AMIS Holdings, Inc. Reports Fourth Quarter and Full Year 2006 Financial Results and Announces Restructuring Plan to Drive Increased R&D Effectiveness and Operating Leverage

Business Wire, Feb 1, 2007

* Record Annual Revenue of $605.6 million, up 20% vs. 2005

* Fourth Quarter GAAP EPS of $0.13, Non-GAAP EPS of $0.21

* Operating Cash Flow of $40.5 million in Fourth Quarter

POCATELLO, Idaho -- 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 year ended December 31, 2006.

Financial Results

Fourth quarter 2006 revenue was $157.0 million, representing a sequential decline of 1 percent but a year over year increase of 12 percent. Gross margin for the quarter was 44.7 percent, up 90 basis points sequentially and 60 basis points year over year.

Operating margin was 9.8 percent in fourth quarter 2006, up 20 basis points sequentially, but down 120 basis points year over year. On a non-GAAP basis, operating margin for the fourth quarter of 2006 was 15.7 percent, up 130 basis points sequentially but down 100 basis points year over year. The sequential increase in non-GAAP operating margin was driven by improved gross margins and lower research and development expenses. Non-GAAP operating margin for the fourth 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 fourth quarter 2006 non-GAAP operating income excludes approximately $1.9 million of stock-based compensation expense.

Net income for fourth quarter 2006 was $12.0 million, or $0.13 per diluted share, which compares to net income of $9.7 million or $0.11 per diluted share for the same period in 2005. Non-GAAP net income for fourth quarter 2006 was $19.0 million or $0.21 per diluted share, compared to non-GAAP net income of $15.7 million or $0.18 per diluted share in fourth quarter 2005. GAAP and non-GAAP net income in fourth quarter 2006 were favorably affected by one-time tax items, including a full year catch up on research and development tax credits, of approximately $0.015 per share.

Revenue for 2006 was $605.6 million, an increase of 20 percent over to 2005. Net income for 2006 was $37.4 million, or $0.42 per diluted share, compared to $21.7 million or $0.25 per diluted share in 2005. Non-GAAP net income for 2006 was $63.5 million, or $0.71 per diluted share, compared to non-GAAP net income of $53.9 million, or $0.61 per diluted share in 2005. Full year 2006 and 2005 non-GAAP net income exclude amortization of acquisition-related intangibles, and restructuring and impairment charges, net of tax effects. Non-GAAP earnings per share for 2006 also excludes stock-based compensation expense of approximately $0.06 per diluted share. Non-GAAP net income for 2005 also excludes charges related to debt refinancing activities in the first quarter and in-process research and development associated with the Flextronics acquisition in the third quarter.

The Company generated operating cash flow during the quarter of $40.5 million. Cash at the end of the quarter was $77.1 million, a decline of $14.4 million sequentially, due primarily to a voluntary $35 million payment on the Company's term debt made just before the end of the quarter. Capital expenditures during fourth quarter 2006 were $20.7 million.

"Despite sequentially lower revenue, I am pleased with our performance especially given the industry environment," stated Christine King, chief executive officer. "I am also pleased with our ability to improve gross margin in the fourth quarter as well as our achievements in 2006, including: record annual revenues with 20 percent growth in 2006, the acquisition of Starkey Laboratories' design center and the medical business of NanoAmp Solutions, completion of the test and sort consolidation into our new facility in the Philippines, and the introduction of multiple new technologies that enhance our core competencies. In addition, during 2006 we successfully generated over $100 million in revenue from new products introduced during the year."

Today the Company also announced a restructuring plan to reduce costs through a consolidation of design centers and a workforce reduction. The restructuring plan includes a workforce reduction of approximately 80 - 85 employees world-wide, representing approximately 3 percent of its total workforce. As part of this reduction, the Company will be closing design centers in Eilat, Israel; Panningen, The Netherlands; Carlsbad, California; and India. The Company anticipates these actions along with other business changes will result in annual cost savings of approximately $10 million when fully implemented by the end of the first quarter 2007. A restructuring charge, expected to range between $6.0 million and $7.0 million, is anticipated to be recorded in the first quarter of 2007. This charge will reflect expenses associated with the workforce reduction and lease termination and other costs associated with closed facilities. Substantially all of the restructuring charges are expected to be cash charges.