With the release of its second-quarter financial results, Integral Systems’ management said the company is taking steps to answer recent shareholder concerns, including progress toward selling the company and appointing a shareholder to the company’s board of directors.
During a May 9 conference call with investors, Pete Gaffney, the Lanham, Md.-based company’s new chief executive officer, said the company appointed Bill Leimkuhler, a manager with Semaphore Capital Advisors LLC of Stamford, Conn., to the board of directors at a May 3 shareholder meeting. Gaffney took over as CEO when Steven Chamberlain resigned from the position in April.
Various decisions by Chamberlain in recent months had caused discontent among shareholders. Those concerns included steps that made it more difficult to appoint a shareholder to the board and a lack of progress toward a sale of the company. Integral’s largest investor, Mellon HBV Alternative Strategies LLC, had spoken up in favor of Leimkuhler’s appointment in April, after board member Bonnie Wachtel resigned over these concerns and others.
During the call, Gaffney said that after engaging the assistance of an investment banking group last month, the company expects to close a deal for a sale some time during the fall of 2006. Gaffney said that both the company and investment banker BB&T Capital Markets/Windsor Group, a division of Richmond, Va.-based Scott & Stringfellow Inc., already have been approached by several potential buyers.
“I don’t think we will have any shortage of companies working to be in this process,” Gaffney said.
In his new role as chief executive officer, Gaffney said he plans to tap further into the government market, particularly U.S. Air Force business. Gaffney said he sees potential for growth in a number of government programs, such as GPS 3 and space-based surveillance. He said the company would focus heavily on command and control ground systems.
“We already have a solid strategy in place,” Gaffney said. “It’s worked well in the past, and I believe there’s a lot of room for growth. I don’t see any reason to make significant changes in our strategy and our focus.”
Gaffney said the company also wishes to pursue more business with the National Oceanic and Atmospheric Administration.
In its financial results, Integral reported revenue of $32.3 million for the quarter ending March 31, up from $23.3 million in the second quarter of 2005. Net income came in at $3.54 million, compared to $2.05 million in the second quarter of 2005.
The mix of Integral’s revenue between commercial and government business shifted a bit during the quarter. The previous mix had been 75 percent government business and 25 percent commercial; in second-quarter 2006, government revenue increased to 80 percent of business, Gaffney said.
Absent from the conference call was any discussion of the problems faced by former CEO Chamberlain, who plead guilty to a fourth-degree sex offense involving a 14-year-old girl in Maryland’s Howard County Circuit Court April 26, days after he resigned from his post.
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