##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2009
 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
 o 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 for the Quarter Ended September 30, 2009
 INDEX
 PagePART I  FINANCIAL INFORMATIONItem 1. Financial Statements Unaudited Condensed Consolidated Balance Sheets as of September 30, 2009 and December 31, 2008
    
    
    1Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended
September 30, 2009 and 2008
    
    
    2Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30,
2009 and 2008
    
    
    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
    
    
    22Item 4. Controls and Procedures
    
    
    22PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    23Item 1A. Risk Factors
    
    
    23Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    23Item 3. Defaults Upon Senior Securities
    
    
    24Item 4. Submission of Matters to a Vote of Security Holders
    
    
    24Item 5. Other Information
    
    
    24Item 6. Exhibits
    
    
    24SIGNATURES
    
    
    25Exhibit 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
 September 30,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    15,359
    
    
    $
    Accounts receivable, net
    
    
    216,023
    
    
    
    190,740Inventory
    
    
    21,368
    
    
    
    13,491Deferred costs
    
    
    2,787
    
    
    
    7,849Other current assets
    
    
    9,182
    
    
    
    7,807Total current assets
    
    
    264,719
    
    
    
    219,887Depreciable assets, net
    
    
    11,669
    
    
    
    13,664Long-term receivables and other assets
    
    
    41,369
    
    
    
    14,078Total assets
    
    $
    317,757
    
    
    $
    247,629LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Borrowings under credit facility
    
    $
    
    
    
    $
    22,387Accounts payable
    
    
    113,197
    
    
    
    103,553Accounts payable  floor plan
    
    
    60,250
    
    
    
    Financed lease debt, current portion
    
    
    1,759
    
    
    
    6,538Accrued liabilities
    
    
    21,563
    
    
    
    17,857Deferred revenue
    
    
    2,436
    
    
    
    2,079Total
current liabilities
    
    
    199,205
    
    
    
    152,414Long-term financed lease debt
    
    
    184
    
    
    
    2,530Other liabilities
    
    
    29,894
    
    
    
    2,571Total liabilities
    
    
    229,283
    
    
    
    157,515Commitments and contingencies (See Note 10)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; 10,119,038issued and
9,652,483 outstanding at September 30, 2009;
and 10,140,757issued and 9,866,662
outstanding at December 31, 2008
    
    
    50
    
    
    
    50Capital in excess of par value
    
    
    50,661
    
    
    
    50,722Retained earnings
    
    
    39,099
    
    
    
    39,469Treasury stock, 286,537 shares at September
30, 2009 and 16,176 shares at December 31,
2008, at cost
    
    
    (1,336
    )
    
    
    (127
    )Total stockholders equity
    
    
    88,474
    
    
    
    90,114Total liabilities and stockholders equity
    
    $
    317,757
    
    
    $
    247,629
   1




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##### Table of Contents



GTSI CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008SALESProduct
    
    $
    189,234
    
    
    $
    233,545
    
    
    $
    466,822
    
    
    $
    504,196Service
    
    
    13,985
    
    
    
    15,331
    
    
    
    40,835
    
    
    
    40,599Financing
    
    
    6,465
    
    
    
    8,183
    
    
    
    10,700
    
    
    
    14,254209,684
    
    
    
    257,059
    
    
    
    518,357
    
    
    
    559,049COST OF SALESProduct
    
    
    169,550
    
    
    
    209,896
    
    
    
    421,566
    
    
    
    454,080Service
    
    
    8,745
    
    
    
    8,890
    
    
    
    25,669
    
    
    
    23,422Financing
    
    
    2,475
    
    
    
    3,498
    
    
    
    3,525
    
    
    
    5,961180,770
    
    
    
    222,284
    
    
    
    450,760
    
    
    
    483,463GROSS MARGIN
    
    
    28,914
    
    
    
    34,775
    
    
    
    67,597
    
    
    
    75,586SELLING, GENERAL & ADMINISTRATIVE
EXPENSES
    
    
    23,836
    
    
    
    27,541
    
    
    
    71,128
    
    
    
    76,243INCOME (LOSS) FROM OPERATIONS
    
    
    5,078
    
    
    
    7,234
    
    
    
    (3,531
    )
    
    
    (657
    )INTEREST AND OTHER INCOME, NETInterest and other income
    
    
    140
    
    
    
    133
    
    
    
    985
    
    
    
    537Equity income from affiliates
    
    
    2,020
    
    
    
    1,480
    
    
    
    4,960
    
    
    
    2,629Interest expense
    
    
    (181
    )
    
    
    (644
    )
    
    
    (2,694
    )
    
