STOCKREPORTS		 Integrated Systems, Inc. NASDAQ Symbol INTS
21-JUN-97 Industry:
Computer (Software & Services)		 Summary: This company is a worldwide developer and marketer of software products and services for control systems design and real-time software development.

Recent Price 11.88
52 Wk Range 40.06 - 9.25		 Yield Nil
12-Mo. P/E 56.5

Quantitative Evaluation:
Outlook (1 Lowest - 5 Highest)
NA
Fair Value
NA
Risk
HIGH
Earn/Div Rank
B
Technical Evaluation:
BEARISH since 11/96
Rel. Strength Rank (1 Lowest - 99 Highest)
7
Insider Activity
NA

Business Profile 01-APR-97

INTS believes that it has strengthened its presence in the fast-growing telecom/datacom, multimedia and embedded Internet markets. The company has also been establishing strategic relationships with important industry partners, including LSI Logic, Philips Electronics, CoSystems and UB Networks. INTS is positioning its MATRIXx product family as the standard for embedded control systems design in the automotive and aerospace markets. Higher-than-anticipated operating costs have limited the impact of continued strong revenue growth on recent earnings. The company intends to implement more stringent cost control measures to bring expenses more into line with revenue growth.

Operation Review 01-APR-97

Based on a preliminary report, revenues in FY 97 (Feb.) advanced 25% from those of FY 96. Aided by significant design wins and the capture of major accounts worldwide, especially with the pSOSystem and SNiFF+ offerings, product revenue gained 34%. Gross margins widened substantially, but penalized by higher marketing and sales, R&D and SG&A expense, income from operations fell 8.5%. Following $5.7 million and $7.3 million of acquisition-related and other charges in the respective years, and after significantly higher interest and other income, net income gained 37%, to $7,254,000 ($0.31 a share, based on 6.4% more shares), from $5,283,000 ($0.24).

Stock Performance 20-JUN-97n

In the past 30 trading days, INTS's shares have declined 10%, compared to a 9% rise in the S&P 500. Average trading volume for the past five days was 144,240 shares, compared with the 40-day moving average of 136,623 shares.

Key Stock Statistics

Dividend Rate/Share Nil
Shs. outstg. (M) 23.0
Avg. daily vol. (M) 0.143
Tang. Bk. Value/Share 3.51
Beta 1.67
Shareholders 100
Market cap. (B) $0.273
Inst. holdings 46%
Value of $10,000 invested 5 years ago:$ 22,619

Fiscal Year Ending Feb. 28

Revenue (Million $)
1998 1997 1996 1995 1994 1993
Q1 24.59 23.15 18.46 10.10 8.70 7.20
Q2 NA 26.11 19.85 12.60 10.30 7.80
Q3 NA 26.80 21.51 13.56 10.50 8.30
Q4 NA 29.40 24.62 15.71 12.20 9.10
Year NA 105.5 84.44 51.98 41.70 32.40

Earning Per Share ($)
1998 1997 1996 1995 1994 1993
Q1 0.01 0.11 0.07 0.03 0.03 0.05
Q2 NA 0.10 0.11 0.07 0.06 0.05
Q3 NA Nil 0.03 0.09 0.06 0.04
Q4 NA 0.11 0.03 0.11 0.08 0.06
Year NA 0.31 0.24 0.30 0.22 0.19

Dividend Data: No cash dividends have been paid, and the company expects that, for the foreseeable future, it will continue to retain earnings for use in the operation of its business.

Business Summary 01-APR-97

Integrated Systems, Inc. develops and markets software products and services to enable users to accelerate design and implementation of control systems and development of software for embedded microprocessors. Its products reduce the time and expense of real-time software and system development and let customers develop systems with enhanced functionality, performance, safety and reliability. In addition to licensing products, the engineering services group helps customers implement specific solutions using company products.

INTS offers three major families of products to support the embedded software development market: real-time or embedded operating software; software development tools; and graphical design products. Sales outside of North America accounted for 34%, 28% and 30% of total revenue in FY 96 (Feb.), FY 95 and FY 94, respectively.

Embedded operating software consists of the pSOS+ operating system and system purpose modules. The combination of real-time operating software and development tools is marketed and licensed as pSOSystem. It is a priority-based, multitasking operating system that is small, highly reliable and efficient.

INTS offers a broad line of software development tools. The company's integrated development environment (IDE) includes SNiFF+, an advanced object-oriented environment of complex object-oriented desktop and client/server applications. Individual tools include C and C++ cross-compilers, source-level debuggers, browsers, pSOS+ simulators and profilers. INTS also offers a visual debugging and analysis tool called ESp. The company's tools operate on Windows-based PCs and workstations made by Sun Microsystems, Hewlett-Packard and IBM.

