EXHIBIT 99.1
AMIS Holdings, Inc. Reports Second Quarter 2006 Financial Results;
Revenue Increased 9% Sequentially, Surpassing $150 Million for the
First Time; Six Month Backlog Increased 9% Sequentially to a Record
$184 Million
POCATELLO, Idaho--(BUSINESS WIRE)--July 27, 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 second quarter and six months
ended July 1, 2006.
Financial Results
Second quarter 2006 revenue was $150.7 million, an increase of
nine percent sequentially and 23 percent compared to the second
quarter of 2005. Second quarter 2005 revenue did not include revenues
from the acquisition of the Flextronics semiconductor business, which
occurred in September 2005. Gross margin for the second quarter of
2006 was 45.2 percent, representing a decline of 30 basis points
sequentially and 390 basis points year over year. Gross margin for the
second quarter of 2005 included a 220 basis point net reduction in
cost of revenue that was primarily the result of a capital spending
and employment investment grant from the Belgian government.
Operating margin was 9.1 percent in the second quarter of 2006, a
decline of 20 basis points sequentially and 670 basis points year over
year. On a non-GAAP basis, operating margin for the second quarter of
2006 was 15.1 percent, flat sequentially, but down 250 basis points
year over year. Non-GAAP operating margin for the second quarter of
2006 and 2005 excludes amortization of acquisition-related intangibles
and restructuring charges. In addition, the Company began expensing
stock options in the first quarter of 2006, and second quarter 2006
non-GAAP operating income excludes $2.1 million of stock-based
compensation expense.
Net income for second quarter 2006 was $8.1 million, or $0.09 per
diluted share, compared to net income of $11.3 million or $0.13 per
diluted share for the same period in 2005. Non-GAAP net income for
second quarter 2006 was $15.1 million or $0.17 per diluted share,
compared to $12.9 million or $0.15 per diluted share in second quarter
2005. Second quarter 2006 and 2005 non-GAAP net income exclude
amortization of acquisition-related intangibles and restructuring
charges, net of tax effects. Non-GAAP earnings per share for the
second quarter of 2006 also excludes stock-based compensation expense
of approximately $0.02 per diluted share. Non-GAAP net income in the
second quarter of 2005 includes a $2.8 million net reduction in cost
of revenue from the Belgian government grant discussed above as well
as a charge to income taxes of $2.3 million to write-down the
Company's deferred tax assets based on a lower blended U.S. statutory
rate in accordance with SFAS No. 109, "Accounting for Income Taxes."
Revenue for the first six months of 2006 was $289.3 million, an
increase of 21 percent compared to the first six months of 2005. Net
income for the first six months of 2006 was $16.5 million, or $0.18
per diluted share, as compared to net income of $0.2 million, or $0.00
per diluted share, for the same period of 2005. Non-GAAP net income
for the first six months of 2006 was $29.6 million, or $0.33 per
diluted share, compared to non-GAAP net income of $23.5 million or
$0.27 per diluted share in the first six months of 2005. Non-GAAP net
income for the first six months of 2006 excludes the same items
described above for the second quarter of 2006. Non-GAAP net income
for the first six months of 2005 excludes charges related to debt
refinancing activities in the first quarter 2005 in addition to the
adjustments described above for the second quarter of 2005.
"I am pleased with the operational improvements we made in the
second quarter," stated Christine King, president and chief executive
officer. "We succeeded in increasing delivery performance which helped
us realize a record level of revenue during the quarter. Though more
work remains to be done to optimize operations, results from the
quarter highlight our ability to grow the top line. I am encouraged by
the strength of our backlog entering the third quarter, and I'm
optimistic about our ability to grow revenue sequentially for the
reminder of the year, driven primarily by anticipated growth in the
automotive market as well as continued strength in the industrial
market."
The Company generated operating cash flow during the quarter of
$17.2 million, bringing cash at the end of the quarter to $108.5
million, a sequential increase of $5.6 million. Capital expenditures
during second quarter 2006 were $9.8 million.
