©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 THIRD QUARTER 2005 RESULTS
***Earnings Conference Call at 11 AM Today ***

 Norcross, GA – November 3, 2005 – 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 Ended Sept.  30,

Nine Months Ended Sept. 30,

 

2005

2004

2005

2004

Revenue

 

 

 

 

 

   Products

$ 1,637

$ 4,291

$ 6,520

$ 9,303

 

   Services

1,641

6,125

4,998

9,068

 

    Total revenue

3,278

10,416

11,518

18,371

 

Cost of sales

 

 

 

 

 

   Products

735

1,054

2,466

2,843

 

   Services

787

2,775

2,636

4,292

 

    Total cost of sales

1,522

3,829

5,102

7,135

 

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

 

Income (loss) from operations

(1,394)

3,273

(2,937)

565

 

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

 

Income (loss) before income tax provision

(1,105)

5,016

(617)

1,992

 

Income tax provision

53 

-- 

65

-- 

 

Net income (loss)

$ (1,158)

$ 5,016

$ (682)

$ 1,992

 

Basic net income (loss) per share

$  (0.26)

$  1.12

$ (0.15)

$  0.44

 

Diluted net income (loss) per share

$  (0.26)

$  1.09

$ (0.15)

$  0.43

 

Basic weighted average shares outstanding

4,478,971

4,478,971

4,478,971

4,478,971

Diluted weighted average shares outstanding

4,478,971

4,584,210

4,478,971

4,585,742

                       

 

  1. Includes $2.1 million gain on investment, offset by $209,000 of investment losses.
  2. Includes investment gains aggregating $2.0 million, offset by $639,000 of investment write-downs.
     

 CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

September  30,

2005

December 31,

2004

ASSETS

(unaudited)

 

 

Current assets:

 

 

 

  Cash

$ 1,674

$   670

 

  Accounts receivable, net

2,133

2,931

 

  Inventories

802

653

 

  Other current assets

360

217

 

    Total current assets

4,969

4,471

 

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

Total assets

$13,374

$ 12,904

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

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

    Total current liabilities

8,689

7,509

Long-term liabilities

238

310

Minority interest

1,516

1,516

Total stockholders’ equity

2,931

3,569

Total liabilities and stockholders’ equity

$ 13,374

$ 12,904

     

 

# # # #