ISSI (MM)

SANTA CLARA, Calif., July 25 /PRNewswire-FirstCall/ -- Integrated Silicon Solution, Inc. (NASDAQ:ISSI) today reported its financial results for the third fiscal quarter ended June 30, 2006. Revenue in the third fiscal quarter ending June 30, 2006 was $54.7 million, compared with $53.2 million in the March 2006 quarter and $53.7 million in the June 2005 quarter. The reported net loss for the June 2006 quarter of ($5.4) million or ($0.15) per diluted share includes a $4.9 million inventory write-down and a $0.9 million charge for FAS 123R stock option expense. These results compare with a net loss for the June 2005 quarter of ($4.6) million or ($0.12) per share on a diluted share basis which included a $1.5 million, or ($0.04) per share, charge to write off in-process R&D related to the acquisition of Integrated Circuit Solution, Inc. (ICSI). "Revenue grew 3% in the June 2006 quarter from the previous quarter," said Jimmy Lee, ISSI's Chairman and CEO. "We acquired additional SRAM assets this quarter to further enhance our SRAM product line. We continue to execute our strategy to grow niche market segments, and remain optimistic about our strategic direction to develop sustainable revenue in both the SRAM and DRAM market segments that meet our margin expectations." 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, 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 1-800-500-0177 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 executing our strategy to grow niche market segments and remaining optimistic about our strategic direction to develop sustainable revenue in SRAM and DRAM market segments are forward-looking statements that are subject to risks. Our actual results may differ materially from current expectations due to many factors, including supply and demand conditions in the market place, unexpected reductions in average selling prices for our products, our ability to sell our products for the die business and automotive applications and the pricing and gross margins achieved on such sales, our ability to retain the revenue and customers of ICSI, our ability to control or reduce operating expenses, 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. 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 25, 2006 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 31, 2006. Consolidated Statement of Operations and Consolidated Balance Sheet to follow. 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, 2006 2005 2006 2005 Net sales $54,749 $53,722 $159,087 $119,971 Cost of sales 49,295 46,422 140,612 113,921 Gross profit 5,454 7,300 18,475 6,050 Operating expenses: Research and development 5,533 5,063 16,706 14,789 Selling, general and administrative 6,458 6,059 20,175 15,668 In-process technology - 1,480 499 1,915 Total operating expenses 11,991 12,602 37,380 32,372 Operating loss (6,537) (5,302) (18,905) (26,322) Other income (expense), net 1,075 917 3,820 2,343 Gain on sale of other investments 267 500 2,454 3,405 Loss before income taxes, minority interest and equity in net loss of affiliated companies (5,195) (3,885) (12,631) (20,574) Provision for income taxes 51 9 164 26 Loss before minority interest and equity in net loss of affiliated companies (5,246) (3,894) (12,795) (20,600) Minority interest in net loss of consolidated subsidiary 38 445 688 631 Equity in net loss of affiliated companies (233) (1,134) (709) (11,776) Net loss $(5,441) $(4,583) $(12,816) $(31,745) Basic and diluted net loss per share $(0.15) $(0.12) $(0.34) $(0.87) Shares used in per share calculation 37,488 36,830 37,367 36,507 Integrated Silicon Solution, Inc. Condensed Consolidated Balance Sheets (In thousands) June 30, September 30, 2006 2005 (unaudited) (1) ASSETS Current assets: Cash and cash equivalents $37,529 $27,484 Restricted cash - 301 Short-term investments 79,639 96,427 Accounts receivable, net 28,245 28,508 Inventories 54,170 60,468 Other current assets 4,354 3,594 Total current assets 203,937 216,782 Investments - 9,182 Property, equipment, and leasehold improvements, net 21,227 21,725 Goodwill 25,338 20,232 Purchased intangible assets, net 5,876 6,142 Other assets 7,641 10,053 Total assets $264,019 $284,116 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt and notes $8,797 $6,628 Accounts payable 33,481 35,705 Accrued compensation and benefits 3,169 2,467 Accrued expenses 8,431 8,029 Total current liabilities 53,878 52,829 Other long-term liabilities 2,105 1,793 Total liabilities 55,983 54,622 Minority interest 694 6,566 Stockholders' equity: Common stock 4 4 Additional paid-in capital 345,439 340,567 Accumulated deficit (144,551) (131,735) Unearned compensation - (17) Accumulated comprehensive income 6,450 14,109 Total stockholders' equity 207,342 222,928 Total liabilities and stockholders' equity $264,019 $284,116 (1) Derived from audited financial statements. DATASOURCE: Integrated Silicon Solution, Inc. CONTACT: Scott Howarth, Vice-President & CFO, Investor Relations, +1-408-969-4686, or Web site: http://www.issi.com/

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