##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q/A
 Amendment No. 1
  þ
    
    AMENDED QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 OR
 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: 0-19394
 GTSI CORP.
  Delaware
    
    54-1248422(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)3901 Stonecroft Boulevard, Chantilly, VA
    
    20151-1010(Address of principal executive offices)
    
    (Zip Code)
 703-502-2000
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ




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##### 



GTSI Corp.
Form 10-Q/A for the Quarter Ended June 30, 2008
 INDEX
 PagePART I  FINANCIAL INFORMATIONItem 1. Financial Statements Unaudited Condensed Consolidated Balance Sheets as of June 30, 2008 (as
restated) and December 31, 2007
    
    
    2Unaudited Condensed Consolidated Statements of Operations for the Three and
Six Months Ended June 30, 2008 (as restated) and 2007
    
    
    3Unaudited Condensed Consolidated Statements of Cash Flows for the Six
Months Ended June 30, 2008 (as restated) and 2007
    
    
    4Notes to Unaudited Condensed Consolidated Financial Statements (as restated)
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations (as restated)
    
    
    15Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    25Item 4. Controls and Procedures
    
    
    25PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    27Item 1A. Risk Factors
    
    
    27Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    27Item 3. Defaults Upon Senior Securities
    
    
    27Item 4. Submission of Matters to a Vote of Security Holders
    
    
    27Item 5. Other Information
    
    
    27Item 6. Exhibits
    
    
    27SIGNATURES
    
    
    28Exhibit 31.1Exhibit 31.2Exhibit 32




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EXPLANATORY NOTE
       1




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 GTSI CORP.
 
 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
 June 30,2008(restated
    
    
    December 31,see Note 2)
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    
    
    
    $
    829Accounts receivable, net
    
    
    147,797
    
    
    
    165,317Inventory
    
    
    12,751
    
    
    
    21,577Deferred costs
    
    
    9,172
    
    
    
    5,615Other current assets
    
    
    7,130
    
    
    
    5,169Total current assets
    
    
    176,850
    
    
    
    198,507Depreciable assets, net
    
    
    11,773
    
    
    
    12,158Long-term receivables and other assets
    
    
    9,554
    
    
    
    16,002Total assets
    
    $
    198,177
    
    
    $
    226,667LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Borrowings under credit facility
    
    $
    
    
    
    $
    18,031Accounts payable
    
    
    99,224
    
    
    
    84,715Financed lease debt, current portion
    
    
    8,472
    
    
    
    8,509Accrued liabilities
    
    
    10,403
    
    
    
    14,725Deferred revenue
    
    
    2,642
    
    
    
    2,542Total current liablilites
    
    
    120,741
    
    
    
    128,522Long-term debt
    
    
    
    
    
    
    10,000Long-term financed lease debt
    
    
    5,608
    
    
    
    9,068Other liabilities
    
    
    390
    
    
    
    1,364Total liabilities
    
    
    126,739
    
    
    
    148,954Commitments and contingencies (See Note 11)Stockholders equityPreferred stock  $0.25 par value, 680,850
shares authorized; none issued or outstanding
    
    
    
    
    
    
    Common stock  $0.005 par value, 20,000,000
shares authorized; 10,179,946 issued and
9,825,623 outstanding at June 30, 2008; and
10,183,251 issued and 9,700,850 outstanding at
December 31, 2007
    
    
    50
    
    
    
    49Capital in excess of par value
    
    
    48,218
    
    
    
    47,097Retained earnings
    
    
    23,660
    
    
    
    31,634Treasury stock, 62,617 shares at June 30, 2008
and 139,994 shares at December 31, 2007, at
cost
    
    
    (490
    )
    
    
    (1,067
    )Total stockholders equity
    
    
    71,438
    
    
    
    77,713Total liabilities and stockholders equity
    
    $
    198,177
    
    
    $
    226,667
   2




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##### Table of Contents



GTSI CORP.
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    
    
    
    
    2008(restated see
    
    
    
    
    
    
    (restated seeNote 2)
    
    
    2007
    
    
    Note 2)
    
    
    2007SALESProduct
    
    $
    143,082
    
    
    $
    141,198
    
    
    $
    270,650
    
    
    $
    275,081Service
    
    
    13,357
    
    
    
    12,439
    
    
    
    25,269
    
    
    
