ISSI Announces Third Fiscal Quarter 2013 Results

               ISSI Announces Third Fiscal Quarter 2013 Results

PR Newswire

MILPITAS, Calif., July 31, 2013

MILPITAS, Calif., July 31, 2013 /PRNewswire/ -- Integrated Silicon Solution,
Inc. (Nasdaq: ISSI) today reported financial results for the third fiscal
quarter ended June 30, 2013.

Third Fiscal Quarter Highlights:

  oReported total revenue of $77.8 million, an increase of 3.7% over the
    second fiscal quarter of 2013 and 20.1% over the third fiscal quarter of
    2012;
  oIndustrial, medical, and military (IMM) revenue increased 5.0%
    sequentially;
  oCommunications revenue increased 3.6% sequentially;
  oConsumer revenue grew 15.6% sequentially on improved flash and analog
    results;
  oAutomotive revenue was flat sequentially and grew 21.0% over the prior
    year period;
  oGAAP net income was $0.24 per diluted share and non-GAAP net income was
    $0.23 per diluted share;
  oRealized $7.0 million in gains on sales of a portion of the Company's
    shares of Nanya Technology Corporation ("Nanya");
  oGenerated $16.4 million in cash flow from operations and cash and
    short-term investments grew to $138.6 million; and
  oAchieved multiple design wins for RLDRAM^® 2 memories, DDR2, DDR3 and SRAM
    products.

"Third quarter revenue reflected sequential growth in sales into the IMM,
communications and consumer markets, including sales of our flash and analog
products," said Scott Howarth, ISSI's President and CEO. "The sequential
increases in IMM and communications sales were even more noteworthy
considering the 13% and 5% sequential growth, respectively, we achieved in the
March quarter despite the continued economic weakness in Europe. We believe
our expanded product portfolio is driving market share gains and increasing
ISSI's role as a strategic source of long-term supply for customers."

"Looking forward, we remain cautious on the overall economic and end market
environment but believe our position as a reliable, long-term source for
customers and our growing pipeline of design wins will contribute to further
market share gains and revenue growth in the coming quarters."

Third Fiscal Quarter 2013 Results
Revenue in the third fiscal quarter ended June 30, 2013 was $77.8 million, an
increase of 3.7 percent from the $75.0 million in the second quarter of 2013
and an increase of 20.1 percent from the $64.8 million in the third fiscal
quarter of 2012. Revenue in the third fiscal quarter of 2013 consisted of
$67.5 million of SRAM and DRAM revenue, $8.4 million of NOR flash revenue, and
$1.9 million of analog revenue. SRAM and DRAM revenue increased 2.0 percent
from the March 2013 quarter and 7.7 percent from the June 2012 quarter.

GAAP gross margin in the third fiscal quarter was 33.5 percent, compared to
33.3 percent in the March 2013 quarter, and 32.9 percent in the June 2012
quarter. Non-GAAP gross margin was 33.7 percent, compared to 33.5 percent in
the March 2013 quarter.

During the third fiscal quarter, the Company continued to sell a portion of
the Nanya shares it purchased in September 2012, realizing a gain of $7.0
million. The remaining tradable Nanya shares are classified as short-term
investments since the Company intends to sell such shares within one year.

GAAP income tax expense in the third fiscal quarter was $5.2 million, compared
to $3.2 million in the March 2013 quarter and $2.5 million in the June 2012
quarter.

GAAP net income in the third fiscal quarter of 2013 was $7.1 million, or $0.24
per diluted share, compared to GAAP net income of $3.3 million, or $0.11 per
diluted share, in the March 2013 quarter and GAAP net income of $3.1 million,
or $0.11 per diluted share, in the June 2012 quarter.

Non-GAAP net income in the June 2013 quarter was $6.7 million, or $0.23 per
diluted share, compared to $6.1 million, or $0.21 per diluted share, in the
March 2013 quarter and $6.5 million, or $0.22 per diluted share, in the June
2012 quarter.

Non-GAAP results exclude stock based compensation, amortization of intangibles
related to acquisitions, gains on the sales of investments, 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.

