ISSI (MM)

SAN JOSE, Calif., July 24 /PRNewswire-FirstCall/ -- Integrated Silicon Solution, Inc. (NASDAQ:ISSI) today reported its financial results for the third fiscal quarter ended June 30, 2008. Revenue in the third fiscal quarter ended June 30, 2008 was $58.5 million, a 0.8% increase from the $58.0 million reported in the March quarter, and a 2.4% decrease from the $59.9 million reported in the June 2007 quarter. Net income for the June 2008 quarter was $2.0 million, or $0.07 per diluted share. Net income includes a $0.9 million charge for stock-based compensation expense and a $1.6 million gain on the sale of investments. These results compare with net income for the June 2007 fiscal quarter of $4.9 million, or $0.13 per diluted share, which included 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 stock-based compensation expense, and $0.9 million in legal and accounting fees for the restatement of our prior financial results. Gross margins for the third fiscal 2008 quarter were 22.8% compared to 19.6% for the same quarter in fiscal 2007. The Company incurred an operating loss for the third fiscal quarter ended June 30, 2008 of ($0.3) million which included $0.9 million in stock-based compensation expense. This compares to an operating loss of ($1.1) million for the same quarter in 2007 which included $0.9 million in stock-based compensation expense and $0.9 million in expense for legal and accounting fees associated with the financial restatement. The Company's cash, cash equivalents and short-term investments totaled $50.8 million at June 30, 2008, an increase of $9.5 million from March 31, 2008. This increase was due to the combination of the reclassification of an investment to marketable securities, as one of our investments became listed on the Taiwan Stock Exchange, and cash flow from operations. The Company's inventory at June 30, 2008 totaled $40.9 million, a decrease of $5.9 million from March 31, 2008. "Our SRAM and ASSP businesses were strong in the June quarter, and we met our revenue guidance despite a difficult pricing and demand environment. We increased our non-commodity revenue by 7.1% year-over-year and further reduced our revenue from DRAM commodity products," said Scott Howarth, ISSI's President and CEO. "In addition, our gross margin increased 3.2 percentage points over the prior year as our product mix in target markets continued to improve." "We had a very strong quarter in design wins and we are optimistic about our future. Overall, we are pleased with our results, as we had our eighth consecutive quarter of profitability," 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 1-719-325- 4760 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, (iv) automotive electronics, and (v) industrial. 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 ended September 30, 2007 and our Quarterly Report on Form 10-Q for the period ended March 31, 2008. 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 Income (Unaudited) (In thousands, except per share data) Three Months Ended Nine Months Ended June 30, June 30, 2008 2007 2008 2007 Net sales $58,494 $59,927 $179,888 $182,066 Cost of sales 45,183 48,192 140,080 146,392 Gross profit 13,311 11,735 39,808 35,674 Operating expenses: Research and development 5,541 4,978 15,250 15,480 Selling, general and administrative 8,102 7,876 23,227 25,644 Total operating expenses 13,643 12,854 38,477 41,124 Operating income (loss) (332) (1,119) 1,331 (5,450) Interest and other income (expense), net 763 3,820 3,942 6,372 Gain on sale of investments 1,625 2,282 1,814 11,429 Income before income taxes, minority interest and equity in net loss of affiliated companies 2,056 4,983 7,087 12,351 Provision for income taxes 41 32 141 45 Income before minority interest and equity in net loss of affiliated companies 2,015 4,951 6,946 12,306 Minority interest in net (income) loss of consolidated subsidiary (17) (33) 2 (105) Equity in net loss of affiliated companies - - - (92) Net income $1,998 $4,918 $6,948 $12,109 Basic net income per share $0.07 $0.13 $0.23 $0.32 Shares used in basic per share calculation 26,658 37,618 30,469 37,614 Diluted net income per share $0.07 $0.13 $0.23 $0.32 Shares used in diluted per share calculation 26,940 37,999 30,759 37,995 Integrated Silicon Solution, Inc. Condensed Consolidated Balance Sheets (In thousands) June 30, September 30, 2008 2007 (unaudited) (1) ASSETS Current assets: Cash and cash equivalents $40,187 $53,722 Short-term investments 10,589 80,093 Accounts receivable, net 39,718 37,030 Inventories 40,855 32,056 Other current assets 4,810 6,134 Total current assets 136,159 209,035 Property, equipment and leasehold improvements, net 23,969 23,284 Long-term investments 18,852 - Goodwill 25,338 25,338 Purchased intangible assets, net 2,206 3,538 Other assets 1,398 1,520 Total assets $207,922 $262,715 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt and notes $- $614 Accounts payable 36,996 36,509 Accrued compensation and benefits 3,615 3,588 Accrued expenses 7,892 6,734 Total current liabilities 48,503 47,445 Other long-term liabilities 754 793 Total liabilities 49,257 48,238 Commitments and contingencies Minority interest 724 726 Stockholders' equity: Common stock 3 4 Additional paid-in capital 309,309 376,998 Accumulated deficit (155,720) (162,668) Accumulated comprehensive income (loss) 4,349 (583) Total stockholders' equity 157,941 213,751 Total liabilities and stockholders' equity $207,922 $262,715 (1) Derived from audited financial statements. DATASOURCE: Integrated Silicon Solution, Inc. CONTACT: John Cobb, Vice President & CFO Investor Relations of Integrated Silicon Solution, Inc., +1-408-969-6600 Web site: http://www.issi.com/

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