    22,639Financing
    
    
    2,761
    
    
    
    3,083
    
    
    
    6,071
    
    
    
    5,616159,200
    
    
    
    156,720
    
    
    
    301,990
    
    
    
    303,336COST OF SALESProduct
    
    
    129,362
    
    
    
    125,512
    
    
    
    244,183
    
    
    
    245,102Service
    
    
    8,816
    
    
    
    8,376
    
    
    
    14,532
    
    
    
    14,415Financing
    
    
    1,617
    
    
    
    637
    
    
    
    2,464
    
    
    
    1,451139,795
    
    
    
    134,525
    
    
    
    261,179
    
    
    
    260,968GROSS MARGIN
    
    
    19,405
    
    
    
    22,195
    
    
    
    40,811
    
    
    
    42,368SELLING, GENERAL & ADMINISTRATIVE EXPENSES
    
    
    22,831
    
    
    
    25,334
    
    
    
    48,702
    
    
    
    51,532LOSS FROM OPERATIONS
    
    
    (3,426
    )
    
    
    (3,139
    )
    
    
    (7,891
    )
    
    
    (9,164
    )INTEREST AND OTHER INCOME (EXPENSE), NETInterest and other income
    
    
    276
    
    
    
    254
    
    
    
    405
    
    
    
    584Equity income from affiliates
    
    
    744
    
    
    
    481
    
    
    
    1,149
    
    
    
    609Interest and other expense
    
    
    (492
    )
    
    
    (965
    )
    
    
    (1,674
    )
    
    
    (2,346
    )Interest and other income (expense), net
    
    
    528
    
    
    
    (230
    )
    
    
    (120
    )
    
    
    (1,153
    )LOSS BEFORE INCOME TAXES
    
    
    (2,898
    )
    
    
    (3,369
    )
    
    
    (8,011
    )
    
    
    (10,317
    )INCOME TAX (PROVISION) BENEFIT
    
    
    (11
    )
    
    
    (252
    )
    
    
    37
    
    
    
    (252
    )NET LOSS
    
    $
    (2,909
    )
    
    $
    (3,621
    )
    
    $
    (7,974
    )
    
    $
    (10,569
    )LOSS PER SHAREBasic
    
    $
    (0.30
    )
    
    $
    (0.38
    )
    
    $
    (0.82
    )
    
    $
    (1.11
    )Diluted
    
    $
    (0.30
    )
    
    $
    (0.38
    )
    
    $
    (0.82
    )
    
    $
    (1.11
    )WEIGHTED AVERAGE SHARES OUTSTANDINGBasic
    
    
    9,762
    
    
    
    9,551
    
    
    
    9,727
    
    
    
    9,513Diluted
    
    
    9,762
    
    
    
    9,551
    
    
    
    9,727
    
    
    
    9,513
   3




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GTSI CORP.
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six Months EndedJune 30,2008(restated seeNote 2)
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (7,974
    )
    
    $
    (10,569
    )Adjustments to reconcile net loss to net cash
provided by operating activities:
    
    
    36,242
    
    
    
    45,597Net cash provided by operating activities
    
    
    28,268
    
    
    
    35,028CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of depreciable assets
    
    
    (1,194
    )
    
    
    (1,083
    )Net cash used in investing activities
    
    
    (1,194
    )
    
    
    (1,083
    )CASH FLOWS FROM FINANCING ACTIVITES:Payments on Credit Facility
    
    
    (18,031
    )
    
    
    (30,912
    )Payment of Term Loan
    
    
    (10,000
    )
    
    
    Payment of deferred financing costs
    
    
    
    
    
    
    (670
    )Common Stock Purchases
    
    
    (212
    )
    
    
    Proceeds from equity transactions
    
    
    340
    
    
    
    842Net cash used in financing activities
    
    
    (27,903
    )
    
    
    (30,740
    )NET (DECREASE) INCREASE IN CASH
    
    
    (829
    )
    
    
    3,205CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    829
    
    
    
    705CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    
    
    
    $
    3,910
   4




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GTSI CORP.
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. Basis of Presentation
  Software Revenue Recognition Modification of SOP 97-2, Software Revenue Recognition, With
Respect to Certain Transaction.
   2. Restatement
    5




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Unaudited Consolidated Condensed Balance Sheet
June 30, 2008
(in thousands)
 As PreviouslyReported
    
