Acquisition

12 Months Ended

Dec. 31, 2011

Acquisition [Abstract]

Acquisition

2. Acquisition

On August 15, 2011, the Company acquired 100% of the outstanding stock of InSysCo. InSysCo provides mission critical IT, software development and business analysis support services to its customers. The business combination provides multiple benefits for both companies and is a significant step in executing our strategy of growing the professional services component of our business. InSysCo’s results have been included in the Company’s consolidated financial statements from August 16, 2011 to December 31, 2011. Pro forma results are not provided because InSysCo’s results of operations are not material to GTSI.

The aggregate purchase price that the Company paid for InSysCo is as follows (in thousands):

		September 30,
Cash paid	$	14,168
Working capital deficit adjustment		(130	)
		14,038
Less: Cash acquired		(2,034	)
Total purchase price	$	12,004

The working capital deficit adjustment represents the difference between the actual working capital and the target net working capital. In addition, approximately $0.4 million was incurred for acquisition-related costs and integration costs which are included in “Selling, General and Administrative” expenses in the accompanying consolidated statement of operations.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

		September 30,
Accounts receivable	$	2,846
Prepaid expenses and other assets		818
Property and equipment		224
Intangible Assets		4,490
Goodwill		9,415
Accounts payable and accrued expenses		(4,092	)
Deferred tax liability		(1,697	)
Total purchase price	$	12,004

Included in prepaid assets is $0.6 million for retention bonuses which the seller funded into an escrow bonus account. As of December 31, 2011, the Company recorded $0.5 million of expense related to these retention bonus programs.

The components and the initial estimated useful lives of the intangible assets listed in the above table as of the acquisition date are as follows (in thousands):

		September 30,		September 30,
	Amount		Life
Customer relationships	$	4,490		10-12 years

Goodwill is primarily attributable to the benefits and synergies GTSI and InSysCo are expected to receive as a result of the business combination. The goodwill recorded in this transaction is not deductible for tax purposes.