©2000-2010 Intelligent Systems
   All Rights Reserved
   Contact Webmaster here

      
  

FOR IMMEDIATE RELEASE

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

 INTELLIGENT SYSTEMS ANNOUNCES SECOND QUARTER 2003 RESULTS

***Earnings Conference Call and Webcast at 11 AM Today ***

 Norcross, GA – August 6, 2003 – Intelligent Systems Corporation [AMEX:INS; www.intelsys.com] announced today its financial results for the second quarter and year-to-date periods ended June 30, 2003.

             For the six-month period ended June 30, 2003, Intelligent Systems recorded revenue of $6.0 million, a 36 percent increase compared to the same period last year.  Net loss was $1.2 million or $0.28 per share compared to a net loss of $6.8 million or $1.52 for the six month period in 2002.

             For the three months ended June 30, 2003, the company recorded revenue of $2.8 million, a 27 percent increase compared to revenue of $2.2 million for the same period in 2002.  Net loss for the three-month period in 2003 was $2.2 million or $0.49 per share compared to a net loss of $4.7 million or $1.05 per share for the second quarter of 2002. 

            The increase in revenue in the second quarter and year-to-date periods of 2003 compared to last year reflects an increase in service revenue (which includes professional services and software maintenance revenue) at the company’s VISaer and QS Technologies subsidiaries as well as a higher volume of product sales at the company’s ChemFree subsidiary. 

            The results for the year-to-date period ended June 30, 2003 were bolstered by net investment income of $3.7 million.  In the first quarter of 2003, the company recognized investment income of $4.2 million on the settlement of an escrow fund related to the sale in April 2001 of an affiliate company, PaySys International, Inc. to First Data Corporation.  In the second quarter, the company recognized additional income of $281,000 reflecting the final disbursement from the escrow fund.  In the aggregate, ISC received $4.5 million cash and recognized an equal amount of investment income on the escrow settlement in the six-month period in 2003.  Offset against this income was a first-quarter write-down aggregating $719,000 against the carrying value of the company’s equity and debt investment in a private technology company in which Intelligent Systems held a minority interest and a second-quarter charge of $76,000 to reduce the carrying value of another minority owned start-up company.  The write-downs were based on the valuations and terms of recently completed transactions involving the minority-held businesses. 

            The overall improvement in results in the second quarter and year-to-date periods in 2003 compared to the same periods in 2002 is the net effect of an increase in revenue and gross margin contribution, a reduction in consolidated operating expenses of more than 15 percent in each period, and the non-recurring investment gain on the escrow settlement.  The loss from operations in the three and six month periods ended June 30, 2003 was $2.6 million and $5.2 million, respectively, which is more than 25 percent lower than the operating loss in each of the comparable periods of 2002.

            The company continues to support investment in product development activities at both its CoreCard Software and VISaer subsidiaries for new software products scheduled for release in 2003.  While the company is incurring development costs in 2003, most of the license revenue related to these products will not be recognized until 2004 when customer installations are complete.

            According to J. Leland Strange, President and Chief Executive Officer, “In the second quarter, our operating subsidiaries continued to make progress on achieving their product development and sales plans for 2003.  Despite the general weakness in enterprise software sales and the aviation industry in particular as well as the recent SARS epidemic, which contributed to delays on contracts with certain of our international prospects and customers, our software companies continue to win contracts for their new products and to position themselves for improved profitability in the future. In addition, our ChemFree subsidiary has benefited from strong European market demand for its parts washer systems.”

Conference Call and Webcast 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 period for 2003.  The call-in number is 877-226-7144 (domestic) and 706-679-3941 (international).  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 12 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. (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 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.  Among the factors that could cause actual results to differ materially from those indicated by such forward-looking statements are delays in product development, undetected software errors, competitive pressures (including pricing), changes in customers’ requirements or financial condition, market acceptance of products and services, changes in financial markets, changes in the performance, financial condition or valuation of affiliate companies, the risks associated with investments in privately-held early stage companies, the impact of events such as the war against IRAQ and the SARS epidemic, on the worldwide commercial aviation industry, other geopolitical or military actions, and general economic conditions, particularly those that cause business or government to delay or cancel purchase decisions.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except share amounts)

 

Three Months Ended June 30,

Six Months Ended June 30,

 

2003

2002

2003

2002

Revenue

 

 

 

 

   Products

$ 1,801

$ 1,335

$ 3,505

$ 2,687

   Services

1,020

878

2,486

1,713

    Total revenue

2,821

2,213

5,991

4,400

Cost of revenue

 

 

 

 

   Products

906

664

1,665

1,313

   Services

792

533

1,842

1,079

    Total cost of revenue

1,698

1,197

3,507

2,392

Expenses

 

 

 

 

    Marketing

681

812

1,452

1,398

    General & administrative

951

1,109

2,034

2,346

    Research & development

2,100

2,607

4,181

5,393

Loss from operations

(2,609)

(3,512)

(5,183)

(7,129)

Other income

 

 

 

 

    Interest income (expense), net

-- 

53

(5)

77

    Investment income (loss), net

205

(1,339)

3,669a

(542)

    Equity in earnings (losses) of affiliate companies

34

(60)

(33)

(126)

    Other income, net

187

151

214

902

Loss before income tax provision (benefit)

(2,183)

(4,707)

(1,338)

(6,818)

Income tax provision (benefit)

-- 

1

(104)

12

Net loss

$ (2,183)

$ (4,708)

$ (1,234)

$ (6,830)

Basic and diluted net loss per share

$    (0.49)

$  (1.05)

$  (0.28)

$  (1.52)

Basic and diluted weighted average shares

4,485,540

4,495,530

4,487,945

4,495,530

 a.  Includes $4.5 million gain on escrow settlement and $795,000 write-down on investments.

  

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

June 30,

2003

December 31,

2002

ASSETS

(unaudited)

(audited)

 

Current assets:

 

 

 

  Cash

$ 3,111

$ 2,644

 

  Accounts receivable, net

3,026

3,025

 

  Notes and interest receivable

156

205

 

  Inventories

784

671

 

  Other current assets

135

213

 

    Total current assets

7,212

6,758

 

Long-term investments

6,674

7,145

Property and equipment, at cost less accumulated depreciation

665

761

Goodwill

2,038

2,380

Intangibles, net

632

788

Other assets, net

28

28

Total assets

$ 17,249

$ 17,860

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

Current liabilities:

 

 

  Accounts payable

$ 1,095

$ 1,301

  Deferred revenue

3,071

1,784

  Deferred gain

362

428

  Accrued expenses and other current liabilities

1,954

1,755

    Total current liabilities

6,482

5,268

Deferred revenue, net of current portion

4,592

4,813

Other long-term liabilities

2

27

    Total long term liabilities

4,594

4,840

Minority interest

1,516

1,516

Redeemable preferred stock of subsidiary

-- 

342

Total stockholders’ equity

4,657

5,894

Total liabilities and stockholders’ equity

$ 17,249

$ 17,860

# # # #