    
    (2,318
    )Interest and other income, net
    
    
    1,979
    
    
    
    969
    
    
    
    3,251
    
    
    
    848NET INCOME (LOSS) BEFORE INCOME TAXES
    
    
    7,057
    
    
    
    8,203
    
    
    
    (280
    )
    
    
    191INCOME TAX (PROVISION) BENEFIT
    
    
    (3,236
    )
    
    
    24
    
    
    
    (89
    )
    
    
    61NET INCOME (LOSS)
    
    $
    3,821
    
    
    $
    8,227
    
    
    $
    (369
    )
    
    $
    252EARNINGS (LOSS) PER SHAREBasic
    
    $
    0.40
    
    
    $
    0.84
    
    
    $
    (0.04
    )
    
    $
    0.03Diluted
    
    $
    0.39
    
    
    $
    0.83
    
    
    $
    (0.04
    )
    
    $
    0.03WEIGHTED AVERAGE SHARES OUTSTANDINGBasic
    
    
    9,651
    
    
    
    9,791
    
    
    
    9,737
    
    
    
    9,749Diluted
    
    
    9,787
    
    
    
    9,885
    
    
    
    9,737
    
    
    
    9,874
   2




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##### Table of Contents



GTSI CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Nine Months EndedSeptember 30,2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net (loss) income
    
    $
    (369
    )
    
    $
    252Adjustments to reconcile net loss to net cash
provided by operating activities
    
    
    (19,793
    )
    
    
    24,085Net cash (used in) provided by operating activities
    
    
    (20,162
    )
    
    
    24,337CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of depreciable assets
    
    
    (1,016
    )
    
    
    (2,296
    )Net cash used in investing activities
    
    
    (1,016
    )
    
    
    (2,296
    )CASH FLOWS FROM FINANCING ACTIVITES:Payments on Credit Facility
    
    
    (22,387
    )
    
    
    (12,993
    )Borrowings under Floor plan loans
    
    
    60,250
    
    
    
    Payment of Term Loan
    
    
    
    
    
    
    (10,000
    )Common Stock Purchases
    
    
    (1,847
    )
    
    
    (216
    )Proceeds from equity transactions
    
    
    521
    
    
    
    339Net cash provided by (used in) financing activities
    
    
    36,537
    
    
    
    (22,870
    )NET INCREASE (DECREASE) IN CASH
    
    
    15,359
    
    
    
    (829
    )CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    
    
    
    
    829CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    15,359
    
    
    $
    
   3




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##### Table of Contents



GTSI CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. Basis of Presentation
    2. New Accounting Pronouncements
 The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles
 Transfers and Servicing.
   4




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##### Table of Contents



3. 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, 2009
    
    
    1,648
    
    
    $
    8.05Granted
    
    
    400
    
    
    
    6.40Exercised
    
    
    (75
    )
    
    
    4.24Forfeited
    
    
    (73
    )
    
    
    6.62Expired
    
    
    (131
    )
    
    
    9.07Outstanding at September 30, 2009
    
    
    1,769
    
    
    $
    7.82
    
    
    
    3.90
    
    
    $
    1,572Exercisable at September 30, 2009
    
    
    1,138
    
    
    $
    8.41
    
    
    
    2.62
    
    
    $
    749
  Restricted Shares
   Weighted AverageShares
    
    
    Grant-Date(in thousands)
    
    
    Fair ValueNonvested at January 1, 2009
    
    
    290
    
    
    $
    10.84Granted
    
    
    38
    
    
    
    4.53Vested
    
    
    (99
    )
    
    
    9.82Forfeited
    
    
    (37
    )
    
    
    10.13Nonvested at September 30, 2009
    
    
    192
    
    
    $
    10.25
  5




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##### Table of Contents



Stock Appreciation Rights (SARs)
  WeightedAverageRemaining
    
    
    AggregateShares
    
    
    Weighted Average
    
    
    Contractual
    
    
    Intrinsic Value(in thousands)
    
    
    Exercise Price
    
    
    Term
    
    
    (in thousands)Outstanding at January 1, 2009
    
    
    758
    
    
    $
    9.60Granted
    
    
    9
    
    
    
    9.60Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (65
    )
    
    
    9.60Expired
    
    
    (30
    )
    
    
    9.60Outstanding at September 30, 2009
    
    
    672
    
    
    $
    9.60
    
    
    
    4.30
    
    
    $
    Exercisable at September 30, 2009
    
    
    269
    
    
    $
    9.60
    
    
    
    4.01
    
    
    $
    
  Unrecognized Compensation
  4. Long-term receivables and other assets
  September 30,
    
