##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2010
 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
(State or other jurisdiction of 
incorporation or organization)
    
    54-1248422
(I.R.S. Employer
Identification No.)2553 Dulles View Drive, Suite 100, Herndon, VA
(Address of principal executive offices)
    
    20171-5219
(Zip Code)
 703-502-2000
 
 þ o
 Yes o No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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##### 



GTSI Corp.
Form 10-Q for the Quarter Ended June 30, 2010
INDEX
 PagePART I  FINANCIAL INFORMATIONItem 1. Financial Statements Unaudited Condensed Consolidated Balance Sheets as of June 30, 2010 and December 31, 2009
    
    
    1Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June
30, 2010 and 2009
    
    
    2Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2010
and 2009
    
    
    3Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    23Item 4. Controls and Procedures
    
    
    23PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    24Item 1A. Risk Factors
    
    
    24Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    24Item 3. Defaults Upon Senior Securities
    
    
    25Item 4. Reserved
    
    
    25Item 5. Other Information
    
    
    25Item 6. Exhibits
    
    
    25SIGNATURES
    
    
    26Exhibit 31.1Exhibit 31.2Exhibit 32




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 GTSI CORP.
 
 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
  June 30,
    
    
    December 31,2010
    
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    33,462
    
    
    $
    7,894Accounts receivable, net
    
    
    143,037
    
    
    
    209,595Inventory
    
    
    8,555
    
    
    
    13,477Deferred costs
    
    
    1,970
    
    
    
    1,807Other current assets
    
    
    7,607
    
    
    
    4,140Total current assets
    
    
    194,631
    
    
    
    236,913Depreciable assets, net
    
    
    9,259
    
    
    
    10,960Long-term receivables and other assets
    
    
    41,377
    
    
    
    40,758Total assets
    
    $
    245,267
    
    
    $
    288,631LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    60,468
    
    
    $
    109,723Accounts payable  floor plan
    
    
    51,939
    
    
    
    34,889Financed lease debt, current portion
    
    
    338
    
    
    
    831Accrued liabilities
    
    
    18,678
    
    
    
    26,127Deferred revenue
    
    
    4,472
    
    
    
    3,176Total current liablilites
    
    
    135,895
    
    
    
    174,746Other liabilities
    
    
    18,587
    
    
    
    17,598Total liabilities
    
    
    154,482
    
    
    
    192,344Commitments and contingencies (See Note 12)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; 10,119,038 issued and 9,622,036
outstanding at June 30, 2010; and 10,119,038 issued and 9,637,676 outstanding at December 31,
2009
    
    
    50
    
    
    
    50Capital in excess of par value
    
    
    53,584
    
    
    
    52,698Retained earnings
    
    
    39,101
    
    
    
    44,925Treasury stock, 348,110 shares at June 30, 2010 and 277,850 shares at December 31, 2009, at cost
    
    
    (1,950
    )
    
    
    (1,386
    )Total stockholders equity
    
    
    90,785
    
    
    
    96,287Total liabilities and stockholders equity
    
    $
    245,267
    
    
    $
    288,631
   1




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##### Table of Contents



GTSI CORP.
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009SALESProduct
    
    $
    120,944
    
    
    $
    149,869
    
    
    $
    209,659
    
    
    $
    277,589Service
    
    
    11,958
    
    
    
    12,576
    
    
    
    22,674
    
    
    
    26,850Financing
    
    
    2,145
    
    
    
    2,156
    
    
    
    4,528
    
    
    
    4,234135,047
    
    
    
    164,601
    
    
    
    236,861
    
    
    
    308,673COST OF SALESProduct
    
    
    109,287
    
    
    
    133,217
    
    
    
    189,740
    
    
    
    252,016Service
    
    
    7,623
    
    
    
    7,640
    
    
    
    14,603
    
    
    
    16,924Financing
    
    
    688
    
    
    
    724
    
    
    
    1,550
    
    
    
    1,050117,598
    
    
    
    141,581
    
    
    
    205,893
    
    
    
    269,990GROSS MARGIN
    
    
    17,449
    
    
    
    23,020
    
    
    
    30,968
    
    
    
    38,683SELLING, GENERAL & ADMINISTRATIVE
EXPENSES
    
    
    21,646
    
    
    
    24,428
    
    
    
    43,860
    
    
    
    47,291LOSS FROM OPERATIONS
    
    
    (4,197
    )
    
    
    (1,408
    )
    
