ISD Announces Second Quarter Results

SAN JOSE, CALIFORNIA, July 11, 1996 . . . ISD (Information Storage Devices, Inc.) (NASDAQ:ISDI) announced today that revenue for the second quarter ended June 30, 1996 was $11.2 million. This compares to revenue of $14.2 million for the second quarter of 1995. Net income for the period was $191,000, or $.02 per share, compared to net income of $1.3 million, or $.15 per share, for last year's second quarter.

For the six months ended June 30, 1996, ISD reported a net loss of $1.8 million, or $.18 per share, on revenue of $23.5 million. This compares to net income of $2.4 million, or $.29 per share, on revenue of $27.2 million for the first half of 1995.

"We are pleased by ISD's return to profitability in the second quarter. Consumer accounts were a little softer than in the first quarter, and our communications business remained flat particularly for applications in cell phone handsets," said David L. Angel, president and chief executive officer. He said that ISD posted a small loss from operations for the period before interest income. Gross margin for the quarter rose to 36% from 24% for the first quarter.

"ISD's mission is to provide essential products to the communications marketplace using our proprietary multi-level storage and related technologies. We're aiming for nothing less than an ISD communications product in everyone's pocket," Angel continued.

"We expect to begin transferring all ChipCorder production to 0.8 micron wafers in the third and fourth quarters. Our foundry is scheduled to stop shipping 1.2 micron wafers late in the third quarter or early in the fourth quarter, so we should be 100 percent 0.8 micron production by the end of the year," Angel said.

Angel added that ISD expects to formally announce its new ISD33000 series on July 24, 1996. "The ISD33000 family is a true 3.0 volt ChipCorder featuring recording times of up to four minutes. It opens the door to the market for long duration recording times, which we think is the key to unlocking a large number of exciting new ChipCorder applications. The interest in these chips among current and potential customers is very encouraging," he said.

Angel added that the Company is continuing to devote resources to the expansion of its sales and marketing effort. ISD opened a sales office in Singapore and appointed a Director of Japanese Sales in the second quarter. In addition, during the period ISD rolled out its first nationwide advertising and promotional program for ChipCorder products.

At June 30, 1996, ISD reported cash and investments of $60.6 million, inventory of $14.5 million, no debt, and shareholders' equity of $77.8 million, or $8.01 per share.

This press release contains forward-looking statements regarding a variety of matters, including but not limited to business trends, production geometries, and product features. In addition to the factors discussed above, other factors that could cause actual results to differ materially include the following: cyclical nature of the markets for the company's products; availability of foundry capacity and raw materials; fluctuations in manufacturing yields; competitive pricing pressures; the timing of significant orders; changes in the mix of products sold; changes in the mix of customers; availability and cost of products from the Company's suppliers; the timing of new product announcements; the cyclical nature of the semiconductor industry; the gain or loss of significant customers; increased research and development expenses; economic conditions generally or in various geographic areas; and the risk factors listed from time to time in the Company's SEC reports, including but not limited to its report on Form 10-K for the year ended December 31, 1995 and the Company's 1995 Annual Report.

ISD designs, develops and markets integrated circuit solutions for voice applications in the consumer, communications and industrial markets. The company is located at 2045 Hamilton Avenue, San Jose, California 95125. Telephone: (408) 369-2520. Fax: (408) 369-2422.

For further information contact: Neil G. Berkman Associates 1900 Avenue of the Stars Suite 2850 Los Angeles, California 90067 (310) 277-5162