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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003
COMMISSION FILE NO. 0-19394
GTSI CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 54-1248422
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3901 STONECROFT BOULEVARD
CHANTILLY, VA 20151-1010
(Address and zip code of principal executive offices)
703-502-2000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES |X| NO |_|
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Class Shares Outstanding at July 31, 2003
- ------------------------------- ---------------------------------------
Common Stock, $0.005 par value 8,205,268
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GTSI CORP. AND SUBSIDIARY
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 2003
TABLE OF CONTENTS PAGE
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COVER PAGE....................................................................1
TABLE OF CONTENTS.............................................................2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS -
Condensed Consolidated Balance Sheets as of
June 30, 2003 (unaudited) and December 31, 2002.................3
Condensed Consolidated Statements of Operations for the
Three Months and Six Months Ended June 30, 2003 and
2002 (unaudited)................................................4
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 2003 and 2002 (unaudited).............5
Notes to Condensed Consolidated Financial Statements (unaudited)..6
ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS............................11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.......20
ITEM 4. CONTROLS AND PROCEDURES..........................................20
PART II - OTHER INFORMATION..................................................21
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES...................................................................22
EXHIBIT 31.1: CEO CERTIFICATION
EXHIBIT 31.2: CFO CERTIFICATION
EXHIBIT 32.1: WRITTEN STATEMENTS OF CEO AND CFO
-2-
GTSI CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
JUNE 30, DECEMBER 31,
2003 2002
(Unaudited) (Audited)
----------------- -----------------
ASSETS
Current assets:
Cash $ 52 $ 32
Accounts receivable, net 127,454 139,164
Lease receivables, current 3,113 308
Merchandise inventories 57,658 56,039
Other current assets 21,786 15,080
----------------- -----------------
Total current assets 210,063 210,623
Property and equipment, net 15,107 11,707
Lease receivables, net of current portion 676 -
Other assets 2,572 2,588
----------------- -----------------
Total assets $ 228,418 $ 224,918
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ - $ 7,539
Accounts payable 137,153 122,432
Accrued liabilities 13,982 13,412
Accrued warranty liabilities 3,710 4,404
----------------- -----------------
Total current liabilities 154,845 147,787
Other liabilities 1,838 1,640
----------------- -----------------
Total liabilities 156,683 149,427
----------------- -----------------
Commitments and contingencies
Stockholders' equity
Preferred Stock - $0.25 par value, 680,850 shares authorized;
none issued or outstanding - -
Common Stock - $0.005 par value 20,000,000 shares authorized;
9,806,084 issued and 8,203,768 outstanding at June 30, 2003;
and 20,000,000 shares authorized; 9,806,084 issued and 8,609,938
outstanding at December 31, 2002 49 49
Capital in excess of par value 44,636 44,439
Retained earnings 36,338 36,952
Treasury stock, 1,602,316 shares at June 30, 2003 and
1,196,146 shares at December 31, 2002, at cost (9,288) (5,949)
----------------- -----------------
Total stockholders' equity 71,735 75,491
----------------- -----------------
Total liabilities and stockholders' equity $ 228,418 $ 224,918
================= =================
The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).
-3-
GTSI CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share information)
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2003 2002 2003 2002
---------------- ---------------- ---------------- ----------------
Sales $ 189,737 $ 200,992 $ 368,595 $ 377,735
Cost of sales 166,981 185,883 329,764 348,115
---------------- ---------------- ---------------- ----------------
Gross margin 22,756 15,109 38,831 29,620
Operating expenses 21,613 14,427 41,315 29,813
---------------- ---------------- ---------------- ----------------
Income (loss) from operations 1,143 682 (2,484) (193)
---------------- ---------------- ---------------- ----------------
Interest and other income 814 650 1,594 2,636
Interest expense (70) (39) (118) (255)
---------------- ---------------- ---------------- ----------------
Interest and other income, net 744 611 1,476 2,381
---------------- ---------------- ---------------- ----------------
Income (loss) before income taxes 1,887 1,293 (1,008) 2,188
Income tax provision (benefit) 738 521 (394) 875
---------------- ---------------- ---------------- ----------------
Net income (loss) $ 1,149 $ 772 $ (614) $ 1,313
================ ================ ================ ================
Basic net income (loss) per share $ 0.14 $ 0.09 $ (0.07) $ 0.16
================ ================ ================ ================
Diluted net income (loss) per share $ 0.13 $ 0.08 $ (0.07) $ 0.14
================ ================ ================ ================
Basic weighted average shares outstanding 8,258 8,265 8,410 8,225
================ ================ ================ ================
Diluted weighted average shares outstanding 8,907 9,582 8,410 9,555
================ ================ ================ ================
The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).
-4-
GTSI CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
SIX MONTHS ENDED
JUNE 30,
2003 2002
------------------ ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (614) $ 1,313
Adjustments to reconcile net income (loss) to net cash
provided by operating activities 16,146 32,068
------------------ ------------------
Net cash provided by operating activities 15,532 33,381
------------------ ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cost of property and equipment (4,831) (2,154)
------------------ ------------------
Net cash used in investing activities (4,831) (2,154)
------------------ ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of bank notes, net (7,539) (20,186)
Payments of note payable - -
Common stock repurchases (3,969) (26)
Proceeds from exercises of stock options 338 512
Proceeds from Employee Stock Purchase Plan 489 422
------------------ ------------------
Net cash used in financing activities (10,681) (19,278)
------------------ ------------------
Net increase in cash 20 11,949
Cash at beginning of period 32 114
------------------ ------------------
Cash at end of period $ 52 $ 12,063
================== ==================
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 151 $ 380
================== ==================
Income taxes $ 25 $ 445
================== ==================
The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).
