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ISSI Announces Fourth Quarter And Fiscal 2012 Results

            ISSI Announces Fourth Quarter And Fiscal 2012 Results

PR Newswire

SAN JOSE, Calif., Nov. 1, 2012

SAN JOSE, Calif., Nov. 1, 2012 /PRNewswire/ -- Integrated Silicon Solution,
Inc. (Nasdaq: ISSI) today reported financial results for the fourth fiscal
quarter and fiscal year ended September 30, 2012.

Fiscal Fourth Quarter and Recent Highlights:

  oReported total revenue of $72.5 million, including $1.2 million in NOR
    flash revenue, an increase of 11.9 percent over the June 2012 quarter;
  oCompleted acquisition of Chingis Technology Corporation ("Chingis") which
    added NOR flash to ISSI's product portfolio (GAAP and non-GAAP results
    include results from Chingis for the two week period beginning September
    14);
  oAchieved record quarterly DRAM revenue of $48.8 million;
  oAchieved record automotive market revenue, increasing 19 percent
    sequentially and 76 percent over the prior year quarter;
  oReported GAAP net loss of $0.48 per basic share and non-GAAP net income of
    $0.24 per diluted share;
  oGenerated $14.8 million in cash flow from operations:
  oInvested $27 million in foundry partner Nanya Technology Corporation and
    expanded the technology and business relationship;
  oAnnounced sampling of 1Gb and 2Gb DDR3 devices targeted at the automotive,
    communications, and industrial, medical and military (IMM) markets; and
  oBegan production shipments of RLDRAM^® 2 devices to a leading telecom
    customer.

Fiscal Year 2012 Highlights:

  oRevenue from specialty DRAM increased 9.5 percent over fiscal 2011;
  oIncreased automotive market revenue 54 percent and IMM revenue 12 percent
    over fiscal 2011; and
  oGenerated $32.4 million in cash flow from operations during the fiscal
    year.

"Fourth quarter revenue exceeded guidance due to continued strength in sales
for our automotive products," said Scott Howarth, ISSI's President and CEO.
"We recorded initial revenue for our NOR flash products following the
successful closing of our Chingis acquisition late in the quarter. The
addition of NOR flash further expands our addressable markets and provides a
complementary memory product for many of our key customers. We also began to
see slight improvements in the IMM and communications markets, even though
both markets remained weaker than the prior year due to the global economic
conditions."

"Looking forward, I believe our new product introductions and design win
traction will contribute to future market share gains. We have a solid
position in the growing automotive memory market and continue to increase our
content at key customers and expect to exceed the growth of the overall
industry. We also believe we are well positioned in IMM and communications to
benefit from our broadened product portfolio when conditions in those markets
improve. These opportunities are expected to drive future growth and
profitability in fiscal 2013."

Fiscal Fourth Quarter 2012 Results:

Revenue in the fourth fiscal quarter ended September 30, 2012 was $72.5
million.Revenue consisted of $69.1 million in SRAM and DRAM revenue, $2.2
million of analog revenue, and $1.2 million of NOR flash revenue during the
two weeks that Chingis was owned by ISSI. SRAM and DRAM revenue increased 10.3
percent from the June 2012 quarter and 4.7 percent from the September 2011
quarter.

GAAP results for the fiscal fourth quarter included the following special
items: a $14.3 million write-down for certain tangible and intangible net
assets related to the acquisition of Si En; a charge in the amount of $2.3
million to write-down ISSI's previous investment in Semiconductor
Manufacturing International Corporation (SMIC) due to the decline in fair
market value being considered other than temporary; and $1.3 million in
expenses related to the acquisition of Chingis.

GAAP gross margin for the fourth quarter was 25.3 percent, compared to 32.9
percent in the June 2012 quarter, and 33.4 percent in the September 2011
quarter. Non-GAAP gross margin was 32.7 percent for the fiscal fourth quarter
2012. Non-GAAP gross margin excludes the special items discussed above. 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 loss in the fourth quarter of fiscal 2012 was $13.2 million, or $0.48
per share, compared to GAAP net income of $3.1 million, or $0.11 per diluted
share, in the June 2012 quarter and $34.9 million, or $1.23 per diluted share,
in the September 2011 quarter. The September 2011 quarter included a $28.1
million income tax benefit.