The company's graphical design product line, called MATRIXx, includes control system engineering tools for analysis, design, simulation and prototyping--covering the complete design life cycle. MATRIXx targets control engineers at Fortune Global 500 firms in aerospace, automotive, manufacturing, computer peripheral and process control markets.

In July 1996, INTS acquired Epilogue Technology, a developer of network managment and embedded Internet software for telecommunications equipment and integrated circuit manufacturers.

Important Developments

Mar. '97 New product capabilites introduced during the fourth quarter of FY 97 (Feb.) included real-time execution of Java with the company's pSOSystem software and a new line of products combining network management and remote monitoring development.

Capitalization

Long Term Liabilities: $203,000 (2/97).

Per Share Data ($)
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
Tangible Bk. Val. 3.60 2.65 4.06 1.93 1.79 1.73 1.39 0.51 0.35 NA
Cash Flow 0.68 0.42 1.01 0.27 0.25 -0.36 0.28 0.17 0.12 NA
Earnings 0.31 0.24 0.30 0.22 0.19 -0.43 0.24 0.15 0.10 NA
Dividends Nil Nil Nil Nil Nil Nil Nil Nil Nil NA
Payout Ratio Nil Nil Nil Nil Nil Nil Nil Nil Nil NA
Cal. Yrs. 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
Prices - High 42 1/2 21 9 3/4 5 3/4 6 5/8 8 5/8 7 1/2 NA NA NA
- Low 15 3/4 8 7/8 4 1/4 2 7/8 2 5/8 4 1/8 3 3/4 NA NA NA
P/E Ratio - High NM 87 32 26 36 NM 32 NA NA NA
- Low NM 37 14 13 14 NM 16 NA NA NA

Income Statement Analysis (Million $)
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
Revs. 105 84.4 123 41.7 32.4 25.3 18.9 12.6 7.9 NA
Oper. Inc. 17.6 17.9 383 5.5 4.9 6.2 5.1 2.9 2.1 NA
Depr. 5.0 4.1 3.7 1.0 1.2 1.1 0.7 0.3 0.2 NA
Int. Exp. Nil Nil 0.1 Nil Nil Nil Nil Nil Nil NA
Pretax Inc. 9.6 8.8 37.0 5.9 5.2 -5.1 6.0 2.9 2.1 NA
Eff. Tax Rate 32% 40% 20% 32% 34% NM 35% 31% 33% NA
Net Inc. 7.3 5.3 29.7 4.0 3.4 -7.4 3.9 2.0 1.4 NA

Balance Sheet & Other Fin. Data (Million $)
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
Cash 30.1 34.1 295 32.9 27.2 24.0 19.5 4.4 3.0 NA
Curr. Assets 64.2 57.8 152 45.2 35.9 32.4 23.7 8.2 6.0 NA
Total Assets 113 85.3 204 50.8 40.9 37.6 25.2 9.6 6.8 NA
Curr. Liab. 26.1 26.4 31.2 11.5 8.1 4.4 2.3 2.5 1.6 NA
LT Debt Nil Nil 28.6 Nil Nil Nil Nil Nil Nil NA
Common Eqty. 86.2 58.3 149 38.1 32.4 32.9 22.7 6.0 4.0 NA
Total Cap. 86.2 58.3 169 39.0 32.4 32.9 22.7 7.0 5.0 NA
Cap. Exp. 16.0 4.3 17.4 1.3 0.9 1.5 0.7 1.1 0.2 NA
Cash Flow 12.2 9.4 33.5 5.0 4.7 -6.3 4.6 2.3 1.6 NA

Curr. Ratio 2.5 2.2 4.8 3.9 4.4 7.3 10.2 3.3 3.7 NA
% LT Debt of Cap. Nil Nil 16.9 Nil Nil Nil Nil Nil Nil NA
% Net Inc.of Revs. 6.9 6.3 24.1 9.7 10.6 NM 20.6 15.7 17.5 NA
% Ret. on Assets 7.3 7.0 25.0 8.7 8.9 NM 20.3 23.9 NA NA
% Ret. on Equity 10.0 9.9 36.8 11.3 10.7 NM 25.2 39.6 NA NA

Data as orig. reptd.; bef. results of disc. opers. and/or spec. items. Per share data adj. for stk. divs. as of ex-div. date. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked.

Office--201 Moffett Park Dr., Sunnyvale, CA 94089. Tel--(408) 542-1500. Website--http://www.isi.com Chrmn & Secy--N. K. Gupta. Pres & CEO--D. P. St. Charles. VP-Fin & CFO--W. C. Smith Dirs--J. C. Bolger, N. K. Gupta, V. Gupta, T. Kailath, R. C. Murphy, D. P. St. Charles. Transfer Agent & Registrar--ChaseMellon Shareholder Services, San Francisco. Incorporated--in California in 1980. Empl-- 416. S&P Analyst: Adam Penn


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