ISSI Announces Fourth Quarter and Fiscal Year 2005 Results

SANTA CLARA, Calif., Nov. 3 /PRNewswire-FirstCall/ -- Integrated Silicon Solution, Inc. (NASDAQ: ISSI) today reported its financial results for the fourth fiscal quarter and year ended September 30, 2005.

Revenue in the fourth quarter was $61.5 million, compared with $31.1 million in the prior year period. The Company reported a GAAP net loss for the fourth quarter of ($6.3) million or ($0.17) per diluted share, compared with a net loss of ($15.6) million or ($0.43) per diluted share, in the prior year period. The fourth quarter GAAP net loss includes a charge for impairment on investments of ($4.9) million, charges related to the purchase accounting for the acquisition of Integrated Circuit Solution, Inc. (ICSI) of ($1.1) million, a charge to allowance for doubtful accounts for amounts due primarily from Delphi Electronics in regards to their bankruptcy filing totaling ($0.9) million and a gain on the sale of investments of $1.6 million. The total impact of these items was to increase the net loss by ($5.3M) or ($0.14) per diluted share.

For the fiscal year ended September 30, 2005, revenue totaled $181.4 million compared to $181.0 million for fiscal year 2004. The net loss for the year ended September 30, 2005 totaled ($38.1) million or ($1.04) per diluted share compared to a net profit of $3.5 million or $0.10 per diluted share in fiscal year 2004.

"As a result of our acquisition of ICSI, we began consolidating their financial results with ours as of May 1, 2005. The net effect is that our first full quarter of consolidating ICSI -- the September 2005 quarter -- has revenue increasing 97% over the quarter ending September 2004," said Jimmy Lee, Chairman and CEO. "We have strengthened our operating capabilities and we believe we are now well positioned to compete in the low and medium density DRAM market and the full range of the SRAM market. We have also made good progress in non-memory product lines."

The statement of operations for the quarter ended September 30, 2005 currently includes an estimated charge for impairment of investments of $4.9 million. The Company is still analyzing the impairment of its investments and has engaged a qualified valuation analyst to assist in this assessment. The investment impairment is the Company's best estimate and may be subject to adjustment as the Company finalizes its valuation assessment. The Company expects to complete its assessment prior to filing its Form 10-K for the year ended September 30, 2005.

Conference Call

ISSI will host a conference call today, November 3, 2005, beginning at 1:30 p.m. Pacific time. To access the call, dial 719-457-2619. The call will be simulcast over the Internet at www.com/call. The webcast will be available for replay until November 28, 2005.

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 and (iv) automotive electronics. 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 China, Europe, Hong Kong, India, Korea and Taiwan. Visit our web site at www.issi.com.

Safe Harbor Statement

Certain statements in this news release may be considered forward-looking statements, including statements related to strengthened operating capabilities, being well positioned to compete in the DRAM and SRAM markets, the estimated charge for impairment of investments, and our belief that we are making good progress in non-memory product lines. Such statements are subject to risks and uncertainties. Actual results may differ materially from current expectations due to many factors, including completion of the fiscal 2005 year-end audit, completion of the analysis of impairments on investments, a reduction in average selling prices for the Company's products and a resultant decrease in the Company's gross profit margin, changes in demand for the Company's products or the products in which the Company's products are used, changes in market conditions, inability to expand revenue, inability to effectively reduce expenses, inability to add new products or diversify product lines, order cancellations, and order rescheduling, product warranty claims, competition, the level and value of inventory held by OEM customers or the Company, the Company's ability to secure manufacturing capacity from its foundries, or other factors. Further information that could affect the Company's results is detailed in ISSI's periodic filings with the Securities and Exchange Commission, including its Annual Report on Form 10K for the fiscal year ended September 30, 2004 and its most recent Quarterly Report on Form 10Q for the quarter ended June 30, 2005.


                      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,
                                         2005      2004      2005      2004

    Net sales                           $61,467   $31,124  $181,438  $181,012
    Cost of sales                        51,772    39,103   165,693   154,315
    Gross profit (loss)                   9,695    (7,979)   15,745    26,697

    Operating expenses:
      Research and development            4,551     5,302    19,340    20,838
      Selling, general and
       administrative                     7,640     3,971    23,308    16,403
      In-process technology                 849        --     2,764        --
        Total operating expenses         13,040     9,273    45,412    37,241

    Operating loss                       (3,345)  (17,252)  (29,667)  (10,544)
    Other income (expense), net          (4,891)      108    (2,548)    1,238
    Gain on sale of investments                      1,597          2,134          5,002        10,874
        Income  (loss)  before  income  taxes,
          minority  interest  and  equity  in
          net  income  (loss)  of
          affiliated  companies                                (6,639)    (15,010)    (27,213)        1,568
        Provision  (benefit)  for  income
          taxes                                                                  (293)              (9)          (267)            488