    
    December 31,2009
    
    
    2008Lease and
other receivables, net of unearned interest
    
    $
    32,855
    
    
    $
    6,988Investment
in Eyak
    
    
    7,167
    
    
    
    5,261Other Assets
    
    
    1,347
    
    
    
    1,829$
    41,369
    
    
    $
    14,078
 5. Lease and Other Receivables
 Leases
   6




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##### Table of Contents



September 30,
    
    
    December 31,2009
    
    
    2008Future minimum lease payments receivable
    
    $
    10,870
    
    
    $
    14,921Unguaranteed residual values
    
    
    727
    
    
    
    3,458Unearned income
    
    
    (1,457
    )
    
    
    (1,164
    )$
    10,140
    
    
    $
    17,215
  September 30,
    
    
    December 31,2009
    
    
    2008Future minimum payments receivable
    
    $
    57,703
    
    
    $
    14,802Unearned income
    
    
    (3,540
    )
    
    
    (1,479
    )$
    54,163
    
    
    $
    13,323
 6. Transferred Receivables and Financed Lease Debt
   7. Credit Facility and Credit Agreement
    Total Credit Agreement
    
    $
    135,000Borrowing base limitation
    
    
    (923
    )Total borrowing capacity
    
    
    134,077Less: interest-bearing borrowings
    
    
    Less: non-interest bearing advances (floor plan loans)
    
    
    (60,250
    )Less: letters of credit
    
    
    (5,138
    )Total unused availability
    
    $
    68,689
  7




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##### Table of Contents



8. Earnings (Loss) Per Share
     8




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##### Table of Contents



Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Basic loss per shareNet income (loss)
    
    $
    3,821
    
    
    $
    8,227
    
    
    $
    (369
    )
    
    $
    252Weighted average shares outstanding
    
    
    9,651
    
    
    
    9,791
    
    
    
    9,737
    
    
    
    9,749Basic earnings (loss) per share
    
    $
    0.40
    
    
    $
    0.84
    
    
    $
    (0.04
    )
    
    $
    0.03Diluted loss per share:Net income (loss)
    
    $
    3,821
    
    
    $
    8,227
    
    
    $
    (369
    )
    
    $
    252Weighted average shares outstanding
    
    
    9,651
    
    
    
    9,791
    
    
    
    9,737
    
    
    
    9,749Incremental shares attributable to the
assumed exercise of outstanding stock options
    
    
    136
    
    
    
    94
    
    
    
    N/A
    
    
    
    125Weighted average shares and equivalents
    
    
    9,787
    
    
    
    9,885
    
    
    
    9,737
    
    
    
    9,874Diluted earnings (loss) per share
    
    $
    0.39
    
    
    $
    0.83
    
    
    $
    (0.04
    )
    
    $
    0.03
 9. Income Taxes
   Income Taxes.
 10. Commitments and Contingencies
 Product Warranties
  Nine Months EndedSeptember 30,2009
    
    
    2008Accrued warranties at beginning of period
    
    $
    155
    
    
    $
    283Charges made against warranty liabilities
    
    
    (3
    )
    
    
    (21
    )Adjustments to warranty reserves
    
    
    (4
    )
    
    
    (152
    )Accruals for additional warranties sold
    
    
    44
    
    
    
    84Accrued warranties at end of period
    
    $
    192
    
    
    $
    194
  9




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##### Table of Contents



Nine Months EndedSeptember 30,2009
    
    
    2008Deferred warranty revenue at beginning of period
    
    $
    221
    
    
    $
    130Deferred warranty revenue recognized
    
    
    (335
    )
    
    
    (210
    )Revenue deferred for additional warranties sold
    
    
    323
    
    
    
    415Deferred warranty revenue at end of period
    
    $
    209
    
    
    $
    335
 Letters of Credit
   Employment Agreements
   Contingencies
  11. Related Party Transactions
  Nine Months endedSeptember 30,2009
    
    
    2008Beginning Balance at January 1
    
    $
    5,261
    
    
    $
    2,875Equity Earnings
    
    
    4,960
    
    
    
    2,629Distributions
    
    
    (3,054
    )
    
    
    (1,546
    )Ending Balance at September 30
    
    $
    7,167
    
    
    $
    3,958
  10




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##### Table of Contents



Three Months ended
    
    
    Nine Months endedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues
    
    $
    94,162
    
    
    $
    81,346
    
    
    $
    255,981
    
    
    $
    182,878Gross margin
    
    $
    10,584
    
    
    $
    9,035
    
    
    $
    29,128
    
    
    $
    19,524Net income
    
    $
    5,459
    
    
    $
    4,118
    
    
    $
    13,341
    
    
    $
    6,996
 12. Subsequent Events
   11




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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 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
    
    Possible 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 ability to integrate any potential future acquisitions, strategic investments or
mergers
  Overview
   12




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##### Table of Contents




    
    Total sales decreased $47.4 million.
 
