Mail Stop 4-6
April 28, 2005
M. Dendy Young
GTSI Corporation
3901 Stonecroft Blvd
Chantilly VA 20151-1010
Re: GTSI Corporation
Form 10-K for the fiscal year ending December 31, 2004
File No. 000-19394
Dear Mr. Young:
We have reviewed the above referenced filing and have the
following comments. Please note that we have limited the scope of
our review to the financial statements and related disclosures
related to your business strategy, revenue recognition, and
accounts
payable. Where indicated, we think you should revise your
document
in response to these comments. If you disagree, we will consider
your explanation as to why our comment is inapplicable or a
revision
is unnecessary. Please be as detailed as necessary in your
explanation. In some of our comments, we may ask you to provide
us
with supplemental information so we may better understand your
disclosure. After reviewing this information, we may or may not
raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 10-K: For the year ended December 31, 2004
Item 1. Business
Business Strategy, p. 4
1. We note that your disclosure in this section indicates that you
plan to "[d]ouble the revenue base of GTSI from $1 billion to $2
billion" over the next three years primarily through "organic
measures, supplemented by strategic acquisitions," and that you
have
included similar disclosure in MD&A. As your sales grew only
12.8%
during 2004, it is unclear how you plan to achieve such revenue
growth. Accordingly, please provide supplemental support for this
statement and revise the disclosure in your filing to better
explain
how you plan to double your revenues over the next three years.
For
example, what are the "organic measures" you plan to take and how
will such measures affect revenues? Do you have any current plans
regarding specific strategic acquisitions? Please revise and
advise
accordingly.
Contracts, p. 6
2. Explain the nature of the "administrative fee(s)" that are
levied
by various government agencies on purchases made by departments
outside of the agency that awarded the contract. Quantify the
amount
fees that are collected by you and remitted to the respective
agency
for the periods presented and explain your revenue recognition
policies associated with these fees. In your response, address
the
criteria outlined in EITF 99-19. If material, revise your revenue
recognition accounting policy to address your accounting for these
fees.
Notes to Consolidated Financial Statements
Note 7. Accounts Payable, p. 41
3. Tell us more about the obligations that you were judicially
released from upon the expiration of the statute of limitations in
2004. Explain the nature of the obligations and the transactions
under which you initially became obligated, including the
respective
counterparties, and describe the statute of limitations you refer
to.
Provide us any additional supplemental information surrounding
these
obligations that will support your conclusions that you were
judicially released from the obligations.
4. Also tell us more about the aged accrued payables that
management
concluded were `no longer valid liabilities". Explain the nature
of
the obligations and the transactions under which you initially
became
obligated, including the respective counterparties. Clarify
whether
these were ever `valid liabilities`. If so, explain why it was
appropriate to derecognize these liabilities in accordance with
SFAS
140. Explain the timing of the reversal, and discuss why it was
appropriate to derecognize these payables during 2004.
5. Given the significance of the reversal/derecognition of these
payables to your operating income and net income during 2004 and
the
respective quarters, revise to provide the following disclosures:
* Revise Selected Financial Data to briefly describe and/or cross
reference to a discussion of the reversal of accounts payable and
the
material effect that reversal had on the comparability of the
information presented. Refer to Instruction 2 to Item 302 of
Regulation S-K.
* Expand the Overview section and/or include a discussion of net
income and operating income in MD&A to discuss the significant
impact
the reversal of accounts payable had on your operating income and
net
income. In this regard, it appears that the annual and quarterly
trends in your operating income and net income would have been
materially different had you not derecognized these accounts
payables
in the respective periods. Refer to SEC Release 33-8350.
As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. You may wish to provide us with marked copies of
the amendment to expedite our review. Please furnish a cover
letter
with your amendment that keys your responses to our comments and
provides any requested supplemental information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Jason Niethamer at (202) 824-5675 or Lisa
Mitrovich, Assistant Chief Accountant, at (202) 942-1836 or me at
(202) 942-1800 if you have questions regarding these comments.
Very truly yours,
Craig Wilson
Senior Assistant Chief
Accountant
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GTSI Corporation
Form 10-K
April 26, 2005
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