Non-GAAP net income in the fourth quarter of 2012 was $6.9 million, or $0.24
per diluted share, compared to $6.5 million, or $0.22 per diluted share, in
the June 2012 quarter and $8.2 million, or $0.29 per diluted share, in the
September 2011 quarter. Non-GAAP net income excludes the special items
discussed above, and stock based compensation, the amortization of intangibles
related to acquisitions, and non-cash tax expense.

Fiscal 2012 Results:

Revenue for the fiscal year ended September 30, 2012 was $266.0 million, a
decrease of 1.7 percent from revenue of $270.5 million in fiscal 2011. DRAM
and SRAM revenue in fiscal 2012 was $255.8 million, an increase of 2.0 percent
from fiscal 2011. GAAP gross margin in fiscal 2012 was 31.2 percent, which
included the special charges discussed above, compared with 33.4 percent in
fiscal 2011.

GAAP net loss in fiscal 2012 was $2.7 million, or $0.10 per share, compared
with GAAP net income in fiscal 2011 of $56.0 million, or $1.98 per diluted
share. Fiscal 2012 included $17.9 million in special charges, whereas fiscal
2011 included a $28.1 million income tax benefit.

Non-GAAP net income in fiscal 2012 was $25.8 million, or $0.89 per diluted
share. This compares to non-GAAP net income of $33.4 million, or $1.18 per
diluted share, in fiscal 2011.

Cash, cash equivalents and short-term investments totaled $82.0 million at
September 30, 2012, compared with $107.5 million at June 30, 2012.Inventory
at September 30, 2012 totaled $67.0 million, including $4.8 million of
acquired Chingis inventory, compared to $46.1 million at June 30, 2012. As
mentioned last quarter, the sequential increase in inventory is primarily
related to a last time buy of products from one of the Company's foundries.

