SAN JOSE, Calif., Jan 26, 2011 /PRNewswire/ -- Integrated Silicon
Solution, Inc. (Nasdaq: ISSI) today reported its financial results
for the first fiscal quarter ended December
31, 2010.
Fiscal First Quarter Results and Recent Highlights:
- Reported revenue of $66.1
million, an increase of 30.8 percent over the same quarter
last year;
- Achieved GAAP net income of $7.2
million, or $0.26 per share,
and non-GAAP net income of $8.3
million, or $0.30 per
share;
- Announced agreement to become an alternate supplier for
Micron's performance enhancing RLDRAM® 3 memory products for the
communications market;
- Completed the spin-off of its Giantec Semiconductor ASSP
business; and
- Signed an agreement to acquire Si En Integration Holdings
Limited ("Si En"), adding complementary high margin analog and
mixed signal products.
Revenue in the first fiscal quarter ended December 31, 2010 was $66.1 million, a 10.2 percent decrease from
$73.6 million in the September 2010 quarter and a 30.8 percent
increase over $50.6 million in the
December 2009 quarter. Gross
margin for the first quarter was 34.0 percent, compared to 37.8
percent in the September 2010
quarter, and 39.8 percent in the December
2009 quarter, which included a 7.7 percentage point net
benefit from sales of previously reserved inventory.
GAAP net income in the first quarter of fiscal 2011 was
$7.2 million, or $0.26 per diluted share, compared to GAAP net
income of $11.8 million, or
$0.43 per diluted share, for the
September 2010 quarter and
$7.2 million, or $0.28 per diluted share, in the December 2009 quarter.
First quarter 2011 non-GAAP net income, which excludes
$0.9 million in stock-based
compensation expense and $0.2 million
in legal fees related to the acquisition of Si En, was $8.3 million, or $0.30 per diluted share. This compares to
$12.6 million, or $0.46 per diluted share, for the September 2010 quarter and $7.7 million, or $0.30 per diluted share, in the December 2009 quarter. A reconciliation of
GAAP results to non-GAAP results is provided in the financial
statement tables following the text of this press release.
"We are pleased with our performance in the December quarter
despite the end market inventory correction. We believe the
relative strength of our results during the quarter demonstrates
the success of our strategic focus on high quality specialty memory
products in more stable market segments. Furthermore, we believe
that the current inventory correction is nearly complete, and our
March quarter outlook reflects normal seasonality for our business
and target markets," said Scott
Howarth, ISSI's President and CEO. "On Monday, we
announced an agreement to acquire Si En, which adds high margin
analog and mixed signal products and provides increased revenue and
profit opportunities for ISSI. The addition of these products
expands our addressable market, increases our presence in
China and enables us to sell a
broader range of products across our combined customer base."
Business Updates
On January 24, 2011, ISSI signed
an agreement to acquire Si En, a privately held fabless provider of
high performance analog and mixed signal integrated circuits
headquartered in Xiamen, China,
for approximately $20.0 million in
cash, net of cash acquired. The acquisition is expected to
close in early February and be immediately accretive to earnings
per share.
The Company also announced that effective December 30, 2010 it had completed the spin-off
of Giantec Semiconductor, which focuses on the ASSP business that
includes EEPROM and SmartCard products. Giantec received additional
direct investment, which reduced ISSI's ownership to approximately
45 percent. As such, the revenue, expenses, and operating
results of Giantec have been included in ISSI's consolidated income
statement for the December 2010
quarter. Giantec recorded $6.1
million of revenue in the December
2010 quarter. In future quarters, ISSI's operating results
will only reflect its proportional share of Giantec's net income or
loss as a single line item below operating income on the income
statement. In addition, since the transaction closed prior to
the quarter end, ISSI's consolidated balance sheet as of
December 31, 2010 excludes Giantec's
assets and liabilities.
March Quarter Outlook
For the March quarter, the Company expects total revenue to
range between $59.0 and $64.0
million. This guidance reflects expectations of SRAM and
DRAM revenue between $56.0 million and $60.0
million, which on a comparable basis totaled $60.0 million in the December 2010 quarter, excluding Giantec.