    
    Gross margin decreased $5.9 million.
 
    
    Selling, General & Administrative expenses decreased $3.7 million.
 
    
    Income before income taxes decreased $1.1 million.
 
    
    Cash provided by operations decreased $34.1 million.
 
    
    Interest and other income increased $1.0 million.
  
    
    Total sales decreased $40.7 million.
 
    
    Gross margin decreased $8.0 million.
 
    
    Selling, General & Administrative expenses decreased $5.1 million.
 
    
    Loss before income taxes increased $0.5 million.
 
    
    Cash provided by operations decreased $44.5 million.
 
    
    Interest and other income increased $2.4 million.
  13




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Critical Accounting Estimates and Policies
  Historical Results of Operations
  Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    86.2
    %
    
    
    86.5
    %
    
    
    87.0
    %
    
    
    86.5
    %Gross margin
    
    
    13.8
    %
    
    
    13.5
    %
    
    
    13.0
    %
    
    
    13.5
    %Selling, general, and
administrative expenses
    
    
    11.4
    %
    
    
    10.7
    %
    
    
    13.7
    %
    
    
    13.6
    %Income (loss) from operations
    
    
    2.4
    %
    
    
    2.8
    %
    
    
    (0.7
    )%
    
    
    (0.1
    )%Interest and other income, net
    
    
    0.9
    %
    
    
    0.4
    %
    
    
    0.6
    %
    
    
    0.2
    %Income (loss) before taxes
    
    
    3.3
    %
    
    
    3.2
    %
    
    
    (0.1
    )%
    
    
    0.1
    %Income tax (provision) benefit
    
    
    (1.5
    )%
    
    
    0.0
    %
    
    
    (0.0
    )%
    
    
    0.0
    %Net income (Loss)
    
    
    1.8
    %
    
    
    3.2
    %
    
    
    (0.1
    )%
    
    
    0.1
    %
  Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,Sales by Type
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Hardware
    
    $
    143.9
    
    
    
    68.6
    %
    
    $
    191.3
    
    
    
    74.3
    %
    
    $
    336.6
    
    
    
    64.9
    %
    
    $
    397.6
    
    
    
    71.1
    %Software
    
    
    45.3
    
    
    
    21.6
    %
    
    
    42.3
    
    
    
    16.5
    %
    
    
    130.3
    
    
    
    25.1
    %
    
    
    106.5
    
    
    
    19.1
    %Service
    
    
    14.0
    
    
    
    6.7
    %
    
    
    15.3
    
    
    
    6.0
    %
    
    
    40.8
    
    
    
    7.9
    %
    
    
    40.6
    
    
    
    7.3
    %Financing
    
    
    6.5
    
    
    
    3.1
    %
    
    
    8.2
    
    
    
    3.2
    %
    
    
    10.7
    
    
    
    2.1
    %
    
    
    14.3
    
    
    
    2.5
    %Total
    
    $
    209.7
    
    
    
    100.0
    %
    
    $
    257.1
    
    
    
    100.0
    %
    
    $
    518.4
    
    
    
    100.0
    %
    
    $
    559.0
    
    
    
    100.0
    %Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,Sales by Vendor (based on YTD 2009 sales)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Cisco
    
    $
    59.9
    
    
    
    28.6
    %
    
    $
    61.9
    
    
    
    24.1
    %
    
    $
    111.4
    
    
    
    21.5
    %
    
    $
    114.3
    
    
    
    20.4
    %Dell
    
    
    31.3
    
    
    
    14.9
    %
    
    
    30.2
    
    
    
    11.8
    %
    
    
    53.3
    
    
    
    10.3
    %
    
    
    54.1
    
    
    
    9.7
    %Sun Microsystems
    
    
    29.0
    
    
    
    13.8
    %
    
    
    27.3
    
    
    
    10.6
    %
    
    
    65.2
    
    
    
    12.6
    %
    
    
    62.5
    
    
    
    11.2
    %Microsoft
    
    
    21.5
    
    
    
    10.2
    %
    
    
    13.5
    
    
    
    5.2
    %
    
    
    73.8
    
    
    
    14.2
    %
    
    
    51.5
    
    
    
    9.2
    %HP
    
    
    16.5
    
    
    
    7.9
    %
    
    
    25.0
    
    
    
