ISSI (MM)

SAN JOSE, Calif., July 27, 2011 /PRNewswire/ -- Integrated Silicon Solution, Inc. (Nasdaq: ISSI) today reported its financial results for the third fiscal quarter ended June 30, 2011.

Fiscal Third Quarter Highlights:

• Reported total revenue of $69.8 million, an increase of 10.4 percent over the March 2011 quarter;
• Achieved GAAP net income of $0.28 per diluted share and non-GAAP net income of $0.34 per diluted share;
• Generated $16.8 million in cash flow from operations during the June quarter;
• Increased automotive market revenue 13 percent from the March 2011 quarter and 51 percent from the June 2010 quarter;
• Formally introduced as second source partner for Micron's RLDRAM® 3 memory; and
• Released 512Mb SDR and DDR Mobile DRAMs targeted for automotive, portable medical, industrial and mobile communication applications.

Revenue in the third fiscal quarter ended June 30, 2011 was $69.8 million. SRAM and DRAM revenue was $65.3 million and analog revenue was $4.5 million. SRAM and DRAM revenue increased 9.7 percent from the March 2011 quarter and was flat with the June 2010 quarter. GAAP gross margin for the third quarter was 33.2 percent, compared to 33.1 percent in the March 2011 quarter, and 38.4 percent in the June 2010 quarter.  Non-GAAP gross margin, which excludes the purchase price adjustments and intangibles amortization related to the Si En acquisition, was 33.5 percent in the third quarter compared to 33.7 percent in the March 2011 quarter, and 38.4 percent in the June 2010 quarter. A reconciliation of GAAP results to non-GAAP results is provided in the financial statement tables following the text of this press release.

GAAP net income in the third quarter of fiscal 2011 was $8.1 million, or $0.28 per diluted share, compared to GAAP net income of $5.8 million, or $0.20 per diluted share, in the March 2011 quarter and $16.0 million, or $0.57 per diluted share, in the June 2010 quarter.

Third quarter 2011 non-GAAP net income was $9.6 million, or $0.34 per diluted share, which excludes $1.0 million in stock-based compensation expense and $0.5 million in amortization of intangibles related to the acquisition of Si En. This compares to $7.4 million, or $0.26 per diluted share, in the March 2011 quarter and $16.6 million, or $0.59 per diluted share, in the June 2010 quarter.

"We are pleased with our third quarter results as revenue and earnings were at the high end of guidance, plus strong cash flow from operations.  These results highlight the strength of our specialty memory business and long-term supply relationships with our customers," said Scott Howarth, ISSI's President and CEO. "During the quarter, we achieved strong growth in the automotive market and were only minimally impacted by the events in Japan. We also experienced increased demand for our products in the communications market. I believe that our ongoing design win traction, strong customer orders, new product introductions and solid balance sheet position ISSI for continued growth and success."

September Quarter Outlook

The Company expects total revenue for the September quarter to range between $68.0 and $73.0 million, consisting of SRAM and DRAM revenue of between $63.5 million and $67.5 million and analog revenue of between $4.5 and $5.5 million. Gross margin for the September quarter is expected to range between 33 percent and 34 percent. Operating expenses are expected to be between $16.0 million and $16.5 million. GAAP net income is expected to be between $0.22 and $0.27 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, is expected to be between $0.27 and $0.32 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 third quarter fiscal 2011 financial results. To access ISSI's conference call via telephone, dial 888-293-6979 by 1:20 p.m. Pacific Time. The participant passcode is 2499261. 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 gross margin, operating income and net income for certain periods that exclude stock based compensation 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 and amortization of intangibles related to the acquisition of Si En. 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 the 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) automotive, (ii) communications, (iii) industrial, medical, and military, and (iv) digital consumer. 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 strength of our memory focus and consistent supply relationships, our ability to execute  on our business model, design win traction, customer orders, new product introductions, and strong balance sheet positioning us for continued growth and success, and our outlook for the September 2011 quarter with respect to revenue, SRAM and DRAM revenue, analog revenue, gross margin, operating expenses (including mask costs) 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, future developments in Japan 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 year ended September 30, 2010 and Form 10-Q for the quarter ended March 31, 2011. The Company assumes no obligation to update or revise the forward-looking statements in this release because of new information, future events, or otherwise.

SOURCE Integrated Silicon Solution, Inc.