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 Pocatello (IPA: [po kə tɛ lo]) is the county seat and largest city of Bannock CountyGR6 -- AMIS A·mis , Kingsley 1922-1995. British writer best known for his novels, including Lucky Jim (1954) and Jake's Thing (1978). Holdings, Inc. (Nasdaq:AMIS), parent company of AMI Semiconductor AMI Semiconductor is a company engaged the design and manufacture of customer specific integrated circuit solutions, including solutions for the automotive, medical and industrial markets. Among its products are products that integrate processing of analog and digital signals. , 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 December: see month. 31, 2005. Financial Results Fourth quarter 2005 revenue was $139.8 million, an increase of 11 percent sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen 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 ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 260 basis points in the fourth quarter due to a reserve taken in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with ongoing discussions involving a previous quality issue with one of our customers. Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: 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 Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. and restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , on a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase 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 di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. 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 Refinancing An extension and/or increase in amount of existing debt. 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 Christine Elizabeth King is a British historian and university administrator. She is currently Vice-Chancellor and Chief Executive of Staffordshire University.[1] , 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 Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. in organic revenue versus our expectations was driven by capacity constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. at our principal assembly subcontractor One who takes a portion of a contract from the principal contractor or from another subcontractor. When an individual or a company is involved in a large-scale project, a contractor is often hired to see that the work is done. and inefficiency in our test operation related to our relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a 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 Manila (mənĭl`ə), city (1990 pop. 1,601,234), capital of the Philippines, SW Luzon, on Manila Bay. Manila is the center of the country's largest metropolitan area, its chief port, and the focus of all governmental, commercial, industrial, , 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 Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. 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
David Henry (b.February 24, 1975 in Denver, Colorado)is an IFBB professional bodybuilder. , senior vice president and chief financial officer. "We're we're Contraction of we are. we're we are 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 Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. , as medical and military margins are generally higher than the Company average. In addition, higher subcontract sub·con·tract n. A contract that assigns some of the obligations of a prior contract to another party. intr. & tr.v. sub·con·tract·ed, sub·con·tract·ing, sub·con·tracts assembly costs and lingering lin·ger v. lin·gered, lin·ger·ing, lin·gers v.intr. 1. To be slow in leaving, especially out of reluctance; tarry. See Synonyms at stay1. 2. 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 forma, adj/n minor elements between the members of a botanical species. diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of 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 (1) A small, thin continuous-loop magnetic tape cartridge that has been used from time to time for data storage and specialized applications. (2) The base unit of chip making. It is a slice taken from a salami-like silicon crystal ingot up to 12" (300mm) in diameter. fabs, --Depreciation and amortization is expected to be about $15.5 million." Impact of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 123(R) Had the Company adopted SFAS No. 123(R) beginning in 2005, diluted earnings per share on a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (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 Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: 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 (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , along with Mike O'Neill Mike O'Neill is the name of:
The process by which the corporation communicates with its investors. 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 European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. corporate offices in Oudenaarde Oudenaarde (ou'dənär`də), Fr. Audenarde, commune (1991 pop. 27,162), East Flanders prov., W Belgium, on the Scheldt River. It is a textile center and a rail junction. , Belgium Belgium (bĕl`jəm), Du. België, Fr. La Belgique, officially Kingdom of Belgium, constitutional kingdom (2005 est. pop. 10,364,000), 11,781 sq mi (30,513 sq km), NW Europe. , and a network of sales and design centers located in the key markets of the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and the Asia Pacific region.
Forward Looking Statements Statements in this press release other than statements of historical fact are "forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. " statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. 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 Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-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 Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. , 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 Form 10-Q See 10-Q. and Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . The Company does not intend to revise or update any forward-looking statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or 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
============= ============
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