ISSI (MM)

SAN JOSE, Calif., April 24 /PRNewswire-FirstCall/ -- Integrated Silicon Solution, Inc. (NASDAQ:ISSI) today reported its financial results for the second fiscal quarter ended March 31, 2008. Revenue in the second fiscal quarter ended March 31, 2008 was $58.0 million, down 8.4% from the $63.3 million reported in the December 2007 quarter, and down 3.3% from the $60.0 million reported in the March 2007 quarter. Net income for the March 2008 quarter was $2.0 million, or $0.07 per diluted share. Net income includes a $0.8 million charge for stock-based compensation expense and a $0.6 million credit for the reversal of previously accrued liabilities for which we are no longer obligated. These results compare with net income for the March 2007 fiscal quarter of $7.1 million, or $0.19 per diluted share, which included a $0.9 million charge for stock-based compensation expense, $1.8 million for legal and accounting fees associated with our stock option investigation, and an $8.5 million gain on sale of assets. Operating income for the second fiscal quarter ended March 31, 2008 was $0.9 million which included the $0.8 million stock-based compensation expense, and the $0.6 million credit for the reversal of previously accrued liabilities which improved gross margins by 1%. This compares to an operating loss of ($2.4) million for the same quarter in 2007 which included a $0.9 million stock-based compensation expense and a $1.8 million expense for legal and accounting fees associated with our stock option investigation. Gross margins for the second fiscal 2008 quarter were 22.9% compared to 19.0% for the same quarter in fiscal 2007. The Company's cash, cash equivalents and short-term investments totaled $41.2 million at March 31, 2008, a decrease of $102.1 million from December 31, 2007. This decrease was primarily due to the completion of our $70 million Tender Offer and stock repurchase, reclassification of $19.1 million in Auction Rate Securities to long-term investment due to failed auctions, and a decrease in our accounts payable. The Company's inventory at March 31, 2008 totaled $46.8 million, an increase of $8.6 million from December 31, 2007. "In the March quarter, we missed our revenue goal as the pricing environment for commodity DRAM continued to weaken, and we reduced our commodity revenue," said Scott Howarth, ISSI's President and CEO. "Strength in our SRAM business and improved product mix in our target markets allowed us to expand our margins, and announce positive operating earnings as well as net income that exceeded our guidance for the quarter. This is our seventh consecutive quarter of profitability and third consecutive quarter of operating income which demonstrates the success of our strategy," added Mr. Howarth. 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 719-325-4840 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 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 and our Quarterly Report on Form 10-Q for the period ended December 31, 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 quarterly review. 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 Six Months Ended March 31, March 31, 2008 2007 2008 2007 Net sales $58,046 $59,995 $121,394 $122,139 Cost of sales 44,750 48,601 94,897 98,200 Gross profit 13,296 11,394 26,497 23,939 Operating expenses: Research and development 4,935 5,140 9,709 10,502 Selling, general and administrative 7,463 8,675 15,125 17,768 Total operating expenses 12,398 13,815 24,834 28,270 Operating income (loss) 898 (2,421) 1,663 (4,331) Interest and other income (expense), net 1,105 1,000 3,179 2,552 Gain on sale of investments - 8,549 189 9,147 Income before income taxes, minority interest and equity in net loss of affiliated companies 2,003 7,128 5,031 7,368 Provision for income taxes 40 3 100 13 Income before minority interest and equity in net loss of affiliated companies 1,963 7,125 4,931 7,355 Minority interest in net (income) loss of consolidated subsidiary 20 (64) 19 (72) Equity in net loss of affiliated companies - - - (92) Net income $1,983 $7,061 $4,950 $7,191 Basic net income per share $0.07 $0.19 $0.15 $0.19 Shares used in basic per share calculation 28,160 37,612 32,374 37,612 Diluted net income per share $0.07 $0.19 $0.15 $0.19 Shares used in diluted per share calculation 28,436 38,006 32,668 37,998 Integrated Silicon Solution, Inc. Condensed Consolidated Balance Sheets (In thousands) March 31, September 30, 2008 2007 (unaudited) (1) ASSETS Current assets: Cash and cash equivalents $37,025 $53,722 Short-term investments 4,212 80,093 Accounts receivable, net 39,206 37,030 Inventories 46,756 32,056 Other current assets 4,262 6,134 Total current assets 131,461 209,035 Property, equipment and leasehold improvements, net 24,591 23,284 Long-term investments 19,090 - Goodwill 25,338 25,338 Purchased intangible assets, net 2,628 3,538 Other assets 1,589 1,520 Total assets $204,697 $262,715 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt and notes $- $614 Accounts payable 41,874 36,509 Accrued compensation and benefits 3,029 3,588 Accrued expenses 6,965 6,734 Total current liabilities 51,868 47,445 Other long-term liabilities 851 793 Total liabilities 52,719 48,238 Commitments and contingencies Minority interest 707 726 Stockholders' equity: Common stock 3 4 Additional paid-in capital 308,346 376,998 Accumulated deficit (157,718) (162,668) Accumulated comprehensive income (loss) 640 (583) Total stockholders' equity 151,271 213,751 Total liabilities and stockholders' equity $204,697 $262,715 (1) Derived from audited financial statements. DATASOURCE: Integrated Silicon Solution, Inc. CONTACT: Scott Howarth, President & CEO, Acting CFO, Investor Relations, Integrated Silicon Solution, Inc., +1-408-969-6600, Web site: http://www.issi.com/

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