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TeleCommunication Systems Inc. Reports Operating Results (10-Q)

November 08, 2010 | About:
10qk

10qk

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TeleCommunication Systems Inc. (TSYS) filed Quarterly Report for the period ended 2010-09-30.

Telecommunication Systems Inc. has a market cap of $270.14 million; its shares were traded at around $5.09 with a P/E ratio of 12.12 and P/S ratio of 0.9. Telecommunication Systems Inc. had an annual average earning growth of 62.6% over the past 5 years.TSYS is in the portfolios of Paul Tudor Jones of The Tudor Group, Jim Simons of Renaissance Technologies LLC, George Soros of Soros Fund Management LLC.

Highlight of Business Operations:

Commercial services revenue in the three- and nine-months ended September 30, 2010 was $19.4 million and $61.5 million higher, respectively, than the same periods for 2009 from increased subscriber revenue for LBS applications, more service connection deployments of our E9-1-1 services for cellular and VoIP service providers, and an increase in software maintenance revenue. The NIM acquisition contributed additional subscriber applications revenue during the three-months ended September 30, 2010. The increase in subscriber applications revenue for the nine-months ended September 30, 2010 was as a result of the NIM and LocationLogic acquisitions.

Commercial services gross profit was $20.1 million and $14.8 million for the three-months ended September 30, 2010 and 2009, respectively, based on higher revenue. Commercial services gross profit was $61.0 million for the nine-months ended September 30, 2010 compared to $36.8 million for the same period in 2009. Commercial services gross profit for the three-months ended September 30, 2010 was approximately 36% higher than the three-months ended September 30, 2009 primarily due to the contributions of the NIM acquisition. Commercial services gross profit for the nine-months ended September 30, 2010 was approximately 66% higher than the nine-months ended September 30, 2009 primarily due to the contributions of the LocationLogic and NIM acquisitions. The inclusion of this subscriber application revenue in the 2010 mix brought the gross profit as a percentage of revenue from 63% to 47% in the three-months ended September 30, 2010 and from 59% to 49% in the nine-months ended September 30, 2010.

The direct cost of our commercial systems consists primarily of compensation and benefits, purchased equipment, third-party hardware and software, travel expenses, consulting fees as well as the amortization of both acquired and capitalized software development costs for all reported periods. During the three- and nine-months ended September 30, 2010, direct costs of systems included $2.3 million and $6.9 million, respectively, of amortization of software development costs. In the three- and nine-months ended September 30, 2009, the composition of the direct cost of our systems was about the same except for $0.8 million and $2.1 million, respectively, of amortization of software development costs. The increase of 48% and 54% in the direct costs of systems

Our commercial systems gross profit was $7.9 million and $16.3 million in the three- and nine-months ended September 30, 2010, respectively, versus $7.0 million and $22.8 in the comparable periods of 2009. Commercial systems gross profit increased 13% for the three-months ended September 30, 2010 compared to the same period in 2009, due to higher location systems revenue. Commercial systems gross profit decreased 29% for the nine-months ended September 30, 2010 compared to the same period in 2009, due to less high-margin messaging systems revenue offset partially by increased revenue from location systems.

Our gross profit from government services increased to $7.1 million and $19.3 in the three- and nine-months ended September 30, 2010, respectively, up from $3.2 million and $9.3 million in the three- and nine-months ended September 30, 2009, as a result of a higher volume of services, including business arising from the acquisitions of Sidereal and Solvern in November 2009. Government services gross profit was 31% and 20% of revenue for the three-months ended September 30, 2010 and 2009, respectively. Government services gross profit was 29% compared to 22% of revenue for the nine-months ended September 30, 2010 and 2009, respectively, reflecting a more favorable mix of contracts.

Government systems sales were $25.1 million and $70.1 million in the three- and nine-months ended September 30, 2010, compared to $22.8 million and $75.0 for the three- and nine-months ended September 30, 2009. The fluctuations in the periods reported reflect changes in sales volume of our SwiftLink® and deployable communication systems due to the timing of government project funding.

Read the The complete Report

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