ISSI Announces Third 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 low, medium and high density DRAM and high speed and low power SRAM. 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 our ongoing focus on cost reductions and operating leverage, opportunities for further share gains with new products and our expanded product line as our customers continue to seek long-term support for their memory needs, confidence in our financial performance and future cash flows and our outlook for the September 2014 quarter with respect to total revenue, SRAM and DRAM revenue, NOR flash revenue, analog revenue, gross margin, operating expenses 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 March 31, 2014. 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,
	2014	2013	2014


Net sales	$ 84,834	$ 77,788	$ 80,868
Cost of sales	55,538	51,741	53,118
Gross profit	29,296	26,047	27,750

Operating expenses:
Research and development	10,978	10,583	10,827
Selling, general and administrative	11,942	10,829	11,469
Total operating expenses	22,920	21,412	22,296

Operating income	6,376	4,635	5,454
Interest and other income (expense), net	99	546	375
Gain on the sale of investments	2,140	7,280	6,039

Income before income taxes	8,615	12,461	11,868
Provision for income taxes	2,388	5,215	2,910

Consolidated net income	6,227	7,246	8,958

Net income attributable to
noncontrolling interests	(41)	(182)	(146)

Net income attributable to ISSI	$ 6,186	$ 7,064	$ 8,812

Basic net income per share	$ 0.20	$ 0.25	$ 0.30
Shares used in basic per share calculation	30,312	28,293	29,818

Diluted net income per share	$ 0.19	$ 0.24	$ 0.28
Shares used in diluted per share calculation	31,963	29,755	31,244


Reconciliation of GAAP to Non-GAAP Financial Measures

Operating income:
GAAP operating income	$ 6,376	$ 4,635	$ 5,454
Adjustments:
Chingis intangible asset amortization	347	336	347
Stock-based compensation expense	1,539	1,464	1,555
Total adjustments	1,886	1,800	1,902
Non-GAAP operating income	$ 8,262	$ 6,435	$ 7,356

Provision for income taxes:
On a GAAP basis	$ 2,388	$ 5,215	$ 2,910
Adjustments:
Tax impact of gains on sale of investments	749	2,839	2,114
Non-cash tax expense	1,204	2,295	409
Total adjustments	1,953	5,134	2,523
Non-GAAP provision for income taxes	$ 435	$ 81	$ 387

Net income attributable to ISSI:
On a GAAP basis	$ 6,186	$ 7,064	$ 8,812
Adjustments:
Chingis intangible asset amortization	347	336	347
Stock-based compensation expense	1,539	1,464	1,555
Gain on sales of investment	(2,140)	(7,280)	(6,039)
Tax impact of gains on sale of investments	749	2,839	2,114
Non-cash tax expense	1,204	2,295	409
Total adjustments	1,699	(346)	(1,614)
Non-GAAP net income	$ 7,885	$ 6,718	$ 7,198

Shares used in Non-GAAP net income per share:
Basic	30,312	28,293	29,818
Diluted	31,963	29,755	31,244

Non-GAAP net income per share:
Basic	$ 0.26	$ 0.24	$ 0.24
Diluted	$ 0.25	$ 0.23	$ 0.23

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