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ISSI Announces Second Fiscal Quarter 2013 Results

              ISSI Announces Second Fiscal Quarter 2013 Results

PR Newswire

SAN JOSE, Calif., May 1, 2013

SAN JOSE, Calif., May 1, 2013 /PRNewswire/ -- Integrated Silicon Solution,
Inc. (Nasdaq: ISSI) today reported financial results for the second fiscal
quarter ended March 31, 2013.

Second Fiscal Quarter Highlights:

  oReported total revenue of $75.0 million, which was at the high-end of the
    Company's guidance and up 20.0 percent over the second fiscal quarter of
    2012;
  oIndustrial, medical, and military (IMM) revenue increased 12.7 percent
    sequentially and 4.0 percent over the second fiscal quarter of 2012;
  oAutomotive revenue was flat sequentially and grew 44.2 percent over the
    prior year period;
  oGAAP net income was $0.11 per diluted share and non-GAAP net income was
    $0.21 per diluted share;
  oRealized $2.1 million in gains on sales of a portion of the Company's
    shares of Nanya Technology Corporation ("Nanya");
  oCash and short-term investments grew to $111.4 million or $3.97 per share;
    and
  oAchieved multiple design wins for new products across all target end
    markets.

"Second quarter revenue was at the high-end of our guidance primarily due to
improvements in the IMM and communications markets," said Scott Howarth,
ISSI's President and CEO. "During the quarter, we gained traction with large
industrial customers, predominately in Europe, where we continue to win new
designs. Additionally, our communications revenue improved slightly in the
quarter, reflecting improvements in U.S. and China specifically related to LTE
basestation implementation. We continued to gain momentum with our RLDRAM^®
memory products and have also secured large design win opportunities with a
major U.S. communications and networking company. Although automotive revenue
was flat sequentially, our year-over-year growth in this market demonstrates
the ongoing trend toward increased semiconductor content not only in high-end
cars, but also lower cost vehicles. Based on our increasing design activity
and share gains, we expect this market will remain a strong growth driver for
our business."

"For the June quarter, we expect revenue to increase based on continued
improvements in end market demand and further ramping of multiple new
products, including DDR wins in automotive, RLDRAM^® memories in
communications, and high density memory designs across all of our end markets.
In addition, we anticipate an increase in NOR flash revenue now that we have
resolved the wafer supply issues that impacted our revenue earlier this year.
We expect that our growing pipeline of design wins and expanded product
portfolio coupled with economic improvements in certain areas of our business
will contribute to further market share gains and revenue growth in the coming
quarters."

Second Fiscal Quarter 2013 Results
Revenue in the second fiscal quarter ended March 31, 2013 was $75.0 million, a
decrease of 1.8 percent from the $76.4 million in the first fiscal quarter of
2013 and an increase of 20.0 percent from the $62.5 million in the second
fiscal quarter of 2012. Revenue in the second fiscal quarter of 2013
consisted of $66.1 million of SRAM and DRAM revenue, $7.2 million of NOR flash
revenue, and $1.7 million of analog revenue. SRAM and DRAM revenue increased
1.0 percent from the December 2012 quarter and increased 10.0 percent from the
March 2012 quarter.

GAAP gross margin in the second fiscal quarter was 33.3 percent, compared to
32.1 percent in the December 2012 quarter, and 33.8 percent in the March 2012
quarter. Non-GAAP gross margin was 33.5 percent, compared to 32.9 percent in
the December 2012 quarter.

During the second fiscal quarter, the Company sold a portion of the Nanya
shares it purchased in September 2012, realizing a gain of $2.1 million. In
addition, the remaining currently tradable Nanya shares were reclassified from
non-current assets to short-term investments since the Company intends to sell
such shares within one year.

GAAP income tax expense in the second fiscal quarter was $3.2 million,
compared to $1.4 million in the December 2012 quarter and $1.2 million in the
March 2012 quarter. In the second fiscal quarter, the Company recorded a
valuation reserve of $1.4 million for deferred tax assets relating to
California net operating loss carry-forwards. Due to a change in the Company's
legal structure and changes in California tax law, the Company believes the
deferred tax assets will no longer be fully utilized.

