COLUMBIA, Md., May 3, 2010 (GLOBE NEWSWIRE) -- Integral Systems, Inc. (Nasdaq:ISYS) ("Company") today reported financial results for its second fiscal quarter ended March 26, 2010.
Revenue for the second quarter of fiscal 2010 was $40.3 million, a decrease of 5.8% versus the second quarter of 2009. Gross margin was 40.5%, compared to 40.2% for the second quarter of fiscal 2009. Second quarter 2010 income from operations was $0.3 million, compared to income from operations of $4.2 million reported in the second quarter of fiscal 2009. Net income for the second quarter of fiscal 2010 was $0.1 million or $0.01 per diluted share, compared to net income of $2.6 million or $0.15 per diluted share reported for the second quarter of fiscal 2009. Excluding the acquisition and interest expenses incurred relating to the CVG-Avtec acquisition discussed below, diluted earnings per share in the second quarter of fiscal 2010 would have been $0.06.
Included in the earnings results for the second quarter of fiscal 2010 is the impact of the following items:
- A gain of $2.2 million ($0.07 per share) reflecting the recovery of a bad debt reserve previously taken in the third quarter of fiscal 2009 as a result of the bankruptcy of a Commercial customer;
- An increase in the Company's lease loss provision of $1.5 million ($0.05 per share) related to real estate in Lanham, MD; and
- Acquisition and interest expenses of $1.5 million ($0.05 per share) relating to the Company's March 5th acquisition of CVG, Inc. and its wholly owned subsidiary, Avtec Systems (CVG-Avtec), now operating as Integral Systems SATCOM Solutions.
"This quarter Integral Systems advanced our business strategically with the acquisition of CVG-Avtec, demonstrating our continued commitment to invest in new markets and industry-leading technology," said Paul Casner, President and Chief Executive Officer. "We expect the contributions of CVG-Avtec to become apparent later this year, and we are optimistic that its contribution to our business, combined with continued solid growth of our Products Group and our recently launched Services Group, set the stage for long-term growth and profitability."
Casner concluded: "We remain mindful of the current market conditions and we continue to keep a very close hold on managing our operations and controlling indirect costs. With this focus and our business projections – including the expected benefits from CVG-Avtec – we reaffirm our fiscal 2010 earnings guidance of $0.35 - $0.40 per share."
QUARTER HIGHLIGHTS
- Acquired privately held CVG, Inc. and its subsidiary, Avtec Systems Inc. for $34.7 million in an all cash transaction, further expanding the reach of Integral Systems' award winning product line and customer base within the Department of Defense.
- Launched Integral Systems Service Solutions (IS3) to provide SATCOM Network Operations (NetOps) services as part of a broader planned Global Managed Network Services offering.
- Announced 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.
- Announced a number of new and additional contracts, including: modems for NASA's Tracking and Data Relay Satellite System (TDRSS), next-generation satellite communication modems for Iridium Communications Inc., and a Monics® Satellite Monitoring and Interference Detection and Analysis System to Argentina's Empresa Argentina de Soluciones Satelitales (AR-SAT).
- Launched several new and upgraded industry-leading products including RT Logic's DG5000 high-rate signal processor platform, Integral Systems SATCOM Solutions' Raptor X 45 X-band Ultra Small Satellite Terminal (USAT) and Newpoint Technologies' integrated Trouble Ticketing and Inventory Management System.
- Expanded its operating management team with the appointment of Colonel (Retired) Robert F. Wright, Jr., United States Air Force as Senior Vice President and General Manager of Integral Systems Military and Intelligence Group and Leonard Moss as Vice President of Security.
- Announced the dismissal of the class action case of Anthony Vidmar, et al v. Integral Systems, Inc., et al. With this dismissal, all pending litigation against the Company has been withdrawn by the plaintiffs or dismissed by the courts without any findings against the Company or its current management team, or payment of any settlement amounts.
Integral Systems will host an investor conference call to discuss the second quarter financial results today at 11:00 am EDT. The conference call will be webcast live on Integral Systems' website at: www.integ.com. Integral Systems participants will include Chief Executive Officer and President Paul Casner and Chief Financial Officer Bill Bambarger.
Interested parties are invited to participate in this conference call by dialing: 1.877.324.1958. A replay of the conference call can be heard from 2:00 pm EDT Monday, May 3, 2010, through midnight EDT Monday, May 10, 2010, by dialing 1.800.642.1687 or 1.706.645.9291 and asking for ID number 70330767.
