The Auto Channel
The Largest Independent Automotive Research Resource
The Largest Independent Automotive Research Resource
Official Website of the New Car Buyer

ISSI Announces Third Fiscal Quarter 2009 Results

SAN JOSE, Calif., July 28 -- Integrated Silicon Solution, Inc. today reported its financial results for the third fiscal quarter ended June 30, 2009.

Revenue in the third fiscal quarter ended June 30, 2009 was $38.9 million, a 24.5% increase from revenue of $31.3 million in the March 2009 quarter and a 33.5% decrease from revenue of $58.5 million in the June 2008 quarter. Gross margin for the third quarter was 25.1%, compared with 20.7% in the March 2009 quarter and 22.8% in the June 2008 quarter.

In accordance with FASB Statement No. 141, "Business Combinations," the Company recorded a charge of $1.5 million in the third quarter of fiscal 2009 to recognize the fair value of in-process R&D from its acquisition of Enable Semiconductor. Reflecting the in-process R&D charge, the Company reported a net loss for the third quarter of $2.7 million or ($0.10) per diluted share. On a non-GAAP basis, without the effect of the in-process R&D charge, the net loss in the third quarter was $1.2 million, or ($0.05) per diluted share. These results compare with a GAAP net loss for the March 2009 quarter of $3.8 million, or ($0.15) per diluted share. The company reported GAAP net income for the June 2008 quarter of $2.0 million, or $0.07 per diluted share. A reconciliation of the Company's GAAP and Non-GAAP results is included as part of this release.

The Company's cash, cash equivalents and short-term investments totaled $71.6 million at June 30, 2009, compared to $44.0 million at March 31, 2009. Additionally, long-term investments totaled $1.5 million at June 30, 2009, compared to $21.1 million at March 31, 2009. This change was the result of the reclassification of $20.0 million in auction rate securities from long-term investments to short-term investments in the third quarter of fiscal 2009. The Company's inventory at June 30, 2009 totaled $16.6 million, a reduction of $11.0 million from March 31, 2009. The Company generated $10.3 million in cash flow from operations in the third quarter of fiscal 2009.

"End market demand strengthened during the June quarter and we experienced a more moderate pricing environment. As a result, we significantly grew our revenue over the March 2009 quarter and increased our gross margin to its highest level in several years," said Scott Howarth, ISSI's President and CEO. "During the June quarter, we took further actions to strengthen our business during this economic downturn. We successfully completed our acquisition of Enable Semiconductor, significantly reduced our inventory, and continued to improve our overall cost structure. Our balance sheet remains very strong as we had $73.1 million in cash and investments at June 30," added Mr. Howarth.

Non-GAAP Financial Information

In addition to disclosing results determined in accordance with GAAP, ISSI has disclosed in this press release its non-GAAP net loss for the June 2009 quarter that excludes the in-process R&D charge. When presenting non-GAAP results, the Company includes a reconciliation of the non-GAAP results to the results under GAAP. Management believes that including the non-GAAP results assists investors in assessing the Company's operational performance and its performance relative to its competitors. The Company has presented these non-GAAP results as a complement to its results provided in accordance with GAAP, and these results should not be regarded as a substitute for GAAP. Management uses these non-GAAP measures to manage and assess the profitability and performance of its business and does not consider the in-process R&D charge in managing its operations. Specifically, management uses non-GAAP measures to plan and forecast future periods, to establish operational goals, to compare with its business plan and individual operating budgets, to measure management performance for purposes of executive compensation including payments to be made under bonus plans, to assist the public in measuring the Company's performance, to allocate resources and, relative to the Company's historical financial performance, to enable comparability between periods. Management also considers such non-GAAP results to be an important supplemental measure of its performance. The economic substance behind management's decision to use such non-GAAP measures relates to the non-GAAP measures being a useful measure of the potential future performance of the Company's business. In line with common industry practice and to help enable comparability with other technology companies, the Company's non-GAAP presentation excludes the impact of the in-process R&D. Other companies may calculate non-GAAP results differently than the Company, limiting its usefulness as a comparative measure. In addition, such non-GAAP measures may exclude financial information that some may consider important in evaluating the Company's performance. Management compensates for the foregoing limitations of non-GAAP measures by presenting certain information on both a GAAP and non-GAAP basis and providing reconciliations of these certain GAAP and non-GAAP measures.

Conference Call

A conference call will be held today at 1:30 p.m. Pacific time to discuss this release. To access ISSI's conference call via telephone, dial 1-719-325-2322 by 1:20 p.m. Pacific time. The call will also be webcast from ISSI's website at http://www.issi.com/.

About the Company

ISSI is a fabless semiconductor company that designs and markets high performance integrated circuits for the following key markets: (i) digital consumer electronics, (ii) networking, (iii) mobile communications, (iv) automotive electronics, and (v) industrial. The Company's primary products are high speed and low power SRAM and low and medium density DRAM. The Company also designs and markets EEPROM, SmartCards and is developing selected non-memory products focused on its key markets. ISSI is headquartered in Silicon Valley with worldwide offices in Taiwan, Japan, Singapore, China, Europe, Hong Kong, India, and Korea. Visit our web site at http://www.issi.com/.

