GTSI Reports Fourth Quarter and Year-end Results.(Financial report)

HERNDON, Va. -- GTSI Corp. (NASDAQ: GTSI), a systems integration, solutions and services provider to the government, today announced its financial results for the three months and twelve months ended December 31, 2010.

"GTSI's fourth quarter was significantly impacted by the temporary suspension by the Small Business Administration (SBA) on October 1, 2010 and the subsequent Administrative Agreement entered into with the SBA on October 19, 2010," said Sterling Phillips, GTSI's Chief Executive Officer and President. "During the fourth quarter, GTSI saw gross margin negatively impacted by $9.6 million and an increase of $3.4 million in operating expenses driven primarily by legal and related costs. Since joining the company in December, I have been impressed by the determination and skill of the men and women of GTSI as they are meeting the challenges head-on to restart business activities with a focus on delivering for our customer and putting the company back on a path toward growth and profitability."

Reported Results

For the fourth quarter of 2010, GTSI reported revenue of $192.5 million compared to $243.5 million for the fourth quarter of 2009, with a revenue decline of 21.0%. Operating expenses were $23.2 million compared to $27.0 million, down 14.1%, driven primarily by strategic restructuring actions taken earlier in the year. Gross margin for the three months ended December 31, 2010 decreased to $19.6 million from $33.9 million, or 42.2%, from the same period in 2009, primarily due to lost sales as a result of the SBA action and related fallout. Net loss for the fourth quarter of 2010 was $1.0 million, compared to $5.8 million net profit for the same period in 2009. Diluted loss per share was $0.11 per share for the fourth quarter of 2010 compared to profit of $0.60 per diluted share for the fourth quarter of 2009.

For the full year of 2010, GTSI reported revenue of $666.7 million compared to $761.9 million for 2009 with a revenue decline of 12.5%. Operating expenses in 2010 were $87.6 million compared to $98.1 million in 2009, down 10.7%. Gross margin for the year ended December 31, 2010 decreased to $80.3 million from $101.5 million, or 20.8%, from the same period in 2009. Net loss for the year was $0.9 million, compared to $5.5 million net profit for the same period in 2009. Diluted loss per share was $0.10 per share for 2010 compared to profit of $0.56 per diluted share for 2009. Diluted shares outstanding for the year were 9.6 million shares compared to 9.8 million shares in 2009.

The effective income tax rate was 648.6% and 43.5% for the year ended December 31, 2010 and 2009 respectively. The increase in the tax rate from 2009 to 2010 was due to non-deductible stock expense in 2010 of $3.5 million that did not occur in 2009. Excluding the effects of non-deductible stock expense, the effective tax rate would have been 40.0% for the year ended December 31, 2010.

GTSI ended the year with $4.0 million in cash on hand. The Company had no long-term debt and no borrowings under its credit facility. As of December 31, 2010, GTSI had stockholders' equity of $96.2 million or $10.02 per diluted share.

Conference Call

An investor conference call to discuss fourth quarter and full year results is scheduled for 11:00 a.m. Eastern Time March 11, 2011. Interested parties are invited to participate by calling 800-593-9034 or 334-323-7224, pass code is GTSI. In addition, you may access the webcast on GTSI's Investor Relations page (www.gtsi.com/ir). Webcast will be available for replay through March 11, 2012. To listen to the live call on the Internet, go to the web site at least 15 minutes early to register, download and install any necessary audio software. A replay will be available following the conclusion of the call until 6:00 p.m. eastern, March 21, 2011. To access the replay, please dial 877-919-4059 or 334-323-7226, pass code 49103957.

About GTSI Corp.

GTSI Corp. provides a Technology Lifecycle Management (TLM) approach to IT infrastructure solutions delivered through industry-leading professional and financial services. GTSI employs a proactive, strategic methodology that streamlines technology lifecycle management, from initial assessment to acquisition, implementation, refresh, and disposal. TLM allows customers to implement solutions quickly and cost-effectively. GTSI's certified engineers and project managers leverage strategic partnerships with technology innovators. These experts use proven, repeatable processes to design, deploy, manage, and support simple to complex solutions, to meet client's current and future requirements and business objectives. GTSI is headquartered in Herndon, Virginia, a suburb of Washington, D.C. Further information about the Company is available at www.GTSI.com.

Except for historical information, all of the statements, expectations, beliefs and assumptions contained in the foregoing are "forward-looking statements" (within the meaning of the Private Securities Litigation Reform Act of 1995) that involve a number of risks and uncertainties. It is possible that the assumptions made by management, including, but not limited to, those relating to sales, margins, operating results and net income, and the effect of new contracts and lender agreements, as well as new vendor relationships may not materialize. Actual results may differ materially from those projected or implied in any forward-looking statements. In addition to the above factors, other important factors that could cause actual results to differ materially are discussed in the Company's most recent annual report on Form 10-K and included from time to time in other documents filed by the Company with the Securities and Exchange Commission.

