
Provision for doubtful accounts		600			650
Amortization of unearned income		(4	)		(27	)
Deferred income taxes		-			564
Changes in working capital accounts:
Accounts receivable		4,678			7,041
Inventories		146			(1,048	)
Other current assets		3,462			387
Net investment in leases		424			546
Accounts payable - floor plan financing		(6,631	)		(1,335	)
Accounts payable trade		(668	)		(11,193	)
Deferred revenue		(291	)		(109	)
Employee compensation and benefits		(761	)		175
Other, net		(2,511	)		155
Net operating activities		357			(470	)
Cash Flows used in Investing Activities:
Capital expenditures		(2,386	)		(1,662	)
Purchases of certificate of deposits		(15	)		(18	)
Net investing activities		(2,401	)		(1,680	)
Cash Flows from Financing Activities:
Proceeds from exercise of stock options		-			90
Purchase of treasury stock		(2,270	)		(405	)
Proceeds from issuance of common shares for employee stock purchase plan		172			146
Net financing activities		(2,098	)		(169	)
Effect of exchange rate changes on cash and cash equivalents		18			(78	)
Decrease in cash and cash equivalents		(4,124	)		(2,397	)
Cash and cash equivalents:
Beginning of period		13,282			13,562
End of period	$	9,158		$	11,165

POMEROY IT SOLUTIONS, INC.

2007 QUARTERS AND FULL YEAR FINANCIAL STATEMENT

(UNAUDITED)

For fiscal 2008, the Company has reclassified amounts previously included in operating expenses. The tables below reflect the fiscal 2007 financial statements as previously reported in the Company’s 2007 10K Report as well as the fiscal 2007 financial statements as restated after these reclassifications.

(in thousands)

	First Quarter of Fiscal 2007
	As Previously Reported		As Restated
Net revenues	$	141,993	$	141,993
Cost of revenues		118,291		124,752
Gross profit		23,702		17,241

Operating expenses		20,861		14,400

Loss from operations		2,841		2,841

Net Interest - income		172		172

Income taxes		1,188		1,188

Net income	$	1,825	$	1,825

	Second Quarter of Fiscal 2007
	As Previously Reported			As Restated
Net revenues	$	138,261		$	138,261
Cost of revenues		116,238			122,653
Gross profit		22,023			15,608

Operating expenses		23,434			17,019

Loss from operations		(1,411	)		(1,411	)

Net Interest - income		90			90

Income taxes benefit		(468	)		(468	)

Net loss	$	(853	)	$	(853	)

	Third Quarter of Fiscal 2007
	As Previously Reported			As Restated
Net revenues	$	144,392		$	144,392
Cost of revenues		123,662			129,637
Gross profit		20,730			14,755

Operating expenses		124,265			118,290

Loss from operations		(103,535	)		(103,535	)

Net Interest - income		70			70

Income taxes benefit		(11,671	)		(11,671	)

Net loss	$	(91,794	)	$	(91,794	)

	Fourth Quarter of Fiscal 2007
	As Previously Reported			As Restated
Net revenues	$	162,261		$	162,261
Cost of revenues		144,731			152,155
Gross profit		17,530			10,106

Operating expenses		26,691			19,267

Loss from operations		(9,161	)		(9,161	)

Net Interest - income		119			119

Income taxes		12,369			12,369

Net loss	$	(21,411	)	$	(21,411	)

	2007 Fiscal Year
	As Previously Reported			As Restated
Net revenues	$	586,907		$	586,907
Cost of revenues		502,922			529,197
Gross profit		83,985			57,710

Operating expenses		195,251			168,976

Loss from operations		(111,266	)		(111,266	)

Net Interest - income		451			451

Income taxes		1,418			1,418

Net loss	$	(112,233	)	$	(112,233	)