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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
COMMISSION FILE NUMBER 33-55090
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
GTSI EMPLOYEES' 401(k) INVESTMENT PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
GOVERNMENT TECHNOLOGY SERVICES, INC.
4100 Lafayette Center Drive
Chantilly, Virginia 20151-1200
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Government Technology Services, Inc.
Employees 401(k) Investment Plan
Financial Statements
As of December 31, 1996 and 1995
Together With Auditors' Report
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Government Technology Services, Inc.
Employees 401(k) Investment Plan
Table of Contents
Page
Reports of Independent Public Accountants 4
Statement of Net Assets Available For Benefits With Fund Information
As of December 31, 1996 5
Statement of Net Assets Available for Benefits With Fund Information
As of December 31, 1995 6
Statement of Changes in Net Assets Available for Benefits With
Fund Information
As of December 31, 1996 7
Notes to Financial Statements
As of December 31, 1996 and 1995 9
Item 27(a) - Schedule of Assets Held For Investment Purposes
As of December 31, 1996 14
Item 27(b) - Schedule of Loans or Fixed-Income Obligations
Due in Default or Classified as Uncollectible
As of December 31, 1996 15
Item 27(d) - Schedule of Reportable Transactions
For the Year Ended December 31, 1996 16
Schedules Omitted Because There Were No Such Items
As of December 31, 1996:
Item 27 (c) - Leases in Default or Classified as Uncollectible
Item 27 (e) and 27 (f) - Nonexempt Transactions
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Report of Independent Public Accountants
To the Advisory Committee of the
Government Technology Services, Inc.
Employees 401(k) Investment Plan:
We have audited the accompanying statements of net assets available for
benefits of the Government Technology Services, Inc., Employees 401(k)
Investment Plan (the "Plan") as of December 31, 1996 and 1995, and the
related statement of changes in net assets available for benefits for the
year ended December 31, 1996. These financial statements and the schedules
referred to below are the responsibility of the Plan's Advisory Committee.
Our responsibility is to express an opinion on these financial statements
and schedules based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for benefits of the Plan
as of December 31, 1996 and 1995, and the changes in net assets available
for benefits for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of
assets held for investment purposes, loans or fixed income obligations due
in default or classified as uncollectable, and reportable transactions are
presented for the purpose of additional analysis and are not a required
part of the basic financial statements but are supplementary information
required by the Department of Labor's Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security Act of 1974.
The fund information in the statement of net assets available for benefits
and the statement of changes in net assets available for benefits is
presented for the purpose of additional analysis rather than to present the
net assets available for benefits and the changes in net assets available
for benefits of each fund. The supplemental schedules and fund information
have been subjected to the auditing procedures applied in the audit of the
basic financial statements and, in our opinion, are fairly stated, in all
material respects, in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Washington, D.C.
July 16, 1997
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Government Technology Services, Inc.
Employees 401(k) Investment Plan
Statement of Net Assets Available For Benefits With Fund Information
As of December 31, 1996
<TABLE>
<CAPTION>
Participant Directed
--------------------------------------------------------------------------------------------------
Money Guaranteed
Market Common Investment
Fund Mutual Funds Stock Contract
---------- ------------------------------------------------ ---------- ----------
Washington Deposit
Nations Cash Growth Mutual Bond Fund Admini- Parti-
Bank Management Fund of Investors of GTSI stration cipant
Cash Trust America Fund America Stock Fund Loans Total
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments $ - $ 62,472 $1,478,940 $ 946,272 $ 406,114 $ 28,463 $ 148,336 $ 113,241 $3,183,838
Cash 236,057 - - - - - - 43,110 279,167
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total 236,057 62,472 1,478,940 946,272 406,114 28,463 148,336 156,351 3,463,005
Liabilities:
Excess
contributions
refundable - - (4,794) (1,414) (60) - (936) - (7,204)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total - - (4,794) (1,414) (60) - (936) - (7,204)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net assets
available for
benefits $ 236,057 $ 62,472 $1,474,146 $ 944,858 $ 406,054 $ 28,463 $ 147,400 $ 156,351 $3,455,801
========== ========== ========== ========== ========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of this statement.
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Government Technology Services, Inc.