    
    (12,892
    )
    
    
    (8,608
    )INTEREST AND OTHER INCOME, NETInterest and other income (expense)
    
    
    (81
    )
    
    
    777
    
    
    
    74
    
    
    
    843Equity income from affiliates
    
    
    2,386
    
    
    
    2,114
    
    
    
    3,859
    
    
    
    2,940Interest expense
    
    
    (178
    )
    
    
    (1,949
    )
    
    
    (357
    )
    
    
    (2,513
    )Interest and other income, net
    
    
    2,127
    
    
    
    942
    
    
    
    3,576
    
    
    
    1,270LOSS BEFORE INCOME TAXES
    
    
    (2,070
    )
    
    
    (466
    )
    
    
    (9,316
    )
    
    
    (7,338
    )INCOME TAX BENEFIT
    
    
    834
    
    
    
    156
    
    
    
    3,492
    
    
    
    3,148NET LOSS
    
    $
    (1,236
    )
    
    $
    (310
    )
    
    $
    (5,824
    )
    
    $
    (4,190
    )LOSS PER SHAREBasic
    
    $
    (0.13
    )
    
    $
    (0.03
    )
    
    $
    (0.61
    )
    
    $
    (0.43
    )Diluted
    
    $
    (0.13
    )
    
    $
    (0.03
    )
    
    $
    (0.61
    )
    
    $
    (0.43
    )WEIGHTED AVERAGE SHARES OUTSTANDINGBasic
    
    
    9,593
    
    
    
    9,700
    
    
    
    9,605
    
    
    
    9,781Diluted
    
    
    9,593
    
    
    
    9,700
    
    
    
    9,605
    
    
    
    9,781
   2




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GTSI CORP.
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  Six Months EndedJune 30,2010
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (5,824
    )
    
    $
    (4,190
    )Adjustments to reconcile net loss to net cash provided by operating activitiesDepreciation and amortization
    
    
    1,935
    
    
    
    1,917Loss on sale of depreciable assets
    
    
    34
    
    
    
    135Stock-based compensation
    
    
    1,127
    
    
    
    1,046Tax impact from stock-based compensation
    
    
    
    
    
    
    116Equity income, net of distributions in 2010
and 2009 of $1,908 and $1,946, respectively
    
    
    (1,951
    )
    
    
    (994
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    66,065
    
    
    
    34,957Inventory
    
    
    4,922
    
    
    
    (5,299
    )Other assets
    
    
    (2,337
    )
    
    
    (31,858
    )Accounts payable
    
    
    (49,255
    )
    
    
    (4,699
    )Accrued liabilities
    
    
    (7,449
    )
    
    
    2,893Other liabilities
    
    
    2,284
    
    
    
    23,923Net cash provided by operating activities
    
    
    9,551
    
    
    
    17,947CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of depreciable assets
    
    
    (228
    )
    
    
    (705
    )Net cash used in investing activities
    
    
    (228
    )
    
    
    (705
    )CASH FLOWS FROM FINANCING ACTIVITIES:Payments under credit facility, net
    
    
    
    
    
    
    (22,387
    )Payments on floor plan, net
    
    
    17,050
    
    
    
    29,239Payment of deferred financing costs
    
    
    
    
    
    
    (50
    )Common stock purchases
    
    
    (889
    )
    
    
    (1,430
    )Proceeds from common stock issued
    
    
    84
    
    
    
    378Net cash provided by financing activities
    
    
    16,245
    
    
    
    5,750NET INCREASE IN CASH
    
    
    25,568
    
    
    
    22,992CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    7,894
    
    
    
    CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    33,462
    
    
    $
    22,992
   3




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GTSI CORP.
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. Basis of Presentation
    2. New Accounting Pronouncements
  3. Stock-Based Compensation
 Stock Incentive Plans
   4




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Stock Options
  Weighted Average
    
    
    AggregateShares
    
    
    Weighted Average
    
    
    Remaining Contractual
    
    
    Intrinsic Value(in thousands)
    
    
    Exercise Price
    
    
    Term
    
    
    (in thousands)Outstanding at January 1,
2010
    
    
    1,505
    
    
    $
    7.83Granted
    
    
    55
    
    
    
    5.66Exercised
    
    
    (30
    )
    
    
    2.81Forfeited
    
    
    (70
    )
    
    
    6.40Expired
    
    
    (72
    )
    