    
    Adjustments
    
    
    As RestatedAccounts Receivable
    
    $
    147,945
    
    
    $
    (148
    )
    
    $
    147,797Deferred Costs
    
    $
    7,065
    
    
    $
    2,107
    
    
    $
    9,172Total Current Assets
    
    $
    174,891
    
    
    $
    1,959
    
    
    $
    176,850Total Assets
    
    $
    196,218
    
    
    $
    1,959
    
    
    $
    198,177Accrued liabilities
    
    $
    9,869
    
    
    $
    534
    
    
    $
    10,403Total Current Liabilities
    
    $
    120,207
    
    
    $
    534
    
    
    $
    120,741Total Liabilities
    
    $
    126,205
    
    
    $
    534
    
    
    $
    126,739Retained earnings
    
    $
    22,235
    
    
    $
    1,425
    
    
    $
    23,660Total stockholders equity
    
    $
    70,013
    
    
    $
    1,425
    
    
    $
    71,438Total liabilities and stockholders equity
    
    $
    196,218
    
    
    $
    1,959
    
    
    $
    198,177
  6




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Unaudited Consolidated Condensed Statement of Operations
(in thousands except per share data)
 For the Three Months Ended June 30, 2008As PreviouslyReported
    
    
    Adjustments
    
    
    As RestatedSalesService
    
    $
    13,505
    
    
    $
    (148
    )
    
    $
    13,357Cost of SalesProduct
    
    $
    131,469
    
    
    $
    (2,107
    )
    
    $
    129,362Gross Margin
    
    $
    17,446
    
    
    $
    1,959
    
    
    $
    19,405Selling, General & Administrative Expenses
    
    $
    22,297
    
    
    $
    534
    
    
    $
    22,831Loss from Operations
    
    $
    (4,851
    )
    
    $
    1,425
    
    
    $
    (3,426
    )Loss before Income Taxes
    
    $
    (4,323
    )
    
    $
    1,425
    
    
    $
    (2,898
    )Net Loss
    
    $
    (4,334
    )
    
    $
    1,425
    
    
    $
    (2,909
    )Loss Per Share
    
    $
    (0.44
    )
    
    $
    0.14
    
    
    $
    (0.30
    )
 For
the Six Months Ended June 30, 2008As PreviouslyReported
    
    
    Adjustments
    
    
    As RestatedSalesService
    
    $
    25,417
    
    
    $
    (148
    )
    
    $
    25,269Cost of SalesProduct
    
    $
    246,290
    
    
    $
    (2,107
    )
    
    $
    244,183Gross Margin
    
    $
    38,852
    
    
    $
    1,959
    
    
    $
    40,811Selling, General & Administrative Expenses
    
    $
    48,168
    
    
    $
    534
    
    
    $
    48,702Loss from Operations
    
    $
    (9,316
    )
    
    $
    1,425
    
    
    $
    (7,891
    )Loss before Income Taxes
    
    $
    (9,436
    )
    
    $
    1,425
    
    
    $
    (8,011
    )Net Loss
    
    $
    (9,399
    )
    
    $
    1,425
    
    
    $
    (7,974
    )Loss Per Share
    
    $
    (0.97
    )
    
    $
    0.15
    
    
    $
    (0.82
    )
 Unaudited Consolidated Condensed Statement of Cash Flows
For the Six Months Ended June 30, 2008
(in thousands)
 As PreviouslyReported
    
    
    Adjustments
    
    
    As RestatedNet loss
    
    $
    (9,399
    )
    
    $
    1,425
    
    
    $
    (7,974
    )Adjustments to reconcile net
loss to net cash provided by
operating activities:
    
    $
    37,667
    
    
    $
    (1,425
    )
    
    $
    36,242
  7




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3. New Accounting Pronouncements
 Fair Value Measurement Application of FASB Statement No. 157 to FASB Statement No. 13 and Other
Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification
or Measurement under Statement 13 Effective Date of FASB Statement No. 157
 The Fair Value Option for Financial Assets and
Financial Liabilities
 Business Combinations
 Noncontrolling Interests in Consolidated Financial
Statements An Amendment of ARB No. 51
 Disclosures about Derivative Instruments and Hedging
Activities An Amendment of FASB Statement No. 133
 The Hierarchy of Generally Accepted Accounting
Principles The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles
 Accounting for Financial Guarantee Insurance
Contracts an interpretation of FASB Statement No. 60
  8




