UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

For the quarterly period ended

or

For the transition period from            to

Commission file number 000-50397

AMIS Holdings, Inc.

2300 Buckskin Road
Pocatello, ID 83201

(Address of principal executive offices)

(208) 233-4690

(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days:

Yes  x   No   o

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act):

Yes  o   No  x

     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

AMIS Holdings, Inc.

TABLE OF CONTENTS

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FORWARD-LOOKING STATEMENTS

     This quarterly report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to our future results, prospects, developments and business strategies.

     These forward-looking statements are identifiable by their use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will” and similar terms and phrases, including references to assumptions. These statements are contained in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” including the sub-section “Factors That May Affect Our Business and Future Results”.

     These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause actual results to be materially different. These factors include, but are not limited to, the following:

•		changes in general economic and business conditions and in the semiconductor industry in particular;
•		changes in the conditions affecting our target markets;
•		changes in the pricing of our products;
•		changes in political, social and economic conditions and local regulations, particularly outside of the United States;
•		changes in technology and development of new technology;
•		reductions in sales to any significant customers;
•		changes in the mix of products sold, industry capacity or competition;
•		changes in competitive conditions;
•		disruptions of established supply channels;
•		manufacturing capacity underutilization or constraints; and
•		the availability, terms and deployment of capital.

     The factors listed above, together with other potential risks, are more specifically described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Factors that May Affect Our Business and Future Results.” If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those expected, estimated or projected.

     We do not undertake to update our forward-looking statements or risk factors to reflect future events or circumstances.

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PART I: FINANCIAL INFORMATION

See accompanying notes.

1

AMIS HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

See accompanying notes.

2

AMIS HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

See accompanying notes.

3

AMIS HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 27, 2004

Note 1: Basis of Presentation and Significant Accounting Policies

     In the opinion of management of AMIS Holdings, Inc. (the “Company”), the accompanying unaudited consolidated financial statements contain all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial information included therein. This financial data should be read in conjunction with the audited consolidated financial statements and related notes thereto for the year ended December 31, 2003 contained in the Company’s Annual Report on Form 10-K.

     The results of operations for interim periods are not necessarily indicative of the results of operations that may be expected for any other period or the fiscal year ending on December 31, 2004. The current interim period ended on March 27, 2004.

Basis of Presentation

     The financial statements have been prepared on a consolidated basis in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The consolidated financial statements include the accounts of AMIS Holdings, Inc. and its majority controlled and owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Reclassifications

     Certain prior period amounts have been reclassified to conform to the current year presentation.

Stock-Based Compensation

     The Company has elected to follow the intrinsic value-based method prescribed by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” (APB 25) and related interpretations in accounting for its employee stock options rather than adopting the alternative fair value accounting provided for under SFAS No. 123, “Accounting for Stock-Based Compensation” (SFAS 123).

     Stock compensation expense for options and/or warrants granted to non-employees has been determined in accordance with SFAS 123 and the Emerging Issues Task Force consensus on Issue No. 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods or Services” (EITF 96-18).

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     The following table provides pro forma information for the periods ended March 27, 2004 and March 29, 2003 that illustrates the net income, net income (loss) attributable to common stockholders, and net income (loss) per common share as if the fair value method had been adopted under SFAS No. 123 (in thousands, except per share data).

     During the period ended March 27, 2004, upon exercise of stock options, 344,229 shares of common stock were issued.

New Accounting Pronouncements

     The Company has reviewed all recently issued accounting standards that have not yet been adopted, in order to determine their potential effect, if any, on the results of operations or financial position of the Company. Based on that review, the Company does not currently believe that any of these recent accounting pronouncements will have a significant effect on its current or future financial position, results of operations, cash flows or disclosures.

2. Inventories

     Inventories consist of the following (in thousands):

3. Net Income (Loss) per Common Share

     Basic income (loss) per common share is based on the weighted-average number of shares of common stock outstanding during the period. Diluted income (loss) per share also includes the effect of stock options and warrants outstanding during the period if such stock options and warrants are dilutive.

     The following table sets forth the computation of basic and diluted net loss per common share (in thousands, except for per share data):

5

     Options to purchase 461,737 and 5,410,478 shares of common stock and warrants to purchase 4,603,032 and 9,184,851 shares of common stock were outstanding at March 27, 2004 and March 29, 2003, respectively, but were not included in the computation of diluted earnings per share as the effect would be antidilutive.

4. Income Taxes

     Income taxes are recorded based on the liability method, which requires recognition of deferred tax assets and liabilities based on differences between financial reporting and tax bases of assets and liabilities measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. A valuation allowance is recorded to reduce the Company’s deferred tax asset to an amount determined to be more likely than not to be realized, based on management’s analyses of past operating results, future reversals of existing taxable temporary differences and projected taxable income, including tax strategies available to generate future taxable income. Based on the operating results of the first quarter of 2004 and management’s projections of taxable income for the remainder of 2004, the Company reversed approximately $1.6 million of valuation allowance during the first quarter of 2004. Management’s analyses of future taxable income are subject to a wide range of variables, many of which involve estimates and therefore the Company’s deferred tax asset may not be ultimately realized.