    
    11.12Outstanding at June 30, 2010
    
    
    1,388
    
    
    $
    7.75
    
    
    
    2.09
    
    
    $
    7Exercisable at June 30, 2010
    
    
    1,144
    
    
    $
    7.99
    
    
    
    1.40
    
    
    $
    7
  Restricted Shares
   Shares
    
    
    Weighted Average(in thousands)
    
    
    Grant-Date Fair ValueNonvested at January 1, 2010
    
    
    215
    
    
    $
    9.91Granted
    
    
    27
    
    
    
    5.61Vested
    
    
    (75
    )
    
    
    9.13Forfeited
    
    
    (48
    )
    
    
    11.49Nonvested at June 30, 2010
    
    
    119
    
    
    $
    8.80
  5




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Stock Appreciation Rights (SARs)
  Weighted Average
    
    
    AggregateShares
    
    
    Weighted Average
    
    
    Remaining Contractual
    
    
    Intrinsic Value(in thousands)
    
    
    Exercise Price
    
    
    Term
    
    
    (in thousands)Outstanding at January 1, 2010
    
    
    717
    
    
    $
    9.60Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (109
    )
    
    
    9.60Expired
    
    
    
    
    
    
    Outstanding at June 30, 2010
    
    
    608
    
    
    $
    9.60
    
    
    
    3.01
    
    
    $
    Exercisable at June 30, 2010
    
    
    377
    
    
    $
    9.60
    
    
    
    2.13
    
    
    $
    
  Unrecognized Compensation
  4. Accounts Receivable
  June 30,
    
    
    December 31,2010
    
    
    2009Trade accounts receivable
    
    $
    108,106
    
    
    $
    143,541Unbilled trade accounts receivable
    
    
    13,456
    
    
    
    32,784Lease receivables, net
    
    
    5,302
    
    
    
    6,149Finance receivables, net
    
    
    12,951
    
    
    
    21,626Vendor and other receivables
    
    
    3,576
    
    
    
    6,392Total accounts receivable
    
    $
    143,391
    
    
    $
    210,492Less: Allowance for doubtful
accounts
    
    
    (109
    )
    
    
    (223
    )Sales return allowance
    
    
    (245
    )
    
    
    (674
    )Accounts receivable, net
    
    $
    143,037
    
    
    $
    209,595
  6




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##### Table of Contents



5. Long-term receivables and other assets
  June 30,
    
    
    December 31,2010
    
    
    2009Lease receivables, net
    
    $
    3,264
    
    
    $
    3,531Finance receivables, net
    
    
    27,127
    
    
    
    28,041Equity Investment in EyakTek
    
    
    9,906
    
    
    
    7,956Other Assets
    
    
    1,080
    
    
    
    1,230Long-term receivables and other assets
    
    $
    41,377
    
    
    $
    40,758
 6. Lease and Other Receivables
 Leases
   June 30,
    
    
    December 31,2010
    
    
    2009Future minimum lease payments
receivable
    
    $
    9,702
    
    
    $
    10,719Unearned income
    
    
    (1,136
    )
    
    
    (1,039
    )$
    8,566
    
    
    $
    9,680
  June 30,
    
    
    December 31,2010
    
    
    2009Future minimum payments receivable
    
    $
    43,101
    
    
    $
    52,625Unearned income
    
    
    (3,023
    )
    
    
    (2,958
    )$
    40,078
    
    
    $
    49,667
 7. Transferred Receivables and Financed Lease Debt
 Transfers and Servicing
  7




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8. Credit Facility and Credit Agreement
    Total Credit Agreement
    
    $
    135,000Borrowing base limitation
    
    
    (38,763
    )Total borrowing capacity
    
    
    96,237Less: interest-bearing borrowings
    
    
    Less: non-interest bearing advances (floor plan loans)
    
    
    (51,939
    )Less: letters of credit
    
    
    (2,432
    )Total unused availability
    
    $
    41,866
    
    
    Maintain Tangible Net Worth not less than or equal to $45 million as dated the end of
each fiscal month
    
    Maintain Ratio of Total Liabilities to Tangible Net Worth not greater than 5.25 to 1.00
as dated the end of each fiscal month
    
    Maintain Current Ratio not less than (i) 1.20 to 1.00 as of the last business day of
the fiscal months of January, February, March, April, May, June, October, November and
December and (ii) 1.15 to 1.00 as of the last business day of the fiscal months of July,
August and September
    
