ISSI Announces First Fiscal Quarter 2014 Results

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 customer base, which is increasingly relying on ISSI for both new and legacy products, expanding our pipeline of design wins as we capitalize on the growing semiconductor content in cars, increasing shipment volumes in the coming quarters, driving further growth in our new products, intending to sell more Nanya shares within one year and our outlook for the March 2014 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 (especially in the automotive 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 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. 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




December 31,


September 30,




2013


2012



2013






















Net sales



$    79,123


$    76,399



$    78,392


Cost of sales



53,594


51,908



52,458


Gross profit



25,529


24,491



25,934












Operating expenses:










  Research and development



10,558


10,023



9,925


  Selling, general and administrative



11,434


11,089



11,316


    Total operating expenses



21,992


21,112



21,241












Operating income



3,537


3,379



4,693


Interest and other income (expense), net



431


268



(183)


Gain on sale of investments



3,121


-



2,878












Income before income taxes



7,089


3,647



7,388


Provision for income taxes



1,643


1,159



2,658












Consolidated net income



5,446


2,488



4,730












  Net (income) loss attributable to










     noncontrolling interests



(11)


11



(32)












Net income attributable to ISSI



$      5,435


$      2,499



$      4,698












Basic net income per share



$       0.19


$       0.09



$       0.16


Shares used in basic per share calculation



29,318


27,696



28,928












Diluted net income per share



$       0.18


$       0.09



$       0.15


Shares used in diluted per share calculation



30,717


29,106



30,372






















Reconciliation of GAAP to Non-GAAP Financial Measures















Operating income:










    GAAP operating income



$      3,537


$      3,379



$      4,693


Adjustments:










    Chingis acquisition related inventory write up

-


492



-


    Chingis intangible asset amortization



347


339



347


    Stock-based compensation expense



1,491


1,440



1,568


       Total adjustments



1,838


2,271



1,915


    Non-GAAP operating income



$      5,375


$      5,650



$      6,608












Provision for income taxes:










    On a GAAP basis



$      1,643


$      1,159



$      2,658


Adjustments:










    Non-cash tax expense



203


490



1,335


    Tax impact of gains on sale of investments

1,092


-



1,052


       Total adjustments



1,295


490



2,387


    Non-GAAP provision for income taxes



$        348


$        669



$        271












Net income attributable to ISSI:









    On a GAAP basis



$      5,435


$      2,499



$      4,698


Adjustments:










    Chingis acquisition related inventory write up

-


492



-


    Chingis intangible asset amortization



347


339



347


    Stock-based compensation expense



1,491


1,440



1,568


    Gain on sales of investment



(3,121)


-



(2,878)


    Non-cash tax expense



203


490



1,335


    Tax impact of gains on sale of investments

1,092


-



1,052


       Total adjustments



12


2,761



1,424


    Non-GAAP net income



$      5,447


$      5,260



$      6,122












Non-GAAP net income per share:









    Basic



$       0.19


$       0.19



$       0.21


    Diluted



$       0.18


$       0.18



$       0.20




Integrated Silicon Solution, Inc.

Condensed Consolidated Balance Sheets

(In thousands)










December 31,


September 30,




2013


2013




(unaudited)


(1)

ASSETS

Current assets:






  Cash and cash equivalents



$  123,399


$  119,997

  Short-term investments



13,366


21,558

  Accounts receivable, net



47,487


46,088

  Inventories



76,287


68,469

  Other current assets



18,390


16,928







Total current assets



278,929


273,040

Property and equipment, net



50,977


46,504

Purchased intangible assets, net



6,217


6,626

Goodwill



9,178


9,178

Other assets



25,991


26,521

Total assets



$  371,292


$  361,869







LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:






  Accounts payable



$    54,832


$    50,229

  Accrued compensation and benefits



8,284


8,072

  Accrued expenses



8,265


7,357

  Current portion of long-term debt



195


195







Total current liabilities  



71,576


65,853







Long-term debt



4,485


4,534

Other long-term liabilities



6,859


8,712







Total liabilities



82,920


79,099







Commitments and contingencies












Stockholders' equity:






  Common stock



3


3

  Additional paid-in capital



348,132


343,947

  Accumulated deficit



(67,063)


(72,498)

  Accumulated other comprehensive income



5,266


9,121







Total ISSI stockholders' equity



286,338


280,573







  Noncontrolling interest



2,034


2,197







Total stockholders' equity



288,372


282,770

Total liabilities and stockholders' equity



$  371,292


$  361,869













(1) Derived from audited financial statements.





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