December Quarter Outlook

The Company expects total revenue for the December quarter to range between
$75.0 and $81.0 million, consisting of SRAM and DRAM revenue of between $66.0
million and $70.5 million, NOR flash revenue between $7.0 million and $8.0
million, and analog revenue of between $2.0 million and $2.5 million. Gross
margin for the December quarter is expected to range between 32 percent and 34
percent. Operating expenses are expected to be between $22.0 million and $22.5
million. GAAP net income is expected to be between $0.10 and $0.14 per diluted
share, and non-GAAP net income, which excludes non-cash tax expense related to
the utilization of deferred tax assets, stock-based compensation, and purchase
price adjustments and amortization of intangibles related to the acquisition
of Chingis, is expected to range between $0.20 and $0.24 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 fourth quarter and fiscal 2012 financial results. To access ISSI's
conference call via telephone, dial 888-466-4462 by 1:20 p.m. Pacific Time.
The participant passcode is 9453167. 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 and net income (loss) for certain periods
that exclude stock based compensation, the amortization of intangibles related
to acquisitions, the write-off of certain Si En tangible and intangible
assets, expenses related to the acquisition of Chingis and the charge to
recognize the decline in fair value of SMIC stock. 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, the amortization of intangibles related to
acquisitions, the write-off of certain Si En tangible and intangible assets,
expenses related to the acquisition of Chingis and the charge to recognize the
decline in fair value of SMIC stock. 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. The Company also designs and markets NOR flash
products and 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
NOR Flash expanding our addressable markets and providing a complementary
memory product, seeing slight improvements in the IMM and communications
markets, being well positioned to benefit from market share gains, having a
solid position in the growing automotive memory market and continue to
increase our content at key customers and expect to exceed the growth of the
overall industry, belief that we are well positioned in IMM and communications
to benefit from our broadened product portfolio when conditions in those
markets improve, expected to drive future growth and profitability in fiscal
2013 and our outlook for the December 2012 quarter with respect to revenue,
SRAM and DRAM revenue, NOR flash revenue, analog 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 (including
Chingis products), our ability to sell our products (including Chingis
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
(including Chingis customers), our ability to realize the expected benefits of
our Chingis acquisition including maintaining relationships with key
customers, vendors and employees, 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 year ended September 30,
2011 and Form 10-Q for the quarter ended June 30, 2012. In addition, the
financial information in this press release is unaudited and subject to any
adjustments that may be made in connection with the year-end audit. 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                 Fiscal Year Ended
                     September    June 30,   September  September   September
                     30,                     30,        30,         30,
                     2012         2012       2011       2012        2011
Net sales            $ 72,500    $ 64,781  $ 71,339  $ 265,950  $ 270,508
Cost of sales        54,172       43,444     47,501     182,966     180,100
Gross profit         18,328       21,337     23,838     82,984      90,408
Operating expenses:
 Research and       10,062       6,749      7,526      30,918      27,622
development
 Selling, general   13,867       9,392      9,518      42,174      36,617
and administrative
 Impairment of      4,261        -          -          4,261       -
goodwill
 Total operating  28,190       16,141     17,044     77,353      64,239
expenses
Operating income     (9,862)      5,196      6,794      5,631       26,169
(loss)
Interest and other
income (expense),    (2,148)      405        798        (1,724)     2,056
net
Gain on sale of      -            -          -          -           560
investments
Income (loss) before (12,010)     5,601      7,592      3,907       28,785
income taxes
Provision (benefit)  1,108        2,454      (27,464)   6,512       (27,338)
for income taxes
Consolidated net     (13,118)     3,147      35,056     (2,605)     56,123
income (loss)
Net income
attributable to
 noncontrolling  (128)        (10)       (182)      (113)       (166)
interests
Net income (loss)    $ (13,246)  $ 3,137   $ 34,874  $ (2,718)  $ 55,957
attributable to ISSI
Basic net income     $ (0.48)    $ 0.11    $ 1.31    $ (0.10)   $ 2.11
(loss) per share
Shares used in basic
per share            27,475       27,316     26,632     27,120      26,568
calculation
Diluted net income   $ (0.48)    $ 0.11    $ 1.23    $ (0.10)   $ 1.98
(loss) per share
Shares used in
diluted per share    27,475       29,069     28,266     27,120      28,308
calculation
Reconciliation of GAAP to Non-GAAP Financial Measures
                     Three Months Ended                 Fiscal Year Ended
                     (In thousands, except per share data)
                     September    June 30,   September  September   September
                     30,                     30,        30,         30,
                     2012         2012       2011       2012        2011
Gross Margin:
 GAAP gross       $ 18,328    $ 21,337  $ 23,838  $ 82,984   $ 90,408
profit
Adjustments:
 Si En
acquisition related  -            -          -          -           269
inventory write up
 Si En intangible 5,402        -          -          5,402       -
asset impairment
 Total         5,402        -          -          5,402       269
adjustments
 Non-GAAP gross   23,730       21,337     23,838     88,386      90,677
profit
 Non-GAAP gross   32.7%        32.9%      33.4%      33.2%       33.5%
margin
Operating expenses:
 GAAP operating   $ 28,190    $ 16,141   $ 17,044  $ 77,353   $ 64,239
expenses
Adjustments:
 Chingis
acquisition expenses (1,154)      -          -          (1,154)     -
and charges
 Si En asset      (8,928)      -          -          (8,928)     -
impairment
 Legal fees
related to Si En     -            -          -          -           (325)
acquisition
 Total         (10,082)     -          -          (10,082)    (325)
adjustments
 Non-GAAP         18,108       16,141     17,044     67,271      63,914
operating expenses
Operating income (loss):
 GAAP operating   $ (9,862)   $ 5,196   $ 6,794   $ 5,631    $ 26,169
income (loss)
Adjustments:
 Chingis
acquisition expenses 1,284        -          -          1,284       -
and charges
 Si En
acquisition related  -            -          -          -           269
inventory write up
 Si En intangible
asset amortization   291          435        402        1,553       1,190
and charge
 Si En intangible 14,330       -          -          14,330      -
asset impairment
 Legal fees
related to Si En     -            -          -          -           325
acquisition
 Stock-based      1,301        1,283      1,076      5,031       4,042
compensation expense
 Total         17,206       1,718      1,478      22,198      5,826
adjustments
 Non-GAAP         $  7,344   $  6,914  $ 8,272   $ 27,829   $ 31,995
operating income
Provision (benefit) for income taxes:
 On a GAAP basis  $ 1,108     $ 2,454   $         $ 6,512    $ 
                                             (27,464)               (27,338)
Adjustments:
 Non-cash tax     588          1,638      (64)       3,953       (225)
expense
 Tax credit for
valuation allowance  -            -          (28,136)   -           (28,136)
release
 Total         588          1,638      (28,200)   3,953       (28,361)
adjustments
 Non-GAAP
provision for income $ 520       $ 816     $ 736     $ 2,559    $ 1,023
taxes
Net income (loss):
 On a GAAP basis  $ (13,246)  $ 3,137   $ 34,874  $ (2,718)  $ 55,957
Adjustments:
 Chingis
acquisition expenses 1,284        -          -          1,284       -
and charges
 Si En
acquisition related  -            -          -          -           269
inventory write up
 Si En intangible
asset amortization   291          435        402        1,553       1,190
and charge
 Si En intangible 14,330       -          -          14,330      -
asset impairment
 Legal fees
related to Si En     -            -          -          -           325
acquisition
 Stock-based      1,301        1,283      1,076      5,031       4,042
compensation expense
 Impairment of    2,327        -          -          2,327       -
investment
 Non-cash tax     601          1,638      (64)       3,966       (225)
expense
 Tax credit for
valuation allowance  -                       (28,136)   -           (28,136)
release
 Total         20,134       3,356      (26,722)   28,491      (22,535)
adjustments
 Non-GAAP net     $ 6,888     $ 6,493   $ 8,152   $ 25,773   $  33,422
income
Shares used in Non-GAAP net income per
share:
 Basic            27,475       27,316     26,632     27,120      26,568
 Diluted          29,160       29,069     28,266     28,901      28,308
Non-GAAP net income per share:
 Basic            $  0.25     $ 0.24    $ 0.31    $ 0.95     $ 1.26
 Diluted          $  0.24     $ 0.22    $ 0.29    $ 0.89     $  1.18







