ISSI (MM)

ISSI Announces Third Quarter Fiscal Year 2005 Results SANTA CLARA, Calif., July 26 /PRNewswire-FirstCall/ -- Integrated Silicon Solution, Inc. (NASDAQ:ISSI) today reported its financial results for the third fiscal quarter ended June 30, 2005. Revenue in the third fiscal quarter ending June 30, 2005 was $53.7 million, compared with $35.7 million in the March 2005 quarter and $58.1 million in the June 2004 quarter. Revenue in the June 2005 quarter includes two months of revenue from Integrated Circuit Solution, Inc. ("ICSI"). The reported net loss includes a $1.5 million, or ($0.04) per share, charge to write off in-process R&D related to the purchase accounting and valuation of the ICSI acquisition. The GAAP loss for the June 2005 quarter, with this charge, is ($4.6) million or ($0.12) per diluted share. These results compare with a net profit for the June 2004 quarter of $5.6 million or $0.15 per share on a diluted share basis. "We assumed effective control of ICSI and as a result began consolidating their numbers with ISSI's numbers as of May 1, 2005," said Jimmy Lee, ISSI's Chairman and CEO. "The improved revenue for the Company illustrates one of the benefits of the acquisition. We have combined our Taiwan operations and moved our ISSI employees into the ICSI-owned building. We are pleased with the progress to date." ISSI's Statement of Operations for the quarter ending June 30, 2005 consolidate the results of ISSI and ICSI. As of June 30, 2005 ISSI owned approximately 61% of ICSI's outstanding shares and, therefore, reversed approximately 39% of the ICSI net loss for May and June 2005 in the line "Minority Interest in Net Loss of Consolidated Subsidiary." ISSI plans to complete the acquisition of substantially all of the remaining outstanding shares of ICSI in August 2005. The $1.5 million charge to write off in-process R&D relates to the purchase accounting and valuation of the ICSI acquisition. The Company anticipates an additional charge of approximately $1.8 million during the September 2005 quarter as a result of acquiring substantially all of the remaining outstanding shares of ICSI. The purchase accounting and valuation of the ICSI acquisition is preliminary and is subject to further review by the Company, its advisors, and its auditors. The valuation numbers could be changed as a result of further review. 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 and (iv) automotive electronics. 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, wireless chipsets, SmartCards and is developing selected non- memory products focused on its key markets. ISSI is headquartered in Silicon Valley with worldwide offices in China, Europe, Hong Kong, India, Korea and Taiwan. Visit our web site at http://www.issi.com/. 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 719-457-2680 by 1:20 p.m. Pacific time. The call will be webcast from ISSI's website at http://www.issi.com/. Safe Harbor Statement The statements in this press release regarding the acquisition of ICSI, the benefits of the acquisition, and progress to date are forward-looking statements that are subject to risks. Our actual results may differ materially from current expectations due to many factors, including our ability to retain the revenue and customers of ICSI, our ability to effectively transfer work assignments from the U.S. to Asia, our ability to reduce operating expenses, de-stabilizing supply and demand conditions in the market place, reductions in average selling prices, changes in manufacturing yields, order cancellations, order rescheduling, product warranty claims, competition, the level and value of inventory held by OEM customers, or other factors. Furthermore, the purchase accounting and valuation information in this release regarding the acquisition of ICSI are preliminary and are subject to further review by the Company, its advisors, and its auditors. The valuation numbers could be changed as a result of further review. Stockholders of ISSI are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date such statements are made. ISSI does not undertake any obligation to publicly update any forward-looking statements to reflect events, circumstances, or new information after this July 26, 2005 press release, or to reflect the occurrence of unanticipated events. Further information that could affect the Company's results is detailed in ISSI's periodic filings with the Securities and Exchange Commission, including its report on Form 10Q for the quarter ended March 30, 2005. Integrated Silicon Solution, Inc. Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except per share data) Three Months Ended Nine Months Ended June 30, June 30, 2005 2004 2005 2004 Net sales $53,722 $58,129 $119,971 $149,888 Cost of sales 46,422 44,290 113,921 115,212 Gross profit 7,300 13,839 6,050 34,676 Operating expenses: Research and development 5,063 5,615 14,789 15,736 Selling, general and administrative 6,059 4,379 15,668 12,232 In-process technology 1,480 -- 1,915 -- Total operating expenses 12,602 9,994 32,372 27,968 Operating income (loss) (5,302) 3,845 (26,322) 6,708 Other income (expense), net 917 138 2,343 1,130 Gain on sale of other investments 500 -- 3,405 8,740 Income (loss) before income taxes, minority interest and equity in net (income) loss of affiliated companies (3,885) 3,983 (20,574) 16,578 Provision for income taxes 9 119 26 497 Income (loss) before minority interest and equity in net income (loss) of affiliated companies (3,894) 3,864 (20,600) 16,081 Minority interest in net loss of consolidated subsidiary 445 -- 631 -- Equity in net income (loss) of affiliated companies (1,134) 1,775 (11,776) 2,965 Net income (loss) $(4,583) $5,639 $(31,745) $19,046 Basic net income (loss) per share $(0.12) $0.16 $(0.87) $0.58 Shares used in basic per share calculation 36,830 35,717 36,507 32,572 Diluted net income (loss) per share $(0.12) $0.15 $(0.87) $0.53 Shares used in diluted per share calculation 36,830 38,399 36,507 35,628 Integrated Silicon Solution, Inc. Condensed Consolidated Balance Sheets (In thousands) June 30, Sept. 30, 2005 2004 (unaudited) (1) ASSETS Current assets: Cash and cash equivalents $45,986 $17,015 Restricted cash 316 1,500 Short-term investments 55,232 120,450 Accounts receivable 28,520 26,733 Inventories 63,522 44,718 Other current assets 9,293 1,541 Total current assets 202,869 211,957 Property, equipment, and leasehold improvements, net 19,457 5,622 Other assets 90,959 83,285 Total assets $313,285 $300,864 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt and notes $10,811 $-- Accounts payable 34,490 30,493 Accrued compensation and benefits 2,146 2,431 Accrued expenses 8,858 4,903 Current portion of convertible bonds payable 1,312 -- Total current liabilities 57,617 37,827 Other long-term liabilities 1,850 -- Total liabilities 59,467 37,827 Minority interest 15,115 -- Stockholders' equity: Common stock 4 4 Additional paid-in capital 338,635 336,524 Accumulated deficit (125,588) (93,843) Unearned compensation (20) (218) Accumulated comprehensive income 25,672 20,570 Total stockholders' equity 238,703 263,037 Total liabilities and stockholders' equity $313,285 $300,864 (1) Derived from audited financial statements. DATASOURCE: Integrated Silicon Solutions, Inc. CONTACT: Gary L. Fischer, President & COO, Investor Relations of Integrated Silicon Solutions, Inc., +1-408-969-4612, or Web site: http://www.issi.com/

Copyright