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ISSI Announces Second Fiscal Quarter 2008 Results

SAN JOSE, Calif., April 24 /PRNewswire-FirstCall/ -- Integrated Silicon Solution, Inc. (Nasdaq: ISSI) today reported its financial results for the second fiscal quarter ended March 31, 2008.

Revenue in the second fiscal quarter ended March 31, 2008 was $58.0 million, down 8.4% from the $63.3 million reported in the December 2007 quarter, and down 3.3% from the $60.0 million reported in the March 2007 quarter. Net income for the March 2008 quarter was $2.0 million, or $0.07 per diluted share. Net income includes a $0.8 million charge for stock-based compensation expense and a $0.6 million credit for the reversal of previously accrued liabilities for which we are no longer obligated. These results compare with net income for the March 2007 fiscal quarter of $7.1 million, or $0.19 per diluted share, which included a $0.9 million charge for stock-based compensation expense, $1.8 million for legal and accounting fees associated with our stock option investigation, and an $8.5 million gain on sale of assets.

Operating income for the second fiscal quarter ended March 31, 2008 was $0.9 million which included the $0.8 million stock-based compensation expense, and the $0.6 million credit for the reversal of previously accrued liabilities which improved gross margins by 1%. This compares to an operating loss of ($2.4) million for the same quarter in 2007 which included a $0.9 million stock-based compensation expense and a $1.8 million expense for legal and accounting fees associated with our stock option investigation. Gross margins for the second fiscal 2008 quarter were 22.9% compared to 19.0% for the same quarter in fiscal 2007.

The Company's cash, cash equivalents and short-term investments totaled $41.2 million at March 31, 2008, a decrease of $102.1 million from December 31, 2007. This decrease was primarily due to the completion of our $70 million Tender Offer and stock repurchase, reclassification of $19.1 million in Auction Rate Securities to long-term investment due to failed auctions, and a decrease in our accounts payable. The Company's inventory at March 31, 2008 totaled $46.8 million, an increase of $8.6 million from December 31, 2007.

"In the March quarter, we missed our revenue goal as the pricing environment for commodity DRAM continued to weaken, and we reduced our commodity revenue," said Scott Howarth, ISSI's President and CEO. "Strength in our SRAM business and improved product mix in our target markets allowed us to expand our margins, and announce positive operating earnings as well as net income that exceeded our guidance for the quarter. This is our seventh consecutive quarter of profitability and third consecutive quarter of operating income which demonstrates the success of our strategy," added Mr. Howarth.

Conference Call

A conference call will be held today at 1:30 p.m. Pacific time to discuss this release. To access ISSI's conference call via telephone, dial 719-325-4840 by 1:20 p.m. Pacific time. The call will be webcast from ISSI's website at http://www.issi.com.

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 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 demonstrating the success of our strategy 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, unexpected reductions in average selling prices for our products, our ability to sell our products for key applications and the pricing and gross margins achieved on such sales, our ability to control or reduce operating expenses, 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 period ending September 2007 and our Quarterly Report on Form 10-Q for the period ended December 31, 2007. In addition, the financial information in this press release is unaudited and subject to any adjustments that may be made in connection with the quarterly review. 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 Operations
                                 (Unaudited)
                    (In thousands, except per share data)

                                         Three Months Ended  Six Months Ended
                                             March 31,          March 31,
                                           2008     2007      2008      2007

    Net sales                            $58,046  $59,995  $121,394  $122,139
    Cost of sales                         44,750   48,601    94,897    98,200
    Gross profit                          13,296   11,394    26,497    23,939

    Operating expenses:
      Research and development             4,935    5,140     9,709    10,502
      Selling, general and administrative  7,463    8,675    15,125    17,768
        Total operating expenses          12,398   13,815    24,834    28,270

    Operating income (loss)                  898   (2,421)    1,663    (4,331)
    Interest and other income (expense),
     net                                   1,105    1,000     3,179     2,552
    Gain on sale of investments                -    8,549       189     9,147
    Income before income taxes, minority
     interest and equity in net loss of
     affiliated companies                  2,003    7,128     5,031     7,368
    Provision for income taxes                40        3       100        13

    Income before minority interest and
     equity in net loss of affiliated
     companies                             1,963    7,125     4,931     7,355

    Minority interest in net (income) loss
     of consolidated subsidiary               20      (64)       19       (72)

    Equity in net loss of affiliated
     companies                                 -        -         -       (92)

    Net income                            $1,983   $7,061    $4,950    $7,191

    Basic net income per share             $0.07    $0.19     $0.15     $0.19
    Shares used in basic per share
     calculation                          28,160   37,612    32,374    37,612

    Diluted net income per share           $0.07    $0.19     $0.15     $0.19
    Shares used in diluted per share
     calculation                          28,436   38,006    32,668    37,998



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

                                                    March 31,    September 30,
                                                     2008            2007
                                                  (unaudited)        (1)
                                    ASSETS
    Current assets:
      Cash and cash equivalents                     $37,025        $53,722
      Short-term investments                          4,212         80,093
      Accounts receivable, net                       39,206         37,030
      Inventories                                    46,756         32,056
      Other current assets                            4,262          6,134

    Total current assets                            131,461        209,035
    Property, equipment and leasehold
     improvements, net                               24,591         23,284
    Long-term investments                            19,090              -
    Goodwill                                         25,338         25,338
    Purchased intangible assets, net                  2,628          3,538
    Other assets                                      1,589          1,520
    Total assets                                   $204,697       $262,715

                     LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Short-term debt and notes                          $-           $614
      Accounts payable                               41,874         36,509
      Accrued compensation and benefits               3,029          3,588
      Accrued expenses                                6,965          6,734

    Total current liabilities                        51,868         47,445

    Other long-term liabilities                         851            793

    Total liabilities                                52,719         48,238

    Commitments and contingencies

    Minority interest                                   707            726

    Stockholders' equity:
      Common stock                                        3              4
      Additional paid-in capital                    308,346        376,998
      Accumulated deficit                          (157,718)      (162,668)
      Accumulated comprehensive income (loss)           640           (583)

    Total stockholders' equity                      151,271        213,751
    Total liabilities and stockholders' equity     $204,697       $262,715

                (1) Derived from audited financial statements.
SOURCE  Integrated Silicon Solution, Inc.
    -0-                             04/24/2008
    /CONTACT:  Scott Howarth, President & CEO, Acting CFO, Investor Relations,
Integrated Silicon Solution, Inc., +1-408-969-6600, ir@issi.com/
    /Web site:  http://www.issi.com /
    (ISSI)

CO:  Integrated Silicon Solution, Inc.; ISSI
ST:  California
IN:  CPR SEM
SU:  ERN CCA

EF-AM
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1387 04/24/2008 16:10 EDT http://www.prnewswire.com