Exhibit 99.1
6721 Columbia Gateway Drive— Columbia— Maryland— 21046— U.S.A.
Telephone: 443.539.5008— Fax: 410.312.2705— Internet: info@integ.com— Web: http://www.integ.com
Integral Systems Announces Fiscal 2010 Fourth Quarter and Fiscal Year 2010 Results
Fourth Quarter Results Drive Year-over-Year Revenue Growth;
Revenue and Gross Margin Meets or Exceeds Guidance
COLUMBIA, Md., December 8, 2010 —Integral Systems, Inc. (NASDAQ: ISYS) (“Company”) today reported financial results for the fourth quarter of fiscal year 2010 and the full fiscal year ended September 24, 2010. Below are highlights of the Company’s reported results:
| • | | Fiscal year 2010 revenues of $177.9 million, an 11.3 percent increase over fiscal year 2009 revenues of $159.9 million and exceeding guidance; |
| • | | Fiscal year 2010 gross margin of 38.6 percent, achieving guidance; |
| • | | Fiscal year 2010 Adjusted EBITDA1 of $8.2 million; |
| • | | Record-level fiscal year 2010 Product segment revenues of $97.4 million, a 41.4 percent increase over fiscal year 2009; and |
| • | | Strong fourth quarter 2010 bookings of $63.5 million; full fiscal year 2010 bookings of $188.9 million. |
Fiscal Year 2010 Fourth Quarter Results
Revenue for the fourth quarter of fiscal year 2010 was $55.5 million, an increase of 42.7 percent compared to the fourth quarter of fiscal year 2009. Gross margin for the quarter was 38.6 percent compared to 32.6 percent for the same period last year. Fourth quarter fiscal year 2010 income from operations was $1.2 million compared to a loss from operations of $1.6 million in the fourth quarter of fiscal year 2009. Adjusted EBITDA for the fourth quarter of fiscal year 2010 was $3.7 million compared to $0.7 million in the fourth quarter of fiscal year 2009.
Fourth quarter 2010 results include the impact of a $2.8 million lease loss reserve resulting from the sublease of a portion of the Company’s former headquarters facility at a lower rental rate than the original lease and an increased reserve on an adjacent facility, which was fully vacated by the Company during the fourth quarter of 2010. Excluding the impact of the lease loss reserve, fourth quarter Adjusted EBITDA would have been $6.5 million.
| 1 | Adjusted EBITDA is a non-GAAP measure, which represents net income before interest income, interest expense, provision (benefit) for income taxes, depreciation, amortization expense and non-cash stock compensation expense. Adjusted EBITDA does not represent income or cash flows as defined by GAAP. A description of our use of non-GAAP information and a reconciliation of Adjusted EBITDA to net income is provided below under “Use of Non-GAAP Financial Information.” |
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Operating results for the fourth quarter of fiscal year 2010 reflect continued investments in research and development and in starting up Integral Systems Service Solutions (IS3) as well as the full impact of the lease loss reserve. Diluted earnings per share for the fourth quarter of 2010 were $0.00 compared to the diluted loss of $0.06 per share for the fourth quarter of fiscal year 2009.
Fiscal Year 2010 Full Year Results
Revenue for fiscal year 2010 was $177.9 million compared to $159.9 million reported for fiscal year 2009. Gross margin for fiscal year 2010 was 38.6 percent compared to 33.6 percent for fiscal year 2009. Fiscal year 2010 loss from operations was $1.5 million compared to income from operations of $0.1 million reported for fiscal year 2009. The loss is primarily due to higher than anticipated selling, general and administrative expenses and a combined $5.9 million in reserves taken over the course of the fiscal year for indirect rates on the Company’s government programs and lease loss reserves on our facilities. Adjusted EBITDA for fiscal year 2010 was $8.2 million compared to $8.0 million for fiscal year 2009. Fiscal year 2010 diluted loss per share was $0.14 compared to diluted earnings of $0.06 per share in fiscal year 2009.
