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FOR IMMEDIATE RELEASE

For further information, call
Bonnie Herron, 770/564-5504
or email to bherron@intelsys.com

INTELLIGENT SYSTEMS ANNOUNCES YEAR-END 2002 RESULTS

***Earnings Conference Call and Webcast at 4 PM Today ***

 Norcross, GA – March 5, 2003 – Intelligent Systems Corporation [AMEX:INS; www.intelsys.com] announced today its financial results for the three and twelve month periods ended December 31, 2002.

             For the twelve-month period ended December 31, 2002, Intelligent Systems recorded revenue of $10.7 million, a 23 percent increase compared to revenue of $8.7 million for the same period in 2001. Net loss for the twelve month period in 2002 was $12.3 million or $2.73 per share compared to net income of $9.1 million or $1.78 per share for the comparable period in 2001. 

             For the fourth quarter ended December 31, 2002, revenue was $3.4 million compared to revenue of $3.2 million in the same period in 2001.  Net loss for the fourth quarter of 2002 was $2.7 million or $0.61 per share compared to net loss of $1.9 million or $0.42 per share in the same quarter of 2001.

            The 2002 results are not comparable to the prior year periods for a number of reasons.  In 2002, the company’s results included the consolidation of two software subsidiaries that were not consolidated for all of the same periods in 2001.  CoreCard Software was consolidated for the full twelve-month period in 2002 but not for 2001 and VISaer was consolidated for all of 2002 but not for the first half of 2001.  Also, in 2001 the company’s earnings were impacted significantly by non-recurring investment income of $17.8 million on the sale of its ownership in an affiliate company, PaySys International.  Furthermore, in 2001 the company recorded non-cash, non-recurring expenses totaling $6.4 million related to the VISaer acquisition.

            The loss from operations in the three and twelve month periods ended December 31, 2002 is in line with the company’s expectations as discussed in previous shareholder communications and reflects significant current expenses for software development incurred by both the CoreCard Software and VISaer subsidiaries for new products that the company anticipates will generate revenue in future periods.

            According to J. Leland Strange, President and Chief Executive Officer, “The reported operating losses, which have decreased each quarter in 2002 and are expected to decline further in 2003, do not reflect the underlying progress achieved by our operating units in 2002.  Both VISaer and CoreCard Software released initial versions of new software products while QS Technologies and ChemFree each experienced over 20 percent growth in revenue compared to 2001.”

In the twelve-month period of 2002, the company’s results included investment losses of $934,000, representing the net effect of $1.5 million in gains on sales of investments offset by $2.4 million in charges to reduce the carrying value of several of the company’s minority-owned interests.  By comparison, the 2001 results included investment income of $19.9 million, consisting mainly of $17.8 million related to the sale of the company’s interest in PaySys International.

Conference Call and Webcast Information

            As announced last week, Intelligent Systems has scheduled a conference call for today at 4 PM EST to discuss in more detail the results of the fourth quarter and annual periods and the company’s current plans and financial condition.  The call-in number is 1-800-500-0177, password 41932.  A live webcast will be available at the same time by logging onto www.intelsys.com and clicking on the webcast icon.  An archived version of the webcast will be available for 30 days.

About Intelligent Systems Corporation

For almost 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 (www.visaer.com), QS Technologies (www.qsinc.com), CoreCard Software (www.corecard.com), (all software companies) and ChemFree (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 www.intelsys.com, or by calling the company at 770/381-2900.

 In addition to historical information, this news release contains 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.  Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements and the company does not undertake to update or revise any forward-looking statements whether as a result of new developments or otherwise.  Among the factors that could cause actual results to differ materially are actions of third parties, delays or changes of intent by third parties (including customers and strategic partners), delays in product development, competitive pressures, unforeseen technical difficulties, changes in customers’ requirements or financial condition, market acceptance of products and services, availability of capital, availability of qualified personnel, financial results and valuation of affiliate companies, the risks associated with investments in privately-held early stage companies, and general economic conditions.

 

SUMMARY OF RESULT

Three Months Ended 
December 31,

                    2002

                   2001

Revenue

            $3,387,000

           $3,249,000

Loss From Operations

             (2,446,000)

            (1,248,000)

Interest Income

                  22,000

               126,000

Investment Loss, net

                 (32,000)

                (46,000)

Equity in Affiliatesa

               (132,000)

            (1,615,000)

Other Income (Expense), net

               (135,000)

               674,000e

Income Tax Provision (Benefit)

                    7,000

              (214,000)

Net Income (Loss)

           $(2,730,000)

          $(1,895,000)

Average Shares Outstanding – Basic

              4,493,640

             4,495,530

Average Shares Outstanding – Diluted

              4,493,640

             4,495,530

Basic and Diluted Share Loss

                   $(0.61)

                 $(0.42)  

 

 

Twelve Months Ended December 31,

 

                    2002

                   2001

Revenue

           $10,741,000  

           $8,718,000   

Loss From Operations

           (12,460,000) 

          (10,420,000)b

Interest Income

                 129,000  

             1,017,000   

Investment Income (Loss), net

               (934,000)c

           19,902,000

Equity in Affiliatesa

               (235,000) 

            (2,173,000) 

Other Income, net

                 900,000

               960,000

Income Tax Provision (Benefit)

               (343,000) 

               173,000  

Net Income (Loss)

         $(12,257,000) 

           $9,113,000  

Average Shares Outstanding – Basic

              4,495,058  

             5,108,413  

Average Shares Outstanding – Diluted

              4,495,058  

             5,145,691  

Basic Share Income (Loss)

                   $(2.73) 

                   $1.78  

Diluted Share Income (Loss)

                   $(2.73) 

                   $1.77  

a.      Reflects pro rata share of net income (loss) of minority-owned affiliate companies accounted for under the equity method.

b.      Includes non-recurring expenses totaling $6.4 million related to VISaer acquisition.

c.       Includes investment gains of $1.5 million offset by losses/write-downs of $2.4 million.

d.      Includes investment gain of $17.8 million on PaySys sale.

e.       Comprised primarily of recognition of deferred gain from sale in prior period.

 

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