ISSI Announces Fourth Quarter and Fiscal Year 2009 Results

SAN JOSE, Calif., Oct 29 /PRNewswire-FirstCall/ -- Integrated Silicon
Solution, Inc. (Nasdaq: ISSI) today reported its financial results for the
fourth fiscal quarter and fiscal year ended September 30, 2009.

Revenue in the fourth fiscal quarter ended September 30, 2009 was $46.4
million, a 19.4% increase from revenue of $38.9 million in the June 2009
quarter, and a 16.1% decrease from revenue of $55.3 million in the September
2008 quarter. Gross margin for the fourth quarter was 33.9%, which included
an 8.3 percentage point net benefit from sales of previously reserved
inventory, compared with 25.1% in the June 2009 quarter and 24.2% in the
September 2008 quarter.

The Company reported net income for the fourth quarter of $3.6 million or
$0.14 per diluted share. These results compare with a GAAP net loss for the
September 2008 fourth quarter of $24.7 million, or ($0.92) per diluted share.
On a non-GAAP basis, without the effect of the $25.3 goodwill charge, net
income in the fourth quarter of fiscal 2008 was $0.6 million, or $0.02 per
diluted share. A reconciliation of our GAAP and non-GAAP results is included
as part of this press release.

Revenue in the fiscal year ended September 30, 2009 was $154.3 million, a
decrease of 34.4% from revenue of $235.2 million in fiscal 2008. Gross margin
for fiscal 2009 was 25.7%, compared with 22.6% in fiscal 2008. Net loss for
fiscal 2009 was $6.2 million, or ($0.24) per diluted share. On a non-GAAP
basis, excluding the in-process R&D charge of $0.7 million in the June
quarter, the fiscal 2009 net loss was $5.5 million, or ($0.22) per share. Net
loss for fiscal 2008 was $17.8 million, or ($0.60) per diluted share, which
included the $25.3 million goodwill write-off. On a non-GAAP basis, without
the effect of the goodwill charge, net income was $7.6 million, or $0.25 per
share in fiscal 2008. The Company had no gains on sales of investments in
fiscal 2009 compared to gains of $1.8 million in fiscal 2008.

The Company's cash, cash equivalents and short-term investments totaled $83.4
million at September 30, 2009, compared to $71.6 million at June 30, 2009. The
Company's inventory at September 30, 2009 totaled $18.1 million, compared to
$16.6 million at June 30, 2009. The Company generated $13.1 million in cash
flow from operations in the fourth quarter of fiscal 2009 and $22.6 million in
cash flow from operations for all of fiscal 2009.

"End market demand strengthened in all of our markets and geographies during
the September quarter, and we experienced the most favorable DRAM pricing
environment in years. As a result, in the fourth quarter we achieved our
highest gross margin in over eight years," said Scott Howarth, ISSI's
President and CEO. "We are very pleased that we were able to return to
profitability during the quarter. We have strengthened our Company over this
difficult past year as our cash position shows, and are well positioned for
growth in our new fiscal year," added Mr. Howarth.

December Quarter Outlook
The Company currently expects its revenue for the December quarter to be
between $48 million and $52 million and gross margin to be between 24 and 28
percent. The December quarter operating expenses are expected to be in the
range of $12.0 to $12.6 million. The Company expects net income per share to
be between $0.01 and $0.04 per share.

Non-GAAP Financial Information
In addition to disclosing results determined in accordance with GAAP, ISSI
discloses its non-GAAP operating expenses, operating income (loss) and net
income (loss) for certain periods that exclude a goodwill write-off and an
in-process R&D charge. 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 these non-GAAP measures
to manage and assess the profitability and performance of its business and
does not consider the goodwill write-off and the in-process R&D charge which
are non-cash charges in managing its operations. Specifically, 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 measure management performance for purposes of executive
compensation including payments to be made under bonus plans, 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 goodwill charge and the in-process R&D charge being non-cash in nature
and 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 goodwill write-off
and the in-process R&D charge. 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 these certain GAAP and non-GAAP measures.

Conference Call
A conference call will be held today at 1:30 p.m. Pacific time to discuss this
release. To access ISSI's conference call via telephone, dial 1-800-909-5202
by 1:20 p.m. Pacific time. The call will be webcast from ISSI's website at
http://www.issi.com.

