Exhibit 99.1
Intelligent Systems Announces Second Quarter 2004 Results
*** Earnings Conference Call at 11 AM Today ***
NORCROSS, Ga., Aug. 9 /PRNewswire-FirstCall/ -- Intelligent Systems
Corporation (Amex: INS) ( http://www.intelsys.com ) announced today its
financial results for the second quarter and year-to-date periods ended June
30, 2004.
For the three months ended June 30, 2004, the company recorded revenue of
$3.3 million, a 19 percent increase compared to revenue of $2.8 million for
the same period in 2003. Net loss from continuing operations for the
three-month period in 2004 was $2.2 million or $0.49 per share, which is equal
to the net loss reported in the second quarter of 2003.
For the six-month period ended June 30, 2004, the company recorded revenue
of $8.0 million, a 33 percent increase compared to the same period last year.
Net loss from continuing operations was $3.0 million or $0.68 per share
compared to a net loss of $1.2 million or $0.28 per share for the six month
period in 2003.
The increase in revenue in the second quarter of 2004 compared to the same
period last year reflects an increase in professional services and software
maintenance revenue at the company's VISaer, QS Technologies and CoreCard
software subsidiaries as well as a higher volume of product sales at the
company's ChemFree subsidiary. In the year-to-date period ended June 30,
2004, the company also benefited from the first significant license revenue
generated by the CoreCard subsidiary. The loss from operations reported in
the three and six month periods in 2004 was lower by 28 percent and 48
percent, respectively, compared to the loss from operations in the same
periods in 2003 as a result of growing revenue while reducing the cost of
sales as a percentage of revenue and holding expenses constant.
The second quarter results reflect a continued deferral of approximately
$7.4 million in revenue and $4.9 million in profit contribution related to
completion of a significant software contract at the company's VISaer
subsidiary. Revenue recognition on that contract was deferred until the third
quarter of 2004 due to the delivery of an optional specified upgrade right in
July 2004. Recognition of this revenue is expected to have a significant
positive impact on the company's results of operations for the third quarter
ended September 30, 2004.
According to J. Leland Strange, President and Chief Executive Officer,
"During the quarter, our operating units made important progress in booking
future business, delivering new software releases, and meeting contract
requirements and customer expectations while maintaining expense control.
While our second quarter financial results do not reflect all of these
underlying achievements, we continue to make our business decisions based on
the realities of the market, our customer requirements and the long-term best
interests of the company, and not on the expected accounting treatments, which
in some cases, for example, result in significant deferrals of revenue."
During the second quarter, the company was informed of a recently
completed transaction that is expected to make a positive contribution to
income and cash in subsequent quarters. The company expects to receive a
distribution of cash from a minority investment in a U.K. company that has
realized a significant gain from the sale of stock in another U.K. based
company. We have been informed that the cash distribution over the next
several quarters is expected to total between $3.5 million and $4.5 million
depending on the current business needs of the U.K. investment. The company's
minority investment is carried on the balance sheet at the company's cost
basis of $31,000.
In the second quarter and year-to-date periods ended June 30, 2004, the
company recorded an investment loss of $371,000 reflecting the net effect of a
gain on the sale of the company's investment in privately-held Cirronet, Inc.
offset by a write down of the carrying value of the company's minority
investment in a start-up technology company, Ardext Technologies, Inc. By
contrast, the results for the year-to-date period ended June 30, 2003 were
bolstered by net investment income of $3.7 million reflecting mainly the
previously disclosed settlement of an escrow fund related to the sale in April
2001 of an affiliate company, PaySys International, Inc.
Conference Call Information
As announced last week, Intelligent Systems has scheduled a conference
call for today at 11 AM EDT to discuss the results of the second quarter and
year-to-date periods for 2004. The call-in number is 877-226-7144. An
archived audio replay of the conference call will be available by the end of
business today by logging onto http://www.intelsys.com and clicking on the
webcast icon. The replay will be available for twelve months.
About Intelligent Systems Corporation
For thirty years, Intelligent Systems Corporation (Amex: INS) has
identified, created, operated and grown early stage technology companies. The
company has operations and investments, principally in the information
technology industry. The company's consolidated subsidiaries include VISaer,
Inc. ( http://www.visaer.com ), QS Technologies, Inc.