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Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating Securities Earnings
Per Share
 4. Stock-Based Compensation
 Stock Incentive Plans
  Stock Options
  WeightedAverageRemaining
    
    
    AggregateShares
    
    
    Weighted Average
    
    
    Contractual
    
    
    Intrinsic Value(in thousands)
    
    
    Exercise Price
    
    
    Term
    
    
    (in thousands)Outstanding at January 1, 2008
    
    
    1,782
    
    
    $
    8.08Granted
    
    
    
    
    
    
    Exercised
    
    
    (45
    )
    
    
    4.88Forfeited
    
    
    (7
    )
    
    
    9.04Expired
    
    
    (42
    )
    
    
    11.34Outstanding at June 30, 2008
    
    
    1,688
    
    
    $
    8.08
    
    
    
    3.84
    
    
    $
    1,022Exercisable at June 30, 2008
    
    
    1,105
    
    
    $
    8.44
    
    
    
    3.33
    
    
    $
    714
  Restricted Shares
   9




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Weighted AverageShares
    
    
    Grant-Date Fair(in thousands)
    
    
    ValueNonvested at January 1, 2008
    
    
    378
    
    
    $
    11.71Granted
    
    
    39
    
    
    
    7.51Vested
    
    
    (87
    )
    
    
    12.30Forfeited
    
    
    (3
    )
    
    
    12.09Nonvested at June 30, 2008
    
    
    327
    
    
    $
    11.04
 Stock
Appreciation Rights (SARs)
  Unrecognized Compensation
  5. Lease and Other Receivables
   June 30, 2008
    
    
    December 31, 2007Future minimum lease payments receivable
    
    $
    12,401
    
    
    $
    13,558Unguaranteed residual values
    
    
    4,703
    
    
    
    4,785Unearned income
    
    
    (1,590
    )
    
    
    (2,450
    )$
    15,514
    
    
    $
    15,893
  June 30, 2008
    
    
    December 31, 2007Future minimum payments receivable
    
    $
    4,280
    
    
    $
    10,240Unearned income
    
    
    (804
    )
    
    
    (1,433
    )$
    3,476
    
    
    $
    8,807
 6. Transferred Receivables and Financed Lease Debt
 Accounting for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities
  10




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7. Credit Facility and Term Loan
      8. Contract Termination Costs
   Contract Termination Liability as of 12/31/07
    
    $
    30Less: Cash Payments
    
    
    (16
    )Contract Termination Liability as of 06/30/08
    
    $
    14
 9. Loss Per Share
    11




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Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2008
    
    
    
    
    
    
    2008(restated see
    
    
    
    
    
    
    (restated seeNote 2)
    
    
    2007
    
    
    Note 2)
    
    
    2007Basic loss per shareNet loss
    
    $
    (2,909
    )
    
    $
    (3,621
    )
    
    $
    (7,974
    )
    
    $
    (10,569
    )Weighted average shares outstanding
    
    
    9,762
    
    
    
    9,551
    
    
    
    9,727
    
    
    
    9,513Basic loss per share
    
    $
    (0.30
    )
    
    $
    (0.38
    )
    
    $
    (0.82
    )
    
    $
    (1.11
    )Diluted loss per share:Net loss
    
    $
    (2,909
    )
    
    $
    (3,621
    )
    
    $
    (7,974
    )
    
    $
    (10,569
    )Weighted average shares outstanding
    
    
    9,762
    
    
    
    9,551
    
    
    
    9,727
    
    
    
    9,513Incremental shares attributable to the
assumed
exercise of outstanding stock options
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AWeighted average shares and
equivalents
    
    
    9,762
    
    
    
    9,551
    
    
    
    9,727
    
    
    
    9,513Diluted loss per share
    
    $
    (0.30
    )
    
    $
    (0.38
    )
    
    $
    (0.82
    )
    
    $
    (1.11
    )
 10. Income Taxes
 Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109
     12




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11. Commitments and Contingencies
 Product Warranties
  Six months endedJune 30,2008
    
    
    2007Accrued warranties at beginning of period
    
    $
    283
    
    
    $
    855Charges made against warranty liabilities
    
    
    (20
    )
    