-5-
GTSI CORP. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited, consolidated financial statements of GTSI Corp.
("GTSI" or the "Company") have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission ("SEC") and, therefore,
omit or condense certain footnotes and other information normally included in
financial statements prepared in accordance with generally accepted accounting
principles. This report should be read in conjunction with the audited financial
statements for the year ended December 31, 2002 and the accompanying Notes to
the Financial Statements, contained in the Company's 2002 Annual Report on Form
10-K. In the opinion of Management, all adjustments, consisting primarily of
normal recurring adjustments, necessary for a fair presentation of interim
period results have been made. The interim results reflected in the consolidated
financial statements are not necessarily indicative of results expected for the
full year, or future periods.
NEW ACCOUNTING PRONOUNCEMENTS.
In November 2002, the Emerging Issues Task Force (EITF) published Issue No.
00-21, "Revenue Arrangements with Multiple Deliverables" ("EITF 00-21"), which
addresses certain aspects of the accounting by a vendor for arrangements under
which it will perform multiple revenue-generating activities. EITF 00-21
addresses how to determine whether an arrangement involving multiple
deliverables contains more than one unit of accounting. EITF 00-21 is effective
for the Company for revenue arrangements entered into beginning July 1, 2003.
The Company does not expect the adoption of EITF 00-21 to have a material impact
on our 2003 condensed consolidated financial statements.
In November 2002, the Financial Accounting Standards Board issued
Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others" (FIN No.
45). FIN 45 elaborates on the disclosure to be made by a guarantor in its
interim and annual financial statements about its obligations under certain
guarantees that it has issued. It also clarifies that a guarantor is required to
recognize, at the inception of a guarantee, a liability for the fair value of
the obligation undertaken in issuing the guarantee. The initial recognition and
initial measurement provisions of FIN No. 45 are applicable on a prospective
basis to guarantees issued or modified after December 31, 2002. The disclosure
requirements of FIN No. 45 are effective for financial statements of interim or
annual periods ending after December 15, 2002. As a result of adopting FIN No.
45 the Company has added additional disclosures to its quarterly reporting.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an amendment of SFAS NO. 123." This
statement amends SFAS No. 123, "Accounting for Stock-Based Compensation," to
provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock -based employee compensation. In
addition, this statement amends the disclosure requirements of SFAS No. 123 to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. The Company has chosen to
continue to account for stock-based compensation using the intrinsic value
method prescribed in APB Opinion No. 25 and related interpretations.
Accordingly, compensation expense for stock options is measured as the excess,
if any, of the fair market value of the Company's stock at the date of the grant
over the exercise price of the related option. The Company adopted the annual
disclosure provisions of SFAS No. 148 in its financial report for the year ended
December 31, 2002 and adopted the interim disclosure provisions for its
financial
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reports for the quarter ended March 31, 2003.
Had compensation costs for the Company's stock options been determined
based on SFAS No. 123, "Accounting for Stock-Based Compensation," using a FASB
accepted fair valuation method, "Black-Scholes", the Company's net income and
earnings per share would have been as follows (in thousands, except per share
amounts):
Three Months Ended June 30, Six Months Ended June 30,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Net (loss) income - as reported $1,149 $772 ($614) $1,313
Add: Total stock-based employee
compensation expense as reported under
intrinsic value method (APB No. 25) for
all awards, net of related tax effects --- --- --- ---
Deduct: Total stock-based employee
compensation expense determined under fair
value based method (SFAS No. 123) for all
awards, net of related tax effects (624) (245) (1,227) (490)
------------ ------------ ------------ ------------
Net income - pro forma $525 $527 ($1,841) $823
============ ============ ============ ============
Net (loss) income per share - as reported
(basic) 0.14 0.09 (0.07) 0.16
Net income per share - as reported
(diluted) 0.13 0.08 (0.07) 0.14
Net income per share - pro forma (basic) 0.06 0.06 (0.22) 0.10
Net income per share - pro forma (diluted) 0.06 0.05 (0.22) 0.09
In January 2003, the Financial Accounting Standards Board issued
Interpretation No. 46, "Consolidation of Variable Interest Entities (FIN No.
46). FIN No. 46 clarifies the application of Accounting Research Bulletin No.
51, "Consolidated Financial Statements, to certain entities in which equity
investors do not have the characteristics of a controlling financial interest or
do not have sufficient equity at risk for the entity to finance its activities
without additional subordinated financial support from the other parties. FIN
No. 46 applies immediately to variable interest entities created after January
31, 2003. The consolidation requirements apply to older entities in the first
fiscal year or the interim period beginning after June 15, 2003 which is the
Company's third quarter fiscal year 2003. The Company does not expect the
adoption of FIN No. 46 to have a material impact on its 2003 condensed
consolidated financial statements.
On January 1, 2003 GTSI adopted a new accounting pronouncement, EITF Issue
No. 02-16, "Accounting for Consideration Received from a Vendor by a Customer
(Including a Reseller of the Vendor's Products)." This pronouncement requires
that consideration from vendors, such as advertising support funds and sales
volume incentives, be accounted for as a reduction to cost of sales unless
certain requirements are met showing that the funds represent a reimbursement of
a specific, incremental, identifiable cost incurred by GTSI in selling the
vendor's product. If these specific requirements related to individual vendors
are met, the consideration is accounted for as a reduction in the related
expense category, such as advertising or selling and administrative expense.
GTSI provides numerous advertising programs to support vendors, including
catalogs, radio, Internet, magazine and newspaper advertising for which the
Company receives consideration. The Company adopted EITF No. 02-16 prospectively
as of the quarter ended March 31, 2003.