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. 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.
| INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES | ||
| CONSOLIDATED BALANCE SHEETS | ||
| March 26, 2010 and September 25, 2009 | ||
| (in thousands of dollars, except share amounts) | ||
| March 26, 2010 | September 25, 2009 | |
| (unaudited) | ||
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 16,699 | $ 5,698 |
| Accounts receivable, net of allowance for doubtful accounts | 24,159 | 27,016 |
| Unbilled revenues | 35,014 | 37,028 |
| Prepaid expenses and other current assets | 2,955 | 1,256 |
| Income tax receivable | 1,698 | 12,361 |
| Deferred contract costs | 1,349 | 2,598 |
| Inventory | 14,343 | 9,994 |
| Total current assets | 96,217 | 95,951 |
| Property and equipment, net | 20,633 | 20,368 |
| Goodwill | 70,376 | 54,113 |
| Intangible assets, net | 21,820 | 6,711 |
| Other assets | 4,707 | 1,181 |
| Total assets | $ 213,753 | $ 178,324 |
| Liabilities and Stockholders' Equity | ||
| Current liabilities: | ||
| Short term debt | $ 30,000 | $ 5,311 |
| Accounts payable | 5,289 | 5,771 |
| Accrued expenses | 20,858 | 17,941 |
| Deferred tax liabilities | 5,381 | 7,347 |
| Deferred revenue | 14,755 | 12,373 |
| Total current liabilities | 76,283 | 48,743 |
| Deferred rent, non-current | 8,279 | 8,460 |
| Deferred tax liabilities, non-current | 5,582 | -- |
| Obligations under capital leases | 4,678 | 5,163 |
| Other non-current liabilities | 1,240 | 955 |
| Total liabilities | 96,062 | 63,321 |
| Stockholders' equity: | ||
| Common stock, $.01 par value, 80,000,000 shares authorized, and 17,436,267 and 17,331,796 shares issued and outstanding at March 26, 2010 and September 25, 2009, respectively | 174 | 173 |
| Additional paid-in capital | 68,233 | 66,461 |
| Retained earnings | 49,705 | 48,354 |
| Accumulated other comprehensive income (loss) | (421) | 15 |
| Total stockholders' equity | 117,691 | 115,003 |
| Total liabilities and stockholders' equity | $ 213,753 | $ 178,324 |
| INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (in thousands, except per share amounts) | ||||
| Three Months Ended | Six Months Ended | |||
|
March 26, 2010 |
March 27, 2009 |
March 26, 2010 |
March 27, 2009 |
|
| (Unaudited) | (Unaudited) | |||
| Revenue | $ 40,306 | $ 42,768 | $ 78,032 | $ 81,238 |
| Cost of revenue | 23,965 | 25,572 | 47,221 | 49,793 |
| Gross profit | 16,341 | 17,196 | 30,811 | 31,445 |
| Operating expense: | ||||
| Selling, general & administrative | 14,522 | 11,980 | 25,690 | 24,209 |
| Research & development | 1,508 | 972 | 2,781 | 1,692 |
| Total operating expense | 16,030 | 12,952 | 28,471 | 25,901 |
| Income from operations | 311 | 4,244 | 2,340 | 5,544 |
| Other (expense) income, net | 60 | (72) | (102) | (65) |
| Income before income taxes | 371 | 4,172 | 2,238 | 5,479 |
| Income tax provision | 241 | 1,527 | 887 | 1,809 |
| Net income | $ 130 | $ 2,645 | $ 1,351 | $ 3,670 |
| Comprehensive income: | ||||
| Cumulative currency translation adjustment | (363) | (33) | (436) | (9) |
| Total comprehensive income (loss) | $ (233) | $ 2,612 | $ 915 | $ 3,661 |
| Weighted average number of common shares: | ||||
| Basic | 17,436 | 17,298 | 17,411 | 17,289 |
| Diluted | 17,456 | 17,333 | 17,422 | 17,394 |
| Net income per share: | ||||
| Basic | $ 0.01 | $ 0.15 | $ 0.08 | $ 0.21 |
| Diluted | $ 0.01 | $ 0.15 | $ 0.08 | $ 0.21 |
| INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (in thousands of dollars) | ||||
| Three Months Ended | Six Months Ended | |||
|
March 26, 2010 |
March 27, 2009 |
March 26, 2010 |
March 27, 2009 |
|
| (unaudited) | (unaudited) | |||
| Revenue: | ||||
| Military and Intelligence Group | $ 15,556 | $ 23,437 | $ 30,816 | $ 40,685 |
| Civil and Commercial Group | 7,694 | 5,279 | 12,063 | 11,195 |