Employees 401(k) Investment Plan
Statement of Net Assets Available For Benefits With Fund Information
As of December 31, 1995
<TABLE>
<CAPTION>
Participant Directed
--------------------------------------------------------------------------------------------------
Money Guaranteed
Market Common Investment
Fund Mutual Funds Stock Contract
---------- ------------------------------------------------ ---------- ----------
Washington Deposit
Nations Cash Growth Mutual Bond Fund Admini- Parti-
Bank Management Fund of Investors of GTSI stration cipant
Cash Trust America Fund America Stock Fund Loans Total
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments $ - $ 82,494 $1,333,589 $ 971,939 $ 437,100 $ 13,843 $ 144,070 $ 54,327 $3,037,362
Cash 65,616 - - - - - - - 65,616
Contributions
receivable 20,499 - - - - - - - 20,499
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
86,115 82,494 1,333,589 971,939 437,100 13,843 144,070 54,327 3,123,477
Liabilities:
Excess
contributions
refundable - (363) (14,397) (11,377) (5,610) - (669) - (32,416)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net assets
available for
benefits $ 86,115 $ 82,131 $1,319,192 $ 960,562 $ 431,490 $ 13,843 $ 143,401 $ 54,327 $3,091,061
========== ========== ========== ========== ========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of this statement.
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<PAGE>
Government Technology Services, Inc.
Employees 401(k) Investment Plan
Statement of Changes in Net Assets Available
For Benefits With Fund Information
As of December 31, 1996
<TABLE>
<CAPTION>
Participant Directed
--------------------------------------------------------------------------------------------------
Money Guaranteed
Market Common Investment
Fund Mutual Funds Stock Contract
---------- ------------------------------------------------ ---------- ----------
Washington Deposit
Nations Cash Growth Mutual Bond Fund Admini- Parti-
Bank Management Fund of Investors of GTSI stration cipant
Cash Trust America Fund America Stock Fund Loans Total
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Employee
contributions $ 200,880 $ 14,292 $ 313,665 $ 228,394 $ 67,821 $ 7,079 $ 39,966 $ - $ 872,097
Unrealized/realized
gains and losses
on investments - 135 125,259 162,889 3,409 5,724 431 - 297,847
Interest and
dividends 6,620 3,552 83,115 26,390 22,570 - 8,713 - 150,960
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total additions 207,500 17,979 522,039 417,673 93,800 12,803 49,110 - 1,320,904
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Distributions to
participants - (23,274) (384,726) (372,385) (135,540) (3,656) (36,583) - (956,164)
Transfers between
funds:
Between investment
funds - (14,364) 39,130 (38,847) 17,252 5,473 (8,644) - -
Participant loan
transactions (57,558) - (21,489) (22,145) (948) - 116 102,024 -
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total transfers (57,558) (14,364) 35,282 (60,992) 16,304 5,473 (8,528) 102,024 -
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase
(decrease) 149,942 (19,659) 154,954 (15,704) (25,436) 14,620 3,999 102,024 364,740
Net assets
available for
benefits:
Beginning of year 86,115 82,131 1,319,192 960,562 431,490 13,843 143,401 54,327 3,091,061
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
End of year $ 236,057 $ 62,472 $1,474,146 $ 944,858 $ 406,054 $ 28,463 $ 147,400 $ 156,351 $3,455,801
========== ========== ========== ========== ========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of this statement.
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Government Technology Services, Inc.
Employees 401(k) Investment Plan
Notes to Financial Statements
As of December 31, 1996 and 1995
1. Description of Plan:
The following description of the Government Technology Services, Inc.
("GTSI" or the "Company"), Employees' 401(k) Investment Plan (the "Plan")
is provided for general information purposes only. Participants should
refer to the Plan document for more detailed information.
General
The Plan was established effective April 1, 1991, in accordance with
Section 401(k) of the Internal Revenue Code (the "IRC"). The Plan was
subsequently amended, effective April 1, 1991, in order to comply with the
Tax Reform Act of 1986. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The
Plan is a voluntary, defined contribution plan that allows eligible
employees to contribute up to fifteen percent of their compensation up to a
statutory limit. Employees are eligible to participate upon the completion
of six months of service and the attainment of 21 years of age.