Fourth Quarter 2010 and Fiscal Year 2010 Full Year Segment Results
Military & Intelligence Group Segment
The Military and Intelligence segment posted fourth quarter 2010 revenues of $19.1 million, an increase of 13.7 percent over the fourth quarter of fiscal year 2009. For fiscal year 2010, Military and Intelligence revenues were $64.1 million, a 19.3 percent decrease from fiscal year 2009. The decrease in full year revenue was primarily due to the loss of our GPS-OCX bid in the second quarter of fiscal year 2010 and a delay in finalizing current and future work scope on an existing contract with the United States Air Force.
Civil & Commercial Group Segment
The Civil & Commercial segment contributed revenues of $6.1 million for the fourth quarter of fiscal year 2010, an increase of 61.9 percent over the fourth quarter of fiscal year 2009. For fiscal year 2010, Civil & Commercial revenues were $24.7 million, an increase of 14.2 percent over fiscal year 2009. The increase was attributable to a $2.1 million increase from contract services revenue and a $0.9 million increase from software maintenance revenue.
Products Group Segment
The Products segment delivered fourth quarter 2010 revenues of $33.9 million, an increase of 61.6 percent over the fourth quarter of fiscal year 2009. For fiscal year 2010, Products revenues were $97.4 million, an increase of 41.4 percent over fiscal year 2009 and representing 54.7 percent of the Company’s total revenues for fiscal year 2010, compared to 43.0 percent for fiscal year 2009. The year over year increase is attributable to a $15.1 million increase from product revenue, a $10.7 million increase from contract services revenue, and a $6.1 million increase from software maintenance revenue. Product revenue included $13.4 million from the SATCOM Solutions division, which includes CVG, Inc. and its subsidiary, Avtec Systems, Inc., which the Company acquired during the second quarter of fiscal year 2010, and the assets of Sophia Wireless, acquired in the third quarter of fiscal year 2010. The remaining increase is attributable to the record growth in Product sales, particularly in the RT Logic and SAT Corporation divisions.
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Selected Fiscal Year 2010 and Recent Business Highlights
| • | | Completed the acquisition of privately held CVG, Inc. and its subsidiary, Avtec Systems Inc., now operating as the Integral Systems SATCOM Solution division, further expanding the reach of Integral Systems’ product line and customer base within the Department of Defense |
| • | | Completed the acquisition of certain assets of Sophia Wireless, now operating as a product line within Integral Systems’ SATCOM Solutions division, adding a product line of highly compact and high-performing Ka-band and Ku-band solid-state power amplifiers to Integral Systems’ lines of communications products and solutions |
| • | | Launched Integral Systems Service Solutions (IS3) to provide SATCOM Network Operations (NetOps) services as part of a broader Global Managed Network Services offering |
| • | | Strengthened the management team with leaders experienced in government contracting and program management, including the appointment of Christopher Roberts as Chief Financial Officer and Colonel (Retired) Robert F. Wright, Jr., as Senior Vice President and General Manager of Integral Systems Military and Intelligence Group |
| • | | Announced the dismissal or withdrawal of all previously pending litigation without any findings against the Company or its current management team, or payment of any settlement amounts |
| • | | Received new contract awards in both core and adjacent markets including: |
| | |
| ¡ | | $1.5 million contract extension on the U.S. Air Force Command and Control System – Consolidated (CCS-C) program through 2013 |
| | |
| ¡ | | $14.2 million contract modification to the Command and Control System – Consolidated (CCS-C) contract to provide contract coverage to account for launches of Advanced Extremely High Frequency (AEHF) satellites 1-3 through 2012 |
| | |
| ¡ | | $13.1 million, multi-year contract to RT Logic by the United States government to modernize a major data communications network |
| | |
| ¡ | | A seven-year contract extension to provide continued support to SKY Perfect JSAT’s existing Monics Carrier Monitoring System (CMS) and satID Geolocation systems |
| • | | Announced significant program and customer milestones such as: |
| | |
| ¡ | | The successful completion of the Required Asset Available (RAA) milestone for the Rapid Attack Identification, Detection Reporting System (RAIDRS) Block 10 (RB-10) Central Operating Location and first deployable system |
