AMIS Holdings, Inc. Reports Fourth Quarter and Full Year 2007 Financial Results

Share Name	Share Symbol	Market	Type
Amis Holdings (MM)	NASDAQ:AMIS	NASDAQ	Common Stock

Amis (NASDAQ:AMIS)
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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, 2007. Financial Results Fourth quarter 2007 revenue was $153.8 million, representing a sequential decline of less than one percent. Gross margin for the fourth quarter of 2007 was 46.0 percent, up 200 basis points sequentially and 130 basis points year over year. On a non-GAAP basis, gross margin for the fourth quarter was 46.2 percent, up 200 basis points sequentially and 130 basis points compared to the same period in 2006. Non-GAAP gross margin for the fourth quarter of 2007 and 2006 excludes stock-based compensation expense. Operating margin was 10.1 percent in the fourth quarter 2007, up 180 basis points sequentially, and 30 basis points year over year. On a non-GAAP basis, operating margin for the fourth quarter of 2007 was 16.8 percent, up 110 basis points both sequentially and year over year. The sequential increase in non-GAAP operating margin was driven by improved gross margins, savings realized from restructuring initiatives during the first half of 2007, and spending controls during the fourth quarter. Non-GAAP operating margin for the fourth quarter of 2007 and 2006 excludes amortization of acquisition-related intangibles, restructuring and impairment charges and stock-based compensation expense. In addition, fourth quarter 2007 non-GAAP operating margin excludes approximately $1.3 million of fees associated with the Audit Committee accounting review. Net income for fourth quarter 2007 was $10.0 million, or $0.11 per diluted share, which compares to net income of $12.1 million, or $0.13 per diluted share, for the same period in 2006. Non-GAAP net income for fourth quarter 2007 was $18.3 million, or $0.20 per diluted share, compared to non-GAAP net income of $19.1 million, or $0.21 per diluted share, in fourth quarter 2006. Fourth quarter 2007 and 2006 non-GAAP net income exclude amortization of acquisition-related intangibles, restructuring and impairment charges and stock-based compensation expense, net of taxes. In addition, fourth quarter 2007 non-GAAP net income also excludes $0.8 million in fees associated with the Audit Committee accounting review and $0.6 million for acquisition expenses related to the previously announced pending merger with ON Semiconductor, both net of taxes. Revenue for 2007 was $615.8 million, an increase of two percent over 2006. Net income for 2007 was $29.4 million, or $0.33 per diluted share, compared to $37.4 million, or $0.42 per diluted share, in 2006. Non-GAAP net income for 2007 was $65.0 million, or $0.72 per diluted share, compared to non-GAAP net income of $63.5 million, or $0.71 per diluted share, in 2006. Full year 2007 and 2006 non-GAAP net income excludes amortization of acquisition-related intangibles, restructuring and impairment charges, and stock-based compensation expense, net of taxes. Non-GAAP net income for 2007 also excludes $0.5 million for charges related to the secondary offering conducted in the first quarter, $0.8 million in fees associated with the Audit Committee accounting review, and $0.6 million for the previously identified acquisition related expenses, all net of tax effects. The Company generated operating cash flow during the quarter of $38.7 million and $87.5 million during the full year 2007. Cash at the end of the quarter was $117.4 million, an increase of $28.1 million sequentially, due primarily to improved working capital management. Capital expenditures during fourth quarter 2007 were $9.0 million, bringing full year capital expenditures to $50.0 million or approximately eight percent of revenue. �I am pleased