Integral Systems (ISYS) 8-K Integral Systems Announces Fourth Quarter and Fiscal Year 2009 Results

Exhibit 99.1

6721 Columbia Gateway Drive • Columbia • Maryland • 21046 • U.S.A. Telephone: 433.539.5008 • Fax:

410.312.2705 • Internet: sales@integ.com • Web: http://www.integ.com

FOR IMMEDIATE RELEASE

Integral Systems Announces Fourth Quarter and Fiscal Year 2009 Results

COLUMBIA, MD, December 7, 2009 —Integral Systems, Inc. (NASDAQ: ISYS) (“Company”) today reported preliminary, unaudited financial results for the fourth quarter and fiscal year ended September 25, 2009.

Revenue for the fourth quarter was $38.9 million, down 16% compared to the fourth quarter of fiscal 2008. Gross margin for the quarter was 32.6% compared to 45.4% for the same period last year. Fourth quarter 2009 loss from operations was $1.6 million compared to income of $7.6 million in the fourth quarter 2008. The decline in revenue was primarily the result of a $3.9 million revenue rate reserve taken to provide for potential future audit adjustments by the U.S. government relating to reimbursable rates on government programs. In late October, the Company received an unexpected notice from the government that a majority of its product development costs were being disallowed for reimbursement. The Company has been in discussions with the government and, while no assurance can be given, we are hopeful of recovering some or all this reserve in future periods. Gross margin was lower in the quarter due to higher unallowable costs in the government segment. Operating results reflect higher investments in research and development initiatives as well as the rate reserve taken in the Company’s government segment, and includes some anticipated non-recurring costs related to the management restructuring that occurred in August. Dilutive earnings per share for the fourth quarter of 2009 was a loss of $0.06 compared to dilutive earnings of $0.28 per share for the fourth quarter of fiscal 2008.

Revenue for the full year was $159.9 million versus $160.2 million reported in fiscal 2008. Gross margin for fiscal 2009 was 33.6% compared to 38.7% for fiscal 2008. Fiscal 2009 operating income declined by $25.0 million from $25.1 million reported in fiscal 2008 due to higher SG&A expenses and rate reserves for our government programs. Year-to-date 2009 dilutive earnings per share including the revenue rate reserve taken in the fourth quarter was $0.06 compared to $1.01 per share in 2008.

The Company noted that its previous full year earnings guidance of $0.15 per share had reflected $1.8 million of the $3.9 million rate reserve that was ultimately taken. Excluding the impact of the additional $2.1 million revenue rate reserve that was taken in the fourth quarter, the company would have reported full fiscal year 2009 dilutive earnings of $0.14 per share.

“2009 was a challenging year for the company. A series of one-time events impacted our financial performance, overshadowing many notable developments ranging from the renewal and extension of key contracts to the growth and expansion of our international operations,” said Paul Casner, President and Chief Executive Officer of Integral Systems. “Most importantly, as we closed fiscal 2009, we

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concluded a number of critical infrastructure initiatives which position the company for efficient and focused growth going forward, including reductions in indirect cost structures, resolution of lingering legal matters and a strengthened senior management team.”

Casner concluded, “Looking ahead, we have many reasons to be cautiously optimistic that fiscal 2010 will reflect the benefits of the initiatives we have taken to refocus the business on its core competencies, improve operational efficiencies, and create a platform for growth. We expect to build upon the momentum created by almost $100 million in new bookings already received and the elevated business activity we see in our markets.”

Mr. Paul Casner, Chief Executive Officer, and Mr. Bill Bambarger, Chief Financial Officer, will host the Company’s fourth quarter earnings results conference call on Monday, December 7, 2009, at 11:00 AM ET. Interested parties are invited to participate in this conference call by dialing: 1.888.221.9554. A replay of the conference call can be heard from 2:00 pm EST Monday, December 7, 2009, through midnight EST Thursday, December 10, 2009, by dialing 1.888.203.1112 or 719.457.0820 and asking for ID number 2364750.

ABOUT INTEGRAL SYSTEMS

Integral Systems, Inc., of Columbia, MD, applies more than 25 years experience to provide integrated technology solutions for satellite communications-interfaced systems. Customers have relied on the Integral Systems family of companies (Integral Systems, Inc., Integral Systems Europe, Lumistar, Inc., Newpoint Technologies, Inc., RT Logic, and SAT Corporation) 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 was named the Region III Prime Contractor of the Year by the U.S. Small Business Administration in 2009. 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. These forward-looking statements are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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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Company Contact: Kathryn Herr Vice President, Marketing and Communications Integral Systems, Inc. Phone: 443.539.5118 kherr@integ.com Media Contact: Michael Glickman Zeno Group for Integral Systems Phone: 212.299.8994 Michael.glickman@zenogroup.com

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INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

September 25, 2009 and September 30, 2008

(in thousands of dollars, except share amounts)

