SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(mark one)
X Quarterly report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
- ---
For the quarterly period ended December 31, 2000 or
___ Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 For the transition period from ______ to ______
Commission file number 0-18603
-------
INTEGRAL SYSTEMS, INC.
----------------------
(Exact name of registrant as specified in its chapter)
Maryland 52-1267968
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5000 Philadelphia Way, Lanham, MD 20706
--------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (301) 731-4233
--------------
--------------------------------------------------------------------
(Former name, address and fiscal year, if changed since last report)
Indicate by checkmark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Registrant had 9,450,518 shares of common stock outstanding as of January 31,
2001
INTEGRAL SYSTEMS, INC.
TABLE OF CONTENTS
Page No.
--------
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Balance Sheets - December 31, 2000 and September 30, 2000........ 1
Statements of Operations - Three Months Ended
December 31, 2000 and December 31, 1999....................... 3
Statement of Stockholders' Equity - Three Months
Ended December 31, 2000....................................... 5
Statements of Cash Flow - Three Months Ended
December 31, 2000 and December 31, 1999....................... 6
Notes to Financial Statements.................................... 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................ 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk... 14
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K............................. 14
PART I. FINANCIAL INFORMATION
- ------------------------------
INTEGRAL SYSTEMS, INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
December 31, 2000 and September 30, 2000
December 31, September 30,
2000 2000
ASSETS (unaudited)
----------------- ------------ -------------
CURRENT ASSETS
Cash $17,181,763 $17,558,331
Marketable Securities 49,966,000 49,966,000
Accounts and other Receivables 14,375,068 13,502,293
Notes Receivable 600,000 600,000
Prepaid Expenses 216,862 190,075
Income Taxes Receivable 1,828,631 1,655,290
----------- -----------
TOTAL CURRENT ASSETS 84,168,324 83,471,989
PROPERTY AND EQUIPMENT 5,141,226 4,471,838
Less: Accum. Depreciation and Amortization 2,570,841 2,267,437
----------- -----------
TOTAL PROPERTY AND EQUIPMENT 2,570,385 2,204,401
OTHER ASSETS
Software Development Costs, net 3,455,920 3,188,783
Deposits 45,724 45,724
----------- -----------
TOTAL OTHER ASSETS 3,501,644 3,234,507
TOTAL ASSETS $90,240,353 $88,910,897
=========== ===========
The accompanying notes are an integral part of these
consolidated financial statements.
-1-
INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2000 and September 30, 2000
December 31, September 30,
2000 2000
LIABILITIES & STOCKHOLDERS' EQUITY (unaudited)
- ---------------------------------- ------------- -------------
CURRENT LIABILITIES
Accounts Payable $ 2,546,291 $ 1,914,985
Accrued Expenses 2,484,021 2,618,512
Capital Leases Payable 357,824 454,154
Billings in Excess of Cost 1,697,307 1,832,520
Deferred Income Taxes 108,178 132,925
----------- -----------
TOTAL CURRENT LIABILITIES 7,193,621 6,953,096
LONG TERM LIABILITIES
Capital Leases Payable 199,669 259,951
----------- -----------
TOTAL LONG TERM LIABILITIES 199,669 259,951
STOCKHOLDERS' EQUITY
Common Stock, $.01 par value, 40,000,000 shares
authorized, and 9,450,518 and 9,427,368 shares
issued and outstanding at December 31, 2000 and
September 30, 2000, respectively 94,505 94,274
Additional Paid-in Capital 65,799,055 65,702,313
Retained Earnings 16,953,503 15,901,263
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 82,847,063 81,697,850
----------- -----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $90,240,353 $88,910,897
=========== ===========
The accompanying notes are an integral part of these
consolidated financial statements.