GTSI and GTSI.com are registered trademarks of GTSI Corp. in the U.S. and other countries. All trade names are the property of their respective owners.

GTSI Corp. Unaudited Consolidated Statements of Operations
(In thousands, except per share data)
		Three Months Ended
		December 31,		2010 vs 2009
		2010		2009		Variance		Percentage
SALES
Product			$174,863				$211,144				$(36,281)			-17.2%
Service			12,559				14,790				(2,231)			-15.1%
Financing			5,061				17,579				(12,518)			-71.2%
			192,483				243,513				(51,030)			-21.0%
COST OF SALES
Product			157,002				189,744				32,742			17.3%
Service			8,324				7,567				(757)			-10.0%
Financing			7,573				12,347				4,774			38.7%
			172,899				209,658				36,759			17.5%
GROSS MARGIN			19,584				33,855				(14,271)			-42.2%
SELLING, GENERAL & ADMINISTRATIVE EXPENSES			23,184				26,979				3,795			14.1%
(LOSS) INCOME FROM OPERATIONS			(3,600)				6,876				(10,476)			-152.4%
INTEREST AND OTHER INCOME, NET			1,822				3,070				(1,248)			-40.6%
(LOSS) INCOME BEFORE TAXES			(1,778)				9,946				(11,724)			-117.9%
INCOME TAX BENEFIT (PROVISION)			738				(4,121)				4,859			117.9%
NET (LOSS) INCOME			$(1,040)				$5,825				$(6,865)			-117.9%
(LOSS) EARNINGS PER SHARE
Basic			$(0.11)				$0.61				$(0.72)			-118.0%
Diluted			$(0.11)				$0.60				$(0.71)			-118.3%
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic			9,603				9,613				(10)			-0.1%
Diluted			9,603				9,675				(72)			-0.7%

GTSI Corp. Unaudited Consolidated Statements of Operations
(In thousands, except per share data)
		Twelve Months Ended
		December 31		2010 vs 2009
		2010		2009		Variance		Percentage
SALES
Product			$593,319				$677,966				$(84,647)			-12.5%
Service			51,140				55,625				(4,485)			-8.1%
Financing			22,252				28,279				(6,027)			-21.3%
			666,711				761,870				(95,159)			-12.5%
COST OF SALES
Product			535,835				611,310				75,475			12.3%
Service			33,895				33,236				(659)			-2.0%
Financing			16,641				15,872				(769)			-4.8%
			586,371				660,418				74,047			11.2%
GROSS MARGIN			80,340				101,452				(21,112)			-20.8%
SELLING, GENERAL & ADMINISTRATIVE EXPENSES			87,636				98,107				10,471			10.7%
(LOSS) INCOME FROM OPERATIONS			(7,296)				3,345				(10,641)			-318.1%
INTEREST AND OTHER INCOME, NET			7,466				6,320				1,146			18.1%
INCOME BEFORE TAXES			170				9,665				(9,495)			-98.2%
INCOME TAX PROVISION			(1,100)				(4,209)				3,109			73.9%
NET (LOSS) INCOME			$(930)				$5,456				$(6,386)			-117.0%
(LOSS) EARNINGS PER SHARE
Basic			$(0.10)				$0.56				$(0.66)			-117.9%
Diluted			$(0.10)				$0.56				$(0.66)			-117.9%
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic			9,604				9,706				(102)			-1.1%
Diluted			9,604				9,762				(158)			-1.6%

GTSI Corp. Unaudited Consolidated Balance Sheet
(In thousands)
							Change from December
							31, 2009
			December 31,		December 31,
			2010		2009		Variance		Percentage
ASSETS
Current assets:
Cash and cash equivalents				$4,049			$7,894			$(3,845)			-48.7%
Accounts receivable, net				154,891			209,595			(54,704)			-26.1%
Inventory				13,708			13,477			231			1.7%
Deferred costs				6,991			1,807			5,184			286.9%
Other current assets				2,462			4,140			(1,678)			-40.5%
Total current assets				182,101			236,913			(54,812)			-23.1%
Depreciable assets, net				7,452			10,960			(3,508)			-32.0%
Long-term receivables and other assets			14,291			40,758			(26,467)			-64.9%
TOTAL ASSETS				$203,844			$288,631			$(84,787)			-29.4%
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable				$50,870			$109,723			$58,853			53.6%
Accounts payable - Floor plan				35,172			34,889			(283)			-0.8%
Financed lease debt, current portion			-			831			831			100.0%
Accrued liabilities				14,887			26,127			11,240			43.0%
Deferred revenue				3,661			3,176			(485)			-15.3%
Total current liabilities				104,590			174,746			70,156			40.1%
Other liabilities				3,044			17,598			14,554			82.7%
Total liabilities				107,634			192,344			84,710			44.0%
Total stockholder's equity				96,210			96,287			77			-0.1%
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY			$203,844			$288,631			$84,787			29.4%