EX-99.1 2 f51337exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
FOR ADDITIONAL INFORMATION:
     
Investor Relations Contact:
  Media Contact:
 
    
Applied Micro Circuits Corporation
  Applied Micro Circuits Corporation
Bob Gargus
  Gilles Garcia
Phone: (408) 542-8752
  Phone: (408) 542-8687
E-Mail: bgargus@amcc.com
  E-Mail: ggarcia@amcc.com
 
Thursday, January 29, 2009
Company Press Release
APPLIED MICRO CIRCUITS CORPORATION REPORTS
THIRD QUARTER FISCAL 2009 FINANCIAL RESULTS
SUNNYVALE, Calif., —January 29, 2009—Applied Micro Circuits Corporation [NASDAQ: AMCC] today reported its financial results for the third quarter of fiscal 2009 ended December 31th, 2008.
  •   Q3 net revenues were $57.6 million down 13% year over year.
 
  •   Q3 GAAP net loss of $274.5 million or $(4.20) per share primarily due to a $264.1 million non-cash write-down of Goodwill and an other than temporary $10.1 million impairment of investments.
 
  •   Q3 non-GAAP net income of $3.9 million or $0.06 per share.
 
  •   Total cash was approximately $188 million.
 
  •   AMCC further demonstrated its 10G OTN product leadership with the announcement that its Pemaquid S19258, a member of the Metro Ethernet (MEtrON) family of products, received the PRODUCT OF THE YEAR 2008 award from Electronic Products Magazine.
Net revenues for the third quarter of fiscal 2009 were $57.6 million compared to $76.9 million in the second quarter of fiscal 2009, representing a sequential decline of 25% and a decline of 13% over the $66.3 million reported in the third quarter of fiscal 2008. Revenues for the first nine months were $208.6 million compared to $174.6 million for the comparable period last year, a 19% increase.

 

 

The net loss on a generally accepted accounting principles (GAAP) basis for the third quarter of fiscal 2009 was $274.5 million or $(4.20) per share. The third quarter GAAP net loss compares with a net loss of $2.3 million or $(0.04) per share for the second quarter of fiscal 2009 and a net loss of $4.3 million or $(0.06) per share for the third quarter of fiscal 2008. Year to date, GAAP net loss was $281.9 million or $(4.33) per share compared to $28.8 million or $(0.42) per share for the first nine months of fiscal 2008. The large loss was due primarily to a $264.1 million write-down of goodwill and a $10.1 million impairment of cash investments.
The non-GAAP net income for the third quarter of fiscal 2009 was $3.9 million or $0.06 per share, compared to the non-GAAP net income of $10.3 million or $0.16 per share in the second quarter of fiscal 2009 and a net income of $3.9 million or $0.06 per share for the third quarter of fiscal 2008. Year to date, non-GAAP net income was $22.0 million or $0.34 per share compared to non-GAAP net loss of $6.4 million or $(0.09) per share for the first nine months of fiscal 2008.
“This was a difficult quarter across the board. General economic conditions continue to be unpredictable and order visibility remains very low. As a result we do not believe we have seen the bottom of this fallout and expect a further decline in our March quarter revenues. However, I am confident our solid product cycles and design win pipeline will enable us to emerge from this crisis in a stronger position.” said Kambiz Hooshmand, president and chief executive officer.
Bob Gargus, chief financial officer commented, “This was a challenging quarter but we did an excellent job of controlling costs and managing our working capital. As the global economic crisis continues to evolve, we will continue to focus on prudent Op-Ex management while executing our long range plan.”
AMCC reports its financial results in accordance with GAAP and also provides additional financial data that have not been prepared in accordance with GAAP. The non-GAAP results and other financial measures reported by the Company exclude certain items that are required by GAAP, such as restructuring charges, amortization of purchased intangibles, stock-based compensation charges, impairment of goodwill, gain on renegotiated tool agreement, other than temporary impairment on investments, realized gain on strategic equity investment, tax provision related to the creation of deferred tax liability relating to a prior asset purchase acquisition transaction, payroll tax on certain stock option exercises and expenses related to stock option investigation and other litigation. Expenses related to stock option investigation consist primarily of fees paid to professional service firms in connection with the Company’s internal investigation of historical stock option grant practices and the resulting restatement of the Company’s financial statements, the investigations by the Securities and Exchange Commission and the U.S. Attorney’s office arising from the internal investigation and the defense of derivative lawsuits arising from the Company’s internal investigation and other litigation relates to an accrual made for a potential litigation settlement. Income taxes are adjusted to an estimated non-GAAP effective tax rate. These non-GAAP measures are not a substitute for GAAP measures and may not be consistent with the presentation used by other companies. The Company uses the non-GAAP financial measures to evaluate and manage its operations. The Company is providing this information to allow investors to perform additional financial analysis and because it is consistent with the financial models and estimates published by analysts who follow the Company. The attached schedule reconciles non-GAAP results and other financial measures reported by the Company with the most directly comparable GAAP financial measures.