GAAP net income in the second quarter of fiscal 2013 was $3.3 million, or
$0.11 per diluted share, compared to GAAP net income of $2.5 million, or $0.09
per diluted share, in the December 2012 quarter and GAAP net income of $3.6
million, or $0.12 per diluted share, in the March 2012 quarter.

Non-GAAP net income in the March 2013 quarter was $6.1 million, or $0.21 per
diluted share, compared to $5.3 million, or $0.18 per diluted share, in the
December 2012 quarter and $6.1 million, or $0.21 per diluted share, in the
March 2012 quarter.

Non-GAAP results exclude stock based compensation, amortization of intangibles
related to acquisitions, gains on the sales of Nanya shares, and non-cash tax
expense. A reconciliation of GAAP results to non-GAAP results is provided in
the financial statement tables following the text of this press release.

June Quarter Outlook
The Company expects total revenue for the June quarter to range between $76.0
and $81.0 million, consisting of SRAM and DRAM revenue of between $66.5
million and $70.0 million, NOR flash revenue between $8.0 million and $9.0
million, and analog revenue of between $1.5 million and $2.0 million. Gross
margin for the June quarter is expected to range between 33.0 percent and 34.0
percent. Operating expenses are expected to range between $21.0 million and
$22.0 million. In April, the Company realized gains of $2.8 million on sales
of Nanya shares and expects to realize additional gains in the quarter.
However, it is impossible to predict the total gains for the June quarter and,
as such, these gains have been excluded from the net income guidance. As
such, GAAP net income is expected to be between $0.12 and $0.16 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, amortization
of intangibles related to the acquisition of Chingis, and gains on the sales
of Nanya shares, 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 second fiscal quarter financial results. To access ISSI's conference
call via telephone, dial 888-389-5988 by 1:20 p.m. Pacific Time. The
participant passcode is 5098998. 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, provision for income
taxes and net income for certain periods that exclude stock based
compensation, the amortization of intangibles related to acquisitions, gains
on sales of Nanya shares, and non-cash tax expense. 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 the items described above. 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
continuing to win new designs and expand our customer base, momentum with our
RLDRAM^® memory products, ongoing trend toward increased semiconductor content
in automobiles, expecting the automotive market will remain a strong growth
driver for our business, expecting revenue in the June quarter to increase
based on continued improvements in end market demand and further ramping of
multiple new products across all of our end markets, anticipating an increase
in NOR flash revenue, expecting that our growing pipeline of design wins and
expanded product portfolio will contribute to further market share gains and
revenue growth in the coming quarters, and our outlook for the June 2013
quarter with respect to revenue, SRAM and DRAM revenue, NOR flash revenue,
analog revenue, gross margin, operating expenses, expect to realize additional
gains on sales of Nanya shares, 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, 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, 2012 and the Company's
Form 10-Q for the quarter ended December 31, 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          Three Months
                                                                  Ended
                                      March 31,                   December 31,
                                      2013          2012          2012
Net sales                             $  74,991   $  62,505   $  76,399
Cost of sales                         50,002        41,384        51,908
Gross profit                          24,989        21,121        24,491
Operating expenses:
 Research and development            10,308        6,506         10,023
 Selling, general and                10,730        9,418         11,089
administrative
 Total operating expenses          21,038        15,924        21,112
Operating income                      3,951         5,197         3,379
Interest and other income             515           (194)         268
(expense), net
Gain on the sale of investments       2,059         -             -
Income before income taxes            6,525         5,003         3,647
Provision for income taxes            3,245         1,406         1,159
Consolidated net income               3,280         3,597         2,488
 Net loss attributable to
 noncontrolling interests         7             4             11
Net income attributable to ISSI       $   3,287  $   3,601  $   2,499
Basic net income per share            $    0.12  $    0.13  $    0.09
Shares used in basic per share        27,976        27,053        27,696
calculation
Diluted net income per share          $    0.11  $    0.12  $    0.09
Shares used in diluted per share      29,348        28,913        29,106
calculation
Reconciliation of GAAP to Non-GAAP Financial
Measures
Gross Margin:
 GAAP gross profit                 $  24,989   $  21,121   $  24,491
Adjustments:
 Chingis acquisition related       -             -             492
inventory write up
 Chingis intangible asset          154           -             148
amortization
 Total adjustments              154           -             640
 Non-GAAP gross profit             25,143        21,121        25,131
 Non-GAAP gross margin             33.5%         33.8%         32.9%
Operating income:
 GAAP operating income (loss)      $   3,951  $   5,197  $   3,379
Adjustments:
 Chingis acquisition related       -             -             492
inventory write up
 Chingis intangible asset          330           -             339
amortization
 Si En intangible asset            -             423           -
amortization and charge
 Stock-based compensation          1,469         1,262         1,440
expense
 Total adjustments              1,799         1,685         2,271
 Non-GAAP operating income         $   5,750  $   6,882  $   5,650
Provision for income taxes:
 On a GAAP basis                   $   3,245  $   1,406  $   1,159
Adjustments:
 Tax impact of gains on sale of    927           -             -
investments
 Non-cash tax expense              2,110         804           490
 Total adjustments              3,037         804           490
 Non-GAAP provision for income     $    208  $    602  $    669
taxes
Net income attributable to ISSI:
 On a GAAP basis                   $   3,287  $   3,601  $   2,499
Adjustments:
 Chingis acquisition related       -             -             492
inventory write up
 Chingis intangible asset          330           -             339
amortization
 Si En intangible asset            -             423           -
amortization and charge
 Stock-based compensation          1,469         1,262         1,440
expense
 Gain on sales of investment       (2,059)       -             -
 Tax impact of gains on sale of    927           -             -
investments
 Non-cash tax expense              2,110         804           490
 Total adjustments              2,777         2,489         2,761
 Non-GAAP net income               $   6,064  $   6,090  $   5,260
Shares used in Non-GAAP net income per share:
 Basic                             27,976        27,053        27,696
 Diluted                           29,348        28,913        29,106
Non-GAAP net income per share:
 Basic                             $    0.22  $    0.23  $    0.19
 Diluted                           $    0.21  $    0.21  $    0.18