Contributions
Twice annually, on January 1 and July 1, participants may elect to defer
from one percent to fifteen percent of their annual compensation to any of
the funds in which the Plan has invested on a pretax basis, subject to
limits detailed in the IRC. In addition, a participant may amend his
salary deferral election to terminate such election or to increase or
decrease the portion of his compensation to be deferred, with such
amendments becoming effective January 1 or July 1. The Plan also contains
a feature for discretionary employer contributions. Contributions are
subject to limitations to comply with the nondiscrimination requirements of
the IRC. The Company made no such contributions to the Plan during the
year ended December 31, 1996 and 1995.
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Vesting
Employee contributions and any earnings thereon are fully vested upon
receipt by the Plan. A participant's vesting percentage with respect to
the discretionary employer contributions is determined according to the
following table:
Years of service Percentage
----------------- ----------
Less than 2 0
2 but less than 3 20
3 but less than 4 40
4 but less than 5 60
5 but less than 6 80
6 or more 100
Upon termination from service, that portion of a participant's
discretionary employer contribution account in which he is not vested is
forfeited. Forfeitures are utilized to reduce any employer contributions
in the current or future years.
Distributions
Upon termination, participants may elect to withdraw the entire amount of
their contribution accounts or delay withdrawal until a future date if
their account balances are at least $3,500. Distributions are made in a
lump-sum payment, except for investments in the Company's common stock
which shall be distributed in whole shares and cash for any fractional
share unless the participant elects to receive the full distribution in
cash. Upon the death of a participant, the participant's beneficiary shall
be entitled to the unpaid balance of the participant's account. Such
beneficiary shall be the participant's spouse unless there is no spouse or
unless another beneficiary is named with the written consent of the spouse.
Loans
Plan participants may borrow from their fund accounts a minimum of $1,000
up to a maximum equal to the lesser of $50,000 or 50 percent of their
account balances. Loans accrue interest at a rate equivalent to interest
rates charged by major financial institutions for comparable loans at the
time the loan is made. As of December 31, 1996, interest rates ranged from
8.25 to 10 percent. Loans are repaid in equal payments, made not less
frequently than quarterly, over terms generally not exceeding five years.
Loans are collateralized as deemed appropriate by the Advisory Committee.
Loans to participants are recorded at cost, which approximates market
value. In the event of retirement, death, disability, or termination of
employment, the loan becomes payable in full.
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<PAGE>
Rollovers
New employees are permitted to transfer account balances from previous
qualified plans to the Plan. Included in employee contributions for the
year ended December 31, 1996, is $165,880 of rollovers from other plans.
Plan Administration
The Plan is administered by an Advisory Committee consisting of three
individuals appointed by the Board of Directors of GTSI. During 1996, the
Company retained Actuarial Benefits and Design, Inc., to perform
record-keeping services for the Plan and NationsBank Trust Company, N.A.
(the "Trustee") to maintain the assets in the Plan. The Company pays
certain administrative fees, such as legal, accounting, and insurance. The
Plan pays no administrative fees to the Company for the services it
provides.
2. Summary of Accounting Policies:
Accounting Method
The financial statements are prepared on an accrual basis in accordance
with generally accepted accounting principles.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Security Transactions and Related Investment Income
Security transactions are recorded on the trade date and dividend income is
recorded on the ex-dividend date.
Investments
Investments are valued at the last reported sales price on the last
business day of the period. Employee contributions are deposited at the
direction of the participants with the American Funds Group ("AFG"), the
First Colony Life Insurance Company ("FCL") or NationsBank Trust Company,
N.A., where they are accumulated and invested on behalf of the Plan
participants. The following represents a brief description of each
investment alternative available for employee contributions during 1996.
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<PAGE>
AFG Growth Fund of America
This fund is a diversified mutual fund investing primarily in the common
stock of a wide range of companies that have potential for long-term growth
of capital.
AFG Washington Mutual Investors Fund
This fund invests in stocks of companies offering potential for current
income and the opportunity for growth of capital.
AFG Bond Fund of America
This fund invests in bonds with the objective of obtaining a high level of
current income while preserving invested capital. At least 60 percent of
the fund's assets must be invested in government guaranteed securities,
corporate bonds rated "A" or better, or money market instruments.
AFG Cash Management Trust
This fund invests in money market instruments such as U.S. Treasury bills,
commercial paper, and certificates of deposit. The objective of the fund
is to provide current income on cash reserves while preserving capital and
maintaining liquidity.