In addition, the Company expects Si En's revenue contribution
will range between $3.0 and
$4.0 million for the portion of the quarter that ISSI expects
to own Si En. Gross margin for the March quarter is expected
to range between 33 percent and 36 percent. Operating
expenses are expected to be from $15.0
million to $15.5 million. The Company expects GAAP net
income to be between $0.18 and $0.25
per diluted share, and non-GAAP net income, which excludes
stock-based compensation and the amortization of intangibles
related to the acquisition of Si En, to be between $0.22 and $0.29 per diluted share.
Conference Call Information
A conference call will be held today at 1:30 p.m. Pacific Time to discuss the Company's
first quarter fiscal 2011 financial results. To access ISSI's
conference call via telephone, dial 888-312-9841 by
1:20 p.m. Pacific Time. The
participant passcode is 5165347. The call will also be
webcast from ISSI's website at http://www.issi.com.
Non-GAAP Financial Information
In addition to disclosing results determined in accordance with
GAAP, ISSI discloses its non-GAAP operating expenses, operating
income (loss) and net income (loss) for certain periods that
exclude stock based compensation, legal fees and other
expenses related to the Si En acquisition, and amortization
of intangibles related to the acquisition of Si En. When presenting
non-GAAP results, the Company includes a reconciliation of the
non-GAAP results to the results under GAAP. Management believes
that including the non-GAAP results assists investors in assessing
the Company's operational performance and its performance relative
to its competitors. The Company has presented these non-GAAP
results as a complement to its results provided in accordance with
GAAP, and these results should not be regarded as a substitute for
GAAP. Management uses non-GAAP measures to plan and forecast
future periods, to establish operational goals, to compare with its
business plan and individual operating budgets, to assist the
public in measuring the Company's performance, to allocate
resources and, relative to the Company's historical financial
performance, to enable comparability between periods. Management
also considers such non-GAAP results to be an important
supplemental measure of its performance. The economic substance
behind management's decision to use such non-GAAP measures relates
to the non-GAAP measures being a useful measure of the potential
future performance of the Company's business. In line with common
industry practice and to help enable comparability with other
technology companies, the Company's non-GAAP presentation excludes
the impact of stock based compensation, legal fees related to the
acquisition, and amortization of intangibles. Other companies may
calculate non-GAAP results differently than the Company, limiting
its usefulness as a comparative measure. In addition, such non-GAAP
measures may exclude financial information that some may consider
important in evaluating the Company's performance. Management
compensates for the foregoing limitations of non-GAAP measures by
presenting certain information on both a GAAP and non-GAAP basis
and providing reconciliations of these certain GAAP and non-GAAP
measures.
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,
medical, and military. The Company's primary products are
high speed and low power SRAM and low and medium density DRAM, and
with its acquisition of Si En the company also designs and markets
high performance analog and mixed signal integrated circuits.
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 the inventory correction being nearly
complete, March outlook reflecting normal seasonality, increased
revenue and profit opportunities from the Si En acquisition,
selling a broader range of products across our combined customer
base, the expected closing date of the Si En transaction and such
transaction being immediately accretive to earnings per share and
our outlook for the March 2011
quarter with respect to revenue, SRAM and DRAM revenue, Si En
revenue, gross margin, operating expenses and GAAP and Non-GAAP net
income per share 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, our ability to obtain a
sufficient supply of wafers, wafer pricing, our ability to maintain
sufficient inventory of products to satisfy customer orders,
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, 2010.
