ISSI (MM)

SAN JOSE, Calif., Jan. 31 /PRNewswire-FirstCall/ -- Integrated Silicon Solution, Inc. (NASDAQ:ISSI) today reported its financial results for the first fiscal quarter ended December 31, 2007. Revenue in the first fiscal quarter ended December 31, 2007 was $63.3 million, flat with our September 2007 quarter and up slightly from $62.1 million reported in the December 2006 quarter. Net income for the December 2007 quarter was $3.0 million, or $0.08 per diluted share. Net income includes a $0.8 million charge for FAS 123R stock option expense and a $0.5 million expense for fees associated with our recent tender offer. These results compare with net income for the December 2006 fourth quarter of $0.1 million, or $0.00 per diluted share, which included a $1.0 million charge for FAS 123R stock option expense, $1.8 million for legal and accounting fees associated with our stock option investigation, and a $0.6 million gain on sale of assets. Operating income for the first fiscal quarter ended December 31, 2007 was $0.8 million which included the $0.8 million FAS 123R charge and $0.5 million for fees associated with our tender offer. This compares to an operating loss of ($1.9) million for the same quarter in 2006 which included a $1.0 million FAS 123R charge and $1.8 million for legal and accounting fees associated with our stock option investigation. Gross margins for the first fiscal 2008 quarter were 20.8%, which compares to 20.2% from the same quarter in fiscal 2007. The Company's cash, cash equivalents and short-term investments totaled $143.3 million at December 31, 2007, an increase of $9.5 million from September 30, 2007. This increase was primarily due to an increase in our accounts payable. The Company also recently announced the completion of a Tender Offer which ended January 3, 2008 in which we repurchased $70 million of our outstanding common stock. Payments for the tendered shares were made in January 2008 and will be reflected in our financial results for the quarter ending March 2008. The Company's inventory at December 31, 2007 totaled $38.2 million, an increase of $6.1 million from September 30, 2007. "This quarter, we achieved our revenue goals and expanded our margins despite another weak pricing environment in mainstream DRAM markets and softening demand in some of our end markets," said Jimmy Lee, ISSI's Chairman and CEO. "Demand in SRAM and our focus DRAM markets remained strong as we continued to reduce our exposure to the price sensitive commodity DRAM markets. We are excited to show another profitable quarter with positive operating earnings which demonstrates the success of our strategy," added Mr. Lee. 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 785-830-1916 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 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 achieving revenue goals, expanding our margins, reducing our exposure to the price sensitive commodity DRAM markets, and demonstrating the success of our strategy 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, 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 ending September 2007. 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 Operations (Unaudited) (In thousands, except per share data) Three Months Ended December 31, 2007 2006 Net sales $63,348 $62,144 Cost of sales 50,147 49,599 Gross profit 13,201 12,545 Operating expenses: Research and development 4,774 5,362 Selling, general and administrative 7,662 9,093 Total operating expenses 12,436 14,455 Operating income (loss) 765 (1,910) Interest and other income (expense), net 2,074 1,552 Gain on sale of investments 189 598 Income before income taxes, minority interest and equity in net loss of affiliated companies 3,028 240 Provision for income taxes 60 10 Income before minority interest and equity in net loss of affiliated companies 2,968 230 Minority interest in net income of consolidated subsidiary (1) (8) Equity in net loss of affiliated companies - (92) Net income $2,967 $130 Basic net income per share $0.08 $0.00 Shares used in basic per share calculation 36,588 37,612 Diluted net income per share $0.08 $0.00 Shares used in diluted per share calculation 36,897 37,994 Integrated Silicon Solution, Inc. Condensed Consolidated Balance Sheets (In thousands) December 31, September 30, 2007 2007 (unaudited) (1) ASSETS Current assets: Cash and cash equivalents $95,895 $53,722 Short-term investments 47,430 80,093 Accounts receivable, net 39,639 37,030 Inventories 38,160 32,056 Other current assets 4,606 6,134 Total current assets 225,730 209,035 Property, equipment and leasehold improvements, net 23,213 23,284 Goodwill 25,338 25,338 Purchased intangible assets, net 3,051 3,538 Other assets 1,495 1,520 Total assets $278,827 $262,715 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt and notes $- $614 Accounts payable 49,210 36,509 Accrued compensation and benefits 3,914 3,588 Accrued expenses 7,867 6,734 Total current liabilities 60,991 47,445 Other long-term liabilities 731 793 Total liabilities 61,722 48,238 Commitments and contingencies Minority interest 727 726 Stockholders' equity: Common stock 4 4 Additional paid-in capital 376,997 376,998 Accumulated deficit (159,701) (162,668) Accumulated comprehensive income (922) (583) Total stockholders' equity 216,378 213,751 Total liabilities and stockholders' equity $278,827 $262,715 (1) Derived from audited financial statements. DATASOURCE: Integrated Silicon Solution, Inc. CONTACT: investor relations, Scott Howarth, President & CFO of Integrated Silicon Solution, Inc., +1-408-969-6600, Web site: http://www.issi.com/

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