EANS-Adhoc: ams AG / ams reports solid full year and positive fourth quarter 2013 results; sees seasonality and OEM program shifts impacting first quarter 2014

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annual result/quarterly report
04.02.2014

Financial information for fiscal year 2013 and fourth quarter 2013

Unterpremstaetten, Austria (4 February 2014) - ams (SIX: AMS), a
leading worldwide manufacturer of high performance sensor and analog
solutions, reports solid results for 2013 showing a slight
year-on-year decrease in revenues and a larger impact on operating
profitability. This was due to a slower revenue development in ams'
consumer and communications business which the strong performance of
the company's industrial, medical and automotive business could not
offset. Focusing on advanced sensors, sensor interfaces, power
management and wireless ams gained record design-wins in 2013 and is
strongly positioned to return to growth in revenues and
profitability. For the first quarter 2014, however, ams expects
noticeable quarter-on-quarter seasonality including impacts from
ramp-up shifts towards the end of the quarter by Asian OEMs.

2013 full year revenues were EUR 377.8 million (USD 502.1 million)
while gross margin, excluding acquisition-related amortization,
remained unchanged at 55% and the operating (EBIT) margin decreased
to 17%. Revenues for the fourth quarter 2013 were EUR 103.5 million,
up 6% year-on-year and 5% higher quarter-on-quarter. The gross
margin, excluding acquisition-related amortization, for the fourth
quarter 2013 was 56% while the operating (EBIT) margin improved to
23% when compared to the previous year.

Financials

Group revenues for 2013 were EUR 377.8 million (USD 502.1 million), a
decrease of 3% compared to EUR 387.6 million for 2012. In constant
currency, full year revenues were unchanged compared to the previous
year. Revenues for the fourth quarter 2013 were EUR 103.5 million, an
increase of 6% from the EUR 97.5 million recorded in the last quarter
2012 (10% in constant currency) and an increase of 5%
quarter-on-quarter.

Gross margin for the full year 2013 came to 55%, excluding
acquisition-related amortization, and 52%, including
acquisition-related amortization, unchanged from 55% and 52% in 2012,
respective-ly. This positive result was mainly due to an improved
product mix and manufacturing efficiencies. Gross margin for the
fourth quarter 2013 was 56%, excluding acquisition-related
amortization, and 54%, including acquisition-related amortization,
compared to 56% and 53% in the same period 2012, respectively.

The result from operations (EBIT) for 2013 was EUR 63.9 million, or
17% of revenues, down from EUR 84.8 million or 22% of revenues in
2012. Investments in research and development amounted to EUR 68.5
million, or 18% of revenues, and were driven by an expansion of
development re-sources to support major design-wins. The EBIT for the
fourth quarter 2013 was EUR 24.2 million, or 23% of revenues,
increasing by 24% from EUR 19.6 million in the fourth quarter 2012.

Net income for 2013 was EUR 60.8 million, down from EUR 81.9 million
in 2012. Basic / diluted earnings per share for 2013 were CHF 5.56 /
5.34 or EUR 4.52 / 4.35 based on 13,448,313 / 13,991,225 shares
(2012: CHF 7.67 / 7.30 or EUR 6.37 / 6.06). Net income for the fourth
quarter 2013 was EUR 23.3 million, increasing by 26% from EUR 18.5
million for the same period 2012. Basic / diluted earnings per share
for the fourth quarter were CHF 2.12 / 2.03 or EUR 1.73 / 1.65 based
on 13,502,672 / 14,103,068 shares (2012: CHF 1.69 / 1.60 or EUR 1.40
/ 1.32).

Cash flow from operations was EUR 100.2 million in 2013, decreasing
from EUR 124.8 million in 2012. Cash and short term investments
increased to EUR 104.3 million on December 31, 2013 from EUR 86.8
million at year-end 2012, while net cash rose to EUR 44.2 million on
December 31, 2013 (year-end 2012: EUR 6.0 million). Capital
expenditures for 2013 were EUR 47.1 million compared to EUR 31.9
million for 2012 given the company's investment in an advanced 3D
packaging line. The total backlog at year-end 2013, excluding
consignment stock agreements, was EUR 76.6 million due to shortened
lead times for upcoming product ramp-ups (EUR 91.2 million on
September 30, 2013 and EUR 90.9 million at year-end 2012). The
average number of group employees was 1,394 for fiscal year 2013,
compared to 1,282 for 2012, and 1,417 for the fourth quarter 2013.

Based on the company's cash dividend policy stipulating the
distribution of 25% of net earnings, ams will propose a dividend of
EUR 1.04 per outstanding share for 2013.

Business

ams' business performance in 2013 was impacted by a
slower-than-expected development of the company's consumer and
communications business which led to a slight decrease in group
revenues compared to the previous year. At the same time, ams was
able to gain a record number and value of design-wins with major OEMs
last year. This achievement demonstrates ams' leadership in high
performance sensor solutions and analog ICs and creates a strong
foundation for growth going forward.

The company's Consumer & Communications business recorded a decrease
in revenues in 2013 which resulted mainly from delayed customer
projects and certain base effects. ams launched several sensor
innovations and new technical solutions last year which strengthened
its market position as a major supplier to leading smartphone, tablet
PC and mobile device OEMs. Consequently, customer design activities
for ams products remained on a high level through 2013 and to date.

ams continued to be successful as the leading provider of advanced
light sensors worldwide and shipped very high volumes of ambient
light and proximity sensors for a wide variety of consumer devices
last year. ams is seeing a clear market trend towards RGB color
sensors for ambient light analysis enabling sophisticated display
management in smartphones and tablet PCs.