September Quarter Outlook
The Company expects total revenue for the September quarter to range between
$77.0 and $83.0 million, consisting of SRAM and DRAM revenue of between $68.0
million and $73.0 million, NOR flash revenue between $7.0 million and $7.5
million, and analog revenue of between $2.0 million and $2.5 million. Gross
margin for the September quarter is expected to range between 33.5 percent and
34.5 percent. Operating expenses are expected to range between $20.0 million
and $21.0 million. The Company expects to realize additional gains on the
Nanya shares in the September quarter. However, it is difficult to predict
the total gains for the quarter and, as such, these gains have been excluded
from the GAAP and Non-GAAP net income guidance. 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, amortization of intangibles related to the
acquisition of Chingis, and gains on the sales of Nanya shares, is expected to
range between $0.24 and $0.28 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 fiscal quarter financial results. To access ISSI's conference
call via telephone, dial 888-438-5519 by 1:20 p.m. Pacific Time. The
participant passcode is 6068298. 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 investments, 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
expanded product portfolio driving market share gains and increasing ISSI's
role as a strategic source of long-term supply, remaining cautious on the
economic and end market environment, our belief that our position as a
reliable, long-term source for customers and our growing pipeline of design
wins will contribute to further market share gains and revenue growth,
intending to sell more Nanya shares within one year and our outlook for the
September 2013 quarter with respect to revenue, SRAM and DRAM revenue, NOR
flash revenue, analog revenue, gross margin, operating expenses, expecting
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 March 31, 2013. 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
                                   June 30,                 March 31,
                                   2013         2012        2013
Net sales                          $ 77,788    $ 64,781   $        
                                                             74,991
Cost of sales                      51,741       43,444      50,002
Gross profit                       26,047       21,337      24,989
Operating expenses:
 Research and development         10,583       6,749       10,308
 Selling, general and             10,829       9,392       10,730
administrative
 Total operating expenses       21,412       16,141      21,038
Operating income                   4,635        5,196       3,951
Interest and other income          546          405         515
(expense), net
Gain on the sale of investments    7,280        -           2,059
Income before income taxes         12,461       5,601       6,525
Provision for income taxes         5,215        2,454       3,245
Consolidated net income            7,246        3,147       3,280
 Net (income) loss attributable   (182)        (10)        7
to noncontrolling interests
Net income attributable to ISSI    $  7,064   $  3,137  $        
                                                              3,287
Basic net income per share         $   0.25   $   0.11  $        
                                                               0.12
Shares used in basic per share     28,293       27,316      27,976
calculation
Diluted net income per share       $   0.24   $   0.11  $        
                                                               0.11
Shares used in diluted per share   29,755       29,069      29,348
calculation
Reconciliation of GAAP to Non-GAAP Financial Measures
Gross Margin:
 GAAP gross profit              $ 26,047    $ 21,337   $        
                                                             24,989
Adjustments:
 Chingis intangible asset       159          -           154
amortization
 Total adjustments           159          -           154
 Non-GAAP gross profit          26,206       21,337      25,143
 Non-GAAP gross margin          33.7%        32.9%       33.5%
Operating income:
 GAAP operating income          $  4,635   $  5,196  $        
                                                              3,951
Adjustments:
 Chingis intangible asset       336          -           330
amortization
 Si En intangible asset         -            435         -
amortization and charge
 Stock-based compensation       1,464        1,283       1,469
expense
 Total adjustments           1,800        1,718       1,799
 Non-GAAP operating income      $  6,435   $  6,914  $        
                                                              5,750
Provision for income taxes:
 On a GAAP basis                $  5,215   $  2,454  $        
                                                              3,245
Adjustments:
 Tax impact of gains on sale of 2,839        -           927
investments
 Non-cash tax expense           2,295        1,638       2,110
 Total adjustments           5,134        1,638       3,037
 Non-GAAP provision for income  $    81  $   816  $        
taxes                                                          208
Net income attributable to ISSI:
 On a GAAP basis                $  7,064   $  3,137  $        
                                                              3,287
Adjustments:
 Chingis intangible asset       336          -           330
amortization
 Si En intangible asset         -            435         -
amortization and charge
 Stock-based compensation       1,464        1,283       1,469
expense
 Gain on sales of investment    (7,280)      -           (2,059)
 Tax impact of gains on sale of 2,839        -           927
investments
 Non-cash tax expense           2,295        1,638       2,110
 Total adjustments           (346)        3,356       2,777
 Non-GAAP net income            $  6,718   $  6,493  $        
                                                              6,064
Shares used in Non-GAAP net income per share:
 Basic                          28,293       27,316      27,976
 Diluted                        29,755       29,069      29,348
Non-GAAP net income per share:
 Basic                          $   0.24   $   0.24  $        
                                                               0.22
 Diluted                        $   0.23   $   0.22  $        
                                                               0.21



Integrated Silicon Solution, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
                                                 June 30,     September 30,
                                                 2013         2012
                                                 (unaudited)  (1)
ASSETS
Current assets:
 Cash and cash equivalents                      $ 105,226   $    75,497
 Short-term investments                         33,408       6,541
 Accounts receivable, net                       48,123       47,710
 Inventories                                    64,606       66,964
 Other current assets                           17,906       21,204
Total current assets                             269,269      217,916
Property, equipment and leasehold improvements,  42,562       29,286
net
Purchased intangible assets, net                 7,035        8,226
Goodwill                                         9,178        9,178
Other assets                                     23,964       52,465
Total assets                                     $ 352,008   $   317,071
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                               $  46,242   $    44,705
 Accrued compensation and benefits              7,656        9,420
 Accrued expenses                               6,898        11,133
 Current portion of long-term debt              195          -
Total current liabilities                       60,991       65,258
Long-term debt                                   4,583        -
Other long-term liabilities                      8,644        5,478
Total liabilities                                74,218       70,736
Commitments and contingencies
Stockholders' equity:
 Common stock                                   3            3
 Additional paid-in capital                     339,528      330,473
 Accumulated deficit                            (77,196)     (90,046)
 Accumulated comprehensive income               13,290       2,399
Total ISSI stockholders' equity                  275,625      242,829
 Noncontrolling interest                        2,165        3,506
Total stockholders' equity                       277,790      246,335
Total liabilities and stockholders' equity       $ 352,008   $   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
 
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