Business Outlook
"Steady progress is being made in improving our operational
performance," said David Henry, senior vice president and chief
financial officer. "Action plans have been implemented and we expect
continued improvement during the rest of the year. Our guidance for
the third quarter of 2006 is as follows:
-- Revenue is expected to be up 2 percent sequentially;
-- Gross margin is expected to be approximately 45 percent;
-- Non-GAAP operating margin is expected to be approximately 15
percent;
-- On a non-GAAP basis, our effective tax rate for the third
quarter is expected to be 17 to 19 percent;
-- Non-GAAP diluted earnings per share is expected to be
approximately $0.17;
-- Pre-tax stock-based compensation expense is expected to be in
the range of $2.3 - $2.5 million, or approximately $0.02 per
diluted share;
-- Capital expenditures for the year are expected to remain at
approximately eight percent of annual revenues."
Conference Call and Webcast Information
Christine King, president and CEO, along with David Henry, senior
vice president and CFO, will host a conference call on July 27, 2006
at 5 p.m. ET, to discuss the Company's second quarter financial
results and its updated business outlook. The web simulcast of this
call will be available under the investor relations section of the
Company's web site at http://www.amis.com. A webcast replay will be
available at that same location until close of business August 10,
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 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 North America, Europe and the Asia Pacific
region.
Additional Information Regarding Non-GAAP Financial Measures
Management presents the non-GAAP financial measures presented in
this release 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. Please see
the reconciliation of each of these non-GAAP financial measures to its
closest GAAP financial measure in the financial statements that
accompany this release. Non-GAAP net income and non-GAAP 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.
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 of sequential
revenue growth through the balance of 2006, gross margin outlook in
the third quarter, and guidance on third quarter 2006 revenue, gross
margin, non-GAAP operating margin, effective tax rate, non-GAAP
earnings per share, stock compensation expense, and capital
expenditures. 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 failure to operate our manufacturing facilities on a
cost-effective basis and in a manner that avoids manufacturing defects
and unnecessary scrap, the availability of required capacity at our
key subcontractors, manufacturing underutilization, changes in the
conditions affecting our target markets, fluctuations in customer
demand, timing and success of new products, competitive conditions in
the semiconductor industry, failure to successfully integrate the
recently-acquired Flextronics business, loss of key personnel, general
economic and political uncertainty, conditions in the semiconductor
industry, 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 Quarterly Report on
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 Six Months Ended
------------------ ----------------
July 1, July 2, July 1, July 2,
2006 2005 2006 2005
---------- ------- -------- -------
Revenue $150.7 $122.5 $289.3 $238.4
Cost of revenue 82.6 62.3 158.2 124.5
---------- ------- -------- -------
Gross profit 68.1 60.2 131.1 113.9
Operating expenses:
Research & development 26.8 21.8 50.9 42.7
Selling, general and
administrative 20.6 16.9 40.4 33.1
Amortization of acquisition-
related intangibles 4.3 1.2 8.4 2.4
Restructuring and impairment
charges 2.7 1.0 4.8 1.3
---------- ------- -------- -------
54.4 40.9 104.5 79.5
---------- ------- -------- -------
Operating income 13.7 19.3 26.6 34.4
Non-operating expenses, net 4.6 2.2 8.8 41.6
---------- ------- -------- -------
Income (loss) before income taxes 9.1 17.1 17.8 (7.2)
Provision (benefit) for income
taxes 1.0 5.8 1.3 (7.4)
---------- ------- -------- -------
Net income $8.1 $11.3 $16.5 $0.2
========== ======= ======== =======
Earnings per share
Basic $0.09 $0.13 $0.19 $0.00
Diluted $0.09 $0.13 $0.18 $0.00
Weighted average shares
Basic 87.6 85.6 87.2 85.4
Diluted 89.2 87.9 89.2 87.9
Key Ratios & Information:
- -------------------------
Gross margin 45.2% 49.1% 45.3% 47.8%
Operating margin 9.1% 15.8% 9.2% 14.4%
AMIS Holdings, Inc.
Reconciliations between GAAP and non-GAAP measures
(In millions - Unaudited)
We prospectively adopted FAS 123(R) beginning in the first quarter of
2006; therefore, equivalent stock-based compensation expense is not
reflected in prior periods.