-7-
As a result of adopting EITF No. 02-16, the Company records certain vendor
considerations as a reduction of inventory and a subsequent reduction in cost of
goods sold when the related product is sold. In previous reporting periods, the
Company recorded these items as a reduction to operating expenses in that
period. The impact on the Company's operating income of EITF No. 02-16 for both
the three-month and six-month ended June 30, 2003 was an increase in cost of
goods sold of $684,000 or a tax effected reduction to net income of $417,000.
For comparative purposes, if the Company applied EITF No. 02-16 to the
three-months and six-months ended June 30, 2002; the Company's operating income
for those periods would have been reduced by $325,000 or a tax effected
reduction to net income of $195,000. In addition, gross margin would have
increased from $15.1 million to $19.7 million for the second quarter 2002 and
from $29.6 million to $35.3 million for the six months of 2002. Gross margin
percentage would have increased from 7.5% to 9.8% for the quarter and from 7.8%
to 9.3% for the six months of 2002. Operating expenses would have also increased
from $14.4 million to $19.3 million and from $29.8 million to $35.8 million for
the quarter and year to date 2002, respectively.
2. SALES OF LEASE RECEIVABLES
The Company sells products to certain customers under sales-type lease
arrangements. The Company accounts for its sales-type leases according to the
provisions of SFAS No. 13, "Accounting for Leases," and accordingly, recognizes
current and long-term lease receivables, net of unearned finance income on the
accompanying balance sheets. The Company periodically sells lease receivables to
various, unrelated financing companies. The Company accounts for its sales of
lease receivables in accordance with SFAS No. 140, "Accounting for Transfers and
Serving of Financial Assets and Extinguishments of Liabilities - a Replacement
of FASB Statement No. 125." In accordance with the criteria set forth in SFAS
No. 140, lease receivables amounting to $3.6 million and $33.4 million were sold
during the Company's quarter ending June 30, 2003 and 2002, respectively.
3. CAPITALIZED SOFTWARE
The Company is implementing software to replace its current fulfillment
system and other enterprise systems. As of June 30, 2003 the Company has
capitalized approximately $8.0 million dollars under this project.
4. NOTES PAYABLE TO BANKS
The Company has a revolving line of credit (the "Revolver") with a group of
banks, which allows for borrowings up to $50.0 million during its highest
seasonal period. Additionally, the Company has a separate facility with a bank
for inventory financing of vendor products (the "Wholesale Financing Facility"),
which allows for borrowings up to $60.0 million during its highest seasonal
period. Combined, the Revolver and the Wholesale Financing Facility (the "Credit
Facilities") allow the Company to borrow from $55.0 million to $110.0 million
depending on the seasonal period. The seasonal structure of the Credit
Facilities coincides with the seasonality of the Company's business and allows
the Company to minimize banking fees. The interest rate under the Revolver is a
rate indexed to the London Interbank Offered Rate (LIBOR) plus 1.75 percentage
points.
Borrowing under the Revolver is limited to 85% of eligible accounts
receivable. The Revolver is secured by substantially all of the Company's
operating assets. Current obligations are first funded and then all cash
receipts are automatically applied to reduce outstanding borrowings. The
Revolver also contains certain covenants that include restrictions on the
payment of dividends and the purchase of the Company's
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Common Stock, as well as provisions specifying compliance with certain quarterly
and annual financial ratios. As of June 30, 2003 the Company is in compliance
with all of its covenants under the Revolver and has available credit on the
Revolver of $20.0 million.
On March 31, 2003 the Company and its group of banks signed an amendment to
the Revolver in which the group of banks consented to allow the Company to
repurchase an additional $5.0 million worth of its stock from third-party
shareholders. During the six months ended June 30, 2003 the Company repurchased
$4.0 million of its stock.
5. ACCRUED WARRANTY LIABILITIES
The Company offers warranties on sales under certain products specific to
the terms of the customer agreements. Standard warranties require repair or
replacement of defective products reported during the warranty period at no cost
to the customer. The Company records an estimate for warranty expenses related
to costs based on its actual historical return rates and repair costs at the
time of sale.
Accrued warranty liability as of December 31, 2002 $4,404
Warranty activity from January 1, 2003 to March 31,
2003:
Charges made against the warranty (1,486)
Accruals related to warranty 1,269
----------
Net change to accrued warranty liability during period (217)
----------
Accrued warranty liability as of March 31, 2003 $4,187
Warranty activity from April 1, 2003 to June 30, 2003:
Charges made against the warranty (1,419)
Accruals related to warranty 942
----------
Net change to accrued warranty liability during period (477)
----------
Accrued warranty liability as of June 30, 2003 $3,710
==========
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6. EARNINGS PER SHARE
The following table sets forth the components of basic and diluted earnings
per share:
Three months ended Six months ended
June 30, June 30,
2003 2002 2003 2002
------------ ----------- ------------ -----------
Basic earnings per share:
Net (loss) income (numerator) $1,149 $772 ($614) $1,313
Weighted average shares outstanding (denominator) 8,258 8,265 8,410 8,225
------------ ----------- ------------ -----------
Basic earnings per share $0.14 $0.09 ($0.07) $0.16
============ =========== ============ ===========
Diluted earnings per share:
Net (loss) income (numerator) $1,149 $772 ($614) $1,313
Denominator:
Weighted average shares outstanding 8,258 8,265 8,410 8,225
Effect of dilutive securities:
Employee stock options 649 1,317 N/A* 1,330
------------ ----------- ------------ -----------
Denominator for dilutive earnings per share 8,907 9,582 8,410 9,555
------------ ----------- ------------ -----------
Dilutive earnings per share $0.13 $0.08 ($0.07) $0.14
============ =========== ============ ===========
* Approximately 730,000 shares of potentially dilutive options are not included
because the net loss for the six month period makes their impact anti-dilutive.