Integrated Silicon Solution, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
                                                  September 30,  September 30,
                                                  2012           2011
                                                  (unaudited)    (1)
ASSETS
Current assets:
 Cash and cash equivalents                       $ 75,497      $ 83,863
 Restricted cash                                 -              6,786
 Short-term investments                          6,541          4,761
 Accounts receivable, net                        47,710         39,460
 Inventories                                     66,964         56,796
 Other current assets                            21,204         16,369
Total current assets                              217,916        208,035
Property, equipment and leasehold improvements,   29,286         28,959
net
Purchased intangible assets, net                  8,226          11,081
Goodwill                                          9,178          9,463
Other assets                                      52,465         34,449
Total assets                                      $ 317,071     $ 291,987
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                                $ 44,705      $ 36,395
 Accrued compensation and benefits               6,310          6,363
 Accrued expenses                                14,243         4,711
Total current liabilities                        65,258         47,469
Other long-term liabilities                       5,478          9,272
Total liabilities                                 70,736         56,741
Commitments and contingencies
Stockholders' equity:
 Common stock                                    3              3
 Additional paid-in capital                      330,473        321,131
 Accumulated deficit                             (90,046)       (87,328)
 Accumulated comprehensive income (loss)         2,399          (1,252)
Total ISSI stockholders' equity                   242,829        232,554
 Noncontrolling interest                         3,506          2,692
Total stockholders' equity                        246,335        235,246
Total liabilities and stockholders' equity        $ 317,071     $ 291,987
(1) Derived from audited financial statements.

SOURCE Integrated Silicon Solution, Inc.

Website: http://www.issi.com
Contact: John M. Cobb, Chief Financial Officer, Investor Relations,
+1-408-969-6600, ir@issi.com, or Leanne K. Sievers, Shelton Group,
+1-949-224-3874, lsievers@sheltongroup.com
 
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