Exhibit 99.1
AMIS Holdings, Inc. Reports Fourth
Quarter and Full Year 2005 Financial Results; Record Operating Cash
Flow of $41 million in Q4; Generated $23 Million in Cash During
Quarter; Q4 Pro Forma EPS of $0.17
POCATELLO, Idaho--(BUSINESS WIRE)--Feb. 2, 2006--AMIS Holdings,
Inc. (Nasdaq:AMIS), parent company of AMI Semiconductor, a leader in
the design and manufacture of integrated mixed-signal solutions, today
reported its financial results for the fourth quarter and full year
ended December 31, 2005.
Financial Results
Fourth quarter 2005 revenue was $139.8 million, an increase of 11
percent sequentially and 13 percent compared to the fourth quarter of
2004. Fourth quarter 2005 revenues include a full quarter of revenues
from the acquisition of the semiconductor business of Flextronics.
Gross margin for fourth quarter 2005 was 44.5 percent, down 460 basis
points sequentially and year over year. Gross margin was negatively
impacted by approximately 260 basis points in the fourth quarter due
to a reserve taken in conjunction with ongoing discussions involving a
previous quality issue with one of our customers.
Operating margin was 11.7 percent in fourth quarter 2005, which
was down 210 basis points sequentially, but up 80 basis points year
over year. Excluding amortization of acquisition-related intangibles
and restructuring charges, on a pro forma basis operating margin for
fourth quarter 2005 was 17.3 percent, which was up 70 basis points
sequentially, but down 180 basis points year over year.
Net income for fourth quarter 2005 was $9.0 million, or $0.10 per
diluted share, which compares to net income of $7.3 million or $0.08
per diluted share for the same period in 2004. Pro forma net income
for fourth quarter 2005 was $15.1 million or $0.17 per diluted share,
compared to pro forma net income of $14.2 million or $0.16 per diluted
share in fourth quarter 2004.
Revenue for 2005 was $503.8 million, a decrease of three percent
compared to 2004. Net income for 2005 was $21.0 million, or $0.24 per
diluted share, compared to $52.4 million or $0.60 per diluted share in
2004. Pro forma net income for 2005 was $53.3 million, or $0.61 per
diluted share, compared to pro forma net income of $59.6 million, or
$0.69 per diluted share in 2004. Full year 2005 pro forma net income
excludes amortization of acquisition-related intangibles and
restructuring charges, net of tax effects. In addition, 2005 also
excludes charges related to debt refinancing activities in the first
quarter 2005 and in-process research and development associated with
the Flextronics acquisition in the third quarter 2005.
"I am pleased with the contribution that the Flextronics
acquisition added to our business in the fourth quarter," stated
Christine King, president and chief executive officer. "While the
Flextronics business contributed $20.1 million of revenue in the
fourth quarter, our organic business declined two percent
sequentially. The shortfall in organic revenue versus our expectations
was driven by capacity constraints at our principal assembly
subcontractor and inefficiency in our test operation related to our
relocation efforts which caused delays in shipments to our customers."
Commenting on full year 2005 accomplishments, King stated, "I am
pleased with our achievements this past year, including: the
acquisition of the semiconductor business of Flextronics, the
successful integration of DSPfactory, the substantial completion of
our test and sort consolidation in Manila, and another record year for
design wins. During 2005 we saw above normal roll off of old products,
particularly in the mixed signal area, which new product introductions
failed to offset. Looking forward to 2006, we expect the decline in
revenues from end of life products to be at more historical levels and
we should realize a greater benefit from new product revenues."
The Company generated record operating cash flow during the
quarter of $41.3 million, bringing cash at the end of the quarter to
$96.7 million, an increase of $22.9 million sequentially. Capital
expenditures during fourth quarter 2005 were $14.1 million.
Business Outlook
"We are anticipating a roughly seasonal decline in revenues in the
first quarter of 2006," stated David Henry, senior vice president and
chief financial officer. "We're seeing improved orders for automotive,
industrial and communications, however we're seeing lower demand at
some key medical and military customers. This will in turn, negatively
impact our gross profit margin, as medical and military margins are
generally higher than the Company average. In addition, higher
subcontract assembly costs and lingering inefficiencies in our test
operation as a result of our ongoing relocation are expected to
negatively impact Q1 gross margin as well. Our outlook for the first
quarter of 2006 is as follows:
-- Revenue is expected to be down 2 to 4 percent sequentially,
-- Gross margin is expected to be in the range of 44 to 45
percent,
-- On a pro forma basis, operating margin is expected to be in
the range of 11.5 to 12.5 percent, including the impact from
stock compensation expense of approximately 200 basis points.