7. OPTIONS
On May 14, 2003, the shareholders of the Company approved a change to
extend the exercise period for certain options granted to its non-employee
Directors following cessation from the Company to the earlier of the fifth
anniversary of the cessation date or the expiration date of the respective
option. Also, in January 2003 the Company agreed that the unvested options held
by one officer would automatically vest if a change in control of the Company
occurs. Both of these changes require a new measurement date as required by
Financial Interpretation No. 44, "Accounting for Certain Transactions Involving
Stock Compensation - An Interpretation of APB Opinion No. 25". No compensation
expense was recorded as a result of the modifications at this time because the
Company is currently unable to estimate whether the non-employee directors will
use the benefit of the extension of their option awards as a result of the
modification and, in respect of the unvested options held by the officer, if a
change in control of the Company will occur.
8. COMMITMENTS AND CONTINGENCIES
The Company is occasionally a defendant in litigation incidental to its
business. The Company believes that none of such litigation currently pending
against it, individually or in the aggregate, will have a material adverse
effect on the Company's financial condition or results of operations.
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ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis is provided to increase the
understanding of, and should be read in conjunction with, the Consolidated
Financial Statements and Notes thereto included elsewhere in this Report, as
well as the Company's consolidated financial statements and notes thereto
incorporated into its Annual Report on Form 10-K for the year ended December 31,
2002. Historical results and percentage relationships among any amounts in the
Consolidated Financial Statements are not necessarily indicative of trends in
operating results for any future period.
OVERVIEW
GTSI is a recognized information technology (IT) solutions leader,
providing products and services to federal, state, and local government
customers worldwide. For two decades GTSI has served the public sector by
teaming up with global IT leaders such as HP, Panasonic, Microsoft, Sun and
Cisco. GTSI seeks to deliver maximum value through its broad range of products,
extensive contract portfolio, and ISO 9000-registered logistics. Through its
Technology Teams, GTSI delivers "best of breed" products and services to help
its customers realize strong value for their IT investments. The Technology
Teams consist of technical experts who support a wide range of integrated IT
solutions in such areas as high performance computing, advanced networking,
mobile and wireless solutions, web portals, high availability storage and
information assurance. GTSI continues to broaden its leadership in electronic
commerce and procurement through its federally focused website, gtsi.com that
provides customized shopping zones to meet customers' personalized needs. GTSI
is headquartered in Northern Virginia, outside of Washington, D.C.
Changes in sales throughout the Company's history have been attributable to
increased or decreased unit sales, to expansion of the Company's product
offerings (e.g., peripherals, personal computers and networking, Unix
servers/workstation and internet products), to the addition/removal of vendors,
and to the addition or expiration of sales contract vehicles. The Company's
financial results have fluctuated seasonally, and may continue to do so in the
future, because of the Government's buying patterns which have historically
favorably affected the last two calendar quarters of the year.
The Company's business strategy is to continue to focus on higher-end
product-based solutions, to broaden its product offering, and to remain a
low-cost, and high-reliability provider of commodity products. The Company also
focuses on bringing new technologies to government customers.
-11-
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentages
that selected items within the statement of operations bear to sales and the
annual percentage changes in the dollar amounts of such items.
PERCENTAGE OF SALES
---------------------------------------------
THREE SIX
MONTHS ENDED MONTHS ENDED
JUNE 30, JUNE 30,
2003 2002 2003 2002
------------------- ---------------------
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 88.0 92.5 89.5 92.2
------- ------- --------- ----------
Gross margin 12.0 7.5 10.5 7.8
------- ------- --------- ----------
Operating expenses:
Selling, general, and 11.0 6.7 10.8 7.4
administrative
Depreciation and amortization 0.4 0.5 0.4 0.5
------- ------- --------- ----------
Total operating expenses 11.4 7.2 11.2 7.9
------- ------- --------- ----------
Income (loss) from operations 0.6 0.3 (0.7) (0.1)
Interest (income) expense, net (0.4) (0.3) (0.4) (0.6)
------- ------- --------- ----------
Income (loss) before taxes 1.0 0.6 (0.3) 0.5
Income tax provision (benefit) 0.4 0.2 (0.1) 0.2
------- ------- --------- ----------
Net income (loss) 0.6 0.4 (0.2) 0.3
======= ======= ========= ==========
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The following tables set forth, for the periods indicated, the approximate
sales by product, by contract vehicle and by vendor, along with related
percentages of total sales.
