Integral Systems (ISYS) 8-K Results of Operations and Financial Condition

Exhibit 99.1

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

CONTACT:	MEDIA CONTACT:
William M. Bambarger, Jr.	Ms. Kathryn Herr
Chief Financial Officer	Vice President, Marketing & Communications
Integral Systems, Inc.	Integral Systems, Inc.
Phone: 301-731-4233, Ext. 1244	Phone: 301-731-4233, Ext. 1104
Fax: 301-731-3183mailto:katy.herr@gmail.com	Katy.Herr@integ.com
www.integ.com

Integral Systems Announces Audited Financial

Results for Fiscal Year 2008

Management announces successful completion of the 2008 audit – reiterating

a record setting fiscal 2008 and solid outlook for fiscal year 2009

Lanham, Md., December 24, 2008 — Integral Systems, Inc. (NASDAQ-ISYS) (the “Company”) today reported audited financial results for the fourth quarter and fiscal year ended September 30, 2008. Revenue for the year was $160.2 million, up $31.5 million or 24.5% from fiscal 2007. Income from operations was $25.1 million compared to $16.9 million for fiscal 2007, and net income was $18.2 million ($1.01 per diluted share) compared to $12.8 million ($0.58 per diluted share) for fiscal 2007.

Revenue for the fourth quarter was $46.3 million, up $10.0 million or 27.5% from the same period in 2007. Income from operations was $7.6 million compared to $6.3 million for the fourth quarter of 2007. The fourth quarter of 2008 included approximately $1.5 million of audit related fees and approximately $0.7 million of non-cash stock compensation expense. Net income was $4.9 million ($0.28 per diluted share) compared to $4.8 million ($0.23 per diluted share) for the fourth quarter of 2007. All per share amounts reflect the 2:1 stock split effected by the Company during the fourth quarter of 2008.

“Integral Systems has achieved another milestone through successful completion of this comprehensive audit in its progression to an examplary organization for compliance, reporting, and transparency”, commented John Higginbotham, Chief Executive Officer. “We are pleased with our financial results for FY 2008 and feel we are positioned to achieve or potentially exceed comparable financial results for FY 2009.”

Bill Bambarger, Chief Financial Officer, added “We successfully transitioned our audit services to Ernst & Young for fiscal 2008. By hiring a world-class audit firm like E&Y, we are further emphasizing our focus on enhancing shareholder confidence, complying with applicable rules and standards, and building an infrastructure that is scalable to meet our future growth needs. E&Y applied their usual comprehensive audit process, and we are now looking forward to continuing our strong record of financial performance and to achieving our goals for fiscal 2009.”

The Company also filed its Annual Report on Form 10-K today. On December 11, 2008, the Company filed for a 15-day extension to the original filing deadline of December 15, 2008 due to the extensive effort involved to complete the audit for fiscal 2008. This filing results in the Company remaining current in all of its public filing obligations.

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 inForbes’ Top 200 Small Companies in America for 2008. For more information, visitwww.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.

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INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

September 30, 2008 and 2007

(in thousands of dollars, except share amounts)

	September 30, 2008		September 30, 2007
	(audited)
Assets
Current assets:
Cash and cash equivalents	$	15,026	$	23,894
Marketable securities		—		568
Accounts receivable, net of allowance for doubtful accounts of $9 at September 30, 2008 and $170 at September 30, 2007		16,688		19,208
Unbilled revenues		18,656		16,530
Prepaid expenses and other current assets		2,542		2,636
Income tax receivable		4,782		541
Deferred contract costs		6,558		—
Inventory		7,237		5,145
Total current assets		71,489		68,522
Property and equipment, net		17,634		15,234
Goodwill		51,414		51,304
Intangible assets, net		—		22
Software development costs, net		—		198
Other assets		6,666		781
Total assets	$	147,203	$	136,061
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	7,163	$	7,834
Accrued expenses		16,650		11,092
Deferred revenue		12,403		10,588
Income taxes payable		—		—
Total current liabilities		36,216		29,514
Other non-current liabilities		946		—
Total liabilities		37,162		29,514
Stockholders’ equity:
Common stock, $.01 par value, 80,000,000 shares authorized, and 17,246,034 and 18,762,344 shares issued and outstanding at September 30, 2008 and 2007, respectively		173		188
Additional paid-in capital		62,608		60,813
Retained earnings		47,249		45,537
Accumulated other comprehensive income		11		9
Total stockholders’ equity		110,041		106,547
Total liabilities and stockholders’ equity	$	147,203	$	136,061

INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands of dollars, except per share amounts)

	Three Months Ended September 30,					Twelve Months Ended September 30,
	2008			2007		2008		2007
	(Unaudited)					(Audited)
Contract revenue	$	46,344		$	36,348	$	160,170	$	128,654
Cost of revenue		26,153			23,625		99,948		86,308
Gross profit		20,191			12,723		60,222		42,346
Operating Expenses:
Selling, general & administrative		11,279			5,959		32,105		23,377
Research & development		1,308			441		3,021		2,077
Total operating expense		12,587			6,400		35,126		25,454
Income from operations		7,604			6,323		25,096		16,892
Other income		(51	)		592		211		2,236
Income before income tax		7,553			6,915		25,307		19,128
Provision for income taxes		2,638			2,108		7,133		6,302
Net income	$	4,915		$	4,807	$	18,174	$	12,826
Weighted average number of common shares - Basic		17,182			21,208		17,813		21,968
Earnings per share - Basic	$	0.29		$	0.23	$	1.02	$	0.58
Weighted average number of common shares - Diluted		17,444			21,196		18,008		21,985
Earnings per share - Diluted	$	0.28		$	0.23	$	1.01	$	0.58
Cash dividends per share	$	—		$	0.035	$	—	$	0.14

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INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands of dollars, except per share amounts)

	Three Months Ended September 30,						Twelve Months Ended September 30,
	2008			2007			2008			2007
Revenue:
Government Systems	$	24,181		$	18,139		$	83,603		$	67,655
Commercial Systems		7,835			8,348			28,748			26,079
Space Communications Systems		17,509			12,210			57,781			42,795
Elimination of intersegment sales		(3,181	)		(2,349	)		(9,962	)		(7,875	)
Total revenue		46,344			36,348			160,170			128,654
Cost of revenue:
Government Systems		15,532			14,328			58,788			54,155
Commercial Systems		5,763			5,340			19,135			15,721
Space Communications Systems		7,921			6,321			32,101			24,321
Elimination of intersegment sales		(3,063	)		(2,364	)		(10,076	)		(7,889	)
Total cost of revenue		26,153			23,625			99,948			86,308
Gross profit:
Government Systems		8,649			3,811			24,815			13,500
Gross Margin		35.8	%		21.0	%		29.7	%		20.0	%
Commercial Systems		2,072			3,008			9,613			10,358
Gross Margin		26.4	%		36.0	%		33.4	%		39.7	%
Space Communications Systems		9,588			5,889			25,680			18,474
Gross Margin		54.8	%		48.2	%		44.4	%		43.2	%
Elimination of intersegment sales		(118	)		15			114			14
Total gross profit		20,191			12,723			60,222			42,346
Gross Margin		43.6	%		35.0	%		37.6	%		32.9	%
Operating expense:
Government Systems		6,696			2,874			17,630			11,080
Commercial Systems		1,777			1,581			5,939			6,077
Space Communications Systems		4,152			1,953			11,631			8,350
Elimination of intersegment sales		(38	)		(8	)		(74	)		(53	)
Total operating expense		12,587			6,400			35,126			25,454
Operating income:
Government Systems		1,953			937			7,185			2,420
Operating margin		8.1	%		5.2	%		8.6	%		3.6	%
Commercial Systems		295			1,427			3,674			4,281
Operating margin		3.8	%		17.1	%		12.8	%		16.4	%
Space Communications Systems		5,436			3,936			14,049			10,124
Operating margin		31.0	%		32.2	%		24.3	%		23.7	%
Elimination of intersegment sales		(80	)		23			188			67
Total operating income		7,604			6,323			25,096			16,892
Operating margin		16.4	%		17.4	%		15.7	%		13.1	%

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