| | |
| ¡ | | The on-schedule handover of satellite bus operations for the third Wideband Global SATCOM Space Vehicle (WGS SV-3) to the Command and Control System – Consolidated (CCS-C) |
| | |
| ¡ | | Acceptance of GeoMon spectrum supervision system for the Ukrainian State Centre of Radio-Frequencies (UCRF) |
| | |
| ¡ | | Awarded Northrop Grumman’s Information Systems Sector “Supplier Excellence Award” and was named a Northrop Grumman corporate “2009 World-Class Team Supplier” |
| • | | Launched several new and upgraded industry-leading products including the RT Logic TS400CS Channel Simulator, SAT Corporation’s SAT-DSP 5000, a new line of satID products (satID Express, satID Essential, and satID Expert), Integral Systems’ SATCOM Solutions division’s Raptor X-45cm X-band Ultra Small Satellite Terminal (USAT) and Newpoint Technologies’ latest version of its industry-leading COMPASS Network Management System (NMS) |
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Management’s Review of Results
“I am proud of the growth in our operations,” commented Paul Casner, Chief Executive Officer of Integral Systems. “We increased our backlog to $191 million, the first time in over three years that we have grown our backlog. I am particularly encouraged by the results of our Products segment, which delivered a 41 percent increase in revenue this fiscal year. Even excluding the additive effect of our newly acquired SATCOM Solutions division, the Products segment delivered 22 percent growth. That is simply tremendous execution. As a commercial products-based company, we deliver not only products but also systems and services based on those products. Today’s results confirm that our operations and market outlook are solid.”
Casner continued, “We continue to work to put the issues that have plagued this company to rest. We have identified several opportunities to reduce Integral Systems’ operating expenses, which totaled $70.1 million in fiscal year 2010, including $34.7 million in corporate expenditures. We are focused on reducing our indirect costs, including excess facility costs, legal expenses and others, to position the company for efficient growth. We have taken steps to achieve over $4 million in net cost reductions in fiscal year 2011 and see room for continued improvement in this area.”
Christopher Roberts, Chief Financial Officer of Integral Systems, commented, “I am encouraged by the fourth quarter results, but am well aware that we still have a lot of work to do. We remain committed to reducing corporate costs, meeting our regulatory obligations and continuing operations growth. I am optimistic that fiscal year 2011 will reflect the benefits of our focus on cost reduction and revenue expansion and will provide value to our shareholders.”
Management’s Expectation for the Fiscal Year Ending September 30, 2011
Integral Systems expects the following financial results for fiscal year 2011:
| | | | |
• Revenue: | | $205.0 - $215.0 million | | |
| | |
• Gross Margin: | | 33% - 35% | | |
| | |
• Earnings per Share (diluted): | | $0.25 - $0.30 | | |
| | |
• Adjusted EBITDA: | | $20.0 - $24.0 million | | |
Mr. Paul Casner, Chief Executive Officer, and Mr. Christopher Roberts, Chief Financial Officer, will host the Company’s fiscal 2010 fourth quarter and full fiscal year 2010 earnings conference call on Wednesday, December 8, 2010, at 11:00 AM EST. Interested parties are invited to participate in the conference call by dialing 1.877.324.1958. A replay of the conference call can be heard from 2:00 p.m. EST, Wednesday, December 8, 2010, through 11:59 p.m. EST, Wednesday, December 15, 2010, by dialing 1.800.642.1687 or 1.706.645.9291 and asking for Conference ID number 27164639. The conference call will also be webcast live on Integral Systems’website.
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Non-GAAP Financial Information
Adjusted EBITDA is a non-GAAP measure, defined as net income (loss) before interest income, interest expense, provision (benefit) for income taxes, depreciation, amortization expense and non-cash stock compensation expense. Adjusted EBITDA does not represent income or cash flows as defined by GAAP. Integral Systems discloses Adjusted EBITDA because it is a financial measure commonly used in the Company’s industry. Because management believes that Adjusted EBITDA facilitates internal comparisons of the Company’s historical financial position and operating performance on a more consistent basis, the Company also uses Adjusted EBITDA in measuring performance relative to that of its competitors and in evaluating acquisition opportunities.