-2-
INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
December 31,
2000 1999
(unaudited) (unaudited)
----------- -----------
Revenue $8,468,676 $12,525,355
Cost of Revenue
Direct Labor 2,193,993 2,723,389
Overhead Costs 1,779,590 2,296,639
Travel and Other Direct Costs 395,499 394,743
Direct Equipment & Subcontracts 1,228,412 2,922,905
---------- -----------
Total Cost of Revenue 5,597,494 8,337,676
---------- -----------
Gross Margin 2,871,182 4,187,679
---------- -----------
Selling, General & Administrative 1,893,286 1,998,576
Product Amortization 342,500 237,500
---------- -----------
Income From Operations 635,396 1,951,603
Other Income (Expense)
Interest Income 815,719 269,872
Interest Expense (16,172) (28,563)
Miscellaneous, net (97,503) (39,231)
---------- -----------
Total Other Income (Expense) 702,044 202,078
Income from Continuing Operations
Before Income Taxes 1,337,440 2,153,681
---------- -----------
Provision for Income Taxes 285,200 770,426
---------- -----------
Income from Continuing Operations 1,052,240 1,383,255
Discontinued Operations
Income From Operations of
Discontinued Segment (Net of tax) 0 82,995
---------- -----------
Net Income $1,052,240 $ 1,466,250
========== ===========
The accompanying notes are an integral part of these
consolidated financial statements.
-3-
INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
Three Months Ended
December 31,
2000 1999
(unaudited) (unaudited)
----------- -----------
Weighted Avg. Number of Common
Shares Outstanding During Period 9,441,118 7,865,998
----------- -----------
Earnings per Share - Basic
Income from Continuing Oper. $ 0.11 $ 0.18
Income from Discontinued Oper. $ 0.00 $ 0.01
----------- -----------
Net Income. $ 0.11 $ 0.19
=========== ===========
Diluted Shares Outstanding 9,564,362 8,411,531
----------- -----------
Earnings per Share - Diluted
Income from Continuing Oper. $ 0.11 $ 0.16
Income from Discontinued Oper. $ 0.00 $ 0.01
----------- -----------
Net Income. $ 0.11 $ 0.17
=========== ===========
The accompanying notes are an integral part of these
consolidated financial statements.
-4-
INTEGRAL SYSTEMS, INC.CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED DECEMBER 31, 2000
(unaudited)
Common
Number Stock Additional
of at Par Paid-in Retained
Shares Value Capital Earnings Total
---------- -------- ------------ ----------- -----------
Balance September 30, 2000 9,427,368 $94,274 $65,702,313 $15,901,263 $81,697,850
Exercise of Stock Options 23,150 231 96,742 - 96,973
Net income - - - 1,052,240 1,052,240
--------- ------- ----------- ----------- -----------
Balance December 31, 2000 9,450,518 $94,505 $65,799,055 $16,953,503 $82,847,063
========= ======= =========== =========== ===========
The accompanying notes are an integral part of these
consolidated financial statements.
-5-
INTEGRAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended
December 31,
2000 1999
(unaudited) (unaudited)
Cash flows from operating activities:
Net income $ 1,052,240 $ 1,466,250
----------- -----------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 645,904 492,847
Loss on disposal of fixed assets 0 32,498
Deferred Income taxes, net (24,747) 84,747
(Increase) decrease in:
Accounts receivable and other receivables (872,775) (2,495,748)
Prepaid expenses and deposits (26,787) (33,375)
(Decrease) increase in:
Accounts payable 631,306 (489,649)
Accrued expenses (134,491) 505,818
Billings in excess of cost (135,213) 684,633
Income taxes payable, net (173,341) 5,167
----------- -----------
Total adjustments (90,144) (1,213,062)
----------- -----------
Net cash provided by operating activities 962,096 253,188
----------- -----------
Cash flows from investing activities:
Acquisition of fixes assets (669,388) (241,495)
Software development costs (609,637) (407,585)
----------- -----------
Net cash (used) in investing activities (1,279,025) (649,080)
----------- -----------
Cash flow from financing activities:
Proceeds from issuance of common stock 96,973 338,169
Payments on capital lease obligations (156,612) (149,716)
----------- -----------
Net cash (used) provided by financing activities (59,639) 188,453
----------- -----------
Net (decrease) in cash (376,568) (207,439)
Cash - beginning of year 17,558,331 9,267,207
----------- -----------
Cash - end of period $17,181,763 $ 9,059,768
=========== ===========
The accompanying notes are an integral part of these
consolidated financial statements.
