Innovative Solutions & Support, Inc. Announces Fourth Quarter and Fiscal 2012 Financial Results

  Innovative Solutions & Support, Inc. Announces Fourth Quarter and Fiscal
  2012 Financial Results

Business Wire

EXTON, Pa. -- December 05, 2012

Innovative Solutions & Support, Inc. (NASDAQ: ISSC) today announced its
financial results for the fourth quarter and full year fiscal 2012 ended
September 30, 2012.

Three Month Results

For the fourth quarter, the Company reported revenue of $6.9 million, up 7%
from revenue of $6.5 million in the fourth quarter of 2011. The Company
reported fourth quarter 2012 net income of $2.8 million, or $0.17 per share,
compared to $12,000, or $0.00 per share in the same quarter a year ago. For
the fourth quarter, the Company generated positive operating cash flow of $1.3
million, up from $0.4 million in the fourth quarter of fiscal 2011.

Of the reported net income and earnings per share, $2.4 million and $0.15,
respectively, resulted from the reversal of income tax valuation allowances
related to book to tax temporary differences and to research and development
credits. The Company established the valuation allowances in 2008, following
several years of losses, at which time the realization of certain deferred tax
assets was considered unlikely in accordance with the requirements of ASC
Topic 740 “Income Taxes”. Over the past several years, the Company has been
profitable, and, in accordance with the requirements of ASC Topic 740, has
concluded that, based upon an analysis of past results and future projections,
the valuation allowances for certain deferred tax assets should be reversed.

Geoffrey Hedrick, Chairman and Chief Executive Officer of Innovative Solutions
& Support, Inc. (“ISSC”), said, “Revenues for the last three months of the
year increased for the third consecutive quarter, which, together with
continued operating efficiency, enabled us to achieve full year profitability
for the fourth consecutive year. The results were accomplished while we were
investing in new product development programs to leverage our core technology,
expand our market opportunities, and increase our growth potential.
Consequently, we not only ended fiscal 2012 in a strong financial position,
but we entered fiscal 2013 with a more robust product portfolio and a larger
addressable market. While economic uncertainty will present challenges to the
health of our end markets in the near term, we are confident that the
investments which we are making to strengthen the Innovative Solutions &
Support franchise will create value for our shareholders over the longer

At September 30, 2012, the Company had $43.0 million of cash on hand and no
debt. During the fourth quarter of the current fiscal year the Company used
cash of approximately $107,000 to repurchase 31,221 shares of Company stock at
an average cost of $3.44 per share.

Backlog was approximately $19.7 million at September 30, 2012, compared to
$23.0 million at June 30, 2012, and $27.5 million at September 30, 2011. For
the year, new orders of $28.2 million exceeded sales of $24.6 million. Backlog
at September 30, 2012 was net of $11.4 million of order reductions primarily
by American Airlines. We expect backlog to improve in the future because of
potential future sole source production sales resulting from the present
customer-funded Engineering Modification and Development (“EMD”) contracts.

Full Year Fiscal 2012 Results

Revenues for the fiscal year ended September 30, 2012 were $24.6 million
compared to $25.7 million for the twelve months ended September 30, 2011. Net
income was $3.0 million, or $0.18 per share, for fiscal 2012 compared to $0.7
million, or $0.04 per share for the twelve months ended September 30, 2011. Of
the reported net income and earnings per share, $2.4 million and $0.15,
respectively, resulted from the reversal of the income tax valuation
allowances that were discussed above. Cash flow from operating activities was
$1.4 million for the twelve months ended September 30, 2012 compared to $2.3
million for the prior year. During fiscal 2012, the Company used $798,000 of
cash to repurchase 211,722 shares of its stock at an average cost of $3.77 per

Shahram Askarpour, President of ISSC, commented, “The profitability and
positive cash flow generated in fiscal 2012 has provided us with additional
resources to continue our development efforts and to leverage our expanding
portfolio of products to gain share in our commercial air transport, military
and general aviation markets. Eclipse Aerospace, Inc. has already placed an
initial production order for one of our new products, our advanced avionics
suite for their Eclipse 550 jet. In addition, we announced two new products
that we are confident will be well received, our NextGen Cockpit/IP® II flight
deck for business and general aviation aircraft, and our Integrated
Multifunction Standby Unit for a variety of fixed wing aircraft and
helicopters. Together with the progress that we are making in the development
of our new System Integration and Cockpit Avionics, we continue to build our
reputation for improving aircraft performance with dependable, high-quality
products that offer owners an exceptional value proposition.”

At the end of the quarter, the Company had $760,000 due from American
Airlines. Based upon the present status of the bankruptcy proceedings, we are
not able to determine the amount, if any, that could be uncollectible.