    
    (157
    )Adjustments to warranty reserves
    
    
    (133
    )
    
    
    (263
    )Accruals for additional warranties sold
    
    
    61
    
    
    
    60Accrued warranties at end of period
    
    $
    191
    
    
    $
    495
  Six months endedJune 30,2008
    
    
    2007Deferred warranty revenue at beginning of period
    
    $
    130
    
    
    $
    506Deferred warranty revenue recognized
    
    
    (131
    )
    
    
    (306
    )Revenue deferred for additional warranties sold
    
    
    369
    
    
    
    80Deferred warranty revenue at end of period
    
    $
    368
    
    
    $
    280
  13




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Letters of Credit
   Employment Agreements
  Contingencies
  12. Related Party Transactions
    Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues
    
    $
    53,815
    
    
    $
    44,521
    
    
    $
    101,532
    
    
    $
    83,323Gross margin
    
    $
    5,742
    
    
    $
    3,343
    
    
    $
    10,488
    
    
    $
    7,018Net income
    
    $
    1,782
    
    
    $
    1,234
    
    
    $
    2,878
    
    
    $
    1,580
  14




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
  Disclosure Regarding Forward-Looking Statements
  
    
    Our reliance on a small number of large transactions for significant portions of our
sales and gross margins
 
    
    Our ability to shift our business model from a reseller of products to a high-end
solutions provider
 
    
    Any issue that compromises our relationship with agencies of the Federal government
would cause serious harm to our business
 
    
    Changes in Federal government fiscal spending
 
    
    Our ability to meet the covenants under our Credit Facility in future periods
 
    
    Possible infrastructure failures
 
    
    Any material weaknesses in our internal control over financial reporting
 
    
    Continuing net losses, if we fail to align costs with our sales levels
 
    
    Potential additional expenses to comply with the changing regulations of corporate
governance and public disclosure
 
    
    Our quarterly sales and cash flows are volatile, which makes our future financial
results difficult to forecast
 
    
    Unsatisfactory performance by third parties with which we work could hurt our
reputation, operating results and competitiveness
 
    
    Our qualifications as a small business for certain new contract awards
 
    
    Our ability to integrate any potential future acquisitions, strategic investments or
mergers
   15




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Restatement
      Overview
      16




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##### Table of Contents




    
    Total sales increased $2.5 million.
    
    Gross margin as a percentage of sales decreased 2.0%.
    
    Selling, General & Administrative expenses decreased $2.5 million.
    
    Loss before income taxes decreased $0.5 million.
    
    Cash provided by operations decreased $3.5 million.
  
    
    Total sales decreased $1.3 million.
    
    Gross margin as a percentage of sales decreased 0.5%.
    
    Selling, General & Administrative expenses decreased $2.8 million.
    
    Loss before income taxes decreased $2.3 million.
    
    Cash provided by operations decreased $6.8 million.
 Critical Accounting Estimates and Policies
  Historical Results of Operations
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2008
    
    
    
    
    
    
    2008(restated
    
    
    
    
    
    
    (restatedsee Note 2)
    
    
    2007
    
    
    see Note 2)
    
    
    2007Sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    87.8
    %
    
    
    85.8
    %
    
    
    86.5
    %
    
    
    86.0
    %Gross margin
    
    
    12.2
    %
    
    
    14.2
    %
    
    
    13.5
    %
    
    
    14.0
    %Selling, general, and administrative expenses
    
    
    14.3
    %
    
    
    16.2
    %
    
    
    16.1
    %
    
    
    17.0
    %Loss from operations
    
    
    (2.1
    )%
    
    
    (2.0
    )%
    
    
    (2.6
    )%
    
    
    (3.0
    )%Interest and other income (expense), net
    
    
    0.3
    %
    
    
    (0.1
    )%
    
    
    0.0
    %
    
    
    (0.4
    )%Loss before taxes
    
    
    (1.8
    )%
    
    
    (2.1
    )%
    
    
    (2.6
    )%
    
    
    (3.4
    )%Income tax benefit (provision)
    
    
    0.0
    %
    
    
    (0.2
    )%
    
    
    0.0
    %
    
    
    (0.1
    )%Net Loss
    
    
    (1.8
    )%
    
    
    (2.3
    )%
    
    
    (2.6
    )%
    
    
    (3.5
    )%
  17




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##### Table of Contents



Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,Sales by Type
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Hardware
    