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
|
|
Three Months
Ended
|
|
|
|
December
31,
|
|
September
30,
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$ 66,103
|
|
$ 50,555
|
|
$
73,632
|
|
Cost of sales
|
|
43,638
|
|
30,434
|
|
45,762
|
|
Gross profit
|
|
22,465
|
|
20,121
|
|
27,870
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
Research and
development
|
|
6,750
|
|
4,989
|
|
7,278
|
|
Selling, general and
administrative
|
|
9,367
|
|
7,626
|
|
8,212
|
|
Total operating
expenses
|
|
16,117
|
|
12,615
|
|
15,490
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
6,348
|
|
7,506
|
|
12,380
|
|
Interest and other income,
net
|
|
307
|
|
336
|
|
36
|
|
Gain on sale of
investments
|
|
560
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
7,215
|
|
7,842
|
|
12,416
|
|
Provision for income
taxes
|
|
1
|
|
644
|
|
191
|
|
|
|
|
|
|
|
|
|
Consolidated net
income
|
|
7,214
|
|
7,198
|
|
12,225
|
|
|
|
|
|
|
|
|
|
Less: Net income
attributable to
|
|
|
|
|
|
|
|
noncontrolling
interests
|
|
(2)
|
|
(2)
|
|
(420)
|
|
|
|
|
|
|
|
|
|
Net income attributable to
ISSI
|
|
$ 7,212
|
|
$ 7,196
|
|
$
11,805
|
|
|
|
|
|
|
|
|
|
Basic net income per
share
|
|
$ 0.27
|
|
$ 0.29
|
|
$
0.45
|
|
Shares used in basic per share
calculation
|
|
26,308
|
|
25,013
|
|
26,126
|
|
|
|
|
|
|
|
|
|
Diluted net income per
share
|
|
$ 0.26
|
|
$ 0.28
|
|
$
0.43
|
|
Shares used in diluted per share
calculation
|
|
27,865
|
|
25,708
|
|
27,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to
Non-GAAP Financial Measures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income:
|
|
|
|
|
|
|
|
On a GAAP
basis
|
|
$ 7,212
|
|
$ 7,196
|
|
$
11,805
|
|
Stock-based
compensation expense
|
|
886
|
|
552
|
|
817
|
|
Legal fees related
to Si En acquisition
|
|
220
|
|
-
|
|
-
|
|
On a non-GAAP
basis
|
|
$ 8,318
|
|
$ 7,748
|
|
$
12,622
|
|
|
|
|
|
|
|
|
|
Diluted net income per
share:
|
|
|
|
|
|
|
|
On a GAAP
basis
|
|
$ 0.26
|
|
$ 0.28
|
|
$
0.43
|
|
Stock-based
compensation expense
|
|
0.03
|
|
0.02
|
|
0.03
|
|
Legal fees related
to Si En acquisition
|
|
0.01
|
|
-
|
|
-
|
|
On a non-GAAP
basis
|
|
$ 0.30
|
|
$ 0.30
|
|
$
0.46
|
|
|
|
|
|
|
|
|
Integrated
Silicon Solution, Inc.
|
|
Condensed
Consolidated Balance Sheets
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
September
30,
|
|
|
|
2010
|
|
2010
|
|
|
|
(unaudited)
|
|
(1)
|
|
ASSETS
|
|
Current assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
71,100
|
|
$
81,665
|
|
Restricted cash
|
|
6,816
|
|
5,107
|
|
Short-term
investments
|
|
3,370
|
|
4,837
|
|
Accounts receivable,
net
|
|
37,591
|
|
41,148
|
|
Inventories
|
|
56,065
|
|
54,560
|
|
Other current
assets
|
|
7,352
|
|
4,479
|
|
|
|
|
|
|
|
Total current assets
|
|
182,294
|
|
191,796
|
|
Property, equipment and
leasehold improvements, net
|
|
26,916
|
|
28,078
|
|
Long-term investments
|
|
6,000
|
|
-
|
|
Purchased intangible assets,
net
|
|
1,058
|
|
1,294
|
|
Goodwill
|
|
1,301
|
|
1,301
|
|
Other assets
|
|
11,463
|
|
11,562
|
|
Total assets
|
|
$
229,032
|
|
$
234,031
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
Current liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
31,136
|
|
$
41,586
|
|
Accrued compensation and
benefits
|
|
4,596
|
|
6,406
|
|
Accrued
expenses
|
|
5,513
|
|
5,930
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
41,245
|
|
53,922
|
|
|
|
|
|
|
|
Other long-term
liabilities
|
|
2,408
|
|
2,288
|
|
|
|
|
|
|
|
Total liabilities
|
|
43,653
|
|
56,210
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
Common stock
|
|
3
|
|
3
|
|
Additional paid-in
capital
|
|
319,194
|
|
317,773
|
|
Accumulated
deficit
|
|
(136,073)
|
|
(143,285)
|
|
Accumulated comprehensive
loss
|
|
(59)
|
|
(2,286)
|
|
|
|
|
|
|
|
Total parent stockholders'
equity
|
|
183,065
|
|
172,205
|
|
|
|
|
|
|
|
Noncontrolling
interest
|
|
2,314
|
|
5,616
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
185,379
|
|
177,821
|
|
Total liabilities and
stockholders' equity
|
|
$
229,032
|
|
$
234,031
|
|
|
|
|
|
|
|
|
|
(1) Derived from audited
financial statements.
|
|
|
|
|
|
|
SOURCE Integrated Silicon Solution, Inc.