-6-
INTEGRAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Basis of Presentation
---------------------
The interim financial statements include the accounts of Integral Systems,
Inc. (ISI or the Company) and its wholly-owned subsidiaries, SAT
Corporation (SAT), and InterSys, Inc. (INTSYS). The consolidated financial
statements have been restated for all periods prior to the acquisition of
SAT to include the combined financial results of the Company and SAT.
Furthermore, since the assets of its subsidiary Integral Marketing, Inc.
(IMI) were disposed of during the year ended September 30, 2000, IMI is
presented as discontinued operations in the consolidated statements of
operations.
In the opinion of management, the financial statements reflect all
adjustments consisting only of normal recurring accruals necessary for a
fair presentation of results for such periods. The financial statements,
which are condensed and do not include all disclosures included in the
annual financial statements, should be read in conjunction with the
consolidated financial statements of the Company for the fiscal year ended
September 30, 2000. The results of operations for any interim period are
not necessarily indicative of results for the full year.
Certain accounts in the prior period financial statements have been
reclassified for comparative purposes to conform with the presentation in
the current year financial statements.
2. Accounts Receivable
-------------------
Accounts receivable at December 31, 2000 and September 30, 2000 consist of
the following:
December 31, September 30,
2000 2000
------------ -------------
Billed $ 8,269,702 $ 5,045,075
Unbilled 5,859,418 8,223,557
Other 245,948 233,661
----------- -----------
Total $14,375,068 $13,502,293
=========== ===========
The Company uses the direct write-off method for bad debts.
The Company's accounts receivable consist of amounts due on prime contracts
and subcontracts with the U.S. Government and contracts with various
private organizations. Unbilled accounts receivable consist principally of
amounts that are billed in the month following the incurrence of cost or
when milestones are delivered under fixed price contracts. All unbilled
receivables are expected to be billed and collected within one year.
3. Line of Credit
--------------
The Company has a line of credit agreement with a local bank for $9.0
million for operating purposes and an additional line of credit with the
bank amounting to $6.0 million, to be used for corporate acquisitions.
Borrowings under the line are due on demand with interest at the London
Inter-Bank Offering Rate (LIBOR), plus a spread of 1.5 to 2.4% based on the
ratio of funded debt to earnings before interest, taxes and depreciation
(EBITDA). The lines of credit are secured by the Company's billed and
unbilled accounts receivable and have certain financial covenants,
including minimum net worth and liquidity ratios. The lines expire
February 28, 2002. The Company also has a line of credit with another bank
for $425,000. This line expires on August 2, 2001. At December 31, 2000,
the Company had no amounts outstanding under the lines of credit.
-7-
INTEGRAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(unaudited)
4. Capital Leases
--------------
The Company has access to a $2.0 million equipment lease line of credit
that had a balance of $557,493 at December 31, 2000.
-8-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED DECEMBER 31, 2000 AND 1999
---------------------------------------------------------------
Overview
Integral Systems, Inc. builds satellite ground systems for command and control,
integration and test, data processing, and simulation. Since its inception in
1982, the Company has provided ground systems for over 120 different satellite
missions for communications, science, meteorology, and earth resource
applications. The Company has an established domestic and international
customer base that includes government and commercial satellite operators,
spacecraft and payload manufacturers, and aerospace systems integrators.
The Company has developed innovative software products that reduce the cost and
minimize the development risk associated with traditional custom-built systems.
The Company believes that it was the first to offer a comprehensive COTS
(Commercial-Off-the-Shelf) software product line for command and control. As a
systems integrator, the Company leverages these products to provide turnkey
satellite control facilities that can operate multiple satellites from any
manufacturer. These systems offer significant cost savings for customers that
have traditionally purchased a separate custom control center for each of their
satellites.
Through its wholly owned subsidiary SAT Corporation ("SAT"), acquired in August
2000, the Company also offers turnkey systems and software for satellite and
terrestrial communications signal monitoring.
The consolidated financial statements of the Company presented herein have been
restated for all periods prior to the acquisition of SAT to include the combined
financial results of the Company and SAT.