        Income  (loss)  before  minority
          interest  and  equity  in  net
          income  (loss)  of
          affiliated  companies                                (6,346)    (15,001)    (26,946)        1,080

        Minority  interest  in  net  loss  of
            consolidated  subsidiaries                          136                --              767                --
        Equity  in  net  income  (loss)  of
            affiliated  companies                                  (137)          (560)    (11,913)        2,405

        Net  income  (loss)                                      $(6,347)  $(15,561)  $(38,092)      $3,485

        Basic  net  income  (loss)  per  share        $(0.17)      $(0.43)      $(1.04)        $0.10
        Shares  used  in  basic  per  share
          calculation                                                  37,038        36,061        36,663        33,444

        Diluted  net  income  (loss)  per  share    $(0.17)      $(0.43)      $(1.04)        $0.10
        Shares  used  in  diluted  per  share
          calculation                                                  37,038        36,061        36,663        36,121


                                            Integrated  Silicon  Solution,  Inc.
                              Condensed  Consolidated  Statements  of  Operations
                                                                  (Unaudited)
                                        (In  thousands,  except  per  share  data)

                                                                          Three  Months  Ended
                                                                          September  30,  2005

        Net  sales                                                            $61,467
        Cost  of  sales                                                      51,772    Includes  charge  of  $273K
                                                                                                          for  ICSI  purchase
                                                                                                          accounting
        Gross  profit  (loss)                                            9,695

        Operating  expenses:
            Research  and  development                              4,551
            Selling,  general  and  administrative        7,640    Includes  charge  of  $882K
                                                                                                          to  allowance  for  doubtful
                                                                                                          accounts  for  amounts  due
                                                                                                          primarily  from  Delphi
                                                                                                          Electronics
            In-process  technology                                        849    Write-off  of  in-process
                                                                                                          technology  from  purchase
                                                                                                          accounting
                Total  operating  expenses                        13,040

        Operating  loss                                                    (3,345)
        Other  income  (expense),  net                          (4,891)  Includes  $4,856K  charge
                                                                                                            for  the  impairment  of
                                                                                                            investments
        Gain  on  sale  of  investments                            1,597    Gain  on  the  sale  of
                                                                                                            investments
        Income  (loss)  before  income  taxes,
          minority  interest  and  equity  in
          net  income  (loss)  of  affiliated
          companies                                                            (6,639)
        Provision  (benefit)  for  income  taxes            (293)

        Income  (loss)  before  minority
          interest  and  equity  in  net
          income  (loss)  of
          affiliated  companies                                      (6,346)

        Minority  interest  in  net  loss  of
          consolidated  subsidiaries                                  136
        Equity  in  net  income  (loss)  of
          affiliated  companies                                          (137)

        Net  income  (loss)                                            $(6,347)

        Basic  and  diluted  net  loss  per  share        $(0.17)
        Shares  used  in  per  share  calculation        37,038


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

                                                                                                September  30,        September  30,
                                                                                                        2005                              2004
                                                                                                  (unaudited)                        (1)
                                                                        ASSETS
        Current  assets:
            Cash  and  cash  equivalents                                        $27,484                        $17,015
            Restricted  cash                                                                    301                            1,500
            Short-term  investments                                                96,427                        120,450
            Accounts  receivable,  net                                            27,508                          26,733
            Inventories                                                                      60,468                          44,718
            Other  current  assets                                                      3,594                            1,541

        Total  current  assets                                                      215,782                        211,957
        Property,  equipment,  and  leasehold
          improvements,  net                                                            21,725                            5,622
        Other  assets                                                                        45,409                          83,285
        Total  assets                                                                    $282,916                      $300,864

                                          LIABILITIES  AND  STOCKHOLDERS'  EQUITY

        Current  liabilities:
            Short-term  debt  and  notes                                          $6,628                                $--
            Accounts  payable                                                            35,705                          30,493
            Accrued  compensation  and  benefits                            2,467                            2,431
            Accrued  expenses                                                              7,029                            4,903

        Total  current  liabilities                                              51,829                          37,827

        Other  long-term  liabilities                                            1,793                                  --

        Total  liabilities                                                              53,622                          37,827

        Minority  interest                                                                6,566                                  --

        Stockholders'  equity:
            Common  stock                                                                              4                                    4
            Additional  paid-in  capital                                      340,567                        336,524
            Accumulated  deficit                                                  (131,935)                      (93,843)
            Unearned  compensation                                                        (17)                            (218)
            Accumulated  comprehensive  income                            14,109                          20,570

        Total  stockholders'  equity                                          222,728                        263,037
        Total  liabilities  and  stockholders'
          equity                                                                              $282,916                      $300,864

                                    (1)  Derived  from  audited  financial  statements.
 


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