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, (iv)
automotive electronics, and (v) industrial. 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 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
our strengthened company over the past year, that we are well positioned for
growth in our new fiscal year and our outlook for the December quarter for
revenue, gross margin, operating expenses and 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
resulting from unexpected fluctuations in the market, liquidity and credit
concerns or other factors, 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, changes in manufacturing yields, order
cancellations, order rescheduling, product warranty claims, competition, our
ability to obtain a sufficient supply of wafers at acceptable prices, 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 period ended September
30, 2008 and our Quarterly Report on Form 10-Q for the period ended June 30,
2009. 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 Operations
(Unaudited)
(In thousands, except per share data)

Three Months Ended Year Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
(1)

Net sales $46,432 $55,341 $154,251 $235,229
Cost of sales 30,669 41,953 114,539 182,033
------ ------ ------- -------
Gross profit 15,763 13,388 39,712 53,196
------ ------ ------ ------

Operating expenses:
Research and development 5,536 5,598 19,910 20,848
Selling, general and
administrative 6,673 8,202 26,340 31,429
Acquired in-process
technology charge - - 710 -
Impairment of goodwill - 25,338 - 25,338
--- ------ --- ------
Total operating expenses 12,209 39,138 46,960 77,615
------ ------ ------ ------

Operating income (loss) 3,554 (25,750) (7,248) (24,419)
Interest and other income
(expense), net 148 1,160 944 5,102
Gain on sale of investments - - - 1,814
--- --- --- -----
Income (loss) before income
taxes and
minority interest 3,702 (24,590) (6,304) (17,503)
Provision (benefit) for
income taxes 34 56 (18) 197
--- --- --- ---

Income (loss) before
minority interest 3,668 (24,646) (6,286) (17,700)

Minority interest in net
income of
consolidated subsidiary (70) (65) 62 (63)
--- --- --- ---

Net income (loss) $3,598 $(24,711) $(6,224) $(17,763)
====== ======== ======= ========

Basic net income (loss)
per share $0.14 $(0.92) $(0.24) $(0.60)
===== ====== ====== ======
Shares used in basic per
share calculation 25,244 26,756 25,441 29,541
====== ====== ====== ======

Diluted net income (loss)
per share $0.14 $(0.92) $(0.24) $(0.60)
===== ====== ====== ======
Shares used in diluted per
share calculation 25,595 26,756 25,441 29,541
====== ====== ====== ======

(1) Derived from audited financial statements.

Reconciliation of GAAP to Non-GAAP Financial Measures

Three Months Ended Year Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Total operating expenses
On a GAAP basis $12,209 $39,138 $46,960 $77,615
Acquired in-process technology
charge - - 710 -
Goodwill impairment - 25,338 - 25,338
--- ------ --- ------
On a non-GAAP basis $12,209 $13,800 $46,250 $52,277
======= ======= ======= =======

Operating income (loss):
On a GAAP basis $3,554 $(25,750) $(7,248) $(24,419)
Acquired in-process technology
charge - - 710 -
Goodwill impairment - 25,338 - 25,338
--- ------ --- ------
On a non-GAAP basis $3,554 $(412) $(6,538) $919
====== ===== ======= ====

Net income (loss):
On a GAAP basis $3,598 $(24,711) $(6,224) $(17,763)
Acquired in-process technology
charge - - 710 -
Goodwill impairment - 25,338 - 25,338
--- ------ --- ------
On a non-GAAP basis $3,598 $627 $(5,514) $7,575
====== ==== ======= ======

Diluted net income (loss) per share:
On a GAAP basis $0.14 $(0.92) $(0.24) $(0.60)
Acquired in-process technology
charge - - 0.03 -
Goodwill impairment - 0.94 - 0.85
--- ---- --- ----
On a non-GAAP basis $0.14 $0.02 $(0.22) $0.25
===== ===== ====== =====

Integrated Silicon Solution, Inc.
Condensed Consolidated Balance Sheets
(In thousands)

September 30, September 30,
2009 2008
---- ----
(unaudited) (1)
ASSETS
Current assets:
Cash and cash equivalents $54,944 $42,175
Short-term investments 28,500 7,840
Accounts receivable, net 26,370 34,741
Inventories 18,090 39,222
Other current assets 2,922 4,717
----- -----

Total current assets 130,826 128,695
Property, equipment and leasehold
improvements, net 23,218 24,555
Long-term investments 1,408 19,304
Purchased intangible assets, net 3,053 2,000
Goodwill 1,251 -
Other assets 1,556 1,397
----- -----
Total assets $161,312 $175,951
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $26,825 $35,171
Accrued compensation and benefits 4,364 3,729
Accrued expenses 5,356 8,157
----- -----

Total current liabilities 36,545 47,057

Other long-term liabilities 325 715
--- ---

Total liabilities 36,870 47,772

Commitments and contingencies

Minority interest 2,375 789

Stockholders' equity:
Common stock 2 3
Additional paid-in capital 309,649 310,712
Accumulated deficit (186,655) (180,431)
Accumulated other comprehensive loss (929) (2,894)
---- ------

Total stockholders' equity 122,067 127,390
------- -------
Total liabilities and stockholders'
equity $161,312 $175,951
======== ========

(1) Derived from audited financial statements.

SOURCE Integrated Silicon Solution, Inc.

John M. Cobb, Chief Financial Officer, Investor Relations of Integrated
Silicon Solution, Inc., +1-408-969-6600, ir@issi.com