    Maintain minimum Total Debt Service Coverage Ratio of 1.25 to 1.00 as dated the end of
each fiscal month.
   8




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9. Accrued Liabilities
  June 30,
    
    
    December 31,2010
    
    
    2009Accrued commissions and bonuses
    
    $
    1,680
    
    
    $
    6,113Accrued income taxes
    
    
    
    
    
    
    2,864Future contractual lease obligations
    
    
    10,730
    
    
    
    10,079Other
    
    
    6,268
    
    
    
    7,071Total accrued liabilities
    
    $
    18,678
    
    
    $
    26,127
 10. Loss Per Share
     Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Basic loss per shareNet loss
    
    $
    (1,236
    )
    
    $
    (310
    )
    
    $
    (5,824
    )
    
    $
    (4,190
    )Weighted average shares outstanding
    
    
    9,593
    
    
    
    9,700
    
    
    
    9,605
    
    
    
    9,781Basic loss per share
    
    $
    (0.13
    )
    
    $
    (0.03
    )
    
    $
    (0.61
    )
    
    $
    (0.43
    )Diluted loss per share:Net loss
    
    $
    (1,236
    )
    
    $
    (310
    )
    
    $
    (5,824
    )
    
    $
    (4,190
    )Weighted average shares outstanding
    
    
    9,593
    
    
    
    9,700
    
    
    
    9,605
    
    
    
    9,781Incremental shares attributable to the assumed
exercise of outstanding stock options
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AWeighted average shares and equivalents
    
    
    9,593
    
    
    
    9,700
    
    
    
    9,605
    
    
    
    9,781Diluted loss per share
    
    $
    (0.13
    )
    
    $
    (0.03
    )
    
    $
    (0.61
    )
    
    $
    (0.43
    )
  9




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##### Table of Contents



11. Income Taxes
    12. Commitments and Contingencies
 Product Warranties
  Six Months EndedJune 30,2010
    
    
    2009Accrued warranties at beginning of period
    
    $
    215
    
    
    $
    155Charges made against warranty liabilities
    
    
    (15
    )
    
    
    (3
    )Adjustments to warranty reserves
    
    
    (1
    )
    
    
    (4
    )Accruals for additional warranties sold
    
    
    8
    
    
    
    24Accrued warranties at end of period
    
    $
    207
    
    
    $
    172
 Maintenance Warranties
  Six Months EndedJune 30,2010
    
    
    2009Deferred warranty revenue at beginning of period
    
    $
    798
    
    
    $
    221Deferred warranty revenue recognized
    
    
    (419
    )
    
    
    (221
    )Revenue deferred for additional warranties sold
    
    
    445
    
    
    
    269Deferred warranty revenue at end of period
    
    $
    824
    
    
    $
    269
 Letters of Credit
   10




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##### Table of Contents



Employment Agreements
  Contingencies
  13. Related Party Transactions
    Three Months June 30,
    
    
    Six Months ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenues
    
    $
    106,769
    
    
    $
    91,096
    
    
    $
    201,254
    
    
    $
    161,819Gross margin
    
    $
    13,150
    
    
    $
    11,667
    
    
    $
    22,342
    
    
    $
    18,544Net income
    
    $
    6,449
    
    
    $
    5,715
    
    
    $
    10,428
    
    
    $
    7,882
  11




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations
 10-Q
 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 Agreement in future periods
    
    Negativity to our business due to the current global economic and credit conditions
    
    Possible infrastructure failures
    
    Any material weaknesses in our internal control over financial reporting
    
    Continued net losses, if we fail to align costs with our sales levels
    
    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 ability to adapt to consolidation within the OEM market place
    
    Our dependence on certain strategic partners
    
    Our ability to integrate any potential future acquisitions, strategic investments or
mergers
    
    Our ability to enter new lines of business
   12




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##### Table of Contents



Overview
      
    
    In the near term, we face some uncertainties due to the current business
environment. We have experienced a longer contracting process with Federal
Governments Department of Defense agencies, which is one of our traditionally stronger
markets. This delay, along with an overall decrease in Federal Government IT spending
could have a negative impact on our financial condition, operating performance,
revenue, income or liquidity.
 
    
    A shift of expenditures away from programs that we support could cause federal
government agencies to reduce their purchases under contracts, to exercise their right
to terminate contracts at any time without penalty or to decide not to exercise options
to renew contracts.
 