Results of Operations
The components of the Company's income statement as a percentage of revenue are
depicted in the following table for the three months ended December 31, 2000 and
December 31, 1999:
Three Months Ended December 31,
% of % of
2000 Revenue 1999 Revenue
------ ------- ------- -------
(in thousands) (in thousands)
Revenue $8,469 100.0 $12,525 100.0
Cost of Revenue 5,598 66.1 8,337 66.6
------ ----- ------- -----
Gross Margin 2,871 33.9 4,188 33.4
Operating Expenses
SG&A 1,893 22.4 1,999 16.0
Prod. Amortization 343 4.0 237 1.8
------ ----- ------- -----
Income from Continuing Oper. 635 7.5 1,952 15.6
Other Income (Expense) (net) 702 8.3 202 1.6
------ ----- ------- -----
Income from Continuing Oper.
Before Income Taxes 1,337 15.8 2,154 17.2
Income Taxes 285 3.4 771 6.2
------ ----- ------- -----
Income from Continuing Oper. 1,052 12.4 1,383 11.0
Income from Operations of
Discontinued Segment 0 0 83 .7
------ ----- ------- -----
Net Income $ 1,052 12.4 $ 1,466 11.7
======= ===== ======= =====
-9-
Revenue
The Company earns revenue from sales of its products and services through
contracts that are funded by the U.S. Government, both as a prime contractor or
a subcontractor, as well as commercial and international organizations.
Internally, the Company classifies revenues in two separate categories on the
basis of the contracts' procurement and development requirements: (i) contracts
which require compliance with Government procurement and development standards
("Government Services") are classified as government revenue, and (ii) contracts
conducted according to commercial practices ("Commercial Products and Services")
are classified as commercial revenue, regardless of whether the end customer is
a commercial or government entity. Sales of the Company's COTS products are
classified as Commercial Products and Services revenue. SAT's revenue is also
classified as Commercial Products and Services revenue.
For the three months ended December 31, 2000 and 1999, the Company's revenues
were generated from the following sources:
Three Months Ended December 31,
Revenue Type 2000 1999
------------ ---- ----
Commercial Products & Services
Commercial Users 47% 52%
U.S. Government Users 1 1
---- ----
Subtotal 48 53
Government Services
NOAA 41 37
NASA 5 6
Other U.S. Government Users 6 4
---- ----
Subtotal 52 47
Total 100% 100%
==== ====
Based on the Company's revenue categorization system, the Company classified 48%
and 53% of its revenue as Commercial Products and Services revenue with the
remaining 52% and 47% classified as Government Services revenue for the three
months ended December 31, 2000 and 1999, respectively. By way of comparison, if
the revenues were classified strictly according to end-user (independent of the
Company's internal revenue categorization system), the U.S. Government would
account for 53% and 48% of the total revenues for the three months ended
December 31, 2000 and 1999, respectively.
On a consolidated basis, revenue decreased 32%, or $4.0 million, to $8.5 million
for the three months ended December 31, 2000, from $12.5 million for the
three months ended December 31, 1999. The decrease was due in large part to a
decline in SAT's revenues, which accounted for approximately $2.1 million of the
decrease. The decline in SAT's revenues between the two periods was primarily
due to the fact that SAT recognized nearly one-half of its entire fiscal year
2000 revenue in the quarter ended December 31, 1999, as large deliveries of
equipment were recorded during that quarter. In addition to the decrease in
SAT's revenue, the Company's revenue from pass-through equipment declined from
approximately $2.2 million in the first quarter last year to $1.1 million in the
current quarter, representing a $1.1 million decrease. The remaining revenue
decrease between periods resulted from lower service revenues in the Company's
Commercial Products and Services Group and the Company's Government Service
Group.
-10-
Cost of Revenue/Gross Margin
The Company computes gross margin by subtracting cost of revenue from revenue.
Included in cost of revenue are direct labor expenses, overhead charges
associated with the Company's direct labor base and other costs that can be
directly related to specific contract cost objectives, such as travel,
consultants, equipment, subcontracts and other direct costs.
Gross margins on contract revenues vary depending on the type of product or
service provided. Generally, license revenues related to the sale of the
Company's COTS products have the greatest gross margins because of the minimal
associated marginal costs to produce. By contrast, gross margins rates for
equipment and subcontract pass-throughs seldom exceed 15%. Engineering service
gross margins typically range between 20% and 35%.
