GTSI Provides Restated and Improved Second Quarter Results

CHANTILLY, Va.--(BUSINESS WIRE)--GTSI Corp.® (NASDAQ: GTSI), an enterprise solutions and services provider to government, today released restated and improved financial and operating results for the second quarter of 2008.

“In the second quarter of 2008, GTSI launched an upgrade of its enterprise management system that was initially installed in 2005, to provide greater capabilities and functionality. As a result of this significant upgrade, data related to one large complex financial services order was dropped. This caused an overstatement of the cost of sales previously reported for the quarter ended June 30, 2008,” said Jim Leto, GTSI’s Chief Executive Officer. “The data error negatively impacted GTSI’s previously reported gross margin and net loss position for the quarter. The restated and improved financial results indicate that GTSI continues to make progress towards returning to profitability on an annual basis.”

Second Quarter Update:

For the second quarter of 2008, GTSI reported sales of $159.2 million, compared to $156.7 million in second quarter of 2007. Total gross margin for the second quarter of 2008 was $19.4 million or 12%. Operating expenses were $ 22.8 million in the second quarter 2008, a reduction of $2.5 million, or 10% decline for the same period in 2007. The quarter resulted in a net loss of $2.9 million ($0.30 per share basic and diluted) versus a net loss of $3.6 million ($0.38 per share basic and diluted) in the second quarter of 2007.

Analysis of previously reported financial results has resulted in a conclusion that a restatement for the quarter ended June 30, 2008 is necessary. The restatement of quarter results was discussed with the Audit Committee of the Company’s Board of Directors as well as GTSI’s independent registered public accounting firm, PricewaterhouseCoopers (PwC). PwC has not audited these restatement adjustments.

About GTSI Corp.

GTSI Corp. provides information technology solutions by offering 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 government agencies to implement solutions of national and local significance 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 governments’ current and future requirements and business objectives. GTSI is headquartered in Northern Virginia, outside of Washington, D.C. Further information about the Company is available at www.GTSI.com/About.

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 revenue, 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 those listed in the Company’s most recent 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. Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
		Three Months Ended
		June 30,								2008 vs 2007
		2008 (restated)					2007			Actual				Percentage
SALES
Product		$	143,082			$	141,198			$	1,884			1.3	%
Service			13,357				12,439				918			7.4	%
Financing			2,761				3,083				(322	)		-10.4	%
			159,200				156,720				2,480			1.6	%
COST OF SALES
Product			129,362				125,512				3,850			3.1	%
Service			8,816				8,376				440			5.3	%
Financing			1,617				637				980			153.8	%
			139,795				134,525				5,270			3.9	%
GROSS MARGIN			19,405				22,195				(2,790	)		-12.6	%
SELLING, GENERAL & ADMINISTRATIVE EXPENSES			22,831				25,334				(2,503	)		-9.9	%
LOSS FROM OPERATIONS			(3,426	)			(3,139	)			(287	)		-9.1	%
INTEREST AND OTHER INCOME (EXPENSE)			528				(230	)			758			329.6	%
LOSS BEFORE INCOME TAXES			(2,898	)			(3,369	)			471			14.0	%
INCOME TAX PROVISION			(11	)			(252	)			241			-95.6	%
NET LOSS		$	(2,909	)		$	(3,621	)		$	712			19.7	%
LOSS PER SHARE
Basic		$	(0.30	)		$	(0.38	)		$	0.08			21.1	%
Diluted		$	(0.30	)		$	(0.38	)		$	0.08			21.1	%
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic			9,762				9,551				211			2.2	%
Diluted			9,762				9,551				211			2.2	%

GTSI Corp. Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
		Six Months Ended
		June 30,								2008 vs 2007
		2008 (restated)					2007			Actual				Percentage
SALES
Product		$	270,650			$	275,081			$	(4,431	)		-1.6	%
Service			25,269				22,639				2,630			11.6	%
Financing			6,071				5,616				455			8.1	%
			301,990				303,336				(1,346	)		-0.4	%
COST OF SALES
Product			244,183				245,102				(919	)		-0.4	%
Service			14,532				14,415				117			0.8	%
Financing			2,464				1,451				1,013			69.8	%
			261,179				260,968				211			0.1	%
GROSS MARGIN			40,811				42,368				(1,557	)		-3.7	%
SELLING, GENERAL & ADMINISTRATIVE EXPENSES			48,702				51,532				(2,830	)		-5.5	%
LOSS FROM OPERATIONS			(7,891	)			(9,164	)			1,273			13.9	%
INTEREST AND OTHER EXPENSE			(120	)			(1,153	)			1,033			89.6	%
LOSS BEFORE INCOME TAXES			(8,011	)			(10,317	)			2,306			22.4	%
INCOME TAX BENEFIT (PROVISION)			37				(252	)			289			114.7	%
NET LOSS		$	(7,974	)		$	(10,569	)		$	2,595			24.6	%
LOSS PER SHARE
Basic		$	(0.82	)		$	(1.11	)		$	0.29			26.1	%
Diluted		$	(0.82	)		$	(1.11	)		$	0.29			26.1	%
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic			9,727				9,513				214			2.2	%
Diluted			9,727				9,513				214			2.2	%

GTSI Corp. Consolidated Balance Sheet
(In thousands)
(unaudited)
								Change from December 31, 2007
		June 30, 2008 (restated)			December 31, 2007			Actual				Percentage
ASSETS
Current assets:
Cash and cash equivalents		$	-		$	829		$	(829	)		-100.0	%
Accounts receivable, net			147,797			165,317			(17,520	)		-10.6	%
Inventory			12,751			21,577			(8,826	)		-40.9	%
Deferred costs			9,172			5,615			3,557			63.3	%
Other current assets			7,130			5,169			1,961			37.9	%
Total current assets			176,850			198,507			(21,657	)		-10.9	%
Depreciable assets, net			11,773			12,158			(385	)		-3.2	%
Long-term receivables and other assets			9,554			16,002			(6,448	)		-40.3	%
TOTAL ASSETS		$	198,177		$	226,667		$	(28,490	)		-12.6	%
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Borrowings under credit facility		$	-		$	18,031		$	(18,031	)		-100.0	%
Accounts payable			99,224			84,715			14,509			17.1	%
Financed lease debt, current portion			8,472			8,509			(37	)		-0.4	%
Accrued liabilities			10,403			14,725			(4,322	)		-29.4	%
Deferred revenue			2,642			2,542			100			3.9	%
Total current liabilities			120,741			128,522			(7,781	)		-6.1	%
Long-term debt			-			10,000			(10,000	)		-100.0	%
Long-term financed lease debt			5,608			9,068			(3,460	)		-38.2	%
Other liabilities			390			1,364			(974	)		-71.4	%
Total liabilities			126,739			148,954			(22,215	)		-14.9	%
Total stockholders' equity			71,438			77,713			(6,275	)		-8.1	%
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	198,177		$	226,667		$	(28,490	)		-12.6	%