ISSI Announces Second Fiscal Quarter 2014 Results

              ISSI Announces Second Fiscal Quarter 2014 Results

Achieves Record Revenue of $80.9 Million; Improves Gross Margin 200 Basis
Points Sequentially

PR Newswire

MILPITAS, Calif., April 30, 2014

MILPITAS, Calif., April 30, 2014 /PRNewswire/ --Integrated Silicon Solution,
Inc. (Nasdaq: ISSI) today reported financial results for the second fiscal
quarter ended March 31, 2014.

Second Fiscal Quarter Highlights:

  oReported record revenue of $80.9 million, compared to $79.1 million in the
    first fiscal quarter of 2014 and $75.0 million in the second fiscal
    quarter of 2013;
  oGross margin was 34.3%, compared to 32.3% in the December 2013 quarter and
    33.3% in the March 2013 quarter;
  oDRAM revenue increased 10.7% and SRAM revenue increased 9.1% over the
    prior year period;
  oIndustrial, medical, and military (IMM) revenue increased 6.5%
    sequentially and 31.2% year-over-year;
  oAutomotive revenue grew 1.6% sequentially and 10.6% year-over-year; 
  oGAAP net income was $0.28 per diluted share and non-GAAP net income was
    $0.23 per diluted share;
  oRealized $3.9 million in gains on sales of a portion of the Company's
    shares of Nanya Technology Corporation ("Nanya") and $2.1 million in gains
    on the sale of the Company's remaining shares of SMIC;
  oEnded the quarter with cash and short-term investments of $130.8 million;
    and
  oAchieved multiple DDR3, DDR2 and SDRAM design wins in automotive and
    industrial applications as well as RLDRAM2®, Pseudo SRAM, DDR2 and DDR3
    design wins with communications customers.

"Second fiscal quarter 2014 set a revenue record for ISSI at $80.9 million,
driven by record revenue for our DRAM products as well as record sales in our
automotive and IMM end markets," said Scott Howarth, ISSI's President and CEO.
"IMM was once again our strongest growth market, primarily due to strength
among European customers, while automotive continues to be a growth market for
us.

"In addition, gross margin improved 200 basis points sequentially thanks to
improved product mix, favorable Taiwan currency rates and ongoing product cost
initiatives which helped us exceed our net income expectations for the
quarter. Looking forward, we continue to see end market growth in IMM and
automotive and expect further revenue growth as volumes continue to ramp
across our expanded product portfolio." 

Second Fiscal Quarter 2014 Results
Revenue in the second fiscal quarter ended March 31, 2014 was $80.9 million,
compared to $79.1 million in the fiscal first quarter of 2014 and $75.0
million in the second fiscal quarter of 2013. Revenue in the second fiscal
quarter of 2014 consisted of $72.9 million of SRAM and DRAM revenue, $6.6
million of NOR flash revenue, and $1.4 million of analog revenue. SRAM and
DRAM revenue increased 5.1% from the December 2013 quarter and 10.2% from the
March 2013 quarter.

Gross margin in the second fiscal quarter was 34.3%, compared to 32.3% in the
December 2013 quarter, and 33.3% in the March 2013 quarter.

During the quarter, the Company continued to sell a portion of the Nanya
shares it purchased in September 2012, realizing a gain of $3.9 million. The
remaining tradable Nanya shares are classified as short-term investments since
the Company intends to sell such shares within one year. Additionally, the
Company sold its remaining SMIC shares, realizing a gain of $2.1 million.

GAAP income tax expense in the second fiscal quarter was $2.9 million,
compared to $1.6 million in the December 2013 quarter and $3.2 million in the
March 2013 quarter.

GAAP net income in the second fiscal quarter of 2014 was $8.8 million, or
$0.28 per diluted share, compared to GAAP net income of $5.4 million, or $0.18
per diluted share, in the December 2013 quarter and GAAP net income of $3.3
million, or $0.11 per diluted share, in the March 2013 quarter.

Second quarter non-GAAP net income was $7.2 million, or $0.23 per diluted
share, compared to $5.4 million, or $0.18 per diluted share, in the December
2013 quarter and $6.1 million, or $0.21 per diluted share, in the March 2013
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.

June Quarter Outlook
The Company expects total revenue for the June quarter to range between $81.0
million and $86.0 million, consisting of SRAM and DRAM revenue of between
$72.5 million and $76.0 million, NOR flash revenue between $6.5 million and
$7.5 million, and analog revenue of between $2.0 million and $2.5 million.
Gross margin for the June quarter is expected to range between 33.5 percent
and 34.5 percent. Operating expenses are expected to range between $22.0
million and $23.0 million. The Company expects to realize additional gains on
the Nanya shares in the June 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 $0.12 and $0.16 per diluted share and non-GAAP net income, which
excludes stock based compensation, amortization of intangibles related to
acquisitions, gains on the sales of Nanya shares and non-cash tax expense, is
expected to range between $0.22 and $0.26 per diluted share.

