PARIS — Managers of satellite ground systems software provider Integral Systems told investors Dec. 11 that the company is rectifying past errors in accounting with the help of its new outside accountant, and is improving its relations with NASA and the U.S. National Oceanic and Atmospheric Administration (NOAA) under Integral’s new management.

Delivering an upbeat forecast for 2009 for its government and commercial markets, the Lanham, Md., company also said its debt-free status and strong near-term business outlook has put it in the position of making one or two acquisitions in the coming months.

“We do have an [acquisitive] intention during this fiscal year,” Integral Chief Executive John B. Higginbotham said in a conference call with investors to present preliminary results for the fiscal year that ended Sept. 30. “We do believe there will be an accretive acquisition opportunity or two that will fit our criteria during the fiscal year.”

Higginbotham and Integral Chief Financial Officer William Bambarger said Integral would delay release of its year-end financial accounts to the U.S. Securities and Exchange Commission (SEC) for a few days to give Ernst and Young time to complete its audit. Integral hired the Big Four accounting firm in September after finding deficiencies in how it booked revenue in certain contracts.

, who referred to the Ernst and Young audit as “the big elephant in the room” for Integral investors, said the audit is nearly complete and would not cause any major modification to the preliminary results released Dec. 11.

Integral reported that for the 12 months ending Sept. 30, revenue increased by 25 percent, to $160 million. Operating income, at about $25 million, was up 48 percent. Net profit increased by 43 percent, to $18 million.

said the company has no debt, a backlog of about $220 million as of Sept. 30 and about $18 million in cash.

Higginbotham, who joined Integral in July, said the company is forecasting a 10 percent revenue increase for 2009, and that depending on the timing of certain likely contracts, growth could be even greater.

Most of Integral’s revenue comes from the
government, mainly the U.S. Air Force. Its biggest current contracts relate to the U.S. GPS Operational Control Segment; the Rapid Attack Identification Detection Reporting System , a ground-based system to detect threats to satellites; and the Command and Control System-Consolidated ground system to support Air Force telecommunications satellite systems.

said these three programs account for 50-60 percent of Integral’s government revenue, and 25-30 percent of the company’s overall revenue.

Higginbotham said the commercial satellite sector thus far shows no sign of being seriously affected by the global economic crisis, even if some early-stage projects may be delayed as a result. For the major satellite-sector companies, he said, the global downturn may not have much of an impact.

“In many ways it’s counter-cyclical,” Higginbotham said. “The need for communications goes up, not down. We would expect to see a fairly substantial growth on the commercial front.”

Higginbotham said Integral, which he said had committed “gaffes” in the past with respect to NOAA contract work, is working to re-establish itself with NOAA and NASA as a reliable partner. “I inherited these gaffes from the past,” Higginbotham said. “I can tell you that any lingering relationships that may have been impacting us are gone. And if I find any more, they’ll be gone.”

Activist Integral investor Bonnie K. Wachtel of Washington-based investment company Wachtel and Co. Inc., who has been highly critical of Integral’s corporate governance, said during the call that Integral management, including Bambarger, had been warned about the accounting problems nearly a year ago but had not acted on them.

, who joined Integral in September 2007, said the current audit has turned up issues related to when Integral registers contract revenue and nothing suggesting malfeasance. The revenue being removed from Integral’s previous quarterly statements in 2008 – about $10 million for the nine months ending in June – will not be lost, but moved to 2009, he said.

He said the company prefers to take a public-relations beating now – “no matter how it looks for us personally or professionally” – by restating the figures rather than by suffering renewed issues with financial regulatory authorities.

“We chose to take a very conservative approach,” Bambarger said. “We have had a history, under previous leadership, of significant issues with the SEC and other governing agencies, and we don’t want to have them recurring going forward. {W]e want to make sure the numbers are accurate. We couldn’t procure the services of a Big Four accounting firm when John and I came on board this company because of the history of the company. The fact that we are able to do that right now, as an investor, you should feel pretty good about that.”