    $
    109.7
    
    
    
    68.9
    %
    
    $
    110.6
    
    
    
    70.6
    %
    
    $
    206.3
    
    
    
    68.3
    %
    
    $
    226.3
    
    
    
    74.6
    %Software
    
    
    33.3
    
    
    
    20.9
    %
    
    
    30.6
    
    
    
    19.5
    %
    
    
    64.3
    
    
    
    21.3
    %
    
    
    48.8
    
    
    
    16.1
    %Service
    
    
    13.4
    
    
    
    8.4
    %
    
    
    12.4
    
    
    
    7.9
    %
    
    
    25.3
    
    
    
    8.4
    %
    
    
    22.6
    
    
    
    7.5
    %Financing
    
    
    2.8
    
    
    
    1.8
    %
    
    
    3.1
    
    
    
    2.0
    %
    
    
    6.1
    
    
    
    2.0
    %
    
    
    5.6
    
    
    
    1.8
    %Total
    
    $
    159.2
    
    
    
    100.0
    %
    
    $
    156.7
    
    
    
    100.0
    %
    
    $
    302.0
    
    
    
    100.0
    %
    
    $
    303.3
    
    
    
    100.0
    %
 Three months ended
    
    
    Six months endedSales by Vendor (based
    
    June 30,
    
    
    June 30,on 2008 sales)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Cisco
    
    $
    31.4
    
    
    
    19.7
    %
    
    $
    25.9
    
    
    
    16.5
    %
    
    $
    52.4
    
    
    
    17.4
    %
    
    $
    43.1
    
    
    
    14.2
    %Microsoft
    
    
    19.6
    
    
    
    12.3
    %
    
    
    27.2
    
    
    
    17.4
    %
    
    
    38.0
    
    
    
    12.6
    %
    
    
    38.8
    
    
    
    12.8
    %Sun Microsystems
    
    
    17.8
    
    
    
    11.2
    %
    
    
    18.9
    
    
    
    12.1
    %
    
    
    35.1
    
    
    
    11.6
    %
    
    
    32.9
    
    
    
    10.8
    %Panasonic
    
    
    15.5
    
    
    
    9.7
    %
    
    
    25.0
    
    
    
    16.0
    %
    
    
    27.3
    
    
    
    9.0
    %
    
    
    48.6
    
    
    
    16.0
    %Dell
    
    
    13.8
    
    
    
    8.7
    %
    
    
    3.5
    
    
    
    2.2
    %
    
    
    23.9
    
    
    
    7.9
    %
    
    
    7.2
    
    
    
    2.4
    %Others, net of
reserves and
adjustments
    
    
    61.1
    
    
    
    38.4
    %
    
    
    56.2
    
    
    
    35.8
    %
    
    
    125.3
    
    
    
    41.5
    %
    
    
    132.7
    
    
    
    43.8
    %Total
    
    $
    159.2
    
    
    
    100.0
    %
    
    $
    156.7
    
    
    
    100.0
    %
    
    $
    302.0
    
    
    
    100.0
    %
    
    $
    303.3
    
    
    
    100.0
    %
 Three Months Ended June 30, 2008 Compared With the Three Months Ended June 30, 2007
 Sales
       18




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##### Table of Contents



Gross Margin
     Selling, General & Administrative Expenses (SG&A)
  Interest and Other Income (Expense), Net
  Income Taxes
   19




---



##### Table of Contents



Six Months Ended June 30, 2008 Compared With the Six Months Ended June 30, 2007
 Sales
      Gross Margin
    20




---



##### Table of Contents



Selling, General & Administrative Expenses (SG&A)
  Interest and Other Income (Expense), Net
  Income Taxes
    Seasonal Fluctuations
   21




---



##### Table of Contents



Liquidity and Capital Resources
 Cash flows for the six months ended June 30,
 Increase(in millions)
    
    2008
    
    
    2007
    
    
    (Decrease)Cash provided by operating activities
    
    $
    28.3
    
    
    $
    35.0
    
    
    $
    (6.7
    )Cash used in investing activities
    
    $
    (1.2
    )
    
    $
    (1.1
    )
    
    $
    0.1Cash used in financing activities
    
    $
    (27.9
    )
    
