Exhibit 99.1
AMIS Holdings, Inc. Reports Third Quarter 2006 Financial Results
-- Record Revenue of $159.3 Million, Up 6% Sequentially
POCATELLO, Idaho--(BUSINESS WIRE)--Oct. 26, 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 third quarter and nine months ended September 30, 2006.
Financial Results
Third quarter 2006 revenue was $159.3 million, an increase of six percent
sequentially and 27 percent compared to the third quarter of 2005. Excluding
$22.3 million of revenue in the third quarter from the Flextronics semiconductor
business and $1.4 million from the acquisitions of the Starkey design center and
the select businesses of NanoAmp, organic revenue was a record $135.6 million,
up 11 percent year over year. Gross margin for the third quarter of 2006 was
43.8 percent, representing a decline of 140 basis points sequentially and 520
basis points year over year. The sequential decline in gross margin was driven
primarily by an unfavorable product mix and some inventory-related charges.
Operating margin was 9.6 percent in the third quarter of 2006, an increase
of 50 basis points sequentially but a decrease of 420 basis points year over
year. On a non-GAAP basis, operating margin for the third quarter of 2006 was
14.4 percent, down 70 basis points sequentially and 220 basis points year over
year. The sequential decline in non-GAAP operating margin was driven by lower
gross margin and lower sequential development revenues. Non-GAAP operating
margin for the third 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 third
quarter 2006 non-GAAP operating income excludes approximately $2.0 million of
stock-based compensation expense.
Net income for third quarter 2006 was $8.6 million, or $0.10 per diluted
share, compared to net income of $11.7 million or $0.13 per diluted share for
the same period in 2005. Non-GAAP net income for third quarter 2006 was $14.6
million or $0.16 per diluted share, compared to $14.8 million or $0.17 per
diluted share in third quarter 2005. Third 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 third quarter
of 2006 also excludes stock-based compensation expense of approximately $0.02
per diluted share.
Revenue for the first nine months of 2006 was $448.6 million, an increase
of 23 percent compared to the first nine months of 2005. Net income for the
first nine months of 2006 was $25.4 million, or $0.28 per diluted share,
compared to net income of $12.0 million, or $0.14 per diluted share, for the
same period of 2005. Non-GAAP net income for the first nine months of 2006 was
$44.5 million, or $0.50 per diluted share, compared to non-GAAP net income of
$38.2 million or $0.43 per diluted share in the first nine months of 2005.
Non-GAAP net income for the first nine months of 2006 and 2005 excludes the same
items described above. Non-GAAP net income for the first nine months of 2005
also excludes charges related to debt refinancing activities in the first
quarter 2005.
"I am very pleased with our ability to deliver back-to-back quarters of
record revenue," stated Christine King, chief executive officer. "In addition,
our target markets remain healthy and new product introductions are on plan for
the year. Although our third quarter margins were disappointing we are focused
on generating greater margin leverage. Based on the margin improvement plans we
have in place, I expect to see positive results in the fourth quarter. "
The Company generated operating cash flow during the quarter of $25.2
million. Cash at the end of the quarter was $91.5 million, a sequential decrease
of $17.0 million due primarily to payments for acquisitions during the quarter.
Capital expenditures during third quarter 2006 were $12.9 million.
In connection with the September 2006 preparation and filing of the
Company's federal tax return for the year ended December 31, 2005, the Company
discovered that it had provided incorrect amounts of income tax expense in its
financial statements in 2005 and the first two quarters of 2006 due to a
misapplication of federal tax rules applicable to transactions between the
Company and its foreign subsidiaries. The problem first occurred in the fourth
quarter of 2005. As a result, the Company determined it must restate its
previously reported financial statements for 2005 and the first two quarters of
2006.
The effect of this restatement in 2005 is to increase net income by
approximately $1.1 million and increase earnings per share by $0.02 on a GAAP
basis and $0.01 on a non-GAAP basis.
For 2006, the restatement in first quarter will increase net income by
approximately $0.1 million and GAAP diluted earnings per share by $0.01. However
there will be no impact to non-GAAP diluted earnings per share. In the second
quarter, net income will increase by approximately $0.1 million, with no impact
on diluted earnings per share on a GAAP and non-GAAP basis.
