NORCROSS, Ga., Nov. 3, 2005 (PRIMEZONE) -- Intelligent Systems Corporation (AMEX:INS)(www.intelsys.com) announced today its financial results for the third quarter and year-to-date periods ended September 30, 2005.
In reporting the results for the third quarter and year-to-date periods of 2005, the company noted that a direct comparison of the financial results for 2005 to the same periods in 2004 is not necessarily meaningful and should not be relied upon as an indication of future performance, because the results for the three and nine-month periods ended September 30, 2004 included recognition of $7.5 million in revenue and $4.9 million in gross profit contribution related to completion of a multi-year software contract that was significantly larger than the company's historical and currently anticipated software contracts.
For the three months ended September 30, 2005, the company recorded revenue of $3.3 million compared to revenue of $10.4 million for the same period in 2004. Net loss for the three-month period ended September 30, 2005 was $1.2 million or $0.26 per basic and diluted share compared to net income of $5.0 million or $1.12 per basic share ($1.09 per diluted share) for the comparable period in 2004.
For the nine-month period ended September 30, 2005, the company recorded revenue of $11.5 million, compared to $18.4 million in the same period last year. Net loss for the nine month period in 2005 was $682,000 or $0.15 per basic and diluted share, compared to net income of $2.0 million or $0.44 per basic share ($0.43 per diluted share) in the nine month period of 2004.
Excluding the above-noted positive impact of the large software contract in 2004, total revenue for the three and nine month periods ended September 30, 2005 would have reflected an increase of 11 percent and 5 percent over the comparable periods in 2004, mainly as a result of an increase in professional services and software maintenance revenue at the company's VISaer and QS Technologies subsidiaries. Additionally, excluding the above-noted positive impact of the large software contract in 2004, the company's loss from operations for the three and nine month periods ended September 30, 2005 would have been lower than in the comparable periods in 2004. The company reduced its operating expenses by five and 12 percent, respectively, in the three and nine month periods ended September 30, 2005 compared to the respective periods in 2004.
In the three-month and year-to-date periods ended September 30, 2005, the company recorded an investment loss of $48,000 and investment income of $1.9 million, respectively. The year-to-date investment income reflects principally two final cash distributions totaling $2.1 million from ISC Guernsey, a minority owned entity that realized a significant gain from the sale of stock in a U.K. based company in 2004, offset in part by aggregate investment losses of $209,000 in the second and third quarters of 2005. In the three and nine month periods of 2004, the company recorded investment income of $1.7 million and $1.4 million, respectively. Investment income in 2004 includes the first cash distribution of $1.6 million related to the ISC Guernsey investment and several other smaller investment gains and losses as previously reported. The company does not expect any additional cash distributions from ISC Guernsey in the future.
At September 30, 2005, the company's balance sheet includes $6.0 million in current net deferred revenue comprised of amounts recorded by its four consolidated subsidiaries, net of associated costs, that is expected to be recognized within the next twelve months.
Conference Call Information
As announced previously, Intelligent Systems has scheduled a conference call for today at 11 AM ET to discuss the results of the third quarter and year-to-date periods for 2005. The call-in number is 877-226-7144. A transcript of the conference call is expected to be available by the end of business today by logging onto www.intelsys.com and clicking on the earnings conference call icon. The replay will be available for twelve months.
About Intelligent Systems Corporation
For over thirty years, Intelligent Systems Corporation (AMEX:INS) has identified, created, operated and grown early stage technology companies. The company's consolidated subsidiaries include VISaer, Inc. (www.visaer.com), QS Technologies, Inc. (www.qsinc.com), CoreCard Software, Inc. (www.corecard.com), (all software companies) and ChemFree Corporation (www.chemfree.com), (an industrial products company). Since 1990, the company has operated the Gwinnett Innovation Park (formerly the Intelligent Systems Incubator), an award-winning pioneer in privately sponsored incubators. Further information is available on the company's website at 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.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share amounts)
Three Months Nine Months
Ended Sept. 30, Ended Sept. 30,
2005 2004 2005 2004
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Revenue
Products $ 1,637 $ 4,291 $ 6,520 $ 9,303
Services 1,641 6,125 4,998 9,068
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Total revenue 3,278 10,416 11,518 18,371
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Cost of sales
Products 735 1,054 2,466 2,843
Services 787 2,775 2,636 4,292
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Total cost of sales 1,522 3,829 5,102 7,135
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Operating expenses
Marketing 457 634 1,599 1,981
General &
administrative 951 996 2,710 2,805
Research &
development 1,742 1,684 5,044 5,885
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Income (loss) from
operations (1,394) 3,273 (2,937) 565
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Other income
(expense), net:
Interest income
(expense), net 1 2 20 (6)
Investment income
(loss), net (48) 1,728 1,908(a) 1,357(b)
Equity in income of
affiliate companies 358 46 393 59
Other income (loss)
net (22) (33) (1) 17
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Income (loss) before
income tax provision (1,105) 5,016 (617) 1,992
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Income tax provision 53 -- 65 --
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Net income (loss) $ (1,158) $ 5,016 $ (682) $ 1,992
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Basic net income
(loss) per share $ (0.26) $ 1.12 $ (0.15) $ 0.44
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Diluted net income
(loss) per share $ (0.26) $ 1.09 $ (0.15) $ 0.43
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Basic weighted
average shares
outstanding 4,478,971 4,478,971 4,478,971 4,478,971
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Diluted weighted
average shares
outstanding 4,478,971 4,584,210 4,478,971 4,585,742
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a. Includes $2.1 million gain on investment, offset by $209,000 of
investment losses.
b. Includes investment gains aggregating $2.0 million, offset by
$639,000 of investment write-downs.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
2005 2004
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ASSETS (unaudited)
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Current assets:
Cash $ 1,674 $670
Accounts receivable, net 2,133 2,931
Inventories 802 653
Other current assets 360 217
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Total current assets 4,969 4,471
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Long-term investments 4,907 4,879
Property and equipment, at
cost less accumulated depreciation 859 781
Intangibles, net 2,622 2,748
Other assets, net 17 25
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Total assets $13,374 $ 12,904
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
Short-term borrowings $ -- $ 267
Accounts payable 884 867
Deferred revenue 6,029 4,895
Accrued payroll 999 928
Accrued expenses and
other current liabilities 777 552
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Total current liabilities 8,689 7,509
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Long-term liabilities 238 310
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Minority interest 1,516 1,516
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Total stockholders' equity 2,931 3,569
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Total liabilities and
stockholders' equity $ 13,374 $ 12,904
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