Stockholders Equity

12 Months Ended

Dec. 31, 2011

Stockholders' Equity [Abstract]

Stockholders' Equity

12. Stockholders’ Equity

Purchase of Capital Stock

On June 8, 2009, the Company’s Board of Directors authorized a program for periodic purchases of GTSI’s common stock through May 27, 2011 for an aggregate purchase price not to exceed $5 million.

On October 19, 2010, GTSI entered into an Amended and Restated Credit Agreement that prohibited GTSI from repurchasing its own common stock for purposes other than tax share settlements on the vesting of restricted stock awards.

On August 30, 2011, GTSI entered into an amendment to the Second Amended Credit Agreement that permits GTSI to purchase its common stock subject to certain conditions, including that such purchases cannot exceed an aggregate purchase price of $5 million. On August 31, 2011, the Board of Directors authorized a share repurchase program pursuant to Rules 10b5-1 and 10b-18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) permitting the Company to repurchase its common stock up to an aggregate purchase price of $5 million.

During the year ended December 31, 2011 and 2010, under the repurchase program, the Company purchased 29,345 and 154,377 shares of its common stock, respectively. In addition, during the year ended December 31, 2011 and 2010, the Company acquired 6,669 and 20,816 shares of its common stock, respectively, related to tax share settlements on the vesting of restricted stock awards.

Stock-Based Compensation

Stock Incentive Plans

The Company has one stockholder approved combination incentive and non-statutory stock incentive plan, which is named the Amended and Restated 2007 Stock Incentive Plan (“2007 Plan”). The 2007 Plan provides for the granting of options to employees and non-employee directors to purchase up to 4,500,000 shares of the Company’s common stock. The 2007 Plan also permits the grant of restricted stock and restricted stock units to its employees and non-employee directors as well as stock appreciation rights (“SARs”).

Under the 2007 Plan, options have a term of up to 10 years, generally vest over four years and option prices are required to be at not less than 100% of the fair market value of the Company’s common stock at the date of grant and, except in the case of non-employee directors, must be approved by the Board of Directors or its Compensation Committee. The vesting period for restricted stock and restricted stock units is determined by the Compensation Committee on an individual award basis. GTSI recognizes stock-based compensation expense for these graded vesting awards on a straight-line basis over the requisite service period for the entire award, which is equal to the vesting period specified in the option agreement.

Valuation Assumptions

The fair value of each option award is estimated on the date of grant using a Black-Scholes-Merton option valuation model that uses the assumptions noted in the following table. Expected volatilities are based on the historical volatility of GTSI’s stock over the historical period of time equal to the expected term of the options. The Company uses historical data to estimate option exercises, employee terminations and award forfeitures within the valuation model. The expected term of options granted has been determined based on historical exercise behavior and represents the period of time that options granted are expected to be outstanding. The risk-free interest rate is based on the U.S. Treasury rates at the time of grant that approximates the expected term of the option. The expected dividend assumption is zero as the Company is currently restricted under its Second Amended Credit Agreement from issuing dividends on its common stock and it does not expect to declare a dividend in the foreseeable future. The fair value of the Company’s stock based option awards to employees was based on the following weighted-average assumptions for the years ended December 31:

		September 30,			September 30,			September 30,
	2011			2010			2009
Expected volatility		52.3	%		51.0	%		51.0	%
Expected dividends		—			—			—
Expected term (in years)		4.9			4.6			5.5
Risk free interest rate		1.6	%		1.6	%		2.9	%

Stock Options

A summary of option activity under the Company’s stock incentive plans as of December 31, 2011, 2010 and 2009, and related changes during the years then ended is presented below (in thousands):

		September 30,			September 30,		September 30,		September 30,
						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinstic
	Shares			Price		Term		Value
Outstanding balance at December 31, 2008		1,648		$	8.05	$	3.40		261
Granted		200		$	6.40
Exercised		(75	)	$	4.24
Forfeited		(74	)	$	6.64
Expired		(194	)	$	9.62
Oustanding balance at December 31, 2009		1,505		$	7.83		3.83	$	69
Granted		285		$	5.22
Exercised		(30	)	$	2.81
Forfeited		(221	)	$	5.77
Expired		(575	)	$	7.65
Oustanding balance at December 31, 2010		964		$	7.79		2.64	$	5
Granted		200		$	4.66
Exercised		0		$	—
Forfeited		(60	)	$	6.27
Expired		(385	)	$	8.35
Outstanding balance at December 31, 2011		719		$	6.75		3.66	$	—
Exercisable at December 31, 2011		421		$	8.14		1.89	$	—