These restatements do not affect the income amounts reported for the three
and nine months ended October 1, 2005. The restatements have no impact on
previously reported net cash flow from operations in any period. The balance
sheet at December 31, 2005 in this press release has been restated to reflect
this change.
Business Outlook
"We expect that third quarter will represent the trough in our margins,"
said David Henry, senior vice president and chief financial officer. "Key
operational initiatives are in place and management's main focus is on improving
margin leverage on both a short-term and long-term basis. Some of the effects of
these actions can be seen in our balance sheet, as days of inventory in the
third quarter declined 8 days sequentially. Our guidance for the fourth quarter
of 2006 is as follows:
-- Revenue is expected to be flat sequentially;
-- Gross margin is expected to increase 50 basis points sequentially;
-- Non-GAAP operating margin is expected to increase by approximately 50
to 100 basis points sequentially;
-- On a non-GAAP basis, our effective tax rate for the fourth quarter is
expected to be 19 to 20 percent;
-- Non-GAAP diluted earnings per share is expected to be approximately
$0.17 to $0.18;
-- Stock-based compensation expense is expected to decrease GAAP diluted
earnings per share by approximately $0.02;
-- Capital expenditures for the year are expected to remain at
approximately eight percent of annual revenues."
Conference Call and Webcast Information
Christine King, CEO, along with David Henry, senior vice president and CFO,
will host a conference call on October 26, 2006 at 5 p.m. ET, to discuss the
Company's third 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 November 9, 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 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 that margins will improve in the fourth quarter; expectation that
third quarter represents the trough in margins; and guidance on fourth 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,
Starkey and NanoAmp businesses, loss of key personnel, general economic and
political uncertainty, conditions in the semiconductor industry, exchange rate
and hedging risks and other risks and uncertainties that we identified in
reports filed from time to time with the Securities and Exchange Commission,
including our most recent Quarterly Report on Form 10-Q and Annual Report on
Form 10-K. We do 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 Income
(In Millions - Unaudited)
Three Months Ended
September 30, 2006
Adjustments
--------------------------------------
Amortization
of
Acquisition Restructuring
Related and Stock
Intangible Impairment Compensation Non-
GAAP Assets Charges Expense GAAP
Revenue $159.3 $- $- $- $159.3
Cost of revenue 89.5 - - (0.2) 89.3
----------------------------------------------------
Gross profit 69.8 - - (0.2) 70.0
Operating
expenses:
Research &
development 27.3 - - (0.8) 26.5
Selling, general
and
administrative 21.5 - - (1.0) 20.5
Amortization of
acquisition-
related
intangibles 4.6 (4.6) - - 0.0
Restructuring
and impairment
charges 1.1 - (1.1) - 0.0
----------------------------------------------------
54.5 (4.6) (1.1) (1.8) 47.0
Operating income 15.3 4.6 1.1 2.0 23.0
Non-operating
expenses, net 4.7 - - - 4.7
Income before
income taxes 10.6 4.6 1.1 2.0 18.3
Provision for
income taxes 2.0 0.7 0.4 0.6 3.7
----------------------------------------------------
Net income $8.6 $3.9 $0.7 $1.4 $14.6
====================================================
Earnings per share
Basic $0.10 $0.04 $0.01 $0.02 $0.17
Diluted $0.10 $0.04 $0.01 $0.02 $0.16
Weighted average
shares
Basic 87.8 87.8 87.8 87.8 87.8
Diluted 89.5 89.5 89.5 89.5 89.5
Key Ratios &
Information:
Gross margin 43.8% 43.9%
Operating margin 9.6% 14.4%
--------------------------------------
Three Months Ended
October 1, 2005
Adjustments
--------------------------------------
Amortization
of
Acquisition Restructuring
Related and In-process
Intangible Impairment Research and Non-
GAAP Assets Charges Development GAAP
Revenue $125.6 $- $- $- $125.6
Cost of revenue 64.0 - - - 64.0
----------------------------------------------------
Gross profit 61.6 - - - 61.6
Operating
expenses:
Research &
development 21.2 - - - 21.2
Selling, general
and
administrative 19.6 - - - 19.6
Amortization of
acquisition-
related
intangibles 2.5 (2.5) - - -
In-process
research and
development 0.8 - - (0.8) -
Restructuring
and impairment
charges 0.2 - (0.2) - -
----------------------------------------------------
44.3 (2.5) (0.2) (0.8) 40.8
Operating income 17.3 2.5 0.2 0.8 20.8
Non-operating
expenses, net 2.9 - - - 2.9
Income before
income taxes 14.4 2.5 0.2 0.8 17.9
Provision for
income taxes 2.7 0.3 0.1 - 3.1
----------------------------------------------------
Net income $11.7 $2.2 $0.1 $0.8 $14.8
====================================================
Earnings per share
Basic $0.14 $0.03 $0.00 $0.01 $0.17
Diluted $0.13 $0.02 $0.00 $0.01 $0.17
Weighted average
shares
Basic 85.9 85.9 85.9 85.9 85.9
Diluted 88.1 88.1 88.1 88.1 88.1
Key Ratios &
Information:
Gross margin 49.0% 49.0%
Operating margin 13.8% 16.6%
--------------------------------------
AMIS Holdings, Inc.