 

 

AMCC management will be holding a conference call today, January 29, 2009, at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time to discuss additional details regarding the Company’s performance for the third quarter of fiscal 2009 and to provide guidance for the fourth quarter of fiscal 2009. You may access the conference call via any of the following:
     
Teleconference:
   719-325-4831
Conference ID:
   1494407
Web Broadcast:
   http://investor.amcc.com/events.cfm
Replay:
   719-457-0820 (available through February 6, 2009)
AMCC Overview
AMCC is a global leader in energy efficient sustainable solutions to Process, Transport, and Store information for the next generation of internet data center and carrier central office. A leader in high speed signal processing, IP & Ethernet packet processing, storage controllers, and processors, AMCC’s patented innovations provide high value solutions in Telecom, Enterprise and Consumer Applications.
AMCC’s corporate headquarters are located in Sunnyvale, California. Sales and engineering offices are located throughout the world. For further information regarding AMCC, please visit our web site at http://www.amcc.com.
This news release contains forward-looking statements that reflect the Company’s current view with respect to future events and financial performance, including statements regarding backlog and future revenues, and profitability. These forward-looking statements are only predictions based on current information and expectations and are subject to certain risks and uncertainties, including, but not limited to, customer demand for the Company’s products, the businesses of the Company’s major customers, reductions, rescheduling or cancellation of orders by the Company’s customers, successful and timely development of products, market acceptance of new products, and general economic conditions. More information about potential factors that could affect the Company’s business and financial results is included in the “Risk Factors” set forth in the Company’s Annual Report on Form 10-K for the year ended March 31, 2008, and the Company’s other filings with the Securities and Exchange Commission. Actual results could differ materially, as a result of such factors, from those set forth in the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement, and the Company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the issuance of this press release.
-Financial Tables Follow-

 

 

APPLIED MICRO CIRCUITS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
                 
      December 31,     March 31,  
      2008     2008  
ASSETS
                
Current assets:
                
Cash, cash equivalents and short-term investments
   $ 187,885     $ 142,889  
Accounts receivable, net
     20,909       28,800  
Inventories
     38,769       37,966  
Other current assets
     9,330       11,340  
 
            
Total current assets
     256,893       220,995  
Marketable securities
     —       51,919  
Property and equipment, net
     27,644       25,995  
Goodwill
     —       264,130  
Purchased intangibles
     38,593       56,025  
Other assets
     25,003       13,783  
 
            
Total assets
   $ 348,133     $ 632,847  
 
            
 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
Current liabilities:
                
Accounts payable
   $ 17,969     $ 25,518  
Other current liabilities
     20,063       22,659  
 
            
Total current liabilities
     38,032       48,177  
Deferred tax liability
     —       3,958  
Stockholders’ equity
     310,101       580,712  
 
            
Total liabilities and stockholders’ equity
   $ 348,133     $ 632,847  
 
            

 

 

APPLIED MICRO CIRCUITS CORPORATION
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
                                         
    Three Months Ended     Nine Months Ended  
    December 31,     September 30,     December 31,     December 31,     December 31,  
    2008     2008     2007     2008     2007  
         
Net revenues
   $ 57,565     $ 76,931     $ 66,267     $ 208,556     $ 174,612  
Cost of revenues
     27,763       35,981       33,311       99,594       90,137  
 
