Basis of Presentation and Third Quarter 2011 Results of Operations

9 Months Ended

Sep. 30, 2011

Basis of Presentation and Third Quarter 2011 Results of Operations [Abstract]

Basis of Presentation and Third Quarter 2011 Results of Operations

1. Basis of Presentation and Third Quarter 2011 Results of Operations

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of GTSI Corp. and its wholly owned subsidiaries (collectively “GTSI” or the “Company”). Intercompany accounts and transactions have been eliminated in consolidation. The statements have been prepared in conformity with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The year-end condensed consolidated balance sheet data was derived from audited financial statements. Because the accompanying unaudited condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America, they should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. In the opinion of management, all adjustments considered necessary for a fair presentation have been included.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cost of sales in the accompanying unaudited condensed consolidated statements of operations is based on the full cost method.

The results of operations for the nine months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the full year or future periods. GTSI has historically experienced seasonal fluctuations in operations as a result of government buying and funding patterns.

Nine Months Ended September 30, 2011 Results of Operations

Our results for the nine months ended September 30, 2011 include reductions to income before income taxes of approximately $0.4 million primarily as a result of out-of-period stock compensation adjustments of $0.1 million, accrual adjustments of $0.2 million and equity income adjustments of $0.1 million recorded during the first three months of 2011 that should have been recorded as an increase of pre-tax income during the three months ended December 31, 2010.

We have determined that the impact of these out-of-period adjustments recorded during the three months ended March 31, 2011, were immaterial, individually and in aggregate, to all current and prior periods and we expect them to be immaterial to our full year 2011 results.