EX-99.1 2 dex991.htm EXHIBIT 99.1 -- PRESS RELEASE Exhibit 99.1 -- Press Release

Exhibit 99.1

LOGO

5000 Philadelphia Way • Lanham • Maryland • 20706-4417 • U.S.A.

Telephone: 301.731.4233 • Fax: 301.731.9606 • Internet: sales@integ.com • Web: http://www.integ.com

FOR IMMEDIATE RELEASE

Integral Systems Announces Financial Results

for the First Quarter of Fiscal Year 2009

Management reaffirms its outlook for the fiscal year

Lanham, Md., February 3, 2009 — Integral Systems, Inc. (NASDAQ-ISYS) (“Company”) today reported financial results for the first quarter of fiscal 2009. Revenue for the quarter was $38.5 million, up $4.5 million or 13.3% from the first quarter of fiscal 2008. Gross profit for the quarter was $13.4 million (34.9% of revenue), up $0.9 million or 7.0% from $12.5 million (36.9% of revenue) from the first quarter of fiscal 2008.

Income from operations for the first quarter of 2009 was $1.3 million compared to $5.3 million for the first quarter of the last fiscal year. Net income was $1.0 million in the first quarter of 2009 ($0.06 per diluted share) compared to $5.1 million ($0.27 per diluted share) for the first quarter of fiscal 2008. Net income, income from operations and earnings per share were significantly impacted in the first quarter of fiscal 2009 as a result of several costs that the Company considers to be out of the ordinary. The results for the first quarter of 2009 include approximately $2.3 million of accounting, legal, and consulting fees that are included in Selling, General and Administrative (SG&A) costs associated with the first audit of the Company conducted by Ernst & Young LLP and the restatement of the Company’s financial statements for the first three quarters of fiscal 2008 and various corporate governance activities.

The results for the first quarter of fiscal 2009 also include approximately $0.6 million of business development costs as the Company continues to invest in future business opportunities, particularly in the national security and intelligence communities, and approximately $0.8 million of increased non-cash stock compensation costs. The results for the first quarter of fiscal 2008 included a $1.6 million non-recurring tax credit for research and development costs related to prior fiscal years, which also contributed to the higher earnings in the first quarter of 2008 compared to the first quarter of 2009. These costs are reflected primarily in the Company’s SG&A expenses and have been factored into management’s projections for fiscal 2009.

“We are pleased that our year-over-year revenue growth continued to expand in the first quarter and we are focused on ensuring that we continue to effectively grow our business and manage costs toward achieving our outlook,” commented John Higginbotham, Chief Executive Officer.

Management expects that revenue will continue to grow over the prior year due to a solid backlog position and increased business development efforts. Costs associated with the recent transition of auditors and the 2008 fiscal year-end close are completed and major infrastructure development efforts initiated in 2008 are nearing completion. The Company has a lower number of outstanding shares in 2009 than in 2008 (after adjusting for the 2:1 stock split effected as of August 25, 2008) due to share repurchases executed in 2008. As a result of these factors, growth initiatives and ongoing cost containment, management is reaffirming the Company’s earnings projection for fiscal 2009 of approximately $176 million of revenue and $1.01 of income on a per share basis.


Mr. Higginbotham and Mr. Bambarger, the Company’s Chief Executive Officer and Chief Financial Officer, respectively, will host a conference call today, February 3, 2009, at 9:00 AM ET. The call will last approximately one hour and will feature John Higginbotham, Integral’s Chief Executive Officer and Bill Bambarger, Integral’s Chief Financial Officer. Interested parties are invited to join the call by calling 800.920.5541, ID number 21413734. A replay of the conference call can be heard from 11:00 AM ET Tuesday, February 3, 2009 through 11:00 AM ET Thursday, February 5, 2009 by dialing 800-633-8284 or 402-977-9140. Ask for reservation number 21413734.

The Company’s 2009 Annual Meeting of Stockholders (the “Annual Meeting”) will be held at the Company’s offices located at 5000 Philadelphia Way, Lanham, Maryland, at 10:00 a.m., on February 26, 2009. All stockholders are cordially invited to attend the Annual Meeting in person.

ABOUT INTEGRAL SYSTEMS

Integral Systems, Inc., applies more than 25 years experience developing innovative satellite communication systems for its government and commercial customers. Integral provides cost-effective solutions for ground, air, and space communications by integrating solutions from its subsidiary companies – SAT Corporation, Newpoint Technologies, Inc., Integral Systems Europe, RT Logic, and Lumistar. Customers have relied on the Integral family of companies to deliver on time and on budget for more than 250 satellite missions. Our dedication to customer service has solidified long-term relationships with the U.S. Air Force, NASA, NOAA, and nearly every satellite operator in the world. Integral Systems, Inc. is listed in Forbes’ Top 200 Small Companies in America for 2008. For more information visit www.integ.com.

Except for statements of historical facts, this news release contains forward-looking statements about the Company, including but not necessarily limited to the Company’s financial projections, all of which are based on the Company’s current expectations. There can be no assurance that the Company’s projections will in fact be achieved and these projections do not reflect any acquisitions or divestitures that may occur in the future. The forward-looking statements contained in this news release are subject to additional risks and uncertainties, including the Company’s reliance on contracts and subcontracts funded by the U.S. government, intense competition in the ground systems industry, the competitive bidding process to which the Company’s government and commercial contracts are subject, the Company’s dependence on the satellite industry for most of its revenues, rapid technological changes in the satellite industry, the Company’s acquisition strategy and those other risks noted in the Company’s SEC filings. The Company assumes no obligation to update or revise any forward-looking statements appearing in this news release.