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
CONTRACT VEHICLE 2003 2002 2003 2002
---------------------- ---------------------- ---------------------- ----------------------
GSA Schedules $53.9 28.4% $64.0 31.8% $105.8 28.7% $99.0 26.2%
IDIQ Contracts 83.3 43.9% 80.5 40.1% 162.2 44.0% 142.7 37.8%
Open Market 28.5 15.0% 16.7 8.3% 55.5 15.1% 35.6 9.4%
Subcontracts and
Other Contracts 24.0 12.7% 39.8 19.8% 45.1 12.2% 100.4 26.6%
------------ --------- ------------ --------- ------------- -------- ------------- --------
Total $189.7 100.0% $201.0 100.0% $368.6 100.0% $377.7 100.0%
============ ========= ============ ========= ============= ======== ============= ========
TOP 5 VENDORS THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2003 2002 2003 2002
--------------------- --------------------- --------------------- ---------------------
Panasonic $33.6 17.7% $25.9 12.9% $68.4 18.6% $53.9 14.3%
HP 28.6 15.1% 32.1 16.0% 60.9 16.5% 60.3 16.0%
Sun 34.8 18.4% 24.8 12.3% 54.5 14.8% 35.7 9.5%
Cisco 18.1 9.5% 15.5 7.7% 38.5 10.4% 52.3 13.8%
Microsoft 17.1 9.0% 34.8 17.3% 31.9 8.7% 43.9 11.6%
Other 57.5 30.3% 67.9 33.8% 114.4 31.0% 131.6 34.8%
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total $189.7 100% $201.0 100% $368.6 100% $377.7 100%
========== ========== ========== ========== ========== ========== ========== ==========
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
PRODUCT 2003 2002 2003 2002
---------------------- ---------------------- ---------------------- ----------------------
Hardware $112.8 59.5% $134.0 66.7% $241.8 65.6% $273.3 72.4%
Software 54.8 28.9% 58.1 28.9% 83.8 22.7% 82.4 21.8%
Services 22.1 11.6% 8.9 4.4% 43.0 11.7% 22.0 5.8%
------------ --------- ------------ --------- ------------- -------- ------------- --------
Total $189.7 100.0% $201.0 100.0% $368.6 100.0% $377.7 100.0%
============ ========= ============ ========= ============= ======== ============= ========
-13-
THREE MONTHS ENDED JUNE 30, 2003 COMPARED
WITH THE THREE MONTHS ENDED JUNE 30, 2002
SALES. Sales consist of revenues from product shipments and services
rendered net of allowances for customer returns and credits. Revenues for the
second quarter of 2003 were $189.7 million, compared to $201.0 million in the
second quarter of 2002, or a decrease of 5.6%. Sales under the GSA Schedules
category are down $10.1 million to $53.9 million while open market sales
increased $11.8 million to $28.5 million for the quarter. Sales in the
Subcontract and Other Category decreased $15.8 million to $24.0 million for the
quarter ended June 30, 2003. This decrease is primarily due to decreased volume
on subcontracts with prime contractors, specifically on the FBI's Trilogy
contract.
BACKLOG. The Company recognizes an order in its backlog at the time it
receives and accepts a written customer purchase order. The Company's Total
Backlog includes orders that have not shipped ("Unshipped Backlog") as well as
orders that have shipped but cannot be recognized as revenue at the period end.
Total Backlog at June 30, 2003, was approximately $106.2 million compared to
$118.4 million at June 30, 2002. Unshipped Backlog at June 30, 2003, was
approximately $96.2 million compared to $108.3 million at June 30, 2002.
Backlogs fluctuate significantly from quarter to quarter because of the
seasonality of Government ordering patterns and fluctuations in inventory
availability of various products.
GROSS MARGIN. Gross margin is sales less cost of goods sold, which includes
product cost, freight, warranty maintenance cost and certain other expenses
related to the cost of acquiring products. Gross margin percentages vary over
time and may change significantly depending on the mix of customer's use of
available contract vehicles and the mix of product sold. Gross margin in the
second quarter of 2003 increased to 12.0% of total sales from 7.5% of total
sales due to three factors. First, the January 1, 2003 adoption of EITF Issue
No. 02-16, "Accounting for Consideration Received from a Vendor by a Customer
(Including a Reseller of the Vendor's Products)," which resulted in
reclassifying certain vendor funds as a reduction in cost of sales. Second,
GTSI's sales organization was effective in securing an order for software
inventory that had been impaired during 2002. As a result, the company reversed
a $1.4 million impairment charge. Third, the company's underlying product margin
increased from 7.5% in the second quarter of 2002 to 8.3% in the second quarter
of 2003.
OPERATING EXPENSES. Total operating expenses for the three months ended
June 30, 2003 increased to $21.6 million for the second quarter 2003 from $14.4
million from the same period in 2002. A large portion of this increase was a
result of the adoption of EITF No. 02-16. For comparative purposes operating
expenses for the quarter ending June 30, 2002 would have been $19.3 million. In
addition to the impact of this new accounting pronouncement, operating expenses
increased due to higher personnel costs due to increased headcount primarily in
the sales and Technology Team organizations. Expressed as a percentage of total
sales, total operating expenses increased to 11.4% from 7.2% in the same quarter
last year. Applying the impact from EITF No. 02-16 to the quarter ending June
30, 2002 for comparison purposes, total operating expenses expressed as a
percentage of sales would have increased to 11.4% for the second quarter of 2003
compared to 9.6% in the same quarter last year.
INTEREST AND OTHER INCOME, NET. Net interest and other income in the
quarter ended June 30, 2003 increased $133,000 to $744,000 compared to $611,000
in the same period in 2002 due primarily to an increase in lease interest
income. The Company continues to maximize prompt payment discounts when offered
by vendors. However, due to lower interest rates, the Company is beginning to
experience vendors reducing their prompt payment programs.
-14-
INCOME TAX. The Company recorded a tax provision of $738,000 for the second
quarter of 2003 based on its annual expected effective tax rate of approximately
39% for the year compared to a tax provision of $521,000 in the same period last
year.
SIX MONTHS ENDED JUNE 30, 2003 COMPARED
WITH THE SIX MONTHS ENDED JUNE 30, 2002
SALES. Sales consist of revenues from product shipments and services
rendered net of allowances for customer returns and credits. Revenues for the
first six-months of 2003 were $368.6 million, compared to $377.7 million in the
first six-months of 2002, or a decrease of 2.4%. Sales in the GSA Schedules,
IDIQ Contracts and Open Market contract categories all experienced growth for
the first six-months of 2003 compared to the same period last year. The
increase in these three categories is attributed to the efforts of our expanded
sales force. The increase in these three categories is offset by a $55.3 million
decrease in sales made under the Subcontracts and Other Contracts category. This
decrease is primarily due to decreased volume on subcontracts with prime
contractors, specifically on the FBI's Trilogy contract.