Excluding stock compensation expense, pro forma operating
margin is expected to be in the range of 13.5 to 14.5 percent,
-- Effective tax rate is expected to be between 16 and 18
percent,
-- Pro forma diluted earnings per share is expected to be in the
range of $0.11 to $0.13, including the impact from stock
compensation expense of approximately $0.02 per share.
Excluding stock compensation expense, pro forma diluted
earnings per share is expected to be in the range of $0.13 to
$0.15 per share,
-- Full year capital expenditures are expected to increase to
approximately eight percent of annual revenues, due primarily
to increased capacity requirements in our wafer fabs,
-- Depreciation and amortization is expected to be about $15.5
million."
Impact of SFAS No. 123(R)
Had the Company adopted SFAS No. 123(R) beginning in 2005, diluted
earnings per share on a GAAP and pro forma basis would have been
reduced by approximately $0.03 and $0.09 for the fourth quarter and
full year 2005, respectively. These amounts exclude approximately
$0.06 per share in the fourth quarter and full year 2005 for the
accelerated vesting of certain stock options.
"Adoption of SFAS No. 123(R) is expected to lower diluted earnings
per share on a GAAP and pro forma basis by $0.02 per quarter and $0.07
for the full year in 2006," stated Henry. "It is our intention to
include stock compensation expense in our pro forma financial results
on a go forward basis. In addition, as a result of expensing stock
compensation our long term pro forma operating margin target decreases
from 21 percent to 20 percent."
Conference Call and Webcast Information
Christine King, president and CEO, along with Mike O'Neill, senior
vice president of the structured digital products, and David Henry,
senior vice president and CFO, will host a conference call on February
2, 2006 at 5 p.m. ET, to discuss the Company's fourth quarter and full
year financial results and its updated business outlook. Details on
how to connect to the conference call or the web simulcast are
available under the investor relations section of the Company's web
site at http://www.amis.com/investor_relations. A webcast replay will
be available at that same location until close of business February
16, 2006.
About AMI Semiconductor
AMI Semiconductor (AMIS) is a leader in the design and manufacture
of silicon solutions for the real world. As a widely recognized
innovator in state-of-the-art integrated mixed-signal products and
structured digital products, AMIS is committed to providing customers
with the optimal value, quickest time-to-market semiconductor
solutions. Offering unparalleled manufacturing flexibility and
dedication to customer service, AMI Semiconductor operates globally
with headquarters in Pocatello, Idaho, European corporate offices in
Oudenaarde, Belgium, and a network of sales and design centers located
in the key markets of the United States, Europe and the Asia Pacific
region.
Forward Looking Statements
Statements in this press release other than statements of
historical fact are "forward-looking" statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include the expectation that the Company
should begin to realize the full benefit of new product revenues as
end of life products will be at more historical levels; guidance on
first quarter 2006 revenue, gross margin, pro forma operating margin,
effective tax rate, pro forma earnings per share, capital
expenditures, and depreciation and amortization; the Company's
intention to include stock compensation expense in pro forma financial
results going forward; the anticipated impact of SFAS 123(R) on
diluted earnings per share on a quarterly and full year basis during
2006; and the decrease in the Company's long-term pro forma operating
margin target. These forward-looking statements involve risks and
uncertainties that could cause the actual results to differ materially
from those anticipated by these forward-looking statements. These
risks include general economic and political uncertainty, conditions
in the semiconductor industry, changes in the conditions affecting our
target markets, manufacturing underutilization, fluctuations in
customer demand, raw material costs, exchange rates, timing and
success of new products, competitive conditions in the semiconductor
industry, risks associated with international operations, the
Company's ability to successfully integrate the acquired Flextronics
business and employees, product delays, loss of key personnel, and
other risks and uncertainties identified in reports filed from time to
time by the Company with the Securities and Exchange Commission,
including its most recent Form 10-Q and Annual Report on Form 10-K.
The Company does not intend to revise or update any forward-looking
statements to reflect events or circumstances after the date of this
press release.
AMIS Holdings, Inc.