| Products Group | 18,575 | 16,419 | 37,731 | 33,438 |
| Elimination of intersegment sales | (1,519) | (2,367) | (2,578) | (4,080) |
| Total revenue | 40,306 | 42,768 | 78,032 | 81,238 |
| Cost of revenue: | ||||
| Military and Intelligence Group | 12,510 | 14,585 | 23,369 | 27,803 |
| Civil and Commercial Group | 3,670 | 3,723 | 6,242 | 7,904 |
| Products Group | 9,304 | 9,631 | 20,188 | 18,166 |
| Elimination of intersegment sales | (1,519) | (2,367) | (2,578) | (4,080) |
| Total cost of revenue | 23,965 | 25,572 | 47,221 | 49,793 |
| Gross profit: | ||||
| Military and Intelligence Group | 3,046 | 8,852 | 7,447 | 12,882 |
| Gross margin | 19.6% | 37.8% | 24.2% | 31.7% |
| Civil and Commercial Group | 4,024 | 1,556 | 5,821 | 3,291 |
| Gross margin | 52.3% | 29.5% | 48.3% | 29.4% |
| Products Group | 9,271 | 6,788 | 17,543 | 15,272 |
| Gross margin | 49.9% | 41.3% | 46.5% | 45.7% |
| Total gross profit | 16,341 | 17,196 | 30,811 | 31,445 |
| Gross margin | 40.5% | 40.2% | 39.5% | 38.7% |
| Operating expense: | ||||
| Military and Intelligence Group | 3,825 | 4,890 | 7,467 | 10,034 |
| Civil and Commercial Group | 1,961 | 1,347 | 4,120 | 2,456 |
| Products Group | 10,244 | 6,715 | 16,884 | 13,411 |
| Total operating expense | 16,030 | 12,952 | 28,471 | 25,901 |
| Income (loss) from operations: | ||||
| Military and Intelligence Group | (779) | 3,962 | (20) | 2,848 |
| Operating margin | -5.0% | 16.9% | -0.1% | 7.0% |
| Civil and Commercial Group | 2,063 | 209 | 1,701 | 835 |
| Operating margin | 26.8% | 4.0% | 14.1% | 7.5% |
| Products Group | (973) | 73 | 659 | 1,861 |
| Operating margin | -5.2% | 0.4% | 1.7% | 5.6% |
| Total income from operations | $ 311 | $ 4,244 | $ 2,340 | $ 5,544 |
| Operating margin | 0.8% | 9.9% | 3.0% | 6.8% |
| INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (in thousands of dollars) | ||
| Six Months Ended | ||
|
March 26, 2010 |
March 27, 2009 |
|
| (Unaudited) | ||
| Cash flows from operating activities: | ||
| Net income | $ 1,351 | $ 3,670 |
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||
| Depreciation and amortization | 2,649 | 1,637 |
| Bad debt expense | (1,050) | 6 |
| Stock-based compensation | 1,289 | 1,649 |
| Changes in operating assets and liabilities, excluding the net effects of acquisitions: | ||
| Accounts receivable | 7,791 | 3,527 |
| Unbilled revenue | 1,012 | (13,612) |
| Prepaid expenses and other current assets | (1,340) | (686) |
| Deferred contract costs | 1,148 | 618 |
| Inventories | (1,885) | (1,850) |
| Income taxes receivable | 11,040 | (2,142) |
| Accounts payable | (1,509) | (1,115) |
| Accrued expenses | 721 | (1,302) |
| Deferred revenue | 1,571 | (1,509) |
| Other | 143 | 238 |
| Net cash provided by (used in) operating activities | 22,931 | (10,871) |
| Cash flows from investing activities: | ||
| Acquisitions of fixed assets | (1,183) | (1,554) |
| Acquisition of CVG, Incorporated, net of cash received | (32,256) | -- |
| Acquisition of satID | -- | (10,941) |
| Net cash used in investing activities | (33,439) | (12,495) |
| Cash flows from financing activities: | ||
| Restricted cash deposit | (1,000) | -- |
| Proceeds from line of credit borrowings | 36,500 | 10,311 |
| Repayment of line of credit borrowings | (11,811) | -- |
| Deferred financing fee incurred | (1,472) | -- |
| Payments on capital lease obligations | (465) | (11) |
| Proceeds from employee stock purchases | -- | 178 |
| Proceeds from issuance of common stock | -- | 76 |
| Net cash provided by financing activities | 21,752 | 10,554 |
| Net increase (decrease) in cash and cash equivalents | 11,244 | (12,812) |
| Effect of exchange rate changes on cash | (243) | 19 |
| Cash and cash equivalents - beginning of period | 5,698 | 15,026 |
| Cash and cash equivalents - end of period | $ 16,699 | $ 2,233 |