ISSI Announces Second Fiscal Quarter 2015 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, 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 guaranteed supply of wafers through 2021, ongoing wafer shortage, continuing to gain customer traction with key new products and completing the acquisition transaction in the third calendar quarter 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 obtaining stockholder approval of the acquisition transaction, the ability to complete the restructuring of ISSI's operations in Taiwan, the satisfaction of the other closing conditions in the definitive merger agreement (including regulatory approvals), supply and demand conditions in the market place (especially in the automotive market and the industrial market), unexpected reductions in average selling prices for ISSI's products, ISSI's ability to sell its products in its key markets (including automotive and industrial) and the pricing and gross margins achieved on such sales, ISSI's ability to continue to control or reduce operating expenses (including merger related expenses), ISSI's ability to obtain a sufficient supply of wafers, wafer pricing, ISSI's ability to maintain sufficient inventory of products to satisfy customer orders, ISSI's ability to realize the expected benefits of its 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, the outcome of any existing or future litigation involving the acquisition transaction, intellectual property or other matters (including ISSI's existing litigation with GSI Technology) or other risks listed from time to time in ISSI's filings with the SEC, including ISSI's Form 10-Q for the quarter ended December 31, 2014. ISSI assumes no obligation to update or revise the forward-looking statements in this press release because of new information, future events, or otherwise. The information in this press release is unaudited and subject to any adjustments that may be made in connection with the year-end audit.

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,
	2015	2014	2014


Net sales	$ 80,104	$ 80,868	$ 80,910
Cost of sales	52,056	53,118	51,765
Gross profit	28,048	27,750	29,145

Operating expenses:
Research and development	12,423	10,827	12,248
Selling, general and administrative	14,177	11,469	12,897
Total operating expenses	26,600	22,296	25,145

Operating income	1,448	5,454	4,000
Interest and other income (expense), net	365	375	162
Gain on the sale of investments	-	6,039	-

Income before income taxes	1,813	11,868	4,162
Provision for income taxes	682	2,910	926

Consolidated net income	1,131	8,958	3,236

Net income attributable to noncontrolling interests	(15)	(146)	(50)

Net income attributable to ISSI	$ 1,116	$ 8,812	$ 3,186

Basic net income per share	$ 0.04	$ 0.30	$ 0.10
Shares used in basic per share calculation	31,544	29,818	30,990

Diluted net income per share	$ 0.03	$ 0.28	$ 0.10
Shares used in diluted per share calculation	33,270	31,244	32,521


Reconciliation of GAAP to Non-GAAP Financial Measures

Operating income:
GAAP operating income	$ 1,448	$ 5,454	$ 4,000
Adjustments:
Merger related expenses	1,617	-	-
GSI litigation	1,202	213	693
Incremental proxy expenses	238	-	288
Chingis intangible asset amortization	347	347	347
Stock-based compensation expense	1,264	1,555	1,526
Total adjustments	4,668	2,115	2,854
Non-GAAP operating income	$ 6,116	$ 7,569	$ 6,854

Provision for income taxes:
On a GAAP basis	$ 682	$ 2,910	$ 926
Adjustments:
Non-cash tax expense	151	399	309
Tax impact of gains on sale of investments	-	2,114	-
Total adjustments	151	2,513	309
Non-GAAP provision for income taxes	$ 531	$ 397	$ 617

Net income attributable to ISSI:
On a GAAP basis	$ 1,116	$ 8,812	$ 3,186
Adjustments:
Merger related expenses	1,617	-	-
GSI litigation	1,202	213	693
Incremental proxy expenses	238	-	288
Chingis intangible asset amortization	347	347	347
Stock-based compensation expense	1,264	1,555	1,526
Gain on sales of investment	-	(6,039)	-
Non-cash tax expense	151	399	309
Tax impact of gains on sale of investments	-	2,114	-
Total adjustments	4,819	(1,411)	3,163
Non-GAAP net income	$ 5,935	$ 7,401	$ 6,349

Non-GAAP net income per share:
Basic	$ 0.19	$ 0.25	$ 0.20
Diluted	$ 0.18	$ 0.24	$ 0.20

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