ISSC Innovative Solutions and Support Inc

Innovative Solutions & Support, Inc. (NASDAQ:ISSC) today announced financial results for the period ended December 31, 2005, the first quarter of fiscal 2006. For the first quarter, Flat Panel System sales were $3.1 million, a better than tenfold increase from $0.3 million in the prior year's first quarter. For the quarter, Flat Panel Systems orders were a record $9.4 million and ending Flat Panel Systems backlog a record $12.1 million. Total first quarter 2006 revenues were $5.4 million compared to $19.0 million in the prior year's first quarter. Roman Ptakowski, President of Innovative Solutions & Support, Inc., commented, "We achieved record levels of Flat Panel Systems revenues, orders and backlog as we continue to experience accelerating interest from an increasing variety of markets. Our goal is to expand our Flat Panel Systems opportunity by targeting markets consisting of large numbers of aircraft, furthering our price leadership, and exploring partnerships and other alliances that can help drive growth." Net income in the first quarter of fiscal 2006 was essentially breakeven. This compared to $6.2 million or thirty four cents ($0.34) per fully diluted share in the first quarter of fiscal 2005. The Company ended the period with $83 million of cash and a total backlog of $18.2 million. Please refer to the accompanying schedules highlighting our Statement of Operations and Balance Sheet. Mr. Ptakowski continued, "We are very pleased that we were able to post a modest profit this quarter despite significantly lower volumes of Air Data product shipments relative to last year when demand benefited from the approaching RVSM compliance deadlines. We remain confident that demand for Air Data products will rebound, especially from the general aviation fleet that missed the January, 2005 deadline, as well from the aging fleets of both commercial and military aircraft. Our recent $7.4 million contract with the Department of Defense underscores the Company's position as a leading supplier of Air Data equipment to all major aviation markets." The company will host a conference call tomorrow morning, January 27, 2006 at 10:00 am local time (EST) to discuss these results as well as our business outlook and recent new business. Please call in to participate at (866) 425-6191, conference ID# 6936252. Also, our web site (www.innovative-ss.com) will carry the conference call live and have it available for subsequent listening for a period of 30 days. Headquartered in Exton, PA. Innovative Solutions & Support, Inc. (www.innovative-ss.com) is a systems integrator engaged in the design, manufacture and marketing of Air Data, Flight Information Computers, Engine and Fuel Measurement and Control Computers, Flat Panel Display Systems and advanced monitoring systems that measure and display critical flight information. This includes data relative to aircraft separation, airspeed and altitude as well as fuel and instrument measurements. 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. -0- *T Innovative Solutions and Support, Inc. Balance Sheet Actual Actual September 30, December 31, 2005 2005 ------------- ------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 83,172,582 $ 82,631,890 Accounts receivable 5,479,936 5,316,834 Inventories 3,911,626 3,648,493 Deferred income taxes 956,070 701,102 Prepaid expenses 4,028,498 4,314,267 ------------- ------------- Total current assets 97,548,712 96,612,586 ------------- ------------- Property and equipment, net 9,361,052 9,262,409 Other assets 125,114 518,114 ------------- ------------- TOTAL ASSETS $107,034,878 $106,393,109 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of note payable $ 100,000 $ 100,000 Current portion of capitalized lease obligation 7,257 7,257 Accounts payable 305,516 337,265 Accrued expenses 3,503,814 2,561,927 Deferred revenue 176,650 209,611 ------------- ------------- Total current liabilities 4,093,237 3,216,060 ------------- ------------- Note payable 4,235,000 4,235,000 Capitalized lease obligation 13,113 10,537 Deferred revenue 191,463 173,845 Deferred income taxes 635,967 581,307 SHAREHOLDERS' EQUITY: Common stock 18,047 18,058 Additional paid-in capital 41,926,318 42,230,444 Retained earnings 55,921,733 55,927,858 ------------- ------------- Total shareholders' equity 97,866,098 98,176,360 ------------- ------------- ------------- ------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $107,034,878 $106,393,109 ============= ============= Innovative Solutions and Support, Inc. Statement of Operations Three months ended December 31, ------------ ------------ 2004 2005 ------------ ------------ Revenues $18,978,804 $ 5,405,387 Cost of Sales 6,182,143 2,702,018 ------------ ------------ Gross profit 12,796,661 2,703,369 ------------ ------------ Research and development 1,271,531 1,535,001 Selling, general and administrative 2,028,467 1,896,836 ------------ ------------ Operating income (loss) 9,496,663 (728,468) ------------ ------------ Interest income 283,250 781,445 Interest expense (39,738) (43,512) ------------ ------------ Income before income taxes 9,740,175 9,465 Income tax expense 3,547,372 3,340 ------------ ------------ Net Income $ 6,192,803 $ 6,125 ------------ ------------ Net Income per Common Share Basic $ 0.35 $ 0.00 Diluted $ 0.34 $ 0.00 Weighted Average Shares Outstanding Basic 17,752,707 18,055,243 Diluted 18,270,413 18,272,423 *T