GROSS MARGIN. Gross margin in the six-month period ended June 30, 2003
increased to 10.5% of total sales from 7.8% of total sales for the same period
in 2002. The primary factor impacting margins for the period is the January 1,
2003 adoption of Emerging Issues Task Force ("EITF") Issue No. 02-16,
"Accounting for Consideration Received from a Vendor by a Customer (Including a
Reseller of the Vendor's Products)," which resulted in reclassifying certain
vendor funds as a reduction in cost of sales. If the Company had applied EITF
02-16 to the six months ending June 30, 2002, gross margins would have increased
to 10.5% of total sales from 9.3% of total sales for the same period in 2002.
The Company's gross margins may fluctuate from period to period based on the
product and contract mix sold during the period.
OPERATING EXPENSES. Total operating expenses for the six months ended June
30, 2003 increased $11.5 million to $41.3 million from the same period in 2002.
Expressed as a percentage of total sales, total operating expenses increased to
11.2% from 7.9% in the same period last year. A large portion of this increase
was a result of the adoption of EITF 02-16, which increased margins, but also
operating costs. In addition to the impact of this new accounting pronouncement,
operating expenses increased $3.6 million due primarily to increased headcount
in the sales and Technology Team organizations. Management feels the Company's
additional investment in sales and Technology Team personnel in the first half
of 2003 was required in order to maximize future sales and market share. The
Company is now better positioned to take advantage of some of its new
opportunities in the State and Local marketplace utilizing the newly awarded US
Communities Contract; sales to Prime Contractors through the Company's revamped
Integrator Solutions Group; and in the area of leasing to the Government. For
comparison purposes, if the Company had applied EITF 02-16 to the six months
ending June 30, 2002; total operating expenses expressed as a percentage of
sales would have increased to 11.2% for the six months of 2003 compared to 9.5%
in the first six months of last year.
INTEREST AND OTHER INCOME. Net interest and other income in the first six
months of 2003 decreased $900,000 to $1.5 million compared to $2.4 million in
the same period in 2002 due primarily to a decrease in interest income from
equipment leases and a $500,000 gain on the sale of equipment leases in the
first quarter of 2002.
INCOME TAX. The Company recorded a tax benefit of $394,000 for the first
six months of 2003 based on its annual expected effective tax rate for the year
of approximately 39% compared to a tax provision of $875,000 in the same period
last year.
EFFECT OF INFLATION
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The Company believes that inflation has not had a material effect on its
operations. If however, inflation increases in the future it could temporarily
adversely affect the profitability of GTSI's sales under its government
fixed-price contracts, which generally preclude the Company from passing on
inflation-related or other increases in product costs to Government customers
during the term of a pre-existing contract. The Company mitigates this risk in
part by often obtaining agreements from certain of its suppliers prohibiting
them from increasing their prices to GTSI during fixed-price, term contracts.
SEASONAL FLUCTUATIONS AND OTHER FACTORS
The Company has historically experienced and expects to continue to
experience significant seasonal fluctuations in its operations as a result of
government buying and funding patterns, which also affects the buying patterns
of GTSI's prime contractor customers. These buying and funding patterns
historically have had a significant positive effect on GTSI's bookings in the
third quarter ending September 30 each year (the federal government's fiscal
year end), and consequently on sales and net income in the third and fourth
quarters of each year. Quarterly financial results are also affected by the
timing of the award of and shipments of products under government contracts,
price competition in the microcomputer and workstation industries, the addition
of personnel or other expenses in anticipation of sales growth, product line
changes and expansions, and the timing and costs of changes in customer and
product mix. In addition, customer order deferrals in anticipation of new
product releases by leading microcomputer and workstation hardware and software
manufacturers, delays in vendor shipments of new or existing products, a shift
in sales mix to more complex requirements contracts with more complex service
costs, and vendor delays in the processing of incentives and credits due GTSI,
have occurred (all of which are also likely to occur in the future) and have
adversely affected the Company's operating performance in particular periods.
The seasonality and the unpredictability of the factors affecting such
seasonality make GTSI's quarterly and yearly financial results difficult to
predict and subject to significant fluctuation. The Company's stock price could
be adversely affected if any such financial results fail to meet the financial
community's expectations.
Additionally, legislation is periodically introduced in Congress that may
change the federal government's procurement practices, and agencies from time to
time may issue new regulations or modify existing regulations that may also
change the government's procurement practices. GTSI cannot predict whether any
legislative or regulatory proposals will be adopted or, if adopted, the impact
upon its operating results. Changes in the structure, composition and/or buying
patterns of the Government, either alone or in combination with competitive
conditions or other factors, could adversely affect future results.
NEW ACCOUNTING PRONOUNCEMENTS.
In November 2002, the Emerging Issues Task Force (EITF) published Issue No.
00-21, "Revenue Arrangements with Multiple Deliverables" ("EITF 00-21"), which
addresses certain aspects of the accounting by a vendor for arrangements under
which it will perform multiple revenue-generating activities. EITF 00-21
addresses how to determine whether an arrangement involving multiple
deliverables contains more than one unit of accounting. EITF 00-21 is effective
for the Company for revenue arrangements entered into beginning July 1, 2003.
The Company does not expect the adoption of EITF 00-21 to have a material impact
on its 2003 condensed consolidated financial statements.
In November 2002, the Financial Accounting Standards Board issued
Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others" (FIN No.
45). FIN No. 45 elaborates on the disclosure to be made by a guarantor in its
interim and annual financial statements about its obligations under certain
guarantees that it has issued. It also clarifies that a guarantor is required to
recognize, at the inception of a guarantee, a liability for the fair value of
the obligation undertaken in issuing the guarantee. The initial recognition and
initial measurement
-16-
provisions of FIN No. 45 are applicable on a prospective basis to guarantees
issued or modified after December 31, 2002. The disclosure requirements of FIN
45 are effective for financial statements of interim or annual periods ending
after December 15, 2002. As a result of adopting FIN No. 45 the Company has
added additional disclosures to its quarterly reporting.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an amendment of No. SFAS 123." This
statement amends SFAS No. 123, "Accounting for Stock-Based Compensation," to
provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock -based employee compensation. In
addition, this statement amends the disclosure requirements of SFAS No. 123 to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. The Company has chosen to
continue to account for stock-based compensation using the intrinsic value
method prescribed in APB Opinion No. 25 and related interpretations.