Adjusted EBITDA is not meant to be considered a substitute or replacement for net income as determined in accordance with GAAP. Adjusted EBITDA may not be comparable to other similarly titled measures of other companies.
Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with the Company’s consolidated financial statements prepared in accordance with GAAP. The Company’s management regularly uses supplemental non-GAAP financial measures internally to understand, manage and evaluate the Company’s business and make operating decisions.
A reconciliation between GAAP net income and Adjusted EBITDA is provided below:
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Twelve Months Ended | |
| | September 24,
2010 | | | September 25,
2009 | | | September 24,
2010 | | | September 25,
2009 | |
| ($ millions) | | | | | | | | | | | | |
Net Income | | $ | 54 | | | $ | (1,077 | ) | | $ | (2,396 | ) | | $ | 1,105 | |
Other (Income) Expense, net | | $ | 762 | | | $ | (94 | ) | | $ | 1,211 | | | $ | 31 | |
Provision for Income Taxes | | $ | 408 | | | $ | (448 | ) | | $ | (300 | ) | | $ | (1,033 | ) |
| | | | | | | | | | | | | | | | |
Income From Operations | | $ | 1,224 | | | $ | (1,619 | ) | | $ | (1,485 | ) | | $ | 103 | |
| | | | |
Non-Cash Stock Compensation | | $ | 458 | | | $ | 916 | | | $ | 2,589 | | | $ | 3,560 | |
Depreciation and Amortization | | $ | 2,052 | | | $ | 1,435 | | | $ | 7,145 | | | $ | 4,328 | |
| | | | | | | | | | | | | | | | |
EBITDA | | $ | 3,734 | | | $ | 732 | | | $ | 8,249 | | | $ | 7,991 | |
| | | | | | | | | | | | | | | | |
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. For more information, visitwww.integ.com.
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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 and the results of any governmental agency audit, 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: | | Investor Relations Contact: |
| Andrew Miller | | Kathryn Herr |
| Vice President, External Communications | | Vice President, Marketing & Communications |
| Integral Systems, Inc. | | Integral Systems, Inc. |
| Phone: 443.539.5124 | | Phone: 443.539.5118 |
| amiller@integ.com | | kherr@integ.com |
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INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
| | | | | | | | |
| | | September 24,
2010 | | | September 25,
2009 | |
| Assets | |
| | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 2,625 | | | $ | 5,698 | |
Accounts receivable, net of allowance for doubtful accounts | | | 27,973 | | | | 27,016 | |
Unbilled revenues | | | 41,703 | | | | 37,028 | |
Prepaid expenses and other current assets | | | 1,854 | | | | 1,256 | |
Income tax receivable | | | 2,563 | | | | 12,361 | |
Deferred contract costs | | | 5,282 | | | | 2,598 | |
Inventory | | | 14,811 | | | | 9,994 | |
| | | | | | | | |
Total current assets | | | 96,811 | | | | 95,951 | |
| | |
Restricted cash | | | 1,001 | | | | — | |
Property and equipment, net | | | 23,374 | | | | 20,368 | |
Goodwill | | | 71,834 | | | | 54,113 | |
Intangible assets, net | | | 21,955 | | | | 6,711 | |
Other assets | | | 2,846 | | | | 1,181 | |
| | | | | | | | |
Total assets | | $ | 217,821 | | | $ | 178,324 | |
| | | | | | | | |
|
| Liabilities and Stockholders’ Equity | |
| | |
Current liabilities: | | | | | | | | |
Short-term debt | | $ | 28,000 | | | $ | 5,311 | |
