Company Also Announces Quarterly Dividend of Three Cents Per Share

Integral Systems, Inc.
today reported financial results for the third quarter of
fiscal 2003. Revenues for the quarter were $19.3 million, up from $14.4
million in the third quarter of fiscal 2002-an increase of approximately 34%.
Operating income increased almost four-fold, rising to $1.4 million for the
quarter, versus $400,000 in the third quarter of fiscal 2002.

Net income decreased to $170,000 in the third quarter of fiscal 2003 from
$960,000 in the third quarter of fiscal 2002, a decrease of 82%. The decline
is attributable to approximately $1.4 million of other expense recorded in the
third quarter of 2003 related to the Company’s investment in the common stock
of Loral Space and Communications Ltd (LOR). LOR filed a voluntary petition
for bankruptcy under Chapter 11 of the Federal Bankruptcy Code on July 15,
2003. As a result, the Company considers the investment to be permanently
impaired. On a fully diluted per share basis, net income declined to $.02
during the third quarter of fiscal 2003 from $.10 during the third quarter of
fiscal 2002.

“Our third quarter was not particularly stellar in terms of earnings
performance,” commented Steven R. Chamberlain, Chairman and Chief Executive
Officer. “In addition to the LOR write-off, our SAT and Newpoint subsidiaries
have yet to turn the corner to profitability, both posting operating losses
greater than originally anticipated. We also experienced a couple of contract
overruns in our core command and control business, which caused that operation
to be less profitable than it has been in recent quarters. Fortunately,
operating income generated by our subsidiary RT Logic, allowed us to operate
in the black on a consolidated basis for the quarter.”

Operating results for the three months ended June 30, 2003 include full
quarter results for RT Logic. The Company did not own RT Logic in the third
quarter of the prior year.

For the nine months ended June 30, 2003, revenues were $58.9 million
compared to $35.3 million for the nine months ended June 30, 2002 — an
increase of $23.6 million, or 67%. For the current nine-month period,
operating income was $5.0 million compared to $1.2 million for the same period
last year, while net income increased to $2.5 million from $2 million, an
increase of approximately $500,000. On a fully diluted per share basis, net
income increased to $.26 during the nine months ended June 30, 2003 from $.22
during the same period of fiscal 2002.

“Despite our third quarter setbacks, the big picture actually remains
quite optimistic,” commented Chamberlain. “First, I am pleased that our year
to date operating income and EPS exceed last year’s numbers, even after the
LOR write-off. Further, not only are we still on track to meet originally
published guidance for revenue, net income and EPS, we are on target to exceed
guidance for operating income by more than 30% for fiscal 2003. Looking
forward to FY04, we should have our best year ever,” stated Chamberlain.

The Company also reported that its Board of Directors has approved the
Company’s plan to pay a quarterly dividend of three cents per share beginning
with the upcoming quarter ending September 30, 2003. “Because of the new tax
laws favoring dividend payments coupled with our continued confidence in the
Company’s future profitability, I believe that a recurring dividend payment
will contribute to enhancing shareholder value,” said Chamberlain. Specifics
regarding record dates and payment dates will be announced in future press

Mr. Chamberlain will host a conference call Wednesday, August 13, 2003 at
11:00 a.m. Eastern Time (ET). Chamberlain will discuss the earnings release
and other Company prospects. To participate or listen to the call, dial
800-633-8467. A replay of the conference call can be heard August 13, 2003
from 12:30 p.m. ET through Friday, August 15, 2003 12:30 p.m. ET by dialing
800-633-8284 or 402-977-9140. Ask for reservation number 21155375.

Founded in 1982, Integral Systems is a leading provider of satellite
systems and has supported over 190 different satellite missions for
communications, science, meteorological and earth resource applications. The
Company was the first to offer an integrated suite of COTS
(Commercial-Off-The-Shelf) software products for satellite command & control,
the EPOCH 2000 product line. EPOCH has become a world market leader in
commercial applications with successful installations on 5 continents. The
Company also offers products and services for satellite integration and test
and payload data processing.

Through its wholly owned subsidiary SAT Corporation, the Company provides
satellite and terrestrial communications signal monitoring systems to
satellite operators and users throughout the world. The Company also provides
software for equipment monitoring and control to satellite operators and
telecommunications firms through its Newpoint Technologies, Inc. subsidiary.
The Company’s RT Logic subsidiary builds telemetry processing systems for
military applications including tracking stations, control centers and range
operations. Integral Systems has approximately 350 employees working at
Company headquarters in Lanham, Maryland, and at other locations in the U.S.
and Europe. For more information, visit

Except for statements of historical facts, this news release contains
forward-looking statements about the Company, including but not necessarily
limited to dividends and financial projections, all of which are based on the
Company’s current expectations. Any payments of dividends will be subject to,
among other factors, review and approval by the Company’s Board of Directors,
the earnings, capital requirements and general operating and financial
condition of the Company, and applicable legal limitations on the payment of
dividends by the Company; therefore, there can be no assurance that the
Company will make any payments of dividends. Likewise, there can be no
assurance that the Company’s projections will in fact be achieved and these
projections do not reflect any acquisitions or divestitures that may occur in
the future. The forward-looking statements contained in this news release are
subject to additional risks and uncertainties, including the Company’s
reliance on contracts and subcontracts funded by the U.S. government, intense
competition in the ground systems industry, the competitive bidding process to
which the Company’s government and commercial contracts are subject, the
Company’s dependence on the satellite industry for most of its revenues, rapid
technological changes in the satellite industry, the Company’s acquisition
strategy and those other risks noted in the Company’s SEC filings. The
Company assumes no obligation to update or revise any forward-looking
statements appearing in this news release.


                             Three Months Ended       Nine Months Ended
                                  June 30,                  June 30,
                             2003          2002       2003          2002
                         (unaudited)  (unaudited)  (unaudited)  (unaudited)

    Revenue              $19,341,829  $14,439,583  $58,868,206  $35,254,569

    Total Cost of
     Revenue              12,995,065   10,803,806   40,031,420   25,454,140

    Gross Margin           6,346,764    3,635,777   18,836,786    9,800,429

    Operating Expenses
      SG&A                 3,068,584    2,673,468    8,739,236    6,727,394
      Research and
       Development           759,701       (2,929)   1,868,203      203,190
      Product Amortization   747,231      547,276    2,241,693    1,641,802
      Intangible Asset
       Amortization          322,265       31,250      966,795       31,250
    Total Operating
     Expenses              4,897,781    3,249,065   13,815,927    8,603,636

    Income from
      Operations           1,448,983      386,712    5,020,859    1,196,793

    Impairment on
     Securities           (1,364,180)           0   (1,364,180)           0
    Other Income (Expense)   145,555      938,118      215,977    1,704,354

    Income Before Income
     Taxes                   230,358    1,324,830    3,872,656    2,901,147

    Provision for Income
     Taxes                    58,464      365,122    1,366,200      891,735

    Net Income              $171,894     $959,708   $2,506,456  $ 2,009,412

    Weighted Average Number
     of Common Shares
     Outstanding During
     Period                9,717,815    9,225,046    9,709,750    9,139,669

    Earnings Per Share
     (Basic)                   $0.02        $0.10        $0.26        $0.22

    Weighted Average Number
     of Fully Diluted Common
     Shares Outstanding
     During Period         9,781,366    9,382,045    9,764,355    9,269,441

    Earnings Per Share
     (Diluted)                 $0.02        $0.10        $0.26        $0.22