 

CONTACT:   MEDIA CONTACT:
William M. Bambarger, Jr.   Kathryn J. Herr
Chief Financial Officer   Vice President, Marketing and Communications
Integral Systems, Inc.   Integral Systems, Inc.
Phone: 301.731.4233, Ext. 1244   Phone: 240.485.1081
www.integ.com   kherr@integ.com

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INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 26, 2008 and September 30, 2008

(in thousands of dollars, except share amounts)

 

     December 26,
2008
   September 30,
2008
     (unaudited)     
Assets      

Current assets:

     

Cash and cash equivalents

   $ 5,518    $ 15,026

Accounts receivable, net of allowance for doubtful accounts

     17,485      16,688

Unbilled revenues

     20,584      18,656

Prepaid expenses and other current assets

     3,248      2,542

Income tax receivable

     4,620      4,782

Deferred contract costs

     6,227      6,558

Inventory

     7,923      7,237
             

Total current assets

     65,605      71,489

Property and equipment, net

     18,063      17,634

Goodwill

     51,414      51,414

Other assets

     7,868      6,666
             

Total assets

   $ 142,950    $ 147,203
             
Liabilities and Stockholders’ Equity      

Current liabilities:

     

Accounts payable

   $ 4,197    $ 7,163

Accrued expenses

     12,928      16,650

Deferred revenue

     12,542      12,403
             

Total current liabilities

     29,667      36,216

Other non-current liabilities

     1,080      946
             

Total liabilities

     30,747      37,162

Stockholders’ equity:

     

Common stock, $.01 par value, 80,000,000 shares authorized, and 17,254,334 and 17,246,034 shares issued and outstanding at December 26, 2008 and September 30, 2008, respectively

     173      173

Additional paid-in capital

     63,721      62,608

Retained earnings

     48,274      47,249

Accumulated other comprehensive income

     35      11
             

Total stockholders’ equity

     112,203      110,041
             

Total liabilities and stockholders’ equity

   $ 142,950    $ 147,203
             

 

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INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF OPERATIONS

(in thousands of dollars, except per share amounts)1

 

     Three Months Ended  
     December 26, 2008    December 31, 2007  
     (Unaudited)  

Contract revenue

   $ 38,470    $ 33,960  

Cost of revenue

     25,049      21,412  
               

Gross profit

     13,421      12,548  
               

Operating Expenses:

     

Selling, general & administrative

     11,526      6,520  

Research & development

     595      710  
               

Total operating expense

     12,121      7,230  
               

Income from operations

     1,300      5,318  

Other income

     7      (65 )
               

Income before income tax

     1,307      5,253  
               

Provision for income taxes

     282      201  
               

Net income

   $ 1,025    $ 5,052  
               

Weighted average number of common shares—Basic

     17,266      18,762  
               

Earnings per share—Basic

   $ 0.06    $ 0.27  
               

Weighted average number of common shares—Diluted

     17,441      18,863  
               

Earnings per share—Diluted

   $ 0.06    $ 0.27  
               

 

1

Share and per share information reflects the 2:1 stock split effected as of August 25, 2008.


INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands of dollars, except per share amounts)

 

     Three Months Ended  
     December 26, 2008     December 31, 2007  
     (unaudited)  

Contract revenue:

    

Government Systems

   $ 18,022     $ 15,442  

Commercial Systems

     6,109       5,326  

Space Communications Systems

     16,052       14,336  

Elimination of intersegment sales

     (1,713 )     (1,144 )
                

Total contract revenue

     38,470       33,960  
                

Cost of revenue:

    

Government Systems

     13,750       11,419  

Commercial Systems

     4,723       3,331  

Space Communications Systems

     8,289       7,902  

Elimination of intersegment sales

     (1,713 )     (1,240 )
                

Total cost of revenue

     25,049       21,412  
                

Gross profit:

    

Government Systems

     4,272       4,023  

Gross Margin

     23.7 %     26.1 %

Commercial Systems

     1,386       1,995  

Gross Margin

     22.7 %     37.5 %

Space Communications Systems

     7,763       6,434  

Gross Margin

     48.4 %     44.9 %

Elimination of intersegment sales

     —         96  
                

Total gross profit

     13,421       12,548  
                

Gross Margin

     34.9 %     36.9 %

Operating expense:

    

Government Systems

     5,430       3,430  

Commercial Systems

     1,122       1,139  

Space Communications Systems

     5,569       2,661  

Elimination of intersegment sales

     —         —    
                

Total operating expense

     12,121       7,230  
                

Income from operations:

    

Government Systems

     (1,158 )     593  

Operating margin

     -6.4 %     3.8 %

Commercial Systems

     264       856  

Operating margin

     4.3 %     16.1 %

Space Communications Systems

     2,194       3,773  

Operating margin

     13.7 %     26.3 %

Elimination of intersegment sales

     —         96  
                

Total income from operations

     1,300       5,318  
                

Operating margin

     3.4 %     15.7 %