Accordingly, compensation expense for stock options is measured as the excess,
if any, of the fair market value of the Company's stock at the date of the grant
over the exercise price of the related option. The Company adopted the annual
disclosure provisions of SFAS No. 148 in its financial report for the year ended
December 31, 2002 and adopted the interim disclosure provisions for its
financial reports for the quarter ended March 31, 2003.
Had compensation costs for the Company's stock options been determined
based on SFAS No. 123, "Accounting for Stock-Based Compensation," using a FASB
accepted fair valuation method, "Black-Scholes", the Company's net income and
earnings per share would have been as follows (in thousands, except per share
amounts):
Three Months Ended June 30, Six Months Ended June 30,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Net (loss) income - as reported $1,149 $772 ($614) $1,313
Add: Total stock-based employee
compensation expense as reported under
intrinsic value method (APB No. 25) for
all awards, net of related tax effects --- --- --- ---
Deduct: Total stock-based employee
compensation expense determined under fair
value based method (SFAS No. 123) for all
awards, net of related tax effects (624) (245) (1,227) (490)
------------ ------------ ------------ ------------
Net income - pro forma $525 $527 ($1,841) $823
============ ============ ============ ============
Net (loss) income per share - as reported
(basic) 0.14 0.09 (0.07) 0.16
Net income per share - as reported
(diluted) 0.13 0.08 (0.07) 0.14
Net income per share - pro forma (basic) 0.06 0.06 (0.22) 0.10
Net income per share - pro forma (diluted) 0.06 0.05 (0.22) 0.09
In January 2003, the Financial Accounting Standards Board issued
Interpretation No. 46, "Consolidation of Variable Interest Entities (FIN No.
46). FIN No. 46 clarifies the application of Accounting Research Bulletin No.
51, "Consolidated Financial Statements, to certain entities in which equity
investors do not have the characteristics of a controlling financial interest or
do not have sufficient equity at risk for
-17-
the entity to finance its activities without additional subordinated financial
support from the other parties. FIN No. 46 applies immediately to variable
interest entities created after January 31, 2003. The consolidation requirements
apply to older entities in the first fiscal year or the interim period beginning
after June 15, 2003 which is the Company's third quarter fiscal year 2003. The
Company does not expect the adoption of FIN No. 46 to have a material impact on
our 2003 condensed consolidated financial statements.
On January 1, 2003 GTSI adopted a new accounting pronouncement, EITF Issue
No. 02-16, "Accounting for Consideration Received from a Vendor by a Customer
(Including a Reseller of the Vendor's Products)." This pronouncement requires
that consideration from vendors, such as advertising support funds and sales
volume incentives, be accounted for as a reduction to cost of sales unless
certain requirements are met showing that the funds represent a reimbursement of
a specific, incremental, identifiable cost incurred by GTSI in selling the
vendor's product. If these specific requirements related to individual vendors
are met, the consideration is accounted for as a reduction in the related
expense category, such as advertising or selling and administrative expense.
GTSI provides numerous advertising programs to support vendors, including
catalogs, radio, Internet, magazine and newspaper advertising for which the
Company receives consideration. The Company adopted EITF No. 02-16 prospectively
as of the quarter ended March 31, 2003.
As a result of adopting EITF No. 02-16, the Company records certain vendor
considerations as a reduction of inventory and a subsequent reduction in cost of
goods sold when the related product is sold. In previous reporting periods, the
Company recorded these items as a reduction to operating expenses in that
period. The impact on the Company's operating income of EITF No. 02-16 for both
the three-month and six-month ended June 30, 2003 was an increase in cost of
goods sold of $684,000 or a tax effected reduction to net income of $417,000.
For comparative purposes, if the Company applied EITF No. 02-16 to the
three-months and six-months ended June 30, 2002; the Company's operating income
for those periods would have been reduced by $325,000 or a tax effected
reduction to net income of $198,000. In addition, gross margin would have
increased from $15.1 million to $19.7 million for the second quarter 2002 and
from $29.6 million to $35.6 million for the six months of 2002. Gross margin
percentage would have increased from 7.5% to 9.8% for the quarter and from 8.5%
to 10.1% for the six months of 2002. Operating expenses would have also
increased from $14.4 million to $19.3 million and from $29.8 million to $35.8
million for the quarter and year to date 2002, respectively.
LIQUIDITY AND CAPITAL RESOURCES
During the first six months of 2003, the Company's operating activities
provided $15.5 million of cash flow, compared to the $33.4 million of cash flow
provided during the same period in 2002. The decrease in cash flow relates
primarily to the Company's sale of equipment leases during the first quarter
2002.
Investing activities used cash of approximately $4.8 million during the six
months ended June 30, 2003, compared to $2.2 million for the same period in 2002
reflecting the Company's investment in software for a new fulfillment system,
intended to improve efficiency throughout the Company. As of June 30, 2003, the
Company has capitalized approximately $8.0 million dollars under this project.
During the six months ended June 30, 2003, the Company's financing
activities used cash of approximately $10.7 million, of which $7.5 million was
used to repay borrowings under the Company's Credit Facilities. The Company also
used $4.0 million of cash to purchase the Company's stock.