that we completed 2007 with fourth quarter non-GAAP gross margins of over 46 percent, which exceeded our target set in early June,� stated Christine King, chief executive officer. �This along with aggressive expense control during the fourth quarter enhanced non-GAAP operating leverage to the highest operating margin in over two years at nearly 17 percent. We also achieved record design wins during the year and are entering 2008 with our most robust design pipeline ever. In addition, during 2007 we successfully generated over $120 million in revenue from new products introduced during the year.� Business Outlook Revenue is expected to be between $145 million and $150 million, Gross margin is expected to be roughly flat sequentially, GAAP diluted earnings per share is expected to be in the range of $0.07 to $0.10. Excluding amortization of acquisition related intangibles, restructuring and impairment charges, stock-based compensation expense and any acquisition related expenses, non-GAAP diluted earnings per share is expected to be in the range of $0.15 to $0.17. Conference Call and Webcast Information Christine King, chief executive officer, along with Joe Passarello, senior vice president and chief financial officer, will host a conference call on January 29, 2008 at 5 p.m. ET, to discuss the Company�s fourth quarter and full year 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 February 12, 2008. 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 mixed-signal and digital products, AMIS is committed to providing customers in the automotive, medical, industrial, mil/aero, and communication markets with the optimal value, quickest time-to-market semiconductor solutions. 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. For more information, please visit the AMIS Web site at www.amis.com. Additional Information Regarding Non-GAAP Financial Measures Management provides 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 excluding these items enhances 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 operational 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 first quarter 2008 guidance on revenue, gross margin, and GAAP and non-GAAP earnings per share. 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 unexpected expenses associated with the proposed merger with ON Semiconductor, customer and/or employee losses as a result of the proposed merger, failure to maintain and improve the quality and effectiveness of our internal controls over financial reporting, failure to properly and efficiently operate our manufacturing facilities and to take the actions necessary to increase our gross margins and avoid manufacturing defects and unnecessary scrap, inability to sell the inventories of products on hand, inability to protect our proprietary technology and operate without infringing the proprietary rights of others, our ability to manage the availability, capacity and quality of our subcontractors, the failure to properly execute on anticipated restructuring plans, fluctuations in customer demand, timing and success of new products, loss of key personnel, general economic and political uncertainty, conditions in our target markets or the semiconductor industry, 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 Annual Report on Form 10-K and Quarterly Report on Form 10-Q. 