Condensed Consolidated Statements of Operations
(In millions - Unaudited)
Three Months Ended Twelve Months Ended
------------------------- -------------------------
December 31, December 31, December 31, December 31,
2005 2004 2005 2004
------------ ------------ ------------ ------------
Revenue $139.8 $123.3 $503.8 $517.3
Cost of revenue 77.6 62.8 266.0 271.0
------------ ------------ ------------ ------------
Gross profit 62.2 60.5 237.8 246.3
Operating expenses:
Research &
development 23.5 19.4 87.4 77.2
Selling, general
and
administrative 14.5 17.5 67.2 71.7
Amortization of
acquisition-
related
intangibles 4.1 0.9 9.0 1.4
In-process
research and
development - 1.5 0.8 1.5
Restructuring
and impairment
charges 3.8 7.8 5.3 7.8
------------ ------------ ------------ ------------
45.9 47.1 169.7 159.6
------------ ------------ ------------ ------------
Operating income 16.3 13.4 68.1 86.7
Non-operating
expenses, net 4.0 5.1 48.5 19.3
------------ ------------ ------------ ------------
Income before
income taxes 12.3 8.3 19.6 67.4
Provision
(benefit) for
income taxes 3.3 1.0 (1.4) 15.0
------------ ------------ ------------ ------------
Net income $9.0 $7.3 $21.0 $52.4
============ ============ ============ ============
Earnings per share
Basic $0.10 $0.09 $0.25 $0.63
Diluted $0.10 $0.08 $0.24 $0.60
Weighted average
shares
Basic 86.2 83.9 85.7 82.9
Diluted 88.1 87.3 88.0 86.6
Key Ratios &
Information:
- ------------------
Gross margin 44.5% 49.1% 47.2% 47.6%
Operating margin 11.7% 10.9% 13.5% 16.8%
AMIS Holdings, Inc.
Reconciliation of Operating Income to Pro Forma Operating Income
(In millions - Unaudited)
Three Months Ended Twelve Months Ended
------------------------- --------------------------
December 31, December 31, December 31, December 31,
2005 2004 2005 2004
------------ ------------ ------------ -------------
Operating income $16.3 $13.4 $68.1 $86.7
Adjustments to
reconcile
operating income to
pro forma operating
income:
Amortization
of
acquisition-
related
intangible
assets 4.1 0.9 9.0 1.4
In-process
research and
development - 1.5 0.8 1.5
Restructuring
and
impairment
charges 3.8 7.8 5.3 7.8
------------ ------------ ------------ -------------
Pro forma
operating income $24.2 $23.6 $83.2 $97.4
============ ============ ============ =============
AMIS Holdings, Inc.
Reconciliation of Net Income to Pro Forma Net Income
(In millions - Unaudited)
Three Months Ended Twelve Months Ended
------------------------- -------------------------
December 31, December 31, December 31, December 31,
2005 2004 2005 2004
------------ ------------ ------------ ------------
Net income $9.0 $7.3 $21.0 $52.4
Adjustments to reconcile
net income to pro
forma net income:
Amortization
of
acquisition-
related
intangible
assets 4.1 0.9 9.0 1.4
In-process
research and
development - 1.5 0.8 1.5
Restructuring
and
impairment
charges 3.8 7.8 5.3 7.8
Costs
associated
with the
tender of 10
3/4% notes - - 28.0 -
Write-off of
deferred
financing
and other
costs - - 6.8 -
Related tax
effects (1.8) (3.3) (17.6) (3.5)
------------ ------------ ------------ ------------
Pro forma net
income $15.1 $14.2 $53.3 $59.6
============ ============ ============ ============
AMIS Holdings, Inc.
Pro forma Condensed Consolidated Statements of Operations
(In millions - Unaudited)
Three Months Ended Twelve Months Ended
------------------------- --------------------------
December 31, December 31, December 31, December 31,
2005 2004 2005 2004
------------ ------------ ------------ -------------
Revenue $139.8 $123.3 $503.8 $517.3
Cost of revenue 77.6 62.8 266.0 271.0
------------ ------------ ------------ -------------
Gross profit 62.2 60.5 237.8 246.3
Operating
expenses:
Research &
development 23.5 19.4 87.4 77.2
Selling, general
and
administrative 14.5 17.5 67.2 71.7
------------ ------------ ------------ -------------
38.0 36.9 154.6 148.9
------------ ------------ ------------ -------------
Pro forma
operating income 24.2 23.6 83.2 97.4
Non-operating
expenses, net 4.0 5.1 13.7 19.3
------------ ------------ ------------ -------------
Income before
income taxes 20.2 18.5 69.5 78.1
Provision for
income taxes 5.1 4.3 16.2 18.5
------------ ------------ ------------ -------------
Pro forma net
income $15.1 $14.2 $53.3 $59.6
============ ============ ============ =============
Pro forma earnings
per share
Basic $0.18 $0.17 $0.62 $0.72
Diluted $0.17 $0.16 $0.61 $0.69
Weighted average
shares
Basic 86.2 83.9 85.7 82.9
Diluted 88.1 87.3 88.0 86.6
Key Pro Forma
Ratios
- ------------------
Pro forma gross
margin 44.5% 49.1% 47.2% 47.6%
Pro forma
operating margin 17.3% 19.1% 16.5% 18.8%
Pro forma condensed consolidated statements of operations are
presented because we use them as an additional measure of our
operating performance and we believe that these excluded charges
enhance comparability between current and prior periods. Pro forma net
income and pro forma earnings per share should not be considered as
alternatives to net income, earnings per share or other consolidated
operations data prepared in accordance with accounting principles
generally accepted in the United States of America, as indicators of
our operating performance or as a measure of liquidity.