    
    With the Sun/Oracle merger and the continued consolidation within the OEM
market place, we are likely to see continued pricing pressure from our partners in the
market place.
    13




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##### Table of Contents




    
    Total sales decreased $29.6 million.
    
    Gross margin decreased $5.6 million.
    
    Selling, General & Administrative expenses decreased $2.8 million.
    
    Interest and other income increased $1.2 million.
    
    Loss before income taxes increased $1.6 million.
    
    Cash used in operations increased $11.7 million.
  
    
    Total sales decreased $71.8 million.
    
    Gross margin decreased $7.7 million.
    
    Selling, General & Administrative expenses decreased $3.4 million.
    
    Interest and other income increased $2.3 million.
    
    Loss before income taxes increased $2.0 million.
    
    Cash provided by operations decreased $8.4 million.
 Critical Accounting Estimates and Policies
   14




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##### Table of Contents



Historical Results of Operations
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    87.1
    %
    
    
    86.0
    %
    
    
    86.9
    %
    
    
    87.5
    %Gross margin
    
    
    12.9
    %
    
    
    14.0
    %
    
    
    13.1
    %
    
    
    12.5
    %Selling, general, and
administrative expenses
    
    
    16.0
    %
    
    
    14.8
    %
    
    
    18.5
    %
    
    
    15.3
    %Loss from operations
    
    
    (3.1
    )%
    
    
    (0.8
    )%
    
    
    (5.4
    )%
    
    
    (2.8
    )%Interest and other income, net
    
    
    1.6
    %
    
    
    0.6
    %
    
    
    1.4
    %
    
    
    0.4
    %Loss before taxes
    
    
    (1.5
    )%
    
    
    (0.2
    )%
    
    
    (4.0
    )%
    
    
    (2.4
    )%Income tax benefit
    
    
    0.6
    %
    
    
    0.1
    %
    
    
    1.5
    %
    
    
    1.0
    %Net loss
    
    
    (0.9
    )%
    
    
    (0.1
    )%
    
    
    (2.5
    )%
    
    
    (1.4
    )%
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,Sales by Type
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Hardware
    
    $
    95.1
    
    
    
    70.4
    %
    
    $
    114.1
    
    
    
    69.4
    %
    
    $
    167.9
    
    
    
    70.9
    %
    
    $
    192.6
    
    
    
    62.4
    %Software
    
    
    25.8
    
    
    
    19.1
    %
    
    
    35.7
    
    
    
    21.7
    %
    
    
    41.8
    
    
    
    17.6
    %
    
    
    85.0
    
    
    
    27.5
    %Service
    
    
    12.0
    
    
    
    8.9
    %
    
    
    12.6
    
    
    
    7.6
    %
    
    
    22.7
    
    
    
    9.6
    %
    
    
    26.9
    
    
    
    8.7
    %Financing
    
    
    2.1
    
    
    
    1.6
    %
    
    
    2.2
    
    
    
    1.3
    %
    
    
    4.5
    
    
    
    1.9
    %
    
    
    4.2
    
    
    
    1.4
    %Total
    
    $
    135.0
    
    
    
    100.0
    %
    
    $
    164.6
    
    
    
    100.0
    %
    
    $
    236.9
    
    
    
    100.0
    %
    
    $
    308.7
    
    
    
    100.0
    %
 Three months ended
    
    
    Six months endedSales by Vendor
    
    June 30,
    
    
    June 30,(based on YTD 2010 sales)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Cisco
    
    $
    35.4
    
    
    
    26.2
    %
    
    $
    24.2
    
    
    
    14.7
    %
    
    $
    56.4
    
    
    
    23.8
    %
    
    $
    36.1
    
    
    
    11.7
    %Oracle
    
    
    23.0
    
    
    
    17.0
    %
    
    
    23.9
    
    
    
    14.5
    %
    
    
    32.1
    
    
    
    13.6
    %
    
    
    30.9
    
    
    
    10.0
    %Dell
    
    
    14.2
    
    
    
    10.5
    %
    
    
    9.3
    
    
    
    5.7
    %
    
    
    26.7
    
    
    
    11.3
    %
    
    
    21.9
    
    
    
    7.1
    %Hewlett Packard
    
    
    9.9
    
    
    
    7.3
    %
    
    
    9.1
    
    
    
    5.5
    %
    
    
    23.3
    
    
    
    9.8
    %
    
    
    19.8
    
    
    