GTSI Stock
Employees may direct up to 20 percent of their contributions and may invest
up to 20 percent of their account balances in the Company's common stock.
Fair values for the GTSI stock are determined using quoted market values
based on public sources.
FCL Deposit Administration Fund
This investment ("the contract") offers a return of principal and interest
guaranteed at competitive rates by FCL. The contract is valued at cost
plus undistributed interest income (contract value) since it is fully
benefit responsive. As of December 31, 1996, the fair value of the
contract was $147,400. The average yield as of December 31, 1996 and 1995,
was 6.0 and 6.5 percent, respectively. The crediting interest rate as of
December 31, 1996 and 1995, was 5.7 and 5.4 percent, respectively. There
are no valuation reserves recorded to adjust contract amounts. The minimum
crediting interest rate under the terms of the contract is 4.0 percent.
There are no limitations or guarantees on the contract. The crediting
interest rate is periodically reviewed by management.
The fair value of the individual assets that represent 5 percent or more of
the Plan's net assets as of December 31, 1996 and 1995, is as follows:
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<PAGE>
1996 1995
---------- ----------
Mutual Funds:
Growth Fund of America $1,474,146 $1,319,192
Washington Mutual Investors Fund 944,858 960,562
Bond Fund of America 406,054 431,490
Money Market Fund:
Cash 236,057 -
Investment income
The Plan presents in the statement of changes in net assets available for
benefits the net appreciation (depreciation) in the fair value of its
investments, which consists of the realized gains or losses and the
unrealized appreciation (depreciation) on those investments. Income,
expenses, and gains or losses (realized and unrealized) of Plan investments
are allocated among participants based upon their respective account
balances at the end of each month.
Cash
Cash consists of contributions that have been transferred to the Trustee
but not yet invested in the investment funds.
3. Benefits Payable:
Benefits are recorded when paid. As of December 31, 1996 and 1995, the
account balances of employees who have terminated employment with the
Company and requested distributions but have not been approved for payment
were $0. As of December 31, 1996, employees had made excess contributions
to the Plan and were due refunds of $7,204.
4. Federal Income Taxes:
The Internal Revenue Service ("IRS") has determined and informed the
Company by a letter dated June 13, 1995, that after considering proposed
amendments necessary for the Plan to conform to the provisions of the Tax
Reform Act of 1986, the Plan and related trust were designed in accordance
with applicable sections of the IRC. The necessary Plan amendment was
adopted on February 13, 1996. GTSI and the Plan Administrator believe that
the Plan is currently designed and is being operated in compliance with
applicable requirements of the IRC. Therefore, GTSI and the Plan
administrator believe that the Plan is qualified and the related trust
continues to be tax exempt.
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<PAGE>
5. Termination of the Plan:
While the Plan is intended to be permanent, it may be terminated at any
time by resolution of the Board of Directors of the Company. Upon
termination, no further contributions may be made to the Plan. However,
the Advisory Committee will remain in existence and all provisions of the
Plan other than the provisions for contributions will remain in force
subject to review by the Advisory Committee. In the event of Plan
termination, participants will become fully vested in their account
balances.
6. Administrative Expenses:
Administrative expenses of the Plan are paid by the Company. Total
expenses paid by the Company for the years ended December 31, 1996 and
1995, were $12,738 and $17,746, respectively. The Company also provides
administrative support at no cost to the Plan.
7. Reconciliation of Net Assets available for Plan Benefits
per Financial Statements to Form 5500 at December 31, 1996:
Net assets available for plan benefits per
financial statements $3,455,801
Refunds to employees 7,204
Investment accrual adjustment (16,037)
----------
Net assets available for plan benefits per Form 5500 $3,446,968
==========
8. GTSI Acquisition of Falcon Microsystems, Inc.:
On August 16, 1994, the Company acquired all of the outstanding shares of
stock of Falcon Microsystems, Inc. ("Falcon"). Effective December 31,
1994, a resolution was passed by the GTSI Advisory Committee that
terminated the Falcon 401(k) Retirement Savings Plan with no further salary
deferrals allowed. Effective January 1, 1995, all Falcon employees
satisfying the eligibility requirements of the GTSI 401(k) Plan became
eligible to participate in the GTSI 401(k) Plan. The Falcon 401(k) Plan
received its final IRS determination letter on January 5, 1996.
