Exhibit 99.1
Press Release
Innovative Solutions & Support, Inc. Announces Record Sales, Net Income and EPS for the Fiscal Year Ended September 30, 2005.
Exton, PA.—(BUSINESS WIRE)—December 6, 2005—Innovative Solutions & Support, Inc. (NASDAQ:ISSC-news) today announced record results for the Fiscal Year ended September 30, 2005. For the year, the Company reported record sales of $63.3 million, record net income of $18.6 million and record diluted earnings per share of $1.02.
Fourth Quarter Results
Sales in the fourth quarter ended September 30, 2005 were $8.2 million compared to the prior year’s $14.4 million. The portion of fourth quarter sales that were Flat Panel Systems, however, grew to more than $3.0 million from less than $0.2 million in the prior year’s fourth quarter. Net income in the fourth quarter of 2005 was $1.2 million or $0.07 per diluted share compared to the prior year’s net income of $4.5 million or $0.25 per diluted share.
Fiscal Year 2005 Results
Sales, Net Income and Diluted Earnings per Share in 2005 increased 37%, 56% and 52% to new full year records of $63.3 million, $18.6 million and $1.02 per share, respectively. Cash flow was also a record $17.3 million in the year. At year end, backlog was $12.9 million compared to $35.4 million last year.
Please refer to the accompanying schedules highlighting our Statement of Operations and Balance Sheet.
A Company spokesperson commented: “In the first three quarters we experienced strong demand for our Air Data equipment as the commercial air transport and general aviation segments of our industry rushed to become compliant with the FAA’s mandate for Domestic Reduced Vertical Separation Minimum (DRVSM). This robust growth in the initial three quarters of the year provided momentum to achieve these record fiscal 2005 results.”
“The anticipated rapid fall off in Air Data orders coupled with a slower than expected start-up in Flat Panel Display System orders created 4th quarter weakness. We remain confident; however, that demand for Air Data products will rebound as we provide equipment for the 30% of the general aviation fleet a recent FAA report indicated was still not DRVSM compliant as well as meet the equipment replacement needs of aging fleets of both commercial and military aircraft.”
“We also anticipate a significant and growing demand for Flat Panel Display Systems. Recently, the Company received a Technical Standard Order (TSO) and a Supplemental Type Certificate (STC) from the FAA for the Primary Flight and Navigation Flat Panel
Display System for B-767 aircraft. These certifications coupled with several previously announced awards all create momentum and lead to significant interest for retrofit applications on both commercial and military planes. As the standard of excellence in older airplanes, we believe entire fleets are candidates for retrofit, despite any near term market weakness.”
The company will host a conference call tomorrow morning, December 7, 2005 at 10:00 am local time (EST) to discuss these results as well as our business outlook. Please call in to participate at (866) 425-6193, conference ID# 6771466. 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.
Contact Mr. James Reilly at (610) 646-9800
INNOVATIVE SOLUTIONS AND SUPPORT, INC.
CONSOLIDATED BALANCE SHEET
| | As of | | As of | |
| | September 30, 2004 | | September 30, 2005 | |
ASSETS | | | | | |
Current Assets: | | | | | |
Cash and cash equivalents | | $ | 65,867,167 | | $ | 83,172,582 | |
Accounts receivable, less allowance for doubtful accounts of $100,000 at September 30, 2004 and 2005 | | 5,003,100 | | 5,479,936 | |
Inventories | | 5,191,628 | | 3,911,626 | |
Deferred income taxes | | 984,111 | | 956,070 | |
Prepaid expenses and other current assets | | 665,276 | | 4,028,498 | |
| | | | | |
Total current assets | | 77,711,282 | | 97,548,712 | |
| | | | | |
Property and Equipment: | | | | | |
