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
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 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.
| | |
| 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 | % |