The weighted-average grant-date fair value of options granted during 2011, 2010 and 2009 was $4.66, $5.22 and $6.40, respectively. The total intrinsic value of options exercised during 2011, 2010 and 2009 was $0.0 million, $0.1 million and $0.1 million, respectively. For the years ended December 31, 2011, 2010 and 2009, stock compensation expense related to stock options was $0.3 million, $0.4 million and $0.7 million, respectively. For the years ended December 31, 2011, 2010 and 2009, the tax impact from stock based compensation was a tax benefit of $0.1 million, $0.7 million and $0.8 million, respectively.

Restricted Shares

In 2011, the Company issued restricted stock grants of 26,664 shares of the Company’s common stock to the non-employee Board members, which will vest in April 2012, and no restricted stock to employees. In 2010, the Company issued restricted stock grants of 26,664 shares of the Company’s common stock to the non-employee Board members, which vested in April 2011, and no restricted stock to employees. During 2009, the Company issued restricted stock grants of 26,664 shares of the Company’s common stock to the non-employee Board members, which vested in April 2010, as well as 36,539 shares of restricted stock to employees, scheduled to vest in equal installments over a period of five years from the grant date. Compensation is recognized on a straight-line basis over the vesting period of the grants. During 2011, 2010 and 2009, less than $0.1 million, $0.6 million and $0.8 million, respectively, was recorded as stock compensation expense for restricted stock.

Holders of non-vested restricted stock have similar dividend and voting rights as common stockholders. The fair value of non-vested restricted stock is determined based on the closing trading price of the Company’s shares on the grant date. A summary of the status of the Company’s non-vested shares as of December 31, 2011, 2010 and 2009, and related changes during the years then ended is presented below (in thousands):

		September 30,			September 30,
				Weighted Average
				Grant-Date Fair
	Shares			Value
Nonvested balance at December 31, 2008		290		$	10.83
Granted		63		$	5.54
Vested		(101	)	$	9.76
Forfeited		(37	)	$	10.13
Nonvested balance at December 31, 2009		215		$	9.91
Granted		27		$	5.61
Vested		(83	)	$	8.90
Forfeited		(74	)	$	11.27
Nonvested balance at December 31, 2010		85		$	8.35
Granted		27		$	4.56
Vested		(45	)	$	7.82
Forfeited		(23	)	$	8.91
Nonvested balance at December 31, 2011		44		$	6.34

Stock Appreciation Rights (“SARs”)

SAR’s provide a cash payment based on the increase in the value of a stated number of shares over a specific period of time. SAR’s are granted with five year terms and an exercise price of $9.60. In 2011 and 2010, there were no SARs granted as part of the 2007 Plan. During 2009 there were 76,179 SARs granted, respectively, as part of the 2007 long term incentive plan. All SARs are to be settled in GTSI stock. During 2011, 2010 and 2009, less than $0.1 million, $0.7 million and $0.9 million, respectively was recorded as stock compensation expense for SARs. A summary of SARs activity under the Company’s stock incentive plans as of December 31, 2011, 2010 and 2009, and related changes during the years then ended is presented below (in thousands):

		September 30,			September 30,		September 30,		September 30,
						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinstic
	Shares			Price		Term		Value
Outstanding balance at December 31, 2008		758		$	9.60		5.09	$	—
Granted		76		$	9.60
Exercised		—			—
Forfeited		(65	)	$	9.60
Expired		(52	)	$	9.60
Outstanding balance at December 31, 2009		717		$	9.60		4.44	$	—
Granted		0		$	—
Exercised		—			—
Forfeited		(171	)	$	9.60
Expired		(165	)	$	9.60
Outstanding balance at December 31, 2010		381		$	9.60		3.04	$	—
Granted		—			—
Exercised		—			—
Forfeited		(56	)	$	9.60
Expired		(118	)	$	9.60
Outstanding balance at December 31, 2011		207		$	9.60		2.03	$	—
Exercisable at December 31, 2011		160		$	9.60		1.67	$	—

Unrecognized Compensation

As of December 31, 2011, there was $0.7 million of total unrecognized compensation cost related to non-vested stock-based awards, which consisted of unrecognized compensation of $0.5 million related to stock options, $0.1 million related to restricted stock awards and $0.1 million related to SARs. The cost as of December 31, 2011 for unrecognized compensation related to stock options, restricted stock awards, and SARs is expected to be recognized over a weighted average period of 2.21 years, 0.74 years and 1.38 years, respectively. During 2011, approximately 91,752 stock option and SAR awards and 45,412 restricted stock awards vested.