Accounts payable | | | 6,479 | | | | 5,771 | |
Accrued expenses | | | 26,162 | | | | 17,941 | |
Deferred income taxes | | | 8,655 | | | | 7,347 | |
Deferred revenues | | | 14,812 | | | | 12,373 | |
| | | | | | | | |
Total current liabilities | | | 84,108 | | | | 48,743 | |
| | |
Deferred rent, non-current | | | 8,553 | | | | 8,460 | |
Deferred income taxes, non-current | | | 3,464 | | | | — | |
Obligations under capital leases | | | 4,181 | | | | 5,163 | |
Other non-current liabilities | | | 991 | | | | 955 | |
| | | | | | | | |
Total liabilities | | | 101,297 | | | | 63,321 | |
| | |
Stockholders’ equity: | | | | | | | | |
Common stock, $.01 par value, 80,000,000 shares authorized, and 17,572,300 and 17,331,796 shares issued and outstanding at September 24, 2010 and September 25, 2009, respectively | | | 176 | | | | 173 | |
Additional paid-in capital | | | 70,528 | | | | 66,461 | |
Retained earnings | | | 45,958 | | | | 48,354 | |
Accumulated other comprehensive income (loss) | | | (138 | ) | | | 15 | |
| | | | | | | | |
Total stockholders’ equity | | | 116,524 | | | | 115,003 | |
| | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 217,821 | | | $ | 178,324 | |
| | | | | | | | |
INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Twelve Months Ended | |
| | | September 24,
2010 | | | September 25,
2009 | | | September 24,
2010 | | | September 25,
2009 | |
| | | (Unaudited) | | | | |
| | | | |
Revenue | | $ | 55,512 | | | $ | 38,912 | | | $ | 177,895 | | | $ | 159,933 | |
| | | | |
Cost of revenue | | | 34,081 | | | | 26,246 | | | | 109,289 | | | | 106,149 | |
| | | | | | | | | | | | | | | | |
| | | | |
Gross profit | | | 21,431 | | | | 12,666 | | | | 68,606 | | | | 53,784 | |
| | | | |
Operating expense: | | | | | | | | | | | | | | | | |
Selling, general & administrative | | | 17,317 | | | | 12,922 | | | | 59,983 | | | | 49,131 | |
Research & development | | | 2,890 | | | | 1,363 | | | | 10,108 | | | | 4,550 | |
| | | | | | | | | | | | | | | | |
Total operating expense | | | 20,207 | | | | 14,285 | | | | 70,091 | | | | 53,681 | |
| | | | | | | | | | | | | | | | |
| | | | |
Income (loss) from operations | | | 1,224 | | | | (1,619 | ) | | | (1,485 | ) | | | 103 | |
| | | | |
Other (expense), net | | | (762 | ) | | | 94 | | | | (1,211 | ) | | | (31 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Income (loss) before income taxes | | | 462 | | | | (1,525 | ) | | | (2,696 | ) | | | 72 | |
| | | | | | | | | | | | | | | | |
| | | | |
Income tax (benefit) | | | 408 | | | | (448 | ) | | | (300 | ) | | | (1,033 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Net income (loss) | | $ | 54 | | | $ | (1,077 | ) | | $ | (2,396 | ) | | $ | 1,105 | |
| | | | | | | | | | | | | | | | |
| | | | |
Comprehensive income (loss): | | | | | | | | | | | | | | | | |
Cumulative currency translation adjustment | | | 489 | | | | (4 | ) | | | (153 | ) | | | 4 | |
| | | | | | | | | | | | | | | | |
| | | | |
Total comprehensive income (loss) | | $ | 543 | | | $ | (1,081 | ) | | $ | (2,549 | ) | | $ | 1,109 | |
| | | | | | | | | | | | | | | | |
| | | | |
Weighted average number of common shares: | | | | | | | | | | | | | | | | |
Basic | | | 17,606 | | | | 17,360 | | | | 17,498 | | | | 17,317 | |
Diluted | | | 17,607 | | | | 17,360 | | | | 17,498 | | | | 17,370 | |
| | | | |