( http://www.qsinc.com ), CoreCard Software, Inc. ( http://www.corecard.com ),
(all software companies) and ChemFree Corporation ( http://www.chemfree.com ),
(an industrial products company). Since 1990, the company has operated the
Intelligent Systems Incubator, an award-winning pioneer in privately sponsored
incubators. Further information is available on the company's website
at http://www.intelsys.com , or by calling the company at 770/381-2900.
In addition to historical information, this news release may contain
forward-looking statements relating to Intelligent Systems and its subsidiary
and affiliated companies. These statements include all statements that are not
statements of historical fact regarding the intent, belief or expectations of
Intelligent Systems and its management with respect to, among other things,
results of operations, product plans, and financial condition. The words
"may," "will," "anticipate," "believe," "intend," "expect," "estimate,"
"plan," "strategy" and similar expressions are intended to identify
forward-looking statements. Prospective investors are cautioned that any such
forward-looking statements are not guarantees of future performance and
involve risks and uncertainties and that actual results may differ materially
from those contemplated by such forward-looking statements. The company does
not undertake to update or revise any forward-looking statements whether as a
result of new developments or otherwise.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Revenue
Products $ 1,786 $ 1,801 $ 5,013 $ 3,505
Services 1,557 1,020 2,942 2,486
Total revenue 3,343 2,821 7,955 5,991
Cost of revenue
Products 804 906 1,789 1,665
Services 707 792 1,517 1,842
Total cost of revenue 1,511 1,698 3,306 3,507
Expenses
Marketing 687 681 1,347 1,452
General & administrative 914 951 1,809 2,034
Research & development 2,102 2,100 4,202 4,181
Loss from operations (1,871) (2,609) (2,709) (5,183)
Other income
Interest expense (5) -- (8) (5)
Investment income (loss),
net (371)(a) 205 (371)(a) 3,669(b)
Equity in earnings (losses)
of affiliate companies 51 34 13 (33)
Other income, net (9) 187 50 214
Loss before income tax
provision (benefit) (2,205) (2,183) (3,025) (1,338)
Income tax benefit -- -- -- (104)
Net loss from continuing
operations $(2,205) $(2,183) $(3,025) $(1,234)
Basic and diluted net loss
per share $(0.49) $(0.49) $(0.68) $(0.28)
Basic and diluted weighted
average shares 4,478,971 4,485,540 4,478,971 4,487,945
(a). Includes $256,000 gain on investment offset by $627,000 investment
write-down.
(b). Includes $4.5 million gain on escrow settlement and $795,000
write-down on investments.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
2004 2003
ASSETS (unaudited)
Current assets:
Cash $547 $1,133
Accounts receivable, net 2,670 1,543
Notes and interest receivable -- 142
Inventories 708 766
Other current assets 227 614
Total current assets 4,152 4,198
Long-term investments 4,848 6,275
Property and equipment, at cost less
accumulated depreciation 695 746
Goodwill 2,035 2,039
Intangibles, net 320 476
Other assets, net 20 8
Total assets $12,070 $13,742
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $370 $250
Accounts payable 982 932
Deferred revenue 8,947 2,586
Deferred gain 258 291
Accrued expenses and other current liabilities 1,972 2,037
Total current liabilities 12,529 6,096
Deferred revenue, net of current portion -- 5,060
Minority interest 1,516 1,516
Total stockholders' equity (1,975) 1,070
Total liabilities and stockholders' equity $12,070 $13,742
For further information, call
Bonnie Herron, 770/564-5504
or email to bherron@intelsys.com
SOURCE Intelligent Systems Corporation
-0- 08/09/2004
/CONTACT: Bonnie Herron of Intelligent Systems Corporation,
+1-770-564-5504, or bherron@intelsys.com /
/Web site: http://www.intelsys.com
http://www.visaer.com
http://www.corecard.com
http://www.chemfree.com
http://www.qsinc.com /
(INS)
CO: Intelligent Systems Corporation; Cirronet, Inc.; Ardext Technologies,
Inc.; PaySys International, Inc.; VISaer, Inc.; QS Technologies, Inc.;
CoreCard Software, Inc.; ChemFree Corporation
ST: Georgia
IN: CPR STW
SU: ERN CCA MAV