During the three months ended December 31, 2000, cost of revenue decreased to
$5.6 million from $8.3 million during the three months ended December 31, 1999,
which decrease was due primarily to decreases in direct labor, related overhead
costs and equipment and subcontract pass-throughs. Cost of revenue expressed as
a percentage of revenue remained virtually unchanged at approximately 66%.
The Company's gross margin decreased 31%, or $1.3 million, to $2.9 million for
the three months ended December 31, 2000 from $4.2 million for the three months
ended December 31, 1999. The decrease was principally due to a decline in
revenue and related cost of revenue. Gross margin as a percentage of revenue
was 33.9% during the three months ended December 31, 2000 compared to 33.4% for
the three months ended December 31, 1999. This increase is considered
immaterial by the Company.
Operating Expenses/Income from Operations
Selling, General & Administrative expenses (SG&A) decreased slightly to
approximately $1.9 million during the three months ended December 31, 2000 from
$2.0 million in the quarter ended December 31, 1999. As a percentage of
revenue, SG&A accounted for 22.4% of revenue for the three months ended December
31, 2000 compared to 16.0% in the quarter ended December 31, 1999. Product
amortization increased from $237,000 for the three months ended December 31,
1999 to $343,000 for the three months ended December 31, 2000 due to increases
in capitalized software development costs.
Income from operations decreased 68.3% to $635,000 for the three months ended
December 31, 2000 from $2.0 million for the three months ended December 31,
1999. As a percentage of revenue, income from operations decreased to 7.5% for
the three months ended December 31, 2000 from 15.6% for the prior year's first
quarter. The foregoing percentage decreases are primarily the result of an
increase in product amortization expense coupled with an increase in SG&A as a
percentage of revenue.
The Company's effective tax rate declined from 35.8% for the three months ended
December 31, 1999 to 21.3% for the three months ended December 31, 2000. The
decrease was a result of approximately $550,000 of tax-free interest income
recorded in the current quarter.
OUTLOOK
-------
This outlook section contains forward-looking statements, including but not
necessarily limited to projections, all of which are based on current
expectations. There is no assurance that the Company's projections will in fact
be achieved and these projections do not reflect any acquisitions or
divestitures which may occur in the future. Reference should be made to the
various important factors listed under the heading "Forward Looking Statements"
that could cause actual future results to differ materially.
At this time, the Company has a backlog of work to be performed and it may
receive additional contract awards based on proposals in the pipeline.
Management believes that operating results for future periods will improve based
on the following assumptions:
-11-
. Demand for satellite technology and related products and services will
continue to expand; and
. Sales of its software products and engineering services will continue to
increase.
Looking forward to fiscal year 2001 in its entirety, the Company is anticipating
growth in revenue, operating income, net income, and fully diluted earnings per
share (excluding discontinued operations and certain non-recurring items
recorded last fiscal year), of approximately 10%, 30%, 30%, and 20%
respectively.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Since the Company's inception in 1982, it has been profitable on an annual basis
and has generally financed its working capital needs through internally
generated funds, supplemented by borrowings under the Company's general line of
credit facility with a commercial bank and the proceeds from the Company's
initial public offering in 1988. In June 1999, the Company supplemented its
working capital position by raising approximately $19.7 million (net) through
the private placement of approximately 1.2 million shares of its common stock.
In February 2000, the Company raised an additional $40.9 million (net) for use
in connection with potential acquisitions and other general corporate purposes
through the private placement of 1.4 million additional shares of its common
stock.
For the three months ended December 31, 2000, the Company generated
approximately $1.0 million of cash from operating activities, and used
approximately $1.3 million for investing activities, including approximately
$600,000 for newly capitalized software development costs and $700,000 for the
purchase of fixed assets (principally new computers and equipment).
The Company has access to a general line of credit facility through which it
could borrow up to $9.0 million for operating purposes and has an additional
line of credit with the bank amounting to $6.0 million, which can be used for
corporate acquisitions. Borrowings under the line are due on demand with
interest at the London Inter-Bank Offering Rate (LIBOR), plus a spread of 1.5 to
2.4% based on the ratio of funded debt to earnings before interest, taxes and
depreciation (EBITDA). The lines of credit are secured by the Company's billed
and unbilled accounts receivable and have certain financial covenants, including
minimum net worth and liquidity ratios. The lines expire February 28, 2002.