-18-
The Company has a revolving line of credit (the "Revolver") with a group of
banks, which allows for borrowings up to $50.0 million during its highest
seasonal period. Additionally, the Company has a separate facility with a bank
for inventory financing of vendor products (the "Wholesale Financing Facility"),
which allows for borrowings up to $60.0 million during its highest seasonal
period. Combined, the Revolver and the Wholesale Financing Facility (the "Credit
Facilities") allow the Company to borrow from $55.0 million to $110.0 million
depending on the seasonal period. The seasonal structure of the Credit
Facilities coincides with the seasonality of the Company's business and allows
the Company to minimize banking fees. The interest rate under the Revolver is a
rate indexed to the London Interbank Offered Rate (LIBOR) plus 1.75 %.
Borrowing under the Revolver is limited to 85% of eligible accounts
receivable. The Revolver is secured by substantially all of the Company's
operating assets. Current obligations are first funded and then all cash
receipts are automatically applied to reduce outstanding borrowings. The
Revolver also contains certain covenants that include restrictions on the
payment of dividends and the purchase of the Company's Common Stock, as well as
provisions specifying compliance with certain quarterly and annual financial
ratios. As of June 30, 2003 the Company is in compliance with all of its
covenants under the Revolver and has available credit of $20.0 million.
On March 31, 2003 the Company and its group of banks signed an amendment to
the Revolver in which the group of banks consented to allow the Company to
repurchase an additional $5.0 million worth of its stock from third-party
shareholders. During the first six months of 2003 the Company repurchased $4.0
million of its stock.
The Company anticipates that it will continue to rely primarily on
operating cash flow, bank loans and vendor credit to finance its operating cash
needs. The Company believes that such funds should be sufficient to satisfy the
Company's near term anticipated cash requirements for operations. Nonetheless,
the Company may seek additional sources of capital, including permanent
financing over a longer term at fixed rates, to finance its working capital
requirements. The Company believes that such capital sources will be available
to it on acceptable terms, if needed.
-19-
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
Except for historical information, all of the statements, expectations,
beliefs, anticipations, intentions, and assumptions contained in the foregoing
material are "forward-looking statements" (within the meaning of the Private
Securities Litigation Reform Act of 1995, as amended) that involve a number of
risks and uncertainties. All such forward-looking statements are intended to be
subject to the safe harbor protection provided by the Private Securities Reform
Act of 1995, as amended, and by other applicable securities laws. It is possible
that the assumptions made by management -- including, but not limited to, those
relating to favorable gross margins, a favorable mix of contracts, benefits of a
more efficient operation, future contract awards, returns on new product
programs, profitability, recovery of the costs of inventory, and increased
control of operating costs -- may not materialize. Actual results may differ
materially from those projected or implied in any forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect management's analysis only as of the date hereof. The
Company undertakes no obligation to revise publicly the forward-looking
statements to reflect events or circumstances that arise after the date hereof.
Readers should carefully review the risks factors described in other documents
the Company files from time to time with the Securities and Exchange Commission,
including the Quarterly Reports on the Form 10-Q to be filed by the Company
subsequent to this Annual Report on Form 10-K and any Current Reports on Form
8-K filed by the Company.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has a $50.0 million revolving line of credit (the "Revolver")
indexed at LIBOR plus 1.75%. This variable rate Revolver subjects the Company to
potential borrowing costs exposure resulting from changes in interest rates.
ITEM 4. CONTROLS AND PROCEDURES
Based on its most recent evaluation, which was completed within 90 days of
the filing of this Form 10-Q, the Company's Chief Executive Officer and Chief
Financial Officer believe the Company's disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) are effective to ensure that
information required to be disclosed by the Company's management, including its
principal executive officer and principal financial officer, are appropriate, to
allow timely decisions regarding required disclosure. There were no significant
changes in the Company's internal controls or the other factors that could
significantly affect these controls subsequent to the date of their evaluation
and there were no corrective actions with regard to significant deficiencies and
material weaknesses.
-20-
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company held its annual meeting of stockholders on May 14, 2003.
(b) Set forth below are the three matters that were presented to and voted upon
by the Company's stockholders, and the results of such stockholders' votes.
1. Election of Directors
Votes
Nominees Votes For Withheld
-------- --------- --------
Steven Kelman, Ph.D. 7,405,919 845,557
Barry L. Reisig 7,575,231 676,245
John M. Toups 7,574,791 676,685
Thomas L. Hewitt 7,576,903 674,573
2. The approval of an Amendment to the Company's 1996 Stock Option Plan to
increase by 1,000,000 the number of shares of the Company's common stock
authorized for issuance thereunder.
Votes For Votes Against Abstention Non-Votes
--------- ------------- ---------- ---------
3,019,106 2,692,308 19,847 2,520,215
3. The approval of an amendment to the Company's 1996 Stock Option Plan to
extend the period during which non-statutory options automatically granted
thereunder to non-employee directors can be exercised after the respective
optionees cease to serve as non-employee directors.
Votes For Votes Against Abstention
--------- ------------- ----------
6,178,193 2,051,703 21,580
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
10.8 GTSI 1996 STOCK OPTION PLANS AS AMENDED ON MAY 14, 2003 STOCKHOLDER
MEETING.
31.1 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER.
31.2 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER.
32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT
TO SECTION 906 OF THE SARBANES - OXLEY ACT OF 2002.
(b) REPORTS ON FORM 8-K:
1. On April 24, 2003, GTSI filed a report on Form 8-K under Item 5
relating to its financial information for the quarter ended March
31, 2003.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: August 14, 2003
GTSI CORP.
By: /s/ DENDY YOUNG
--------------------------------------
Dendy Young
Chairman and Chief Executive Officer
By: /s/ THOMAS A. MUTRYN
--------------------------------------
Thomas A. Mutryn
Senior Vice President and Chief
Financial Officer