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 December 31, 2007 � � � Adjustments � � GAAP � Amortization of Acquisition Related Intangible Assets � Restructuring and Impairment Charges � Stock Compensation Expense Audit Committee Accounting Review � ON Acquisition Related Expenses � � Non-GAAP Revenue $ 153.8 $ - � $ - � $ - $ - � $ - $ 153.8 Cost of revenue � 83.0 � � � - � � � - � � � (0.3 ) � - � � � - � � 82.7 Gross profit 70.8 - - (0.3 ) - - 71.1 � Operating expenses: Research & development 26.8 - - (0.8 ) - - 26.0 Selling, general and administrative 21.9 - - (1.3 ) (1.3 ) - 19.3 Amortization of acquisition-related intangibles 5.3 (5.3 ) - - - - 0.0 Restructuring and impairment charges � 1.2 � � � - � � � (1.2 ) � � - � � - � � � - � � 0.0 55.2 (5.3 ) (1.2 ) (2.1 ) (1.3 ) - 45.3 � Operating income 15.6 5.3 1.2 2.4 1.3 - 25.8 � Non-operating expenses, net 5.8 - - - - (0.9 ) 4.9 � Income before income taxes 9.8 5.3 1.2 2.4 1.3 0.9 20.9 (Benefit) Provision for income taxes � (0.2 ) � � 0.9 � � � 0.4 � � � 0.7 � � 0.5 � � � 0.3 � � 2.6 Net income $ 10.0 � � $ 4.4 � � $ 0.8 � � $ 1.7 � $ 0.8 � � $ 0.6 � � $ 18.3 � Earnings per share Basic $ 0.11 $ 0.20 Diluted $ 0.11 $ 0.20 � Weighted average shares Basic 89.4 89.4 Diluted 90.0 90.0 � Key Ratios & Information: � Gross margin 46.0 % 46.2% Operating margin 10.1 % � � � � � � � � � 16.8% Three Months Ended December 31, 2006 � � � � � Adjustments GAAP � Amortization of Acquisition Related Intangible Assets � Restructuring and Impairment Charges � Stock Compensation Expense � Non-GAAP Revenue $ 157.0 $ - $ - $ - $ 157.0 Cost of revenue � 86.8 � � - � � - � � (0.3) � � 86.5 Gross profit 70.2 - - (0.3) 70.5 � Operating expenses: Research & development 26.4 - - (0.7) 25.7 Selling, general and admini-strative 21.0 - - (0.9) 20.1 Amortization of acquisition-related intangibles 5.0 (5.0) - - 0.0 Restructuring and impairment charges � 2.4 � � - � � (2.4) � � - � � 0.0 54.8 (5.0) (2.4) (1.6) 45.8 � Operating income 15.4 5.0 2.4 1.9 24.7 � Non-operating expenses, net 5.2 - - - 5.2 � Income before income taxes 10.2 5.0 2.4 1.9 19.5 (Benefit) Provision for income taxes � (1.9) � � 0.8 � � 0.9 � � 0.6 � � 0.4 Net income $ 12.1 � $ 4.2 � $ 1.5 � $ 1.3 � $ 19.1 � Earnings per share Basic $ 0.14 $ 0.22 Diluted $ 0.13 $ 0.21 � Weighted average shares Basic 88.1 88.1 Diluted 89.8 89.8 � Key Ratios & Information: � Gross margin 44.7% 44.9% Operating margin 9.8% � � � � � 15.7% AMIS Holdings, Inc. Condensed Consolidated Statements of Income (In Millions - Unaudited) � � � � � � � � Twelve Months Ended December 31, 2007 � Adjustments GAAP � Amortization of Acquisition Related Intangible Assets � Restructuring and Impairment Charges � Stock Compensation Expense � Secondary Offering Expenses � Audit Committee Accounting Review � ON Acquisition Related Expenses � Non-GAAP Revenue $ 615.8 $ - $ - $ - $ - $ - $ - $ 615.8 Cost of revenue � 339.6 � � � - � � � - � � � (1.1 ) � � - � � � - � � � - � � � 338.5 � Gross profit 276.2 - - (1.1 ) - - - 277.3 � Operating expenses: Research & development 105.1 - - (2.6 ) - - - 102.5 Selling, general and administrative 87.4 - - (4.3 ) - (1.3 ) - 81.8 Amortization of acquisition-related intangibles 20.7 (20.7 ) - - - - - 0.0 Restructuring and impairment charges � 16.8 � � � - � � � (16.8 ) � � - � � � - � � � - � � � - � � � 0.0 � 230.0 (20.7 ) (16.8 ) (6.9 ) - (1.3 ) - 184.3 � Operating income 46.2 20.7 16.8 8.0 - 1.3 - 93.0 � Non-operating expenses, net 21.8 - - - (0.8 ) - (0.9 ) 20.1 � Income before income taxes 24.4 20.7 16.8 8.0 0.8 1.3 0.9 72.9 (Benefit) Provision for income taxes � (5.0 ) � � 3.4 � � � 6.0 � � � 2.4 � � � 0.3 � � � 0.5 � � � 0.3 � � � 7.9 � Net income $ 29.4 � � $ 17.3 � � $ 10.8 � � $ 5.6 � � $ 0.5 � � $ 0.8 � � $ 0.6 � � $ 65.0 � � Earnings per share Basic $ 0.33 $ 0.73 Diluted $ 0.33 $ 0.72 � Weighted average shares Basic 88.9 88.9 Diluted 89.8 89.8 � Key Ratios & Information: � Gross margin 44.9 % 45.0 % Operating margin 7.5 % � � � � � � � � � � � 15.1 % Twelve Months Ended December 31, 2006 � � � � � � Adjustments GAAP � Amortization of Acquisition Related Intangible Assets � Restruct-uring and Impairment Charges � Stock Compensation Expense � Non-GAAP Revenue $ 605.6 $ - $ - $ - $ 605.6 Cost of revenue � 334.5 � � � - � � � - � � � (0.8 ) � � 333.7 � Gross profit 271.1 - - (0.8 ) 271.9 � Operating expenses: Research & development 104.6 - - (3.1 ) 101.5 Selling, general and admini-strative 82.9 - - (3.9 ) 79.0 Amortization of acquisition-related intangibles 18.0 (18.0 ) - - - Restructuring and impairment charges � 8.3 � � � - � � � (8.3 ) � � - � � � - � 213.8 (18.0 ) (8.3 ) (7.0 ) 180.5 � Operating income 57.3 18.0 8.3 7.8 91.4 � Non-operating expenses, net 18.7 - - - 18.7 � Income before income taxes 38.6 18.0 8.3 7.8 72.7 Provision for income taxes � 1.2 � � � 2.7 � � � 2.9 � � � 2.4 � � � 9.2 � Net income $ 37.4 � � $ 15.3 � � $ 5.4 � � $ 5.4 � � $ 63.5 � � Earnings per share Basic $ 0.43 $ 0.72 Diluted $ 0.42 $ 0.71 � Weighted average shares Basic 87.6 87.6 Diluted 89.4 89.4 � Key Ratios & Information: � Gross margin 44.8 % 44.9 % Operating margin 9.5 % � � � � � 15.1 % AMIS Holdings, Inc. Condensed Consolidated Balance Sheets (In Millions) � � � � � � December 31, December 31, 2007 2006 (unaudited) � Assets Current assets: Cash and cash equivalents $ 117.4 $ 77.1 Accounts receivable, net 103.6 110.1 Inventories 90.9 77.5 Deferred tax assets 2.9 3.9 Prepaid expenses and other current assets � 31.6 � � 32.3 � Total current assets 346.4 300.9 � Property, plant and equipment, net 226.1 215.9 Goodwill, net 95.8 89.1 Other intangibles, net 85.2 100.6 Deferred tax assets 70.1 61.3 Other long-term assets � 28.5 � � 23.4 � � Total assets $ 852.1 � $ 791.2 � � Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term debt $ 2.8 $ 2.8 Accounts payable 56.8 56.5 Accrued expenses 50.1 58.4 Foreign deferred tax liability 0.2 2.3 Income taxes payable � 0.1 � � 1.7 � Total current liabilities 110.0 121.7 � Long-term debt, less current portion 274.0 276.8 Other long-term liabilities � 11.6 � � 10.0 � Total liabilities 395.6 408.5 � Stockholder's equity: Common stock 0.9 0.9 Additional paid-in capital 566.2 553.6 Accumulated deficit (183.1 ) (211.5 ) Accumulated other comprehensive income � 72.5 � � 39.7 � Total stockholders' equity 456.5 382.7 � Total liabilities and stockholders' equity $ 852.1 � $ 791.2 � AMIS Holdings, Inc. Condensed Consolidated Statements of Cash Flows (In Millions) � � � � � Twelve Months Ended: December 31, December 31, 2007 2006 (unaudited) � � Cash flows from operating activities Net income $ 29.4 $ 37.4 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 70.5 67.9 Write-off of deferred financing costs - 0.4 Amortization of deferred financing costs 0.7 0.8 Stock-based compensation expense 7.9 7.9 Impairment of long-term asset 2.7 0.6 Restructuring charges, net of cash expended 1.9 (0.6 ) Benefit from deferred income taxes (9.0 ) (4.4 ) Loss on disposition of property, plant and equipment 1.3 0.5 Changes in operating assets and liabilities: Accounts receivable 11.7 (5.1 ) Inventories (8.5 ) (6.6 ) Prepaid expenses and other assets (0.6 ) (0.4 ) Accounts payable and other accrued expenses � (20.5 ) � (4.6 ) Net cash provided by operating activities 87.5 93.8 Cash flows from investing activities Purchases of property, plant and equipment (50.0 ) (51.2 ) Change in restricted cash 0.7 0.5 Change in other assets (10.0 ) (5.6 ) Purchase of businesses � (0.7 ) � � (27.0 ) Net cash used in investing activities (60.0 ) (83.3 ) Cash flows from financing activities Payments on long-term debt (2.8 ) (38.2 ) Proceeds from bank borrowings - - Deferred financing costs (0.6 ) (0.1 ) � Change in pension liability (0.6 ) - Proceeds from exercise of stock options � 4.6 � � 2.8 � Net cash (used in) provided by financing activities 0.6 (35.5 ) � Effect of exchange rate changes on cash and cash equivalents � 12.2 � � 5.4 � Net decrease in cash and cash equivalents 40.3 (19.6 ) Cash and cash equivalents at beginning of period � 77.1 � � 96.7 � Cash and cash equivalents at end of period $ 117.4 � $ 77.1 �

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AMIS Amis Holdings (MM)