San Jose, CA -- January 24, 1996 -- ISD (Information Storage Devices, Inc.) (NASDAQ:ISDI), a leading supplier of integrated circuit solutions for voice applications, today reported its results for the fourth quarter and year ended December 31, 1995.

Net revenues for the fourth quarter rose 2.9 percent to $12.7 million, up from $12.3 million in the same period last year. Net income increased 5.2 percent to $1.7 million, up from $1.6 million in the comparable quarter a year ago, and earnings per share totaled 15 cents, compared with 25 cents a year ago. Weighted average common and common equivalent shares outstanding increased 71.0 percent to 11.0 million in the fourth quarter of 1995, up from 6.4 million a year earlier.

As a result of booking a one-time tax benefit in the fourth quarter, the effective tax rate for the quarter was 9.2 percent. On a fully-taxed basis, assuming a 35 percent tax rate, net income was $1.2 million, compared with $1.1 million a year ago. Earnings per share were 11 cents, compared with 17 cents a year ago.

“The December quarter was challenging,” stated David Angel, president and chief executive officer of ISD. “As anticipated in the December 15 announcement, ISD experienced a revenue shortfall for its 20-second recording chip, which is used predominantly in consumer products. Fortunately, demand for our communications products remained strong, and this strength helped mitigate some of the softness in the consumer market.”

Gross profit margin for the quarter improved to 41.4 percent from 35.6 percent a year ago and from 40.6 percent in the third quarter.

“The competitive landscape of the cellular phone market is heating up,” Angel stated. “In this highly price-sensitive environment, manufacturers must offer differentiating features in order to maintain market share. ISD is uniquely positioned to provide its customers, including Motorola and Matsushita, a cost-effective, single-chip solution with excellent audio quality that does not shorten the battery life.”

Full-Year 1995

For the full-year ended December 31, 1995, net revenues rose 42.9 percent to $55.5 million, up from $38.8 million in fiscal 1994. Net income climbed 44.6 percent to $5.8 million, up from $4.0 million. Earnings per share were 64 cents, compared with 63 cents last year. Gross margin improved to 39.0 percent from 32.7 percent in 1994.

As a result of the fourth-quarter tax benefit, the annual effective tax rate was reduced to 29.3 percent. On a fully-taxed basis, assuming a 35 percent tax rate, net income was $5.3 million, compared with $2.7 million in the previous year. Earnings per share in 1995 were 59 cents , compared with 42 cents in 1994, despite a 42.3 percent increase in weighted average common and common equivalent shares outstanding.

“Throughout the first three quarters of 1995, our revenue growth and profitability were constrained by limited wafer capacity,” Angel noted. “Numerous industry analysts are reporting that semiconductor supply has caught up with demand. We believe this bodes well for ISD, as it means that additional foundry capacity may become available. I am beginning to believe that capacity going forward will no longer be an issue.”

About ISD

ISD, a leading supplier of semiconductor voice record and playback solutions, provides essential products to the communications marketplace using its proprietary multilevel storage and related technologies. ISD is headquartered at 2045 Hamilton Avenue, San Jose, California 95125, USA. Telephone: (408) 369-2400. Fax: (408) 369-2422. World Wide Web home page: http://www.isd.com.

This press release contains forward-looking statements regarding features and performance of future products and the benefits and future applications for high density multi-level digital memory technology. Actual results could differ materially as a result of a number of factors including the following: cyclical nature of the markets and demand for the Company’s products; the timing of new product announcements; the ability of the Company’s customers to develop and market products incorporating the new high density multi-level digital memory circuits; availability of foundry capacity and raw materials; fluctuations in manufacturing yields; competitive pricing pressures; the ability of the Company to develop or acquire needed technology, assimilate personnel and pursue new markets; 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, 1996.