ISSI (MM)

ISSI Announces Fourth Quarter and Fiscal Year 2004 Results SANTA CLARA, Calif., Oct. 28 /PRNewswire-FirstCall/ -- Integrated Silicon Solution, Inc. (NASDAQ:ISSI) today reported its preliminary financial results for the fourth fiscal quarter and year ended September 30, 2004. Revenue in the fourth quarter was $31.1 million, compared with $30.0 million in the prior year period. The Company reported a net loss for the fourth quarter of ($15.6) million or ($0.43) per diluted share, compared with a net loss of ($2.5) million or ($0.09) per diluted share, in the prior year period. The September quarter loss of ($15.6) million includes a charge for inventory write downs of $12.1 million. For the fiscal year ended September 30, 2004, revenue totaled $181.0 million compared to $97.7 million for fiscal year 2003, or 85% growth. The net profit for the year ended September 30, 2004 totaled $3.5 million or $0.10 per diluted share compared to a net loss of ($28.1) million or ($1.01) per diluted share in fiscal year 2003. The Company ended the 2004 fiscal year with cash and cash equivalents of $139.0 million and no long or short-term debt obligations. "Following a period of shortages and product allocation in the first half of the year, we experienced the results of too much inventory build up in the channels and a high inventory level at certain customers. The result was that, for the September 2004 quarter, our DRAM family saw average selling prices drop by about 36% from the June quarter, and overall unit shipments also declined," said Jimmy Lee, ISSI's chief executive officer. "This resulted in disappointing operating results for the September 2004 quarter. Our balance sheet remains strong and we will work diligently to expand our revenue and to leverage off our subsidiaries in Asia to reduce operating costs." The statement of operations for the year ended September 30, 2004 currently includes an estimated tax provision of $488K. The company is still analyzing the utilization of its tax loss carry forwards in light of certain possible carry forward restrictions in Section 382 of the federal tax code. If this analysis results in a conclusion that the company's tax loss carry forwards are restricted, then the tax provision for the quarter and year ended September 30, 2004 could be increased by a material amount when the company reports its audited results for the year. Conference Call ISSI will host a conference call today, October 28, 2004, beginning at 1:30 p.m. Pacific time. To access the call, dial 719-457-2692. The call will be simulcast over the Internet at http://www.issi.com/. The webcast will be available for replay until November 28, 2004. 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 China, Europe, Hong Kong, India, Korea and Taiwan. Visit our web site at http://www.issi.com/. Safe Harbor Statement Certain statements in this news release may be considered forward-looking statements, including statements related to working diligently to expand revenue, leveraging to reduce operating costs, and such statements are subject to risks and uncertainties. Actual results may differ materially from current expectations due to many factors, including completion of the Section 382 tax analysis and the fiscal 2004 year-end audit, a reduction in average selling prices for the Company's products and a resultant decrease in the Company's gross profit margin, changes in demand for the Company's products or the products in which the Company's products are used, changes in market conditions, inability to expand revenue, inability to effectively reduce expenses, inability to add new products or diversify product lines, order cancellations, and order rescheduling, product warranty claims, competition, the level and value of inventory held by OEM customers or the Company, the Company's ability to secure manufacturing capacity from its foundries, or other factors. Further information that could affect the Company's results is detailed in ISSI's periodic filings with the Securities and Exchange Commission, including its Annual Report on Form 10K for the fiscal year ended September 30, 2003 and its most recent Quarterly Report on Form 10Q for the quarter ended June 30, 2004. Integrated Silicon Solution, Inc. Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except per share data) Three Months Ended Year Ended September 30, September 30, 2004 2003 2004 2003 Net sales $31,124 $30,025 $181,012 $97,660 Cost of sales 39,103 24,543 154,315 86,046 Gross profit (loss) (7,979) 5,482 26,697 11,614 Operating Expenses: Research and development 5,302 4,871 20,838 23,394 Selling, general and administrative 3,971 3,233 16,403 13,328 Total operating expenses 9,273 8,104 37,241 36,722 Operating loss (17,252) (2,622) (10,544) (25,108) Other income (expense), net 108 157 1,238 (807) Gain on sale of investments 2,134 134 10,874 552 Income (loss) before income taxes, minority interest and equity in net (income) loss of affiliated companies (15,010) (2,331) 1,568 (25,363) Provision (benefit) for income taxes (9) 3 488 3 Income (loss) before minority interest and equity in net income (loss) of affiliated companies (15,001) (2,334) 1,080 (25,366) Minority interest in net loss of consolidated subsidiary -- -- -- 17 Equity in net income (loss) of affiliated companies (560) (144) 2,405 (2,728) Net income (loss) $(15,561) $(2,478) $3,485 $(28,077) Basic net income (loss) per share $(0.43) $(0.09) $0.10 $(1.01) Shares used in basic per share calculation 36,061 28,062 33,444 27,777 Diluted net income (loss) per share $(0.43) $(0.09) $0.10 $(1.01) Shares used in diluted per share calculation 36,061 28,062 36,121 27,777 Integrated Silicon Solution, Inc. Condensed Consolidated Balance Sheets (In thousands) September 30, September 30, 2004 2003 (1) ASSETS Current assets: Cash and cash equivalents $17,015 $19,992 Restricted cash 1,500 -- Short-term investments 120,450 38,450 Accounts receivable 26,733 12,152 Inventories 44,718 16,638 Other current assets 1,541 1,712 Total current assets 211,957 88,944 Property, equipment, and leasehold improvements, net 5,622 6,295 Other assets 83,285 62,860 Total assets $300,864 $158,099 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $30,493 $17,230 Accrued compensation and benefits 2,431 3,406 Accrued expenses 4,903 5,436 Total current liabilities 37,827 26,072 Minority interest -- 78 Stockholders' equity: Common stock 4 3 Additional paid-in capital 336,524 233,957 Accumulated deficit (93,843) (97,328) Unearned compensation (218) (268) Accumulated comprehensive income (loss) 20,570 (4,415) Total stockholders' equity 263,037 131,949 Total liabilities and stockholders' equity $300,864 $158,099 (1) Derived from audited financial statements. DATASOURCE: Integrated Silicon Solution, Inc. CONTACT: Suzanne Weaver, Investor Relations, +1-408-969-6600, or , or Gary Fischer, President & COO, +1-408-969-4612, or , both of ISSI Web site: http://www.issi.com/

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