Condensed Consolidated Statements of Income
(In Millions - Unaudited)
Nine Months Ended
September 30, 2006
Adjustments
--------------------------------------
Amortization
of
AcquisitionRestructuring
Related and Stock
Intangible Impairment Compensation Non-
GAAP Assets Charges Expense GAAP
Revenue $448.6 $- $- $- $448.6
Cost of revenue 247.7 - - (0.5) 247.2
----------------------------------------------------
Gross profit 200.9 - - (0.5) 201.4
Operating
expenses:
Research &
development 78.2 - - (2.4) 75.8
Selling, general
and
administrative 61.9 - - (3.0) 58.9
Amortization of
acquisition-
related
intangibles 13.0 (13.0) - - -
Restructuring
and impairment
charges 5.9 - (5.9) - -
----------------------------------------------------
159.0 (13.0) (5.9) (5.4) 134.7
Operating income 41.9 13.0 5.9 5.9 66.7
Non-operating
expenses, net 13.4 - - - 13.4
Income before
income taxes 28.5 13.0 5.9 5.9 53.3
Provision for
income taxes 3.1 1.8 2.1 1.8 8.8
----------------------------------------------------
Net income $25.4 $11.2 $3.8 $4.1 $44.5
====================================================
Earnings per share
Basic $0.29 $0.13 $0.04 $0.05 $0.51
Diluted $0.28 $0.13 $0.04 $0.05 $0.50
Weighted average
shares
Basic 87.4 87.4 87.4 87.4 87.4
Diluted 89.3 89.3 89.3 89.3 89.3
Key Ratios &
Information:
Gross margin 44.8% 44.9%
Operating margin 9.3% 14.9%
--------------------------------------
Nine Months Ended
October 1, 2005
Adjustments
----------------------------------------
Costs
associated
with the
tender of
Amortizat- 10 3/4%
ion of In- notes and
Acquisit- Restruct-process write-off
ion uring and Research of
Related Impair- and deferred
Intangible ment Develop- financing Non-
GAAP Assets Charges ment costs GAAP
Revenue $364.0 $- $- $- $- $364.0
Cost of revenue 188.4 - - - - 188.4
------------------------------------------------------
Gross profit 175.6 - - - - 175.6
Operating
expenses:
Research &
development 63.9 - - - - 63.9
Selling,
general and
administrative 52.7 - - - - 52.7
Amortization of
acquisition-
related
intangibles 4.9 (4.9) - - - -
In-process
research and
development 0.8 - - (0.8) - -
Restructuring
and impairment
charges 1.5 - (1.5) - - -
------------------------------------------------------
123.8 (4.9) (1.5) (0.8) - 116.6
Operating income 51.8 4.9 1.5 0.8 - 59.0
Non-operating
expenses, net 44.5 - - - (34.7) 9.8
Income before
income taxes 7.3 4.9 1.5 0.8 34.7 49.2
Provision
(benefit) for
income taxes (4.7) 0.8 0.5 0.1 14.3 11.0
------------------------------------------------------
Net income $12.0 $4.1 $1.0 $0.7 $20.4 $38.2
======================================================
Earnings per
share
Basic $0.14 $0.05 $0.01 $0.01 $0.24 $0.45
Diluted $0.14 $0.05 $0.01 $0.01 $0.23 $0.43
Weighted average
shares
Basic 85.6 85.6 85.6 85.6 85.6 85.6
Diluted 88.0 88.0 88.0 88.0 88.0 88.0
Key Ratios &
Information:
Gross margin 48.2% 48.2%
Operating margin 14.2% 16.2%
----------------------------------------
AMIS Holdings, Inc.