Reconciliation of Cost of Revenue to Non-GAAP Cost of Revenue
Three Months Ended Six Months Ended
------------------ -----------------
July 1, July 1,
2006 2006
------------------ -----------------
Cost of Revenue $82.6 $158.2
Adjustments to reconcile cost of
revenue to non-GAAP cost of revenue:
Share-based compensation (0.3) (0.3)
------------------ -----------------
Non-GAAP Cost of Revenue $82.3 $157.9
================== =================
Reconciliation of Gross Profit to Non-GAAP Gross Profit
Three Months Ended Six Months Ended
------------------ -----------------
July 1, July 1,
2006 2006
----------------- -----------------
Gross Profit $68.1 $131.1
Adjustments to reconcile gross
profit to non-GAAP gross profit:
Share-based compensation 0.3 0.3
----------------- -----------------
Non-GAAP Gross Profit $68.4 $131.4
================= =================
Reconciliation of Research and Development to Non-GAAP Research and
Development
Three Months Ended Six Months Ended
----------------- -----------------
July 1, July 1,
2006 2006
----------------- -----------------
Research and Development $26.8 $50.9
Adjustments to reconcile research
and development to non-GAAP
research and development:
Share-based compensation (0.8) (1.6)
----------------- -----------------
Non-GAAP Research and Development $26.0 $49.3
================= =================
Reconciliation of Selling, General and Administrative to Non-GAAP
Selling, General and Administrative
Three Months Ended Six Months Ended
------------------- ----------------
July 1, July 1,
2006 2006
------------------ ----------------
Selling, General and
Administrative $20.6 $40.4
Adjustments to reconcile selling,
general and administrative to
non-GAAP selling, general and
administrative:
Share-based compensation (1.0) (2.0)
------------------ ----------------
Non-GAAP Selling, General and
Administrative $19.6 $38.4
================== ================
Reconciliation of Operating Income to Non-GAAP Operating Income
Three Months Ended Six Months Ended
------------------- ----------------
July 1, July 2, July 1, July 2,
2006 2005 2006 2005
--------- --------- -------- -------
Operating income $13.7 $19.3 $26.6 $34.4
Adjustments to reconcile operating
income to non-GAAP operating income:
Amortization of
acquisition-related
intangible assets 4.3 1.2 8.4 2.4
Restructuring and
impairment charges 2.7 1.0 4.8 1.3
Share-based compensation 2.1 - 3.9 -
--------- --------- -------- -------
Non-GAAP operating income $22.8 $21.5 $43.7 $38.1
========= ========= ======== =======
Reconciliation of Net Income to Non-GAAP Net Income
Three Months Ended Six Months Ended
------------------- ----------------
July 1, July 2, July 1, July 2,
2006 2005 2006 2005
--------- --------- -------- -------
Net income $8.1 $11.3 $16.5 $0.2
Adjustments to reconcile net
income to non-GAAP net income:
Amortization of acquisition-
related intangible assets 4.3 1.2 8.4 2.4
Restructuring and impairment
charges 2.7 1.0 4.8 1.3
Costs associated with the
tender of 10 3/4% notes - - - 28.0
Write-off of deferred
financing and other costs - - - 6.8
Share-based compensation 2.1 - 3.9 -
Related tax effects (2.1) (0.6) (4.0) (15.2)
------ ------ ------- ------
Non-GAAP net income $15.1 $12.9 $29.6 $23.5
====== ====== ======= ======
AMIS Holdings, Inc.