Net income (loss) per share: | | | | | | | | | | | | | | | | |
Basic | | $ | 0.00 | | | $ | (0.06 | ) | | $ | (0.14 | ) | | $ | 0.06 | |
Diluted | | $ | 0.00 | | | $ | (0.06 | ) | | $ | (0.14 | ) | | $ | 0.06 | |
INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of dollars)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Twelve Months Ended | |
| | | September 24,
2010 | | | September 25,
2009 | | | September 24,
2010 | | | September 25,
2009 | |
| | | (unaudited) | | | (unaudited) | |
| | | | |
Revenue: | | | | | | | | | | | | | | | | |
Military and Intelligence Group | | $ | 19,116 | | | $ | 16,808 | | | $ | 64,132 | | | $ | 79,457 | |
Civil and Commercial Group | | | 6,095 | | | | 3,766 | | | | 24,680 | | | | 21,618 | |
Products Group | | | 33,858 | | | | 20,952 | | | | 97,353 | | | | 68,848 | |
Elimination of intersegment sales | | | (3,557 | ) | | | (2,614 | ) | | | (8,270 | ) | | | (9,990 | ) |
| | | | | | | | | | | | | | | | |
Total revenue | | | 55,512 | | | | 38,912 | | | | 177,895 | | | | 159,933 | |
| | | | | | | | | | | | | | | | |
| | | | |
Cost of revenue: | | | | | | | | | | | | | | | | |
Military and Intelligence Group | | | 13,892 | | | | 15,739 | | | | 47,182 | | | | 62,897 | |
Civil and Commercial Group | | | 4,541 | | | | 2,615 | | | | 15,632 | | | | 16,085 | |
Products Group | | | 19,205 | | | | 10,506 | | | | 54,745 | | | | 37,157 | |
Elimination of intersegment sales | | | (3,557 | ) | | | (2,614 | ) | | | (8,270 | ) | | | (9,990 | ) |
| | | | | | | | | | | | | | | | |
Total cost of revenue | | | 34,081 | | | | 26,246 | | | | 109,289 | | | | 106,149 | |
| | | | | | | | | | | | | | | | |
| | | | |
Gross profit: | | | | | | | | | | | | | | | | |
Military and Intelligence Group | | | 5,224 | | | | 1,069 | | | | 16,950 | | | | 16,560 | |
Gross margin | | | 27.3 | % | | | 6.4 | % | | | 26.4 | % | | | 20.8 | % |
Civil and Commercial Group | | | 1,554 | | | | 1,151 | | | | 9,048 | | | | 5,533 | |
Gross margin | | | 25.5 | % | | | 30.6 | % | | | 36.7 | % | | | 25.6 | % |
Products Group | | | 14,653 | | | | 10,446 | | | | 42,608 | | | | 31,691 | |
Gross margin | | | 43.3 | % | | | 49.9 | % | | | 43.8 | % | | | 46.0 | % |
| | | | | | | | | | | | | | | | |
Total gross profit | | | 21,431 | | | | 12,666 | | | | 68,606 | | | | 53,784 | |
| | | | | | | | | | | | | | | | |
Gross margin | | | 38.6 | % | | | 32.6 | % | | | 38.6 | % | | | 33.6 | % |
| | | | |
Operating expense: | | | | | | | | | | | | | | | | |
Military and Intelligence Group | | | 4,958 | | | | 5,264 | | | | 17,138 | | | | 20,177 | |
Civil and Commercial Group | | | 1,820 | | | | 1,585 | | | | 8,405 | | | | 5,615 | |
Products Group | | | 13,429 | | | | 7,436 | | | | 44,548 | | | | 27,889 | |
| | | | | | | | | | | | | | | | |
Total operating expense | | | 20,207 | | | | 14,285 | | | | 70,091 | | | | 53,681 | |
| | | | | | | | | | | | | | | | |
| | | | |
Income (loss) from operations: | | | | | | | | | | | | | | | | |
Military and Intelligence Group | | | 266 | | | | (4,195 | ) | | | (188 | ) | | | (3,617 | ) |
Operating margin | | | 1.4 | % | | | -25.0 | % | | | -0.3 | % | | | -4.6 | % |
Civil and Commercial Group | | | (266 | ) | | | (434 | ) | | | 643 | | | | (82 | ) |
Operating margin | | | -4.4 | % | | | -11.5 | % | | | 2.6 | % | | | -0.4 | % |
Products Group | | | 1,224 | | | | 3,010 | | | | (1,940 | ) | | | 3,802 | |