	September 25, 2009		September 30, 2008
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	5,698	$	15,026
Accounts receivable, net of allowance for doubtful accounts		27,016		16,688
Unbilled revenues		37,028		18,656
Prepaid expenses and other current assets		1,256		2,542
Income tax receivable		12,361		4,782
Deferred contract costs		2,598		6,558
Inventory		9,994		7,237
Total current assets		95,951		71,489
Property and equipment, net		20,368		17,634
Goodwill		54,113		51,414
Intangible assets, net		6,711		—
Other assets		1,181		6,666
Total assets	$	178,324	$	147,203
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	5,771	$	7,163
Accrued expenses		17,941		16,650
Deferred tax liability		7,347		—
Deferred revenue		12,373		12,403
Short term debt		5,311		—
Total current liabilities		48,743		36,216
Deferred rent, non-current		8,460		—
Obligations under capital leases		5,163		—
Other non-current liabilities		955		946
Total liabilities		63,321		37,162
Stockholders’ equity:
Common stock, $.01 par value, 80,000,000 shares authorized, and 17,331,796 and 17,246,034 shares issued and outstanding at September 25, 2009 and September 30, 2008, respectively		173		173
Additional paid-in capital		66,461		62,608
Retained earnings		48,354		47,249
Accumulated other comprehensive income		15		11
Total stockholders’ equity		115,003		110,041
Total liabilities and stockholders’ equity	$	178,324	$	147,203

INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands of dollars, except per share amounts)

	Three Months Ended						Twelve Months Ended
	September 25, 2009			September 30, 2008			September 25, 2009			September 30, 2008
	(Unaudited)						(unaudited)
Revenue	$	38,912		$	46,344		$	159,933		$	160,170
Cost of revenue		26,246			25,325			106,149			98,172
Gross profit		12,666			21,019			53,784			61,998
Operating expense:
Selling, general & administrative		12,922			11,998			49,131			33,585
Research & development		1,363			1,417			4,550			3,317
Total operating expense		14,285			13,415			53,681			36,902
(Loss) income from operations		(1,619	)		7,604			103			25,096
Other income, net		94			(52	)		(31	)		211
(Loss) income before income taxes		(1,525	)		7,552			72			25,307
Income tax (benefit) provision		(448	)		2,637			(1,033	)		7,133
Net (loss) income	$	(1,077	)	$	4,915		$	1,105		$	18,174
Comprehensive (loss) income:
Cumulative currency translation adjustment		(4	)		(34	)		4			2
Total comprehensive (loss) income	$	(1,081	)	$	4,881		$	1,109		$	18,176
Weighted average number of common shares:
Basic		17,360			17,182			17,317			17,813
Diluted		17,360			17,444			17,370			18,008
Net (loss) income per share:
Basic	$	(0.06	)	$	0.29		$	0.06		$	1.02
Diluted	$	(0.06	)	$	0.28		$	0.06		$	1.01

INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands of dollars, except per share amounts)

	Three Months Ended						Twelve Months Ended
	September 25, 2009			September 30, 2008			September 25, 2009			September 30, 2008
	(unaudited)						(unaudited)
Revenue:
Government Systems	$	17,476		$	24,181		$	82,269		$	83,603
Commercial Systems		3,727			5,981			22,400			20,117
Space Communications Systems		20,324			20,240			65,164			66,897
Elimination of intersegment sales		(2,615	)		(4,058	)		(9,900	)		(10,447	)
Total revenue		38,912			46,344			159,933			160,170
Cost of revenue:
Government Systems		16,122			15,532			64,631			58,795
Commercial Systems		2,566			4,094			16,078			13,556
Space Communications Systems		10,173			9,757			35,340			36,268
Elimination of intersegment sales		(2,615	)		(4,058	)		(9,900	)		(10,447	)
Total cost of revenue		26,246			25,325			106,149			98,172
Gross profit:
Government Systems		1,354			8,649			17,638			24,808
Gross Margin		7.7	%		35.8	%		21.4	%		29.7	%
Commercial Systems		1,161			1,887			6,322			6,561
Gross Margin		31.2	%		31.5	%		28.2	%		32.6	%
Space Communications Systems		10,151			10,483			29,824			30,629
Gross Margin		49.9	%		51.8	%		45.8	%		45.8	%
Total gross profit		12,666			21,019			53,784			61,998
Gross Margin		32.6	%		45.4	%		33.6	%		38.7	%
Operating expense:
Government Systems		5,501			6,696			21,161			17,623
Commercial Systems		1,965			1,768			7,341			5,305
Space Communications Systems		6,819			4,951			25,179			13,974
Total operating expense		14,285			13,415			53,681			36,902
(Loss) income from operations:
Government Systems		(4,147	)		1,953			(3,523	)		7,185
Operating margin		-23.7	%		8.1	%		-4.3	%		8.6	%
Commercial Systems		(804	)		119			(1,019	)		1,256
Operating margin		-21.6	%		2.0	%		-4.5	%		6.2	%
Space Communications Systems		3,332			5,532			4,645			16,655
Operating margin		16.4	%		27.3	%		7.1	%		24.9	%
Total (loss) income from operations	$	(1,619	)	$	7,604		$	103		$	25,096
Operating margin		-4.2	%		16.4	%		0.1	%		15.7	%