Non-GAAP Condensed Consolidated Statements of Operations
(In millions - Unaudited)
Three Months Ended Six Months Ended
------------------- -----------------
July 1, July 2, July 1, July 2,
2006 2005 2006 2005
----------- ------- --------- -------
Revenue $150.7 $122.5 $289.3 $238.4
Cost of revenue 82.3 62.3 157.9 124.5
----------- ------- --------- -------
Gross profit 68.4 60.2 131.4 113.9
Operating expenses:
Research & development 26.0 21.8 49.3 42.7
Selling, general and
administrative 19.6 16.9 38.4 33.1
----------- ------- --------- -------
45.6 38.7 87.7 75.8
----------- ------- --------- -------
Non-GAAP operating income 22.8 21.5 43.7 38.1
Non-operating expenses, net 4.6 2.2 8.8 6.8
----------- ------- --------- -------
Income before income taxes 18.2 19.3 34.9 31.3
Provision for income taxes 3.1 6.4 5.3 7.8
----------- ------- --------- -------
Non-GAAP net income $15.1 $12.9 $29.6 $23.5
=========== ======= ========= =======
Non-GAAP earnings per share
Basic $0.17 $0.15 $0.34 $0.28
Diluted $0.17 $0.15 $0.33 $0.27
Weighted average shares
Basic 87.6 85.6 87.2 85.4
Diluted 89.2 87.9 89.2 87.9
Key Ratios
- ----------
Non-GAAP gross margin 45.4% 49.1% 45.4% 47.8%
Non-GAAP operating margin 15.1% 17.6% 15.1% 16.0%
Non-GAAP 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. Non-GAAP net income
and non-GAAP 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)
July 1, December 31,
2006 2005
(unaudited)
------------ ------------
Assets
- ------
Current assets:
Cash and cash equivalents $108.5 $96.7
Accounts receivable, net 110.2 99.9
Inventories 76.0 64.3
Deferred tax assets 3.5 4.5
Prepaid expenses and other current assets 28.8 31.7
------------ ------------
Total current assets 327.0 297.1
Property, plant and equipment, net 203.5 203.8
Goodwill, net 85.0 72.6
Other intangibles, net 88.5 92.5
Deferred tax assets 54.4 50.3
Other long-term assets 20.0 23.4
------------ ------------
Total assets $778.4 $739.7
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $3.2 $3.2
Accounts payable 45.0 48.8
Accrued expenses 60.9 62.7
Foreign deferred tax liability 1.9 2.7
Income taxes payable 1.3 0.7
------------ ------------
Total current liabilities 112.3 118.1
Long-term debt, less current portion 313.1 314.7
Other long-term liabilities 5.6 8.2
------------ ------------
Total liabilities 431.0 441.0
Stockholder's equity:
Common stock 0.9 0.9
Additional paid-in capital 548.3 534.4
Accumulated deficit (233.5) (250.0)
Deferred stock-based compensation - (0.2)
Accumulated other comprehensive income 31.7 13.6
------------ ------------
Total stockholders' equity 347.4 298.7
Total liabilities and stockholders' equity $778.4 $739.7
============ ============
AMIS Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(In Millions)
Six Months Ended:
------------------------
July 1, July 2,
2006 2005
(unaudited) (unaudited)
------------ -----------
Cash flows from operating activities
Net income $16.5 $0.2
Adjustments to reconcile net income to net
cash provided by (used in):
Depreciation and amortization 33.0 24.0
Amortization of deferred financing costs 0.4 0.5
Stock-based compensation expense 3.9 0.2
Write-off of deferred financing costs - 6.7
Benefit from deferred income taxes (2.2) (10.3)
Loss on disposition of property, plant and
equipment 0.1 -
Noncash impact of change in value of
derivative (0.7) -
Changes in operating assets and
liabilities:
Accounts receivable (6.7) (3.5)
Inventories (8.8) (4.4)
Prepaid expenses and other assets 1.5 (2.1)
Accounts payable and other accrued
expenses (9.7) (19.6)
----------- -----------
Net cash provided by (used in) operating
activities 27.3 (8.3)
Cash flows from investing activities
Purchases of property, plant and equipment (17.6) (14.1)
Deposit on pending purchase of a business - (5.0)
Change in restricted cash - (1.4)
Change in other assets (2.0) (5.0)
----------- -----------
Net cash used in investing activities (19.6) (25.5)
Cash flows from financing activities
Payments on long-term debt (1.6) (254.0)
Proceeds from bank borrowings - 210.0
Debt issuance costs (0.1) -
Deferred financing costs - (2.9)
Proceeds from derivative 0.6 -
Proceeds from exercise of stock options 1.4 2.1
----------- -----------
Net cash provided by (used in) financing
activities 0.3 (44.8)
Effect of exchange rate changes on cash and
cash equivalents 3.8 (7.3)
----------- -----------
Net increase (decrease) in cash and cash
equivalents 11.8 (85.9)
Cash and cash equivalents at beginning of
period 96.7 161.7
----------- -----------
Cash and cash equivalents at end of period $108.5 $75.8
=========== ===========
CONTACT: AMI Semiconductor, Pocatello
Investor Relations Contact
Wade Olsen, 208-234-6045
wade_olsen@amis.com
or
Media Relations Contact
Tamera Drake, 208-234-6890
tamera_drake@amis.com