ISSI (MM)

SAN JOSE, Calif., July 26 /PRNewswire-FirstCall/ -- Integrated Silicon Solution, Inc. (NASDAQ:ISSI) today reported its financial results for the third fiscal quarter ended June 30, 2007. Revenue in the third fiscal quarter ending June 30, 2007 was $59.9 million, compared with $60.0 million in the March 2007 quarter and $53.2 million in the June 2006 quarter. The reported net profit for the June 2007 quarter was $4.9 million, or $0.13 per diluted share, with gross margins of 19.6%. This profit includes a $2.3 million gain on sale of investments, a $2.3 million gain in connection with the settlement of a commercial dispute, a $0.9 million charge for FAS 123R stock option expense, and a $0.9 million expense for legal and accounting fees for the recently completed restatement of our prior financial results. These results compare with a net loss for the June 2006 quarter of ($6.9) million, or ($0.18) per share on a diluted share basis, which included a $4.9 million inventory write-down and a $0.9 million charge for FAS 123R stock option expense. The Company's cash, cash equivalents and short-term investments totaled $126.1 million at June 30, 2007 which was an increase of $4.6 million from March 31, 2007. This increase was primarily due to operating results and from sales of investment securities. The Company's inventory at June 30, 2007 totaled $40.5 million which was a reduction of $15.1 million from the quarter ending March 31, 2007. "Despite soft pricing this quarter, we were able to meet our revenue and margin expectations and deliver solid financial results. We are pleased with the significant inventory reduction and a 12.5% growth in revenue from the same quarter in 2006," said Jimmy Lee, ISSI's Chairman and CEO. 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) 457-2657 by 1:20 p.m. Pacific time. The call will 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 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/. Risk Factors to our Business The statements in this press release regarding our results for the June 2007 quarter and pricing conditions in the market are historical and should not be read as predictive of future results. Among the risks affecting our business are 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 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. 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 and quarterly reviews. Further information about risks that could affect the Company's business are detailed in ISSI's periodic filings with the Securities and Exchange Commission, including its report on Form 10-K for the year ending September 30, 2006, and Form 10-Q for the quarter ended March 31, 2007. 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, 2007 2006 2007 2006 Net sales $59,927 $53,249 $182,066 $157,587 Cost of sales 48,192 48,911 146,392 140,219 Gross profit 11,735 4,338 35,674 17,368 Operating expenses: Research and development 4,978 5,459 15,480 16,574 Selling, general and administrative 7,876 6,509 25,644 20,360 Acquired in-process technology charge -- -- -- 499 Total operating expenses 12,854 11,968 41,124 37,433 Operating loss (1,119) (7,630) (5,450) (20,065) Interest and other income (expense), net 3,820 696 6,372 3,441 Gain on sale of investments 2,282 267 11,429 2,454 Income (loss) before income taxes, minority interest and equity in net loss of affiliated companies 4,983 (6,667) 12,351 (14,170) Provision for income taxes 32 51 45 164 Income (loss) before minority interest and equity in net loss of affiliated companies 4,951 (6,718) 12,306 (14,334) Minority interest in net (income) loss of consolidated subsidiary (33) 39 (105) 689 Equity in net loss of affiliated companies -- (233) (92) (709) Net income (loss) $4,918 $(6,912) $12,109 $(14,354) Basic and diluted net income (loss) per share $0.13 $(0.18) $0.32 $(0.38) Shares used in basic per share calculation 37,618 37,488 37,614 37,367 Diluted net income (loss) per share $0.13 $(0.18) $0.32 $(0.38) Shares used in diluted per share calculation 37,999 37,488 37,995 37,367 Integrated Silicon Solution, Inc. Condensed Consolidated Balance Sheets (In thousands) June 30, September 30, 2007 2006 (unaudited) (1) ASSETS Current assets: Cash and cash equivalents $58,045 $37,318 Short-term investments 68,083 76,015 Accounts receivable, net 37,175 31,906 Inventories 40,487 52,417 Other current assets 6,958 4,799 Total current assets 210,748 202,455 Property, equipment and leasehold improvements, net 22,334 21,984 Goodwill 25,338 25,338 Purchased intangible assets, net 4,103 5,391 Other assets 1,809 5,110 Total assets $264,332 $260,278 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt and notes $606 $1,632 Accounts payable 33,952 40,123 Accrued compensation and benefits 3,312 2,928 Accrued expenses 7,161 9,665 Total current liabilities 45,031 54,348 Other long-term liabilities 1,917 2,048 Total liabilities 46,948 56,396 Commitments and contingencies Minority interest 662 690 Stockholders' equity: Common stock 4 4 Additional paid-in capital 382,422 379,038 Accumulated deficit (165,920) (178,029) Accumulated comprehensive income 216 2,179 Total stockholders' equity 216,722 203,192 Total liabilities and stockholders' equity $264,332 $260,278 (1) Derived from audited financial statements. DATASOURCE: Integrated Silicon Solution, Inc. CONTACT: Scott Howarth, Vice-President & CFO, Investor Relations of Integrated Silicon Solution, Inc., +1-408-969-6600, Web site: http://www.issi.com/

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