5. Long-Term Debt

     The Company and AMI Semiconductor, Inc. (AMIS) maintain senior secured credit facilities (the facilities) consisting of a $125,000,000 term loan and a revolving credit facility of $90,000,000. The term loan requires a principal payment of $321,500, together with accrued and unpaid interest, on the last day of March, June, September and December, with the balance due on September 26, 2008. The interest rate on the term loan at March 27, 2004 was 3.59%. The revolving credit facility ($20,000,000 of which may be in the form of letters of credit) is available for working capital and general corporate purposes. As of March 27, 2004, no amount was drawn on the revolving credit facility.

     The facilities require the Company to maintain a consolidated interest coverage ratio and a maximum senior leverage ratio and contain certain other nonfinancial covenants, all as defined within the credit agreement, as amended. The facilities also generally restrict payment of dividends to parties outside of the consolidated entity. The Company was in compliance with these covenants as of March 27, 2004.

     AMIS also has $130,000,000 aggregate principal amount of 10 ¾% senior subordinated notes maturing on February 1, 2013 (senior subordinated notes). Interest on the senior subordinated notes is payable semi-annually on February 1 and August 1. The indenture governing the senior subordinated notes contains covenants that, among other things, (i) limit AMIS’ ability and certain of its subsidiaries’ ability to incur additional indebtedness, (ii) pay dividends on AMIS’ capital stock or redeem, repurchase or retire AMIS’ capital stock or subordinated indebtedness, (iii) make investments, (iv) engage in certain transactions with affiliates, (v) sell assets, including capital stock of subsidiaries, and (vi) consolidate, merge or transfer assets.

6. Comprehensive Income (Loss)

     Comprehensive income for the three month period ended March 27, 2004 was approximately $10,477,000. This includes a loss of $3,046,000 all of which related to changes in the cumulative translation adjustment. Comprehensive income for the three month period ended March 29, 2003 was approximately $3,352,000. Of this amount, a gain of approximately $528,000 related to the change in the fair value of certain interest rate swap hedging derivatives that were held at that time and a gain of approximately $1,042,000 related to changes in the cumulative translation adjustment.

7. Restructuring and Impairment Charges

     Pursuant to FASB Statement 146, “Accounting for Costs Associated with Exit or Disposal Activities,” in 2003, and EITF Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring),” in 2002 and 2001, senior management and the Board of Directors approved plans to restructure certain of the Company’s operations. All expenses associated with these plans were included as restructuring and impairment charges in the periods incurred.

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     The 2003 plan involved the termination of certain management and other employees as well as certain sales representative firms in the United States. Internal sales employees will replace these sales representative firms. In total, 32 employees, from various departments within the Company, were terminated as part of this program. All terminated employees were notified in the period in which the charge was recorded. Expenses related to the plan totaled approximately $1,713,000, which included $653,000 related to the accelerated vesting on certain options making them immediately exercisable upon termination. As of December 31, 2003, approximately $692,000 of these severance costs have not yet been paid and were included in accrued expenses. As of March 27, 2004, all amounts related to this plan had been paid.

     The 2002 plan involved the curtailment of redundant functions between the U.S. and Belgian entities resulting from the acquisition of the Belgian entity in June 2002 (the MSB acquisition). In total 90 people employed by the Company prior to the MSB acquisition were terminated in connection with this restructuring program. The Company recorded related restructuring expense of approximately $457,000, all of which had been paid as of December 31, 2003. Additionally, relationships with certain sales representative firms in Europe were terminated because their duties were transferred to MSB. The expense associated with these terminations was approximately $478,000, all of which had been paid as of December 31, 2003.

     The 2001 plan involved the closure of certain offices and the termination of certain management and other employees. As of December 31, 2003, and March 27, 2004, the remaining accrual for this plan, representing lease termination costs, of approximately $164,000, and $131,000, respectively, was included in accrued expenses on the accompanying balance sheets. The remaining lease termination costs will be paid over the remaining lease terms, which end in July 2005.

     Following is a summary of the restructuring accrual relating to the 2003, 2002 and 2001 plans (in thousands):

8. Transactions with Related Parties

     In 2000, the Company entered into advisory agreements with affiliates of Citigroup Venture Capital Equity Partners, L.P. (CVC) and Francisco Partners, L.P. (Francisco Partners) (the Sponsors) pursuant to which the Sponsors may provide financial, advisory and consulting services to the Company. For the three-month period ended March 29, 2003, expenses totaling approximately $500,000 were recorded related to these advisory agreements. During 2003, the Company entered into amendments to these advisory agreements whereby the annual advisory fees payable under these agreements ceased.

9. Segment Reporting

     The Company has three reportable segments: Integrated Mixed Signal Products, Mixed Signal Foundry Services and Structured Digital Products. Each segment comprises product families with similar requirements for design, development and marketing.

     Information about segments (in thousands):

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10. Condensed Consolidating Financial Statements

     The Company’s term loan and the senior subordinated notes are each fully and unconditionally guaranteed by the Company and each existing domestic subsidiary and by each subsequently acquired or organized domestic subsidiary of AMIS. AMIS’ foreign subsidiaries do not provide these guarantees. Below are the Company’s unaudited condensed consolidating balance sheets as of March 27, 2004 and December 31, 2003, and unaudited statements of operations and cash flows for the three months ended March 27, 2004 and March 29, 2003, reflecting the financial position, results of operations and cash flows of the guarantor and non-guarantor entities.

8

AMIS Holdings, Inc. and Subsidiaries

Condensed Consolidating Balance Sheet

March 27, 2004 (unaudited)

9

AMIS Holdings, Inc. and Subsidiaries

Condensed Consolidating Balance Sheet (continued)