    9.7
    %
    
    
    39.7
    
    
    
    7.7
    %
    
    
    42.4
    
    
    
    7.6
    %Others, net of reserves and adjustments
    
    
    51.5
    
    
    
    24.6
    %
    
    
    99.2
    
    
    
    38.6
    %
    
    
    175.0
    
    
    
    33.7
    %
    
    
    234.2
    
    
    
    41.9
    %Total
    
    $
    209.7
    
    
    
    100.0
    %
    
    $
    257.1
    
    
    
    100.0
    %
    
    $
    518.4
    
    
    
    100.0
    %
    
    $
    559.0
    
    
    
    100.0
    %
  14




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##### Table of Contents



Three Months Ended September 30, 2009 Compared With the Three Months Ended September 30, 2008
 Sales
    Transfers and Servicing Transfers and Servicing
  Gross Margin
    15




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##### Table of Contents



Selling, General & Administrative Expenses (SG&A)
  Interest and Other Income, Net
  Income Taxes
   Nine Months Ended September 30, 2009 Compared With the Nine Months Ended September 30, 2008
 Sales
    16




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##### Table of Contents



Gross Margin
     Selling, General & Administrative Expenses (SG&A)
   17




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##### Table of Contents



Interest and Other Income, Net
  Income Taxes
 Income Taxes,
  Seasonal Fluctuations
   Liquidity and Capital Resources
 Cash flows for the nine months ended September 30,
 (in millions)
    
    2009
    
    
    2008
    
    
    ChangeCash (used in) provided by operating
activities
    
    $
    (20.2
    )
    
    $
    24.3
    
    
    $
    (44.5
    )Cash used in investing activities
    
    $
    (1.0
    )
    
    $
    (2.3
    )
    
    $
    (1.3
    )Cash provided by (used in) financing
activities
    
    $
    36.5
    
    
    $
    (22.9
    )
    
    $
    59.4
  18




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##### Table of Contents



Credit Facility and Credit Agreement
    Total Credit Agreement
    
    $
    135,000Borrowing base limitation
    
    
    (923
    )Total borrowing capacity
    
    
    134,077Less: interest-bearing borrowings
    
    
    Less: non-interest bearing advances (floor plan loans)
    
    
    (60,250
    )Less: letters of credit
    
    
    (5,138
    )Total unused availability
    
    $
    68,689
   19




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##### Table of Contents



Liquidity
     Capital Requirements
  New Accounting Pronouncements
 The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles
  20




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##### Table of Contents



Transfers and Servicing.
   21




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##### 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
   22




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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
       (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
    
    
    Plams or ProgramsJuly 1 to July 31
    
    
    16,163
    
    
    $
    5.71
    
    
    
    13,107
    
    
    $
    3,625,372August 1 to August 31
    
    
    18,972
    
    
    $
    7.64
    
    
    
    18,972
    
    
    $
    3,480,500September 1 to
September 30
    
    
    22,239
    
    
    $
    7.87
    
    
    
    22,239
    
    
    $
    3,305,42557,374
    
    
    
    7.18
    
    
    
    54,318
 (a)
    
    The July purchases includes 3,056 shares surrendered to cover the tax withholding obligation
with respect to the vesting of 8,790 restricted stock awards.  23




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##### Table of Contents



Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Items to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
   24




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##### Table of Contents



SIGNATURES
  GTSI Corp.Date: November 5, 2009
    /s/ JAMES J. LETOJames J. LetoChief Executive OfficerDate: November 5, 2009
    /s/ PETER WHITFIELDPeter WhitfieldSenior Vice President and Chief Financial Officer  25




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description10.1
    
    Credit Agreement dated as of May 27, 2009 among Castle Pines Capital LLC, as Administrative
Agent and a Lender, Wells Fargo Foothill, LLC as Administrative Agent and Collateral Agent, and
GTSI Corp. (1)10.2
    
    First Amendment to Credit Agreement dated as of May 27, 2009 among GTSI Corp., Castle Pines
Capital LLC and Wells Fargo Foothill LLC (2)10.3
    
    GTSIs Board of Directors authorization of common stock repurchase program dated as of June 8,
2009 (3)10.4
    
    Change in Control Agreements and
amendments to existing employment agreements (4)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 May 27, 2009.(2)
    
    Incorporated by reference to the Registrants current report on Form 8-K dated May 27, 2009.(3)
    
    Incorporated by reference to the Registrants current report on Form 8-K dated June 12, 2009.(4)
    
    Incorporated by reference to the Registrants current report on Form 8-K dated September 4,
2009.  26