ISSI Announces Flash Spin-Off/Expense
Reduction and Expected Results For
September Quarter
SANTA CLARA, Calif., Oct. 5 /PRNewswire/ -- Integrated Silicon Solution, Inc.(Nasdaq: ISSI - news) today
announced that it will spin off its Flash operations and create a new company, NexFlash Technologies, Inc. A group
of private investors, NexFlash management, and employees are expected to own approximately 50 percent to 60
percent of the new company; ISSI is expected to own approximately 40 percent to 50 percent.
''This spin-off is expected to reduce our expense level by approximately $1.5 million per quarter,'' said Jimmy Lee,
president and CEO of ISSI. ''This step will allow ISSI to focus on its core strengths and have an independent team,
NexFlash, focus on the Flash business, including the licensing of Flash intellectual property to ASIC, OEM and
wafer foundry companies.''
Mr. Lee further explained that ISSI's strategy is to focus its internal resources on its stronger product lines and,
simultaneously, reduce its overall expenses. Approximately 80 to 85 percent of the company's revenue is derived
from its high performance SRAM product line. In addition, the company will continue its embedded memory
development work and expects that revenue from its EEPROM and DRAM product lines will grow.
The company also announced a recent workforce reduction of approximately 12 percent of its U.S. employee base.
''The spring and summer industry-wide statistics and our current level of business require that we adapt and adjust to
reflect the business cycle,'' Lee said. ''In June we announced the partial sale of our Taiwan subsidiary, which added
cash to our balance sheet. The Flash spin-off announced today is another step in reducing expenses and focusing on
our core competencies.''
September Quarter Outlook
ISSI further announced that it currently expects revenue for the September 1998 quarter to be up slightly from the
June 1998 quarter. ''We expect September revenue to be approximately $26 million, compared to $25 million in the
June quarter,'' Lee said. ''Activity levels are improving as the summer season concludes, which is a positive
development.''
The company expects to incur write-downs of approximately $18 million to $23 million related to the write-down of
inventory for lower of cost or market reasons, the write-down of certain Flash inventory as a result of the the
company's decision to spin off Flash, as well as the write-down of certain assets. Including the write-downs, the
company expects a loss for the September 1998 quarter of approximately $25 to $30 million.
''In spite of the industry down cycle, our annual revenue for the fiscal year ending Sept. 30, 1998 is expected to
increase by over 20 percent compared to fiscal 1997,'' Lee said. ''I believe the steps we are taking will position us to
leverage off of our core strengths as we go forward.''
ISSI designs, develops and markets high performance SRAM, DRAM, FLASH, EPROM and EEPROM memory
devices as well as voice products and microcontrollers. ISSI's products are used in telecommunications, data
communications, networking systems, personal computers, instrumentation and consumer products.
Certain statements in this news release, including those related to the spin-off of the company's Flash memory
operations, the company's expense reduction efforts, the future growth of the company's EEPROM and DRAM
product lines, the expected results for the September 1998 quarter and fiscal year 1998, those related to improved
activity levels, the extent of the industry down cycle, and the company's product development focus are
forward-looking statements that are subject to risks and uncertainties that could cause volatility in the company's
business, operating results or financial condition. Actual results may differ from current expectations due to changes
in industry conditions, changes in average selling prices for the company's products, imbalances between supply and
demand, the level of market acceptance of the company's products, the company's ability to successfully institute
expense reduction measures, changes in inventory valuation, changes in utilization of equipment or other assets,
competition, the cancellation, modification or delay of orders from customers, the level of inventory held by OEM
customers, fluctuations in the rates of foreign currency exchange, the timing of industry cycles, the successful
implementation of the spin-off transaction, 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 Sept. 30, 1997 and its Quarterly Report on Form 10Q for the quarter
ended June 30, 1998.
SOURCE: Integrated Silicon Solution, Inc.
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