Forward Looking Statements

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements concerning our balance sheet remaining strong are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those anticipated. Such risks and uncertainties include supply and demand conditions in the market place, unexpected reductions in average selling prices for our products, our ability to sell our products for key applications and the pricing and gross margins achieved on such sales, our ability to control or reduce operating expenses, our ability to obtain a sufficient supply of wafers, our ability to maintain sufficient inventory of products to satisfy customer orders, changes in manufacturing yields, order cancellations, order rescheduling, product warranty claims, competition, the level and value of inventory held by OEM customers, or other risks listed from time to time in the Company's filings with the Securities and Exchange Commission, including the Company's Form 10-K for the period ended September 30, 2008 and our Quarterly Report on Form 10-Q for the period ended March 31, 2009. In addition, the financial information in this press release is unaudited and subject to any adjustments that may be made in connection with the year end audit. The Company assumes no obligation to update or revise the forward-looking statements in this release because of new information, future events, or otherwise.

                      Integrated Silicon Solution, Inc.
                  Condensed Consolidated Statements of Income
                                  (Unaudited)
                     (In thousands, except per share data)

                                          Three Months         Nine Months
                                             Ended                Ended
                                             June 30,            June 30,
                                             --------            --------
                                           2009     2008      2009      2008
                                           ----     ----      ----      ----

  Net sales                             $38,901  $58,494  $107,819  $179,888
  Cost of sales                          29,152   45,183    83,870   140,080
                                         ------   ------    ------   -------
  Gross profit                            9,749   13,311    23,949    39,808
                                          -----   ------    ------    ------

  Operating expenses:
    Research and development              4,980    5,541    14,374    15,250
    Selling, general and administrative   5,958    8,102    19,667    23,227
    Acquired in-process technology
     charge                               1,450        -     1,450         -
                                          -----      ---     -----       ---
      Total operating expenses           12,388   13,643    35,491    38,477
                                         ------   ------    ------    ------

  Operating income (loss)                (2,639)    (332)  (11,542)    1,331
  Interest and other income (expense),
   net                                      (68)     763       796     3,942
  Gain on sale of investments                 -    1,625         -     1,814
                                            ---    -----       ---     -----

  Income (loss) before income taxes and
   minority interest                     (2,707)   2,056   (10,746)    7,087
  Provision (benefit) for income taxes       50       41       (52)      141
                                            ---      ---       ---       ---

  Income (loss) before minority
   interest                              (2,757)   2,015   (10,694)    6,946

  Minority interest in net (income) loss of
   consolidated subsidiary                   91      (17)      132         2
                                            ---      ---       ---       ---

  Net income (loss)                     $(2,666)  $1,998  $(10,562)   $6,948
                                        =======   ======  ========    ======

  Basic net income (loss) per share      $(0.10)   $0.07    $(0.41)    $0.23
                                         ======    =====    ======     =====
  Shares used in basic per share
   calculation                           25,410   26,658    25,507    30,469
                                         ======   ======    ======    ======

  Diluted net income (loss) per share    $(0.10)   $0.07    $(0.41)    $0.23
                                         ======    =====    ======     =====
  Shares used in diluted per share
   calculation                           25,410   26,940    25,507    30,759
                                         ======   ======    ======    ======

  Reconciliation of GAAP to Non-GAAP Financial Measures

  Net income (loss):
      On a GAAP basis                   $(2,666)  $1,998  $(10,562)   $6,948
      Acquired in-process technology
       charge                             1,450        -     1,450         -
                                          -----      ---     -----       ---
      On a non-GAAP basis               $(1,216)  $1,998   $(9,112)   $6,948
                                        =======   ======   =======    ======

  Diluted net income (loss) per share:
      On a GAAP basis                    $(0.10)   $0.07    $(0.41)    $0.23
      Acquired in-process technology
       charge                              0.06        -      0.06         -
                                           ----      ---      ----       ---
      On a non-GAAP basis                $(0.05)   $0.07    $(0.36)    $0.23
                                         ======    =====    ======     =====

                    Integrated Silicon Solution, Inc.
                  Condensed Consolidated Balance Sheets
                             (In thousands)

                                             June 30,      September 30,
                                               2009             2008
                                               ----             ----
                                            (unaudited)          (1)
                                 ASSETS
  Current assets:
    Cash and cash equivalents                  $40,912        $42,175
    Short-term investments                      30,674          7,840
    Accounts receivable, net                    24,617         34,741
    Inventories                                 16,620         39,222
    Other current assets                         2,316          4,717
                                                 -----          -----

  Total current assets                         115,139        128,695
  Property, equipment and leasehold
   improvements, net                            23,443         24,555
  Long-term investments                          1,504         19,304
  Purchased intangible assets, net               3,349          2,000
  Goodwill                                         511              -
  Other assets                                   1,429          1,397
                                                 -----          -----
  Total assets                                $145,375       $175,951
                                              ========       ========

                  LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
    Accounts payable                           $16,513        $35,171
    Accrued compensation and benefits            3,671          3,729
    Accrued expenses                             5,494          8,157
                                                 -----          -----

  Total current liabilities                     25,678         47,057

  Other long-term liabilities                      656            715
                                                   ---            ---

  Total liabilities                             26,334         47,772

  Commitments and contingencies

  Minority interest                              2,305            789

  Stockholders' equity:
    Common stock                                     3              3
    Additional paid-in capital                 309,961        310,712
    Accumulated deficit                       (190,993)      (180,431)
    Accumulated other comprehensive loss        (2,235)        (2,894)
                                                ------         ------

  Total stockholders' equity                   116,736        127,390
                                               -------        -------
  Total liabilities and stockholders'
   equity                                     $145,375       $175,951
                                              ========       ========

  (1) Derived from audited financial statements.