The Company also has a line of credit with another bank for $425,000. This line
expires on August 2, 2001. At December 31, 2000, the Company had no amounts
outstanding under the lines of credit.
The Company also has access to a $2.0 million equipment lease line of credit
under which it had approximately $560,000 outstanding as of December 31, 2000.
The Company currently anticipates that its current cash balances, amounts
available under its lines of credit and net cash provided by operating
activities will be sufficient to meet its working capital and capital
expenditure requirements for at least the next twelve months. The Company
believes that inflation did not have a material impact on the Company's revenues
or income from operations during the quarter ended December 31, 2000 or in past
fiscal years.
-12-
Forward Looking Statements
--------------------------
Certain of the statements contained in this section, including those under the
headings "Outlook" and "Liquidity and Capital Resources," and in other parts of
this 10-Q, are forward looking. In addition, from time to time, the Company may
publish forward looking statements relating to such matters as anticipated
financial performance, business prospects, technological developments, new
products, research and development activities and similar matters. Forward-
looking statements can be identified by the use of forward-looking terminology
such as "may", "will", "believe", "expect", "anticipate", "estimate",
"continue", or other similar words, including statements as to the intent,
belief, or current expectations of the Company and its directors, officers, and
management with respect to the Company's future operations, performance, or
positions or which contain other forward-looking information. These forward-
looking statements are predictions. No assurances can be given that the future
results indicated, whether expressed or implied, will be achieved. The
Company's actual results may differ significantly from the results discussed in
the forward-looking statements. While the Company believes that these
statements are and will be accurate, a variety of factors could cause the
Company's actual results and experience to differ materially from the
anticipated results or other expectations expressed in the Company's statements.
The Company's business is dependent upon general economic conditions and upon
various conditions specific to its industry, and future trends cannot be
predicted with certainty. Particular risks and uncertainties that may effect
the Company's business, other than those described elsewhere herein, include the
following:
. A significant portion of the Company's revenue is derived from contracts
or subcontracts funded by the U.S. Government, which are subject to
termination without cause, government regulations and audits,
competitive bidding, and the budget and funding process of the U.S.
Government.
. The presence of competitors with greater financial resources and their
strategic response to the Company's new services.
. The potential obsolescence of the Company's services due to the
introduction of new technologies.
. The response of customers to the Company's marketing strategies and
services.
. The Company's commercial contracts are subject to strict performance and
other requirements.
. The intense competition in the satellite ground system industry could
harm the Company's financial performance.
. Changes in activity levels in the Company's core markets.
While sometimes presented with numerical specificity, these forward-looking
statements are based upon a variety of assumptions relating to the business of
the Company, which although considered reasonable by the Company, may not be
realized. Because of the number and range of the assumptions underlying the
Company's forward-looking statements, many of which are subject to significant
uncertainties and contingencies beyond the reasonable control of the Company,
some of the assumptions inevitably will not materialize and unanticipated events
and circumstances may occur subsequent to the date of this document. These
forward-looking statements are based on current information and expectation, and
the Company assumes no obligation to update. Therefore, the actual experience
of the Company and the results achieved during the period covered by any
particular forward-looking statement should not be regarded as a representation
by the Company or any other person that these estimates will be realized, and
actual results may vary materially. There can be no assurance that any of these
expectations will be realized or that any of the forward-looking statements
contained herein will prove to be accurate.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
-13-
Part II. OTHER INFORMATION
- ---------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
--------
11.1 Computation of Per Share Earnings.
27.1 Financial Data Schedule.
b. Reports on Form 8-K
-------------------
None.
-14-
SIGNATURES
----------
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTEGRAL SYSTEMS, INC.
---------------------
(Registrant)
Date: February 14, 2001 By: /s/
----------------- -----------------------------------------
Thomas L. Gough
President & Chief Operating Officer
Date: February 14, 2001 By: /s/
----------------- -----------------------------------------
Elaine M. Parfitt
Vice President & Chief Financial Officer
-15-