Operating margin | | | 3.6 | % | | | 14.4 | % | | | -2.0 | % | | | 5.5 | % |
| | | | | | | | | | | | | | | | |
Total income (loss) from operations | | $ | 1,224 | | | $ | (1,619 | ) | | $ | (1,485 | ) | | $ | 103 | |
| | | | | | | | | | | | | | | | |
Operating margin | | | 2.2 | % | | | -4.2 | % | | | -0.8 | % | | | 0.1 | % |
INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
| | | | | | | | |
| | | 2010 | | | 2009 | |
| | |
Cash flows from operating activities: | | | | | | | | |
Net income (loss) | | $ | (2,396 | ) | | $ | 1,105 | |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | | | | | | | | |
Depreciation and amortization | | | 7,145 | | | | 4,328 | |
Bad debt expense (recovery) | | | (1,047 | ) | | | 1,060 | |
Stock-based compensation | | | 2,589 | | | | 3,560 | |
Tax (benefit) expense on the exercise of stock options | | | — | | | | 479 | |
Provision for deferred income taxes | | | (305 | ) | | | 8,522 | |
Changes in operating assets and liabilities, excluding the net effects of acquisitions: | | | | | | | | |
Accounts receivable | | | 3,854 | | | | (10,894 | ) |
Unbilled revenues | | | (4,746 | ) | | | (12,867 | ) |
Prepaid expenses and other current assets | | | (216 | ) | | | (258 | ) |
Lease incentive and leasehold improvement allowance | | | — | | | | 9,343 | |
Deferred contract costs | | | (3,149 | ) | | | 4,070 | |
Inventory | | | (2,541 | ) | | | (2,126 | ) |
Accounts payable | | | (346 | ) | | | (1,414 | ) |
Accrued expenses | | | 5,893 | | | | 93 | |
Deferred revenue | | | 1,070 | | | | (391 | ) |
Income taxes receivable/payable | | | 11,569 | | | | (8,119 | ) |
Other | | | 368 | | | | 194 | |
| | | | | | | | |
Net cash provided by (used in) operating activities | | | 17,742 | | | | (3,315 | ) |
| | |
Cash flows from investing activities: | | | | | | | | |
Acquisition of fixed assets | | | (5,980 | ) | | | (12,152 | ) |
Proceeds from the sale of property and equipment | | | — | | | | 12,515 | |
Acquisition of CVG, Incorporated, net of cash acquired | | | (32,256 | ) | | | — | |
Acquisition of Sophia Wireless, Incorporated | | | (2,500 | ) | | | — | |
Acquisition of satID | | | — | | | | (10,979 | ) |
Decrease in restricted cash | | | — | | | | — | |
Proceeds from collections on notes receivable | | | — | | | | — | |
| | | | | | | | |
Net cash (used in) investing activities | | | (40,736 | ) | | | (10,616 | ) |
| | |
Cash flows from financing activities: | | | | | | | | |
Proceeds from line of credit borrowing | | | 46,500 | | | | 19,811 | |
Repayments of line of credit borrowings | | | (23,811 | ) | | | (14,500 | ) |
Deferred financing fees incurred | | | (1,751 | ) | | | — | |
Restricted cash deposit | | | (1,001 | ) | | | — | |
Payments on capital lease obligations | | | (947 | ) | | | (193 | ) |
Proceeds from issuance of common stock | | | 460 | | | | 77 | |
Tax (benefit) expense of stock option exercises | | | — | | | | (479 | ) |
| | | | | | | | |
Net cash provided by (used in) financing activities | | | 19,450 | | | | 4,716 | |
| | |
Net decrease in cash and cash equivalents | | | (3,544 | ) | | | (9,215 | ) |
Effect of exchange rate changes on cash | | | 471 | | | | (113 | ) |
Cash and cash equivalents - beginning of year | | | 5,698 | | | | 15,026 | |
| | | | | | | | |
Cash and cash equivalents - end of year | | $ | 2,625 | | | $ | 5,698 | |
| | | | | | | | |