As of December 31, 2010, there was $2.0 million of total unrecognized compensation cost related to non-vested stock-based awards, which consisted of unrecognized compensation of $0.6 million related to stock options, $0.6 million related to restricted stock awards and $0.8 million related to SARs. The cost as of December 31, 2010 for unrecognized compensation related to stock options, restricted stock awards, and SARs is expected to be recognized over a weighted average period of 2.62 years, 1.64 years and 2.26 years, respectively. During 2010, approximately 167,919 stock option and SAR awards and 83,485 restricted stock awards vested.

Employee Stock Purchase Plan

Under GTSI’s Employee Stock Purchase Plan (“ESPP”), eligible employees may elect to set aside, through payroll deduction, up to 15% of their compensation to purchase Company common stock at 85% of the fair market value of shares of common stock on the last day of the offering period. The maximum number of shares that an eligible employee may purchase during any offering period is equal to 5% of such employee’s compensation for the 12 calendar-month period prior to the commencement of an offering period divided by 95% of the fair market value of a share of common stock on the first day of the offering period. The ESPP is implemented through one offering during each six-month period beginning January 1 and July 1. Prior to July 1, 2008, the ESPP purchase price was 95% of the fair market value of a share of common stock on the last day of the offering period. No other material changes were made to the plan. The Company uses its treasury shares to fulfill the obligation of both the employee withholding and the discount.

The table below summarizes the number of shares purchased by employees under the ESPP during offering periods indicated:

		September 30,		September 30,
Offering period ended	Number of shares purchased		Purchase price
December 31, 2011		14,775	$	3.54
June 30, 2011		17,538	$	4.57
December 31, 2010		20,649	$	4.00
June 30, 2010		34,233	$	4.64
December 31, 2009		46,350	$	4.22
June 30, 2009		34,739	$	4.56

The weighted average fair market value of shares under the ESPP was $4.10 in 2011, $4.40 in 2010 and $4.37 in 2009. GTSI has reserved 1,600,000 shares of common stock for the ESPP, of which 458,223 were available for future issuance as of December 31, 2011. The ESPP plan was terminated as of January 1, 2012.

Stockholder Rights Plan

On September 13, 2010, the Company’s Board of Directors adopted a stockholder rights plan (the “Rights Plan”). The Rights Plan, which expired in September 2011, was set forth in the Rights Agreement dated as of September 14, 2010 (the “Rights Agreement”) between the Company and American Stock Transfer & Trust Company, LLC. In connection with the Rights Plan, the Company declared a dividend of one preferred share purchase right (individually, a “Right” and collectively, the “Rights”) for each share of outstanding common stock of the Company at the close of business on September 24, 2010. If the Rights became exercisable, each Right would entitle the registered holder thereof, until September 12, 2011 (or the earlier redemption, exchange or termination of the Rights), to purchase from the Company one one-thousandth (1/1000th) of a share of Series A Junior Participating Preferred Stock, par value $0.25 per share (the “Preferred Stock”), of the Company, at a price of $20.00 per one one-thousandth (1/1000th) of a share of Preferred Stock, subject to certain anti-dilution adjustments.

The Rights were not immediately exercisable. The Rights initially traded only with the Company’s common stock to which they were attached, and generally became exercisable only if a person or group becomes an Acquiring Person (as defined in the Rights Agreement) by accumulating beneficial ownership (as defined in the Rights Agreement) of 20% or more of the Company’s outstanding common stock. If a person became an Acquiring Person, the holders of each Right (other than an Acquiring Person) would be entitled, after the tenth business day, to purchase shares of the Company’s preferred stock at the exercise price of the Right, which is initially $20.00 per Right. The Rights Agreement provided that a person or group currently owning 20% or more of the Company’s outstanding common stock would not be deemed to be an Acquiring Person if the person or group did not subsequently accumulate an additional 1% of the Company’s outstanding common stock through open market purchases, expansion of the group or other means. The Rights, which would only become exercisable after a person became an Acquiring Person, had no objective value. If the Rights became exercisable, any objective determinable value of the Rights would be accounted for with a charge to retained earnings and a credit to paid-in capital. At any time prior to a person becoming an Acquiring Person, the Company’s Board of Directors could cause the Company to redeem the Rights in whole, but not in part, at a price of $0.01 per Right.