Business Outlook

For the fiscal year ending September 30, 2013, we expect to increase sales and
generate profit, which would represent our fifth consecutive profitable year.
Our ability to provide specific targets and ranges remains difficult as a
result of the uncertain current economic climate; however, we are cautiously
optimistic about results for 2013. We anticipate that sales will increase over
2012 sales; however, income before income taxes will not grow as fast as sales
because of the continued high investment in lower margin EMD programs and in
IR&D. We will provide additional commentary during our earnings conference

Conference Call

The Company will be hosting a conference call December 6, 2012 at 10:00 AM ET
to discuss these results and its business outlook. Please use the following
dial in number to register your name and company affiliation for the
conference call: 877-883-0383 and enter the PIN Number 2640289. The call will
also be carried live on the Investor Relations page of the Company web site

About Innovative Solutions & Support, Inc.

Headquartered in Exton, Pennsylvania, Innovative Solutions & Support, Inc.
( is a systems integrator that designs and manufactures
flight guidance and cockpit display systems for Original Equipment
Manufacturers (OEM’s) and retrofit applications. The company supplies
integrated Flight Management Systems (FMS) and advanced GPS receivers for
precision navigation resulting in low carbon footprint.

Certain matters contained herein that are not descriptions of historical facts
are “forward-looking” (as such term is defined in the Private Securities
Litigation Reform Act of 1995). Because such statements include risks and
uncertainties, actual results may differ materially from those expressed or
implied by such forward-looking statements. Factors that could cause results
to differ materially from those expressed or implied by such forward-looking
statements include, but are not limited to, those discussed in filings made by
the Company with the Securities and Exchange Commission. Many of the factors
that will determine the Company’s future results are beyond the ability of
management to control or predict. Readers should not place undue reliance on
forward-looking statements, which reflects management’s views only as of the
date hereof. The Company undertakes no obligation to revise or update any
forward-looking statements, or to make any other forward-looking statements,
whether as a result of new information, future events or otherwise.

Innovative Solutions and Support, Inc.
Consolidated Statement of Operations
                 Three months ended                Twelve months ended
                 September 30,                     September 30,
                  2012           2011           2012           2011       
Sales            $ 6,928,026      $ 6,490,277        24,578,198       25,737,652
Cost of Sales     4,259,701      3,324,155      14,067,933     11,945,184 
Gross Profit       2,668,325        3,166,122        10,510,265       13,792,468
Research and       560,741          1,181,696        2,693,554        5,500,924
general and       1,734,578      1,889,470      7,400,199      7,683,637  
operating          2,295,319        3,071,166        10,093,753       13,184,561
Operating          373,006          94,956           416,512          607,907
Interest           38,521           24,202           101,012          143,942
Interest           (61        )     (297       )     (598       )     (1,509     )
Other income      6,489          -              65,005         150,010    
Income before      417,955          118,861          581,931          900,350
income taxes
Income tax
(benefit)         (2,355,174 )    107,222        (2,397,063 )    183,760    
Net income       $ 2,773,129     $ 11,639        $ 2,978,994     $ 716,590    
Net income per
Common Share
Basic            $ 0.17          $ 0.00          $ 0.18          $ 0.04       
Diluted          $ 0.17          $ 0.00          $ 0.18          $ 0.04       
Average Shares
Basic              16,581,819       16,782,262       16,641,895       16,782,223
Diluted            16,581,819       16,811,629       16,641,900       16,824,621

Innovative Solutions and Support, Inc.
Consolidated Statement of Operations
                                             September 30,     September 30,
                                              2012            2011        
Current Assets
Cash and cash equivalents                    $ 42,977,501      $ 42,625,854
Accounts receivable, net                       3,978,512         3,124,114
Inventories                                    3,801,547         3,508,595
Deferred income taxes                          1,588,162         438,635
Prepaid expenses and other current assets     2,031,644       875,636     
Total current assets                           54,377,366        50,572,834
Property and equipment, net                    7,214,378         7,476,362
Long term deferred income taxes                846,887
Other assets                                  158,600         208,408     
Total Assets                                 $ 62,597,231     $ 58,257,604  
Current Liabilities
Current portion of capitalized lease         $ -               $ 13,189
Accounts payable                               1,139,464         443,516
Accrued expenses                               2,723,812         2,551,389
Deferred revenue                              1,426,552       232,630     
Total current liabilities                      5,289,828         3,240,724
Long term deferred income taxes                128,998           566,963
Other liabilities                             98,002          189,130     
Total Liabilities                             5,516,828       3,996,817   
Commitments and contingencies                  -                 -
Shareholders' Equity
Preferred Stock, 10,000,000 shares
authorized, $.001 par value, of which
200,000 shares are authorized as Class A       -                 -
Convertible stock. No shares issued and
outstanding at September 30, 2012 and 2011
Common stock, $.001 par value: 75,000,000
shares authorized, 18,329,314 and              18,329            18,287
18,286,884 issued at September 30, 2012
and 2011, respectively
Additional paid-in capital                     47,845,732        47,206,690
Retained earnings                              29,605,236        26,626,242
Treasury stock, at cost, 1,756,632 and
1,544,910 shares at September 30, 2012 and    (20,388,894 )    (19,590,432 )
2011, respectively
Total Shareholders' Equity                    57,080,403      54,260,787  
Total Liabilities and Shareholders' Equity   $ 62,597,231     $ 58,257,604  


Innovative Solutions & Support, Inc.
Ron Albrecht, Chief Financial Officer
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