    $
    (30.7
    )
    
    $
    (2.8
    )
     Credit Facility and Term Loan
     22




---



##### Table of Contents



Liquidity
    Capital Requirements
  New Accounting Pronouncements
 Fair Value Measurement Application of FASB Statement No. 157 to FASB Statement No. 13 and Other
Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification
or Measurement under Statement 13 Effective Date of FASB Statement No. 157
 The Fair Value Option for Financial Assets and
Financial Liabilities
  23




---



##### Table of Contents



Business Combinations
 Noncontrolling Interests in Consolidated Financial
Statements  An Amendment of ARB No. 51
 Disclosures about Derivative Instruments and Hedging
Activities  An Amendment of FASB Statement No. 133 161).
 The Hierarchy of Generally Accepted Accounting
Principles The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles
 Accounting for Financial Guarantee Insurance
Contracts-an interpretation of FASB Statement No. 60
 Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating Securities Earnings
Per Share
 SEC Comment Letter
    24




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
    25




---



##### Table of Contents



Material
Weakness
     
    
    We did not maintain effective controls over changes in our information technology
systems operational and financial applications.
Specifically, we lacked adequate controls over changes to logic in a
reporting database relative to deferred cost of sales for unbilled transactions where revenue recognition
criteria has not been met. Changes to the logic in the reporting
database did not follow the approved
change management process and lacked adequate user testing.
    
    Further, an effective business performance review of gross margin was not designed
and/or in operation to detect incomplete data relative to deferred cost of sales for
unbilled transactions where revenue recognition criteria has not been met.
  Changes in Internal Control over Financial Reporting
   26




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Items to a Vote of Security Holders
 (a)
    
    The Company held its annual meeting of stockholders on April 24, 2008.
 (b)
    
    Set forth below are the matters that were presented to and voted upon by the Companys
stockholders, and the results of such stockholders votes.
  Nominees
    
    Votes For
    
    
    Votes WithheldJames J. Leto
    
    
    8,328,611
    
    
    
    99,104Lee Johnson
    
    
    7,796,477
    
    
    
    631,238Thomas L. Hewitt
    
    
    8,246,524
    
    
    
    181,191Lloyd Griffths
    
    
    8,345,023
    
    
    
    82,692
  Votes For
    
    Votes Against
    
    Abstained5,208,789
    
    2,183,943
    
    435
 
 Item 5. Other Information
  
 Item 6. Exhibits
   27




---



##### Table of Contents



SIGNATURES
  GTSI Corp.Date:  September 19, 2008
    /s/ JAMES J. LETOJames J. LetoChief Executive OfficerDate: September 19, 2008
    /s/ PETER WHITFIELDPeter WhitfieldInterim Chief Financial Officer  28




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description10.1
    
    
    Credit Agreement dated as of June 2, 2006 between GTSI Corp.,
SunTrust Bank and Bank of America (1)10.2
    
    
    First Amendment to Credit Agreement dated as of July 13, 2006
between GTSI Corp., SunTrust Bank and Bank of America (2)10.3
    
    
    Second Amendment to Credit Agreement dated as of November 30, 2006
between GTSI Corp., the Lenders, the other Borrower Parties, and
SunTrust Bank (3)10.4
    
    
    Third Amendment to Credit Agreement dated as of March 30, 2007
between GTSI Corp., the Lenders, the other Borrower Parties, and
SunTrust Bank (4)10.5
    
    
    2008 Short Term Incentive Plan Description (5)31.1
    
    
    Section 302 Certification of Chief Executive Officer (filed herewith)31.2
    
    
    Section 302 Certification of Chief Financial Officer (filed herewith)32
    
    
    Section 906 Certification of Chief Executive Officer and Chief
Financial Officer (filed herewith)
 
 (1)
    
    Incorporated by reference to the Registrants current report on Form 8-K dated June 2, 2006.(2)
    
    Incorporated by reference to the Registrants current report on Form 8-K dated July 13, 2006.(3)
    
    Incorporated by reference to the Registrants current report on Form 8-K dated December 5,
2006.(4)
    
    Incorporated by reference to the Registrants Annual Report on Form 10-K for the year ended
December 31, 2006.(5)
    
    Incorporated by reference to the Registrants current report on Form 8-K dated April 23,
2008.  29