Satellite ground gear provider Integral Systems reported flat revenue but improved profit for the three months ending Dec. 25 and said its revenue for its full fiscal year ending Sept. 30 would be 7 to 9 percent above last year’s revenue, with profit expected to benefit from reduced expenses.

Columbia, Md.-based Integral told investors Feb. 1 this year’s results will also improve because of a likely reduction in legal expenses, which were a drag on 2009 results.

Two shareholder lawsuits have been withdrawn or dismissed by courts, with no payment demanded of Integral. Company Chief Executive Paul Casner said the financial effects of the dismissals, plus the continued effort to reduce expenses company-wide, were already showing up in the quarterly results and would continue throughout the year.

Casner, who assumed his position in mid-2009, reiterated that his priority is to find ways that Integral’s diverse product and services portfolio can be assembled to present all-in-one satellite communications network operations and management to customers.

In the conference call, Casner said space situational awareness -–- meaning the ability to monitor space traffic — is one area in which Integral should be able to enter new markets. The company plans to begin demonstrating to customers its space situational awareness services in March.

Casner said Integral is “aggressively pursuing strategic acquisitions to get us involved more in the intelligence community” and has identified at least one acquisition target.

In addition to the legal and other expenses that pulled down Integral’s 2009 performance, the company was informed by the U.S. Defense Contract Audit Agency (DCAA) in October that several million dollars in contract-related charges that Integral had presumed were reimbursable under U.S. government cost-plus contracts would not be reimbursed.

Integral Chief Financial Officer William M. Bambarger Jr. said Integral and DCAA were nearing an agreement that would be satisfactory to both parties.

The U.S. government is Integral’s biggest customer and accounts for well over half of the company’s revenue. Two large Air Force contracts — the Rapid Attack Identification, Detection and Reporting System (RAIDRS), for the U.S. Space Command, and the Command and Control Systems-Consolidated, or CCS-C, business with the U.S. Air Force Space and Missile Systems Center — are likely to continue to account for a sizable portion of Integral revenue in 2010.

For the three months ending Dec. 25, Integral reported $37.7 million in revenue, down 2 percent from the same period a year earlier. But operating earnings were up sharply, to $2 million compared with $1.3 million a year ago, and net profit increased by 20 percent, to $1.2 million. Backlog at Dec. 25 was $182.1 million, or 15 percent higher than a year earlier.