Condensed Consolidated Balance Sheets
(In Millions)
September December
30, 31,
2006 2005
(unaudited)
----------- --------
Assets
- --------------------------------------------------
Current assets:
Cash and cash equivalents $91.5 $96.7
Accounts receivable, net 111.0 99.9
Inventories 75.1 64.3
Deferred tax assets 2.7 4.5
Prepaid expenses and other current assets 34.5 31.7
----------- --------
Total current assets 314.8 297.1
Property, plant and equipment, net 205.1 203.8
Goodwill, net 87.3 72.6
Other intangibles, net 107.1 92.5
Deferred tax assets 54.8 51.4
Other long-term assets 18.8 23.4
----------- --------
Total assets $787.9 $740.8
=========== ========
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $3.2 $3.2
Accounts payable 50.6 48.8
Accrued expenses 53.0 62.7
Foreign deferred tax liability 1.7 2.7
Income taxes payable 2.5 0.7
----------- --------
Total current liabilities 111.0 118.1
Long-term debt, less current portion 312.3 314.7
Other long-term liabilities 5.4 8.2
----------- --------
Total liabilities 428.7 441.0
Stockholder's equity:
Common stock 0.9 0.9
Additional paid-in capital 551.5 534.4
Accumulated deficit (223.5) (248.9)
Deferred stock-based compensation - (0.2)
Accumulated other comprehensive income 30.3 13.6
----------- --------
Total stockholders' equity 359.2 299.8
Total liabilities and stockholders' equity $787.9 $740.8
=========== ========
AMIS Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(In Millions)
Nine Months Ended:
-------------------------
September 30, October 1,
2006 2005
(unaudited) (unaudited)
------------- -----------
Cash flows from operating activities
Net income $25.4 $12.0
Adjustments to reconcile net income to net
cash provided by (used in):
Depreciation and amortization 50.4 39.7
Amortization of deferred financing costs 0.6 0.6
Stock-based compensation expense 5.9 0.2
Write-off of deferred financing costs 0.1 6.7
In-process research and development - 0.8
Benefit from deferred income taxes (2.4) (10.0)
Loss on disposition of property, plant and
equipment 0.4 -
Noncash impact of change in value of
derivative (2.0) -
Changes in operating assets and
liabilities:
Accounts receivable (7.8) (9.9)
Inventories (6.1) (7.4)
Prepaid expenses and other assets (4.2) (2.3)
Accounts payable and other accrued
expenses (7.8) (14.9)
------------- -----------
Net cash provided by operating activities 52.5 15.5
Cash flows from investing activities
Purchases of property, plant and equipment (30.5) (20.4)
Change in restricted cash - (1.2)
Change in other assets (4.1) (2.2)
Purchase of businesses (27.0) (136.5)
------------- -----------
Net cash used in investing activities (61.6) (160.3)
Cash flows from financing activities
Payments on long-term debt (2.4) (254.8)
Proceeds from bank borrowings - 320.0
Deferred financing costs (0.1) (4.5)
Proceeds from derivative 0.7 (0.1)
Proceeds from exercise of stock options 2.6 3.6
------------- -----------
Net cash provided by financing activities 0.8 64.2
Effect of exchange rate changes on cash and
cash equivalents 3.1 (7.3)
------------- -----------
Net (decrease) in cash and cash equivalents (5.2) (87.9)
Cash and cash equivalents at beginning of
period 96.7 161.7
------------- -----------
Cash and cash equivalents at end of period $91.5 $73.8
============= ===========
CONTACT: AMI Semiconductor
Wade Olsen, 208-234-6045 (Investor Relations)
wade_olsen@amis.com
Tamera Drake, 208-234-6890 (Media Relations)
tamera_drake@amis.com