9. Party-In-Interest Transaction:
The Plan has invested certain amounts with NationsBank, the Trustee of the
Plan.
10. Subsequent Event:
In 1997, the Company elected to change its record-keeper and trustee. As a
result, the Plan's 1996 investment options were canceled. There was no
impact on participant account values.
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Government Technology Services, Inc.
Employees 401(k) Investment Plan
Item 27(a) - Schedule of Assets Held For Investment Purposes
As of December 31, 1996
<TABLE>
<CAPTION>
Current
Identity of Issuer Description Cost Value
- --------------------------------- -------------------------- ---------- ----------
<S> <C> <C> <C>
NationsBank Cash* Money Market Fund $ 236,057 $ 236,057
AFG Cash Management Trust Mutual Fund 62,472 62,472
AFG Growth Fund of America Mutual Fund 1,259,145 1,474,146
AFG Washington Mutual Investors Mutual Fund 710,835 944,858
AFG Bond Fund of America Mutual Fund 401,534 406,054
GTSI Stock* Common Stock 31,477 28,463
First Colony Life Insurance Group Guaranteed Investment
Deposit Administration Fund Contract, 5.7% guaranteed
at 12/31/96 147,400 147,400
Participant loans Fully amortized loans to
participants at 8.25% to
10% per annum 156,351 156,351
---------- ----------
Totals $3,005,271 $3,455,801
========== ==========
* Represents a party-in-interest.
</TABLE>
The accompanying notes are an integral part of this schedule.
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Government Technology Services, Inc.
Employees 401(k) Investment Plan
Item 27(b) - Schedule of Loans or Fixed-Income
Obligations Due in Default or Classified as Uncollectible
As of December 31, 1996
<TABLE>
<CAPTION>
Detailed Description of Loan Including
Amount Received Dates of Making and Maturity, Interest
During Unpaid Rate, the Type and Value of Collateral,
Original Reporting Year Balance Any Renegotiation of the Loan and the Amount Overdue
Identity and Address Amount -------------------- at End Terms of the Renegotiation, and Other --------------------
or Obligor of Loan Principal Interest of Year Material Items Principal Interest
- -------------------- --------- --------- --------- --------- --------------------------------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael Cook $ 1,500 $ - $ 35 $ 1,052 8.75% Maturity 12/13/96 $ 1,052 $ -
Katherine Leunig 4,902 - - 4,092 9.5% Maturity 6/4/99 2,580 -
</TABLE>
The accompanying notes are an integral part of this schedule.
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Government Technology Services, Inc.
Employees 401(k) Investment Plan
Item 27(d) - Schedule of Reportable Transactions
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
Identity of Party Purchase Sales
Involved ------------------------- --------------------------------------------------
Description Description Number of Purchase Number of Sales Historical Gain
of Asset of Investment Transactions Price Transactions Price Cost (Loss)
- ------------------ -------------- ------------- ---------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Growth Fund of
America Mutual Fund 23 $ 517,472 19 $ 478,410 $ 431,343 $ 47,067
NationsBank Prime
Fund Trust* Money Market 3 729,870 3 722,060 722,060 -
Fund
Washington Mutual
Investors Fund Mutual Fund 23 262,507 18 414,888 359,063 55,825
Bond Fund of
America Mutual Fund - - 17 160,625 162,286 (1,661)
* Represents a party-in-interest.
</TABLE>
The accompanying notes are an integral part of this schedule.
- 16 -
<PAGE>
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on behalf of the employee
benefit plan by the undersigned, thereunto duly authorized.
Date: June 12, 1998
GTSI EMPLOYEES' 401(k) INVESTMENT PLAN
By: /s/ JUDITH B. KASSEL
-----------------------------------------
Judith B. Kassel
Vice President & General Counsel and
401(k) Plan Advisory Committee Member
- 17 -
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INDEX TO EXHIBITS
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EXHIBIT |
NUMBER | DESCRIPTION
- ---------------------------------------------------------------------------
23 | Consent of Arthur Andersen LLP
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<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report dated July 16, 1996, included in this Form
11-K, into the Company's previously filed Registration Statements on Form
S-8 (File Nos. 33-44363, 33-55090 and 333-29439).
/s/ Arthur Andersen LLP
-----------------------------
ARTHUR ANDERSEN LLP
Washington, D.C.
May 28, 1998