Creating new content opportunities at mobile device vendors, ams
launched an innovative gesture sensor solution last year. ams
combines gesture sensing with RGB color sensing, proximity sensing,
and mobile coupon redemption in a very compact module offering
impressive sensor performance in a minimized footprint. ams has
started high volume production for its lead gesture sensor products
supporting new platform ramps by several major Asian OEMs, with
shipments starting this quarter. Based on multiple design wins, ams
expects to benefit strongly from the adoption of gesture sensing in
smartphones.

MEMS microphone interface shipments increased meaningfully again last
year to around 1.6 billion units reflecting continuing device
penetration and growth in smartphone and tablet PC volumes. ams
continues to be the clear market leader in this area which is
characterized by high market dynamics and active competition.
Together with further improvements in audio quality, ongoing cost
optimizations remain a key positioning aspect in this market. ams'
power management solutions benefitted from the growth in compact
outdoor video systems while the support of a mobile graphics
processor vendor's recent and upcoming platforms offers attractive
device opportunities.

ams' wireless business for RFID and NFC solutions and mobile
applications showed a positive development last year but nevertheless
fell short of expectations. Particularly the market for NFC mobile
payment hardware solutions did not provide the expected momentum for
ams in 2013. This was mainly due to customer-specific factors. ams
remains fully convinced that its innovative antenna booster solution
for NFC mobile transactions together with its world class NFC
expertise will drive substantial mobile device-based growth for the
company in the foreseeable future.

ams' industrial, medical and automotive business recorded positive
results in 2013 given the supportive development of end markets and
ams' broad range of customers and applications.

Industrial product lines performed very well last year showing
considerable improvements over 2012. As a leading supplier of sensors
and sensor interfaces for a wide variety of applications in
industrial automation and related areas, ams benefitted from the
brightening macroeconomic outlook over the course of 2013. The
positive demand trend in industrial end markets translated into
attractive business momentum for ams' industrial solutions.
Consequently, ams was able to expand its market position as a
technology specialist for industrial sensors and position
measurement.

ams' medical business continued to develop positively in 2013. Highly
advanced sensor and sensor interface solutions are the foundation of
ams' medical portfolio, particularly in the core area Medical Imaging
for computed tomography (CT), digital X-ray, ultrasound and
mammography. ams' high resolution CT imaging sensors define what is
technically feasible and create significant performance advantages
for the benefit of patients. In this long-term oriented environment,
ams works in strategic partnership with global leaders in medical
devices and systems and was able to add a number of attractive
design-wins last year.

ams' automotive business recorded strong growth in 2013 driven by new
vehicle platform launches and a sustained positive momentum in the
end market. ams saw a significant increase in shipments last year
helped by the increasing penetration of sensors and electronics in
vehicles. ams' automotive portfolio continues to be focused on high
performance sensor and position measurement solutions, innovative
safety systems such as laser-based collision avoidance, and battery
power management. ams achieved major automotive design-wins in 2013,
above all in Japan and other Asian markets. These wins highlight ams'
position at leading system suppliers and create a strong pipeline for
the coming years. ams' dedicated specialty foundry business again
provided an attractive contribution to the company's results.

ams' global customer base expanded last year with significant
additions in the Asia/Pacific region in particular. Through ongoing
selective investments into its sales and support network in Asia and
the U.S. ams continues to improve customer reach and penetration in
these important markets.

ams recorded full capacity utilization for its in-house manufacturing
throughout 2013. Given the company's full product pipeline, ams has
decided to implement certain additional investments in 2014 to
optimize capacity at its wafer fab and grow test capacity in
anticipation of new high volume business. These additional
investments of EUR 10-15 million in 2014 will also enable ams to take
full advantage of 0.18µm CMOS process technology going forward. To
support its expected future growth and capacity needs, ams has
started an internal project to identify suitable additional wafer fab
assets outside Europe which are able to enhance ams' successful
manufacturing model.

The company's investment in an advanced 3D packaging line at its
wafer fab has been completed as planned. ams' proprietary TSV
(Through Silicon Via) technology offers considerable advantages for
light sensor packaging and substantial cost benefits from material
savings and the insourcing of packaging process steps. This will
allow ams to address highly price-sensitive segments of the light
sensor market at attractive terms. The 3D packaging line is now
undergoing pre-production flow optimization and final qualifications,
after which ams expects mass production of TSV optical sensors to
start around mid-year 2014.

Pursuing its strategic focus on sensor solutions and innovation, ams
sees attractive opportunities to expand the scope of its sensor
expertise to address exciting new applications. ams is therefore
actively evaluating further additions to its sensor technology
portfolio.

Outlook

Based on currently available information, ams sees significant new
product ramps for major consumer and other OEMs in 2014 with a bias
towards the second half of the year. These are expected to result in
attractive new revenue streams and will be driving ams' expected
positive business and margin development for the future.

Despite this strong outlook for revenue and profitability growth, ams
expects the first quarter 2014 to show noticeable quarter-on-quarter
seasonality including impacts from ramp-up shifts towards the end of
the quarter by Asian customers. Revenues for the first quarter 2014
are expected to reach EUR 80-85m; at the same time, ams anticipates
robust gross margins to result in better operating profitability than
last year's first quarter.

Additional financial information for fiscal year 2013 and the fourth
quarter 2013 is available on the company website at
www.ams.com/eng/Investor/Financial-Reports

Further inquiry note:
Moritz M. Gmeiner
Director Investor Relations
Tel: +43 3136 500-31211
Fax: +43 3136 500-931211
Email: investor@ams.com

end of announcement euro adhoc
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issuer: ams AG
Tobelbader Strasse 30
A-8141 Unterpremstaetten
phone: +43 3136 500-0
FAX: +43 3136 500-931211
mail: investor@ams.com
WWW: www.ams.com
sector: Technology
ISIN: AT0000920863
indexes:
stockmarkets: official dealing: SIX Swiss Exchange
language: English