ISSI Announces First Fiscal Quarter 2014 Results

MILPITAS, Calif., Jan. 29, 2014 — (PRNewswire) —  Integrated Silicon Solution, Inc. (Nasdaq: ISSI) today reported financial results for the first fiscal quarter ended December 31, 2013.

First Fiscal Quarter Highlights:

  • Reported record revenue of $79.1 million, compared to $78.4 million in the fourth fiscal quarter of 2013 and $76.4 million in the first fiscal quarter of 2013;
  • DRAM revenue increased 4.2% and SRAM revenue increased 8.6% over the prior year periods;
  • Industrial, medical, and military (IMM) revenue increased 38.8% year-over-year;
  • Automotive revenue grew 9.0% year-over-year;
  • GAAP net income was $0.18 per diluted share and non-GAAP net income was $0.18 per diluted share;
  • Realized $3.1 million in gains on sales of a portion of the Company's shares of Nanya Technology Corporation ("Nanya");
  • Ended the quarter with cash and short-term investments of $136.8 million; and
  • Achieved multiple design wins for DDR2, DDR3, SDR and mobile DRAM in automotive and industrial applications as well as QUAD and RLDRAM3® design wins with communications customers.  

"First quarter 2014 set a quarterly revenue record, driven by strong growth in IMM and consistent performance in our automotive business," said Scott Howarth, ISSI's President and CEO. "Our IMM growth was fueled by continued strong orders across our expanded customer base, which is increasingly relying on ISSI for both new and legacy products. While automotive revenue was flat sequentially, we continued to expand our pipeline of design wins as we capitalize on the growing semiconductor content in cars, including multiple wins for our new higher density DDR2 and DDR3 products. We anticipate increasing shipment volumes in the coming quarters, driving further growth in our new products."

First Fiscal Quarter 2014 Results
Revenue in the first fiscal quarter ended December 31, 2013 was $79.1 million, compared to $78.4 million in the fiscal fourth quarter of 2013 and $76.4 million in the first fiscal quarter of 2013. Revenue in the first fiscal quarter of 2014 consisted of $69.3 million of SRAM and DRAM revenue, $7.9 million of NOR flash revenue, and $1.9 million of analog revenue. SRAM and DRAM revenue increased 5.5% from the December 2012 quarter.

Gross margin in the first fiscal quarter was 32.3%, compared to 33.1% in the September 2013 quarter, and 32.1% in the December 2012 quarter.

During the December 2013 quarter, the Company continued to sell a portion of the Nanya shares it purchased in September 2012, realizing a gain of $3.1 million. The remaining tradable Nanya shares are classified as short-term investments since the Company intends to sell such shares within one year.

GAAP income tax expense in the first fiscal quarter was $1.6 million, compared to $2.7 million in the September 2013 quarter and $1.2 million in the December 2012 quarter.

GAAP net income in the first fiscal quarter of 2014 was $5.4 million, or $0.18 per diluted share, compared to GAAP net income of $4.7 million, or $0.15 per diluted share, in the September 2013 quarter and GAAP net income of $2.5 million, or $0.09 per diluted share, in the December 2012 quarter.

First quarter non-GAAP net income was $5.4 million, or $0.18 per diluted share, compared to $6.1 million, or $0.20 per diluted share, in the September 2013 quarter and $5.3 million, or $0.18 per diluted share, in the December 2012 quarter.

Non-GAAP results exclude stock based compensation, amortization of intangibles related to acquisitions, gains on the sales of investments, and non-cash tax expense. A reconciliation of GAAP results to non-GAAP results is provided in the financial statement tables following the text of this press release.

March Quarter Outlook
The Company expects total revenue for the March quarter to range between $77.0 and $82.0 million, consisting of SRAM and DRAM revenue of between $67.5 million and $71.0 million, NOR flash revenue between $7.5 million and $8.5 million, and analog revenue of between $2.0 million and $2.5 million. Gross margin for the March quarter is expected to range between 32.5 percent and 33.5 percent. Operating expenses are expected to range between $21.5 million and $22.5 million.  The Company expects to realize additional gains on the Nanya shares in the March quarter.  However, it is difficult to predict the total gains for the quarter and, as such, these gains have been excluded from the GAAP and non-GAAP net income guidance. GAAP net income is expected to be between $0.10 and $0.14 per diluted share and non-GAAP net income, which excludes stock based compensation, amortization of intangibles related to acquisitions, gains on the sales of Nanya shares and non-cash tax expense related to the utilization of deferred tax assets, is expected to range between $0.18 and $0.22 per diluted share.

Conference Call Information
A conference call will be held today at 7:00 a.m. Pacific Time to discuss the Company's first fiscal quarter financial results. To access ISSI's conference call via telephone, dial 877-638-9067 by 6:50 a.m. Pacific Time. The participant passcode is 9991991. The call will also be webcast from ISSI's website at http://www.issi.com.

Non-GAAP Financial Information
In addition to disclosing results determined in accordance with GAAP, ISSI discloses its non-GAAP   operating income, provision for income taxes and net income for certain periods that exclude stock based compensation, the amortization of intangibles related to acquisitions, gains on sales of investments, and non-cash tax expense. 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 its 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 non-GAAP measures to plan and forecast future periods, to establish operational goals, to compare with its business plan and individual operating budgets, 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 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 items described above. 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 the GAAP and non-GAAP measures.

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