AMIS Holdings, Inc.
Condensed Consolidated Balance Sheets
(In Millions)
December 31, December 31,
2005 2004
(unaudited)
--------------- -------------
Assets
- ------
Current assets:
Cash and cash equivalents $96.7 $161.7
Accounts receivable, net 100.3 78.6
Inventories 64.3 52.2
Deferred tax assets 4.4 6.5
Prepaid expenses and other current
assets 30.7 30.1
--------------- -------------
Total current assets 296.4 329.1
Property, plant and equipment, net 203.8 199.2
Goodwill, net 73.0 16.9
Other intangibles, net 92.5 35.1
Deferred tax assets 51.6 39.6
Other long-term assets 22.6 23.3
--------------- -------------
Total assets $739.9 $643.2
=============== =============
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $3.2 $1.3
Accounts payable 48.6 37.6
Accrued expenses 65.3 62.4
Income taxes payable 0.7 1.3
--------------- -------------
Total current liabilities 117.8 102.6
Long-term debt, less current portion 314.7 252.2
Other long-term liabilities 8.2 2.4
--------------- -------------
Total liabilities 440.7 357.2
Stockholder's equity:
Common stock 0.9 0.8
Additional paid-in capital 534.4 530.6
Accumulated deficit (249.6) (270.6)
Deferred stock-based compensation (0.2) (0.4)
Accumulated other comprehensive income 13.7 25.6
--------------- -------------
Total stockholders' equity 299.2 286.0
Total liabilities and stockholders'
equity $739.9 $643.2
=============== =============
AMIS Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(In Millions)
Twelve Months Ended:
--------------------------
December 31, December 31,
2005 2004
(unaudited)
------------- ------------
Cash flows from operating activities
Net income $21.0 $52.4
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 51.1 43.8
Write-off of deferred financing costs 6.7 -
Amortization of deferred financing
costs 0.8 1.3
Stock-based compensation expense 0.2 0.9
In-process research and development 0.8 1.5
Restructuring charges, net of cash
expended 3.6 5.1
Provision for (benefit from) deferred
income taxes (4.6) 2.2
Loss on disposition of property, plant
and equipment 0.1 -
Changes in operating assets and
liabilities:
Accounts receivable (16.6) (0.4)
Inventories (11.5) (4.0)
Prepaid expenses and other assets 7.8 (5.2)
Accounts payable and other
accrued expenses (0.6) (1.4)
------------- ------------
Net cash provided by operating activities 58.8 96.2
Cash flows from investing activities
Purchases of property, plant and equipment (34.5) (32.4)
Proceeds from sale of property, plant and
equipment - 0.1
Purchase of business (138.5) (26.8)
Change in restricted cash (1.2) 2.4
Change in other assets (4.7) (3.3)
------------- ------------
Net cash used in investing activities (178.9) (60.0)
Cash flows from financing activities
Payments on long-term debt (255.6) (1.2)
Proceeds from bank borrowings 320.0 -
Deferred financing costs (4.5) -
Proceeds from derivative (0.1) -
Proceeds from exercise of stock options 3.8 2.5
------------- ------------
Net cash provided by financing activities 63.6 1.3
Effect of exchange rate changes on cash
and cash equivalents (8.5) 5.1
------------- ------------
Net increase (decrease) in cash and cash
equivalents (65.0) 42.6
Cash and cash equivalents at beginning of
period 161.7 119.1
------------- ------------
Cash and cash equivalents at end of period $96.7 $161.7
============= ============
CONTACT: AMI Semiconductor, Pocatello
Investor Relations
Wade Olsen, 208-234-6045
wade_olsen@amis.com
or
Media Relations
Tamera Drake, 208-234-6890
tamera_drake@amis.com