Computers and test equipment | | 3,933,326 | | 4,278,748 | |
Corporate airplane | | 2,998,161 | | 2,998,161 | |
Furniture and office equipment | | 622,364 | | 734,038 | |
Manufacturing facility | | 5,414,986 | | 5,420,741 | |
Land | | 1,021,245 | | 1,021,245 | |
| | 13,990,082 | | 14,452,933 | |
Less- Accumulated depreciation and amortization | | (4,369,851 | ) | (5,091,881 | ) |
| | | | | |
Net property and equipment | | 9,620,231 | | 9,361,052 | |
| | | | | |
Deposits and other assets | | 137,114 | | 125,114 | |
| | | | | |
Total assets | | $ | 87,468,627 | | $ | 107,034,878 | |
| | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | |
| | | | | |
CURRENT LIABILITIES: | | | | | |
Current portion of notes payable | | $ | 100,000 | | $ | 100,000 | |
Current portion of capitalized lease obligations | | 7,257 | | 7,257 | |
Accounts payable | | 1,696,247 | | 305,516 | |
Accrued expenses | | 4,754,641 | | 3,503,814 | |
Deferred revenue | | 526,023 | | 176,650 | |
| | | | | |
Total current liabilities | | 7,084,168 | | 4,093,237 | |
| | | | | |
Note payable | | 4,235,000 | | 4,235,000 | |
Long-term portion of capitalized lease obligations | | 20,681 | | 13,113 | |
Deferred revenue | | 261,934 | | 191,463 | |
Deferred income taxes | | 411,857 | | 635,967 | |
Commitments and contingencies | | — | | — | |
| | | | | |
Shareholders’ Equity: | | | | | |
Preferred stock, 10,000,000 shares authorized-Class A Convertible stock, $.001 par value, of which 200,000 shares authorized as Class A convertible stock. No shares issued and outstanding at September 30, 2004 and 2005. | | — | | — | |
| | | | | |
Common stock, $.001 par value: 75,000,000 shares authorized, 20,272,995 and 18,047,425 shares issued and outstanding at September 30, 2004 and 2005 | | 20,273 | | 18,047 | |
Additional paid-in capital | | 48,712,289 | | 41,926,318 | |
Retained earnings | | 37,336,182 | | 55,921,733 | |
Treasury stock, at cost, 2,535,039 and 0 shares at September 30, 2004 and 2005 | | (10,613,757 | ) | — | |
| | 75,454,987 | | 97,866,098 | |
Total shareholders’ equity | | | | | |
| | | | | |
Total liabilities and shareholders’ equity | | $ | 87,468,627 | | $ | 107,034,878 | |
Innovative Solutions and Support, Inc.
Consolidated Statements of Operations
| | Three Months ended | | Twelve Months ended | |
| | September 30, | | September 30, | |
| | 2004 | | 2005 | | 2004 | | 2005 | |
Revenues | | $ | 14,411,501 | | $ | 8,182,914 | | $ | 46,099,777 | | $ | 63,264,359 | |
| | | | | | | | | |
Cost of sales | | 4,462,484 | | 3,082,402 | | 15,663,108 | | 20,888,729 | |
| | | | | | | | | |
Gross profit | | 9,949,017 | | 5,100,512 | | 30,436,669 | | 42,375,630 | |
| | | | | | | | | |
Research and development | | 949,844 | | 1,736,415 | | 4,811,156 | | 6,057,889 | |
Selling, general and administrative | | 1,967,499 | | 2,076,940 | | 7,567,959 | | 8,898,622 | |
Total Operating Expenses | | 2,917,343 | | 3,813,355 | | 12,379,115 | | 14,956,511 | |
| | | | | | | | | |
Operating income | | 7,031,674 | | 1,287,157 | | 18,057,554 | | 27,419,119 | |
| | | | | | | | | |
Interest income | | 186,760 | | 683,965 | | 532,745 | | 1,939,397 | |
Interest expense | | (33,817 | ) | (47,221 | ) | (128,018 | ) | (175,151 | ) |
| | | | | | | | | |
Income before income taxes | | 7,184,617 | | 1,923,901 | | 18,462,281 | | 29,183,365 | |
| | | | | | | | | |
Income taxes | | 2,719,459 | | 704,455 | | 6,530,084 | | 10,598,563 | |
| | | | | | | | | |
Net income | | $ | 4,465,158 | | $ | 1,219,446 | | $ | 11,932,197 | | $ | 18,584,802 | |
| | | | | | | | | |
Net Income Per Common Share: | | | | | | | | | |
Basic | | $ | 0.25 | | $ | 0.07 | | $ | 0.69 | | $ | 1.04 | |
Diluted | | $ | 0.25 | | $ | 0.07 | | $ | 0.67 | | $ | 1.02 | |
| | | | | | | | | |
Weighted Average Shares Outstanding: | | | | | | | | | |
Basic | | 17,714,696 | | 18,042,523 | | 17,400,380 | | 17,873,780 | |
Diluted | | 18,219,156 | | 18,312,651 | | 17,928,180 | | 18,259,856 | |