Conference Call Information
A conference call will be held today at 7:00 a.m. Pacific Time to discuss the
Company's second fiscal quarter financial results. To access ISSI's conference
call via telephone, dial 888-455-2260 by 6:50 a.m. Pacific Time. The
participant passcode is 8293165. 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 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 its
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
automotive continuing to be a growth market, continuing to see end market
growth in IMM and automotive and expecting further revenue growth as volumes
continue to ramp across our expanded product portfolio, intending to sell more
Nanya shares within one year and our outlook for the June 2014 quarter with
respect to total 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
(especially in the automotive market and the IMM market), unexpected
reductions in average selling prices for our products, our ability to sell our
products in our key markets (including automotive and IMM) and the pricing and
gross margins achieved on such sales, our ability to continue 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 acquisitions 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,
2013 and Form 10-Q for the period ended December 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
                                     March 31,             December 31,
                                     2014       2013       2013
Net sales                            $ 80,868   $ 74,991   $        
                                                           79,123
Cost of sales                        53,118     50,002     53,594
Gross profit                         27,750     24,989     25,529
Operating expenses:
 Research and development           10,827     10,308     10,558
 Selling, general and               11,469     10,730     11,434
administrative
 Total operating expenses         22,296     21,038     21,992
Operating income                     5,454      3,951      3,537
Interest and other income            375        515        431
(expense), net
Gain on the sale of investments      6,039      2,059      3,121
Income before income taxes           11,868     6,525      7,089
Provision for income taxes           2,910      3,245      1,643
Consolidated net income              8,958      3,280      5,446
 Net (income) loss attributable
to
 noncontrolling interests        (146)      7          (11)
Net income attributable to ISSI      $ 8,812   $ 3,287   $         
                                                           5,435
Basic net income per share           $  0.30  $  0.12  $         
                                                            0.19
Shares used in basic per share       29,818     27,976     29,318
calculation
Diluted net income per share         $  0.28  $  0.11  $         
                                                            0.18
Shares used in diluted per share     31,244     29,348     30,717
calculation
Reconciliation of GAAP to Non-GAAP Financial
Measures
Operating income:
 GAAP operating income            $ 5,454   $ 3,951   $         
                                                           3,537
Adjustments:
 Chingis intangible asset         347        330        347
amortization
 Stock-based compensation         1,555      1,469      1,491
expense
 Total adjustments             1,902      1,799      1,838
 Non-GAAP operating income        $ 7,356   $ 5,750   $         
                                                           5,375
Provision for income taxes:
 On a GAAP basis                  $ 2,910   $ 3,245   $         
                                                           1,643
Adjustments:
 Tax impact of gains on sale of   2,114      927        1,092
investments
 Non-cash tax expense             409        2,110      203
 Total adjustments             2,523      3,037      1,295
 Non-GAAP provision for income    $   387  $   208  $         
taxes                                                        348
Net income attributable to ISSI:
 On a GAAP basis                  $ 8,812   $ 3,287   $         
                                                           5,435
Adjustments:
 Chingis intangible asset         347        330        347
amortization
 Stock-based compensation         1,555      1,469      1,491
expense
 Gain on sales of investment      (6,039)    (2,059)    (3,121)
 Tax impact of gains on sale of   2,114      927        1,092
investments
 Non-cash tax expense             409        2,110      203
 Total adjustments             (1,614)    2,777      12
 Non-GAAP net income              $ 7,198   $ 6,064   $         
                                                           5,447
Shares used in Non-GAAP net income per share:
 Basic                            29,818     27,976     29,318
 Diluted                          31,244     29,348     30,717
Non-GAAP net income per share:
 Basic                            $  0.24  $  0.22  $         
                                                            0.19
 Diluted                          $  0.23  $  0.21  $         
                                                            0.18





Integrated Silicon Solution, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
                                            March 31,    September 30,
                                            2014         2013
                                            (unaudited)  (1)
ASSETS
Current assets:
 Cash and cash equivalents                 $ 124,779   $   119,997
 Restricted cash                           1,000        -
 Short-term investments                    5,038        21,558
 Accounts receivable, net                  51,166       46,088
 Inventories                               75,883       68,469
 Other current assets                      18,924       16,928
Total current assets                        276,790      273,040
Property and equipment, net                 50,122       46,504
Purchased intangible assets, net            5,808        6,626
Goodwill                                    9,178        9,178
Other assets                                33,419       26,521
Total assets                                $ 375,317   $   361,869
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                          $  48,628   $    50,229
 Accrued compensation and benefits         7,996        8,072
 Accrued expenses                          10,147       7,357
 Current portion of long-term debt         195          195
Total current liabilities                  66,966       65,853
Long-term debt                              4,436        4,534
Other long-term liabilities                 5,607        8,712
Total liabilities                           77,009       79,099
Commitments and contingencies
Stockholders' equity:
 Common stock                              3            3
 Additional paid-in capital                354,593      343,947
 Accumulated deficit                       (58,251)     (72,498)
 Accumulated other comprehensive income    (217)        9,121
Total ISSI stockholders' equity             296,128      280,573
 Noncontrolling interest                   2,180        2,197
Total stockholders' equity                  298,308      282,770
Total liabilities and stockholders' equity  $ 375,317   $   361,869
(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 Shelton Group, Leanne Sievers, EVP, P: 949-224-3874,
E: lsievers@sheltongroup.com, Matt Kreps, Managing Director, P: 972-239-5119
ext. 125, E: mkreps@sheltongroup.com
 
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