Integrated Silicon Solution, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
                                                    March 31,    September 30,
                                                    2013         2012
                                                    (unaudited)  (1)
ASSETS
Current assets:
 Cash and cash equivalents                         $  77,052  $  75,497
 Short-term investments                            34,363       6,541
 Accounts receivable, net                          49,189       47,710
 Inventories                                       68,748       66,964
 Other current assets                              19,868       21,204
Total current assets                                249,220      217,916
Property, equipment and leasehold improvements,     36,595       29,286
net
Purchased intangible assets, net                    7,433        8,226
Goodwill                                            9,178        9,178
Other assets                                        29,591       52,465
Total assets                                        $ 332,017   $ 317,071
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                                  $  46,408  $  44,705
 Accrued compensation and benefits                 6,220        9,420
 Accrued expenses                                  5,712        11,133
 Current portion of long-term debt                 195          -
Total current liabilities                          58,535       65,258
Long-term debt                                      4,631        -
Other long-term liabilities                         5,287        5,478
Total liabilities                                   68,453       70,736
Commitments and contingencies
Stockholders' equity:
 Common stock                                      3            3
 Additional paid-in capital                        334,986      330,473
 Accumulated deficit                               (84,260)     (90,046)
 Accumulated comprehensive income                  9,347        2,399
Total ISSI stockholders' equity                     260,076      242,829
 Noncontrolling interest                           3,488        3,506
Total stockholders' equity                          263,564      246,335
Total liabilities and stockholders' equity          $ 332,017   $ 317,071
(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, (408)
969-6600, ir@issi.com or Leanne K. Sievers, Shelton Group, (949) 224-3874,
lsievers@sheltongroup.com