    6.4
    %Panasonic
    
    
    5.3
    
    
    
    3.9
    %
    
    
    12.6
    
    
    
    7.7
    %
    
    
    10.7
    
    
    
    4.5
    %
    
    
    22.8
    
    
    
    7.4
    %Others, net of reserves and adjustments
    
    
    47.2
    
    
    
    35.1
    %
    
    
    85.5
    
    
    
    51.9
    %
    
    
    87.7
    
    
    
    37.0
    %
    
    
    177.2
    
    
    
    57.4
    %Total
    
    $
    135.0
    
    
    
    100.0
    %
    
    $
    164.6
    
    
    
    100.0
    %
    
    $
    236.9
    
    
    
    100.0
    %
    
    $
    308.7
    
    
    
    100.0
    %
 Three Months Ended June 30, 2010 Compared With the Three Months Ended June 30, 2009
 Sales
   15




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##### Table of Contents



Transfers and Servicing
  Gross Margin
    16




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##### Table of Contents



Selling, General & Administrative Expenses (SG&A)
  Interest and Other Income, Net
  Income Taxes
  Income Taxes
  Six Months Ended June 30, 2010 Compared With the Six Months Ended June 30, 2009
 Sales
   17




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##### Table of Contents



Transfers and Servicing
  Gross Margin
    18




---



##### Table of Contents



Selling, General & Administrative Expenses (SG&A)
  Interest and Other Income, Net
  Income Taxes
  Income Taxes
  Seasonal Fluctuations
   19




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##### Table of Contents



Liquidity and Capital Resources
 Cash flows for the three months ended June 30,
 (in millions)
    
    2010
    
    
    2009
    
    
    ChangeCash provided by operating
activities
    
    $
    9.6
    
    
    $
    17.9
    
    
    $
    (8.3
    )Cash used in investing activities
    
    $
    (0.2
    )
    
    $
    (0.7
    )
    
    $
    0.5Cash provided by financing
activities
    
    $
    16.2
    
    
    $
    5.8
    
    
    $
    10.4
     Credit Agreement
   20




---



##### Table of Contents



Total Credit Agreement
    
    $
    135,000Borrowing base limitation
    
    
    (38,763
    )Total borrowing capacity
    
    
    96,237Less: interest-bearing borrowings
    
    
    Less: non-interest bearing advances (floor plan loans)
    
    
    (51,939
    )Less: letters of credit
    
    
    (2,432
    )Total unused availability
    
    $
    41,866
   Liquidity
     Capital Requirements
   21




---



##### Table of Contents



New Accounting Pronouncements
  SEC Comment Letter
    22




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
      
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   Changes in Internal Control over Financial Reporting
   23




---



##### 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
       (a)
    
    
    
    
    
    
    Total Number of
    
    
    Maximum DollarTotal
    
    
    
    
    
    
    Shares Purchased
    
    
    Value of SharesNumber
    
    
    Average
    
    
    as Part of
    
    
    that May Yet Beof Share
    
    
    Price Paid
    
    
    Publicly Announced
    
    
    Purchased Under thePeriod
    
    Purchased
    
    
    per Share
    
    
    Plans or Programs
    
    
    Plans or ProgramsApril 1 to April 30
    
    
    31,657
    
    
    $
    5.83
    
    
    
    31,657
    
    
    $
    2,115,024May 1 to May 31
    
    
    27,622
    
    
    $
    6.29
    
    
    
    27,328
    
    
    $
    1,943,065June 1 to June 30
    
    
    17,494
    
    
    $
    5.64
    
    
    
    17,494
    
    
    $
    1,844,38476,773
    
    
    $
    5.95
    
    
    
    76,479
 (a)
    
    The May purchases include 294 shares surrendered to cover the tax withholding obligation
with respect to the vesting of 911 restricted stock awards.  24




---



##### Table of Contents



Item 3. Defaults Upon Senior Securities
  
 Item 4. RESERVED
 
 Item 5. Other Information
  
 Item 6. Exhibits
   25




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##### Table of Contents



SIGNATURES
  GTSI Corp.Date: August 5, 2010
    
    /s/ SCOTT W. FRIEDLANDER

Scott W. FriedlanderPresident and Chief Executive OfficerDate: August 5, 2010
    
    /s/ PETER WHITFIELD

Peter WhitfieldSenior Vice President and Chief Financial Officer
  26




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description31.1
    
    
    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)
  27