Innovative Solutions & Support, Inc. Announces First Quarter Fiscal 2013 Financial Results

  Innovative Solutions & Support, Inc. Announces First Quarter Fiscal 2013
  Financial Results

       Revenue up 35%, Net Income Increases over $660,000 from year ago

New Orders Total $16 Million, Increasing Backlog Sequentially $10 Million for
                                 the Quarter

Business Wire

EXTON, Pa. -- January 23, 2013

Innovative Solutions & Support, Inc. (NASDAQ: ISSC) today announced its
financial results for the first quarter of fiscal 2013, ended December 31,

For the first quarter, the Company reported revenue of $6.5 million, a 35
percent increase compared to the first quarter fiscal 2012 revenue of $4.8
million. The Company reported first quarter 2013 net income of $318,000, or
$0.02 per diluted share, compared to a loss of $343,000, or ($0.02) per fully
diluted share, in the same quarter a year ago.

Geoffrey Hedrick, Chairman and Chief Executive Officer of Innovative Solutions
& Support, Inc. (“ISSC”) said, “The year is off to a strong start, with 35
percent revenue growth leading to our fourth consecutive profitable quarter.
New orders totaled over $16 million in the quarter, which increased backlog by
nearly $10 million over the last three months. The majority of the orders are
related to strategically important new products. These results reflect our
strategy of growth through a combination of near term orders for existing
products and simultaneous investment in new capabilities that build upon our
proprietary technology to develop new opportunities for us across our various
commercial air transport, general aviation, and military markets. Over the
course of this year, we expect R & D spending to remain elevated and gross
margins to reflect a higher mix of Engineering Modification and Development
(“EMD”) contracts as we focus on completing programs that will enable us to
bring new products to market. Despite the continuing high level of engineering
spend on EMD programs and IR&D, we expect to remain profitable. We are
progressing toward the next phase of our growth strategy, as we begin a
transition from new product development to production orders.”

In December 2012, the Company paid a special cash dividend of $1.50 per share,
or an aggregate payment of approximately $25 million. At December 31, 2012,
the Company had $17 million in cash and no debt.

First Quarter orders of $16.3 million, backlog increases by 50%

Orders were $16.3 million in the first quarter and backlog was approximately
$29.4 million at December 31, 2012, up almost $10 million over the last three
months from $19.7 million at September 30, 2012. Backlog includes only modest
levels of potential future sole-source production orders from products
currently in development under the Company’s EMD contracts.

Shahram Askarpour, President of ISSC, commented, “The first quarter was
noteworthy from both a strategic and operational perspective. We booked over
$16 million in new business, including production orders for near-term
delivery and orders for new products. These orders include a $4 million
military contract to provide the Company’s integrated suite of avionics for
the C-130 and L-100 aircraft, and an order from Eclipse Aerospace, Inc. for an
initial fifty ship sets of our advanced avionics suite. Strategically, we will
be providing a first-of-its-kind military application of our flight management
system and Beta 3 GPS receivers that provide RNP (Required Navigational
Performance) and LPV (Localizer Performance with Vertical Guidance)
capabilities. Operationally, these new contracts include initial orders for
the more profitable sole source production of products developed under our EMD
programs. We are focused on increasing shareholder value by remaining
dedicated to serving customers by improving aircraft performance with
dependable, high-quality products that offer competitively priced, enhanced

Business Outlook

Mr. Hedrick concluded that, “For the fiscal year ending September 30, 2013, we
expect to increase sales and generate a profit, which would represent our
fifth consecutive profitable year. Our ability to provide specific targets and
ranges remains difficult in the present economic climate; however, we are
optimistic about results for 2013. We continue to project that 2013 sales will
increase over 2012 sales; however, the continued high investment in lower
margin EMD programs and IR&D will constrain the growth of operating income. We
will provide additional commentary during our earnings conference call.”

Conference Call

The Company will be hosting a conference call January 24, 2013 at 10:00 AM ET
to discuss these results and its business outlook. Those planning to dial in
to the call should dial the following number and register their names and
company affiliations: 877-883-0383, and enter the PIN Number 0070901. The call
will also be carried live on the Investor Relations page of the Company web

About Innovative Solutions & Support, Inc.

Headquartered in Exton, Pa., 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 low carbon footprint navigation.

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 Balance Sheet

                                           December 31,        September 30,
                                           2012                2012
Current Assets
Cash and cash equivalents                  $ 17,027,886        $ 42,977,501
Accounts receivable, net                     4,238,626           3,978,512
Inventories                                  3,467,694           3,801,547
Deferred income taxes                        1,683,578           1,588,162
Prepaid expenses and other current          3,669,728         2,031,644   
Total current assets                         30,087,512          54,377,366
Property and equipment, net                  7,151,650           7,214,378
Non-current deferred income taxes            697,805             846,887
Other assets                                145,400           158,600     
Total Assets                               $ 38,082,367       $ 62,597,231  
Current Liabilities
Accounts payable                           $ 779,288           $ 1,139,464
Accrued expenses                             2,609,028           2,723,812
Deferred revenue                            1,161,532         1,426,552   
Total current liabilities                    4,549,848           5,289,828
Deferred income taxes                        129,201             128,998
Other liabilities                           77,376            98,002      
Total Liabilities                           4,756,425         5,516,828   
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 December 31, 2012
and September 30, 2012
Common stock, $.001 par value:
75,000,000 shares authorized,
18,521,044 and 18,329,314 issued at          18,521              18,329
December 31, 2012 and September 30,
2012, respectively
Additional paid-in capital                   48,781,705          47,845,732
Retained earnings                            4,915,307           29,605,236
Treasury stock, at cost, 1,756,807 and
1,756,632 shares at December 31, 2012       (20,389,591 )      (20,388,894 )
and September 30, 2012, respectively
Total Shareholders' Equity                  33,325,942        57,080,403  
Total Liabilities and Shareholders'        $ 38,082,367       $ 62,597,231  

Innovative Solutions and Support, Inc.
Consolidated Statement of Operations
                                        Three months ended December 31,
                                        2012             2011
Sales                                   $ 6,536,734      $ 4,755,459
Cost of Sales                            3,496,482       2,629,860  
Gross Profit                              3,040,252        2,125,599
Operating expenses:
Research and development                  850,852          790,223
Selling, general and administrative      1,804,809       1,993,575  
Total operating expenses                  2,655,661        2,783,798
Operating income (loss)                   384,591          (658,199   )
Interest income                           17,572           21,779
Interest expense                          -                (237       )
Other income                             11,545          42,069     
Income (loss) before income taxes         413,708          (594,588   )
Income tax expense (benefit)             96,119          (251,609   )
Net income (loss)                       $ 317,589        $ (342,979   )
Net income (loss) per common share
Basic                                   $ 0.02           $ (0.02      )
Diluted                                 $ 0.02           $ (0.02      )
Weighted Average Shares Outstanding
Basic                                     16,613,122       16,721,494
Diluted                                   16,613,128       16,721,494


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