                              
Gross profit
     29,802       40,950       32,956       108,962       84,475  
Operating expenses:
                                        
Research and development
     21,255       24,461       24,696       69,197       74,658  
Selling, general and administrative
     13,418       16,334       14,125       46,365       46,038  
Amortization of purchased intangibles
     1,320       1,320       1,320       3,960       4,001  
Impairment of goodwill
     264,130       —       —       264,130       —  
Restructuring charges, net
     1,150       140       125       1,032       1,469  
Litigation settlement
     —       130       —       130       —  
Option investigation related expenses, net
     (79 )     (184 )     (792 )     84       (291 )
 
                              
Total operating expenses
     301,194       42,201       39,474       384,898       125,875  
 
                              
Operating loss
     (271,392 )     (1,251 )     (6,518 )     (275,936 )     (41,400 )
Interest and other (expense) income, net
     (7,397 )     (550 )     2,148       (9,274 )     12,130  
 
                              
Loss before income taxes
     (278,789 )     (1,801 )     (4,370 )     (285,210 )     (29,270 )
Income tax expense (benefit)
     (4,329 )     512       (31 )     (3,263 )     (458 )
 
                              
Net loss
   $ (274,460 )   $ (2,313 )   $ (4,339 )   $ (281,947 )   $ (28,812 )
 
                              
 
Basic and diluted loss per share:
                                        
Loss per share
   $ (4.20 )   $ (0.04 )   $ (0.06 )   $ (4.33 )   $ (0.42 )
 
                              
 
Shares used in calculating basic and diluted loss per share
     65,366       65,150       67,015       65,127       68,737  
 
                              

 

 

APPLIED MICRO CIRCUITS CORPORATION
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME (LOSS)
(in thousands, except per share data)
(unaudited)
                                         
    Three Months Ended     Nine Months Ended  
    December 31,     September 30,     December 31,     December 31,     December 31,  
    2008     2008     2007     2008     2007  
         
GAAP net loss
   $ (274,460 )   $ (2,313 )   $ (4,339 )   $ (281,947 )   $ (28,812 )
Adjustments:
                                        
Stock-based compensation charges
     1,905       2,997       2,312       8,110       8,229  
Amortization of purchased intangibles
     5,628       5,903       5,903       17,432       17,858  
Impairment of goodwill
     264,130       —       —       264,130       —  
Restructuring charges
     1,150       140       125       1,032       1,469  
Other than temporary investment impairment
     10,104       3,444       846       16,941       846  
Gain on renegotiated design tool agreement
     —       —       —       —       (749 )
Realized gain on sale of strategic equity investment
     —       —       —       —       (4,649 )
Payroll taxes on certain stock option exercises
     —       —       —       —       3  
Litigation settlement
     —       130       —       130       —  
Option investigation related expenses, net
     (79 )     (184 )     (792 )     84       (291 )
Income tax adjustments
     (4,450 )     193       (152 )     (3,942 )     (261 )
 
                              
Total GAAP to Non-GAAP adjustments
     278,388       12,623       8,242       303,917       22,455  
 
                              
 
Non-GAAP net income (loss)
   $ 3,928     $ 10,310     $ 3,903     $ 21,970     $ (6,357 )
 
                              
 
                                        
Diluted income (loss) per share
   $ 0.06     $ 0.16     $ 0.06     $ 0.34     $ (0.09 )
 
                              
 
                                        
Shares used in calculating diluted income (loss) per share
     65,531       65,369       67,301       65,335       68,737  
 
                              
 
                                        
Income (loss) per share:
                                        
GAAP income (loss) per share
   $ (4.20 )   $ (0.04 )   $ (0.06 )   $ (4.33 )   $ (0.42 )
GAAP to non-GAAP adjustments
     4.26       0.20       0.12       4.67       0.33  
 
                              
Non-GAAP income (loss) per share
   $ 0.06     $ 0.16     $ 0.06     $ 0.34     $ (0.09 )
 
                              
 
                                        
Reconciliation of shares used in calculating the non-GAAP income per share:
                                        
Shares used in calculating the basic and diluted income(loss) per share
     65,366       65,150       67,015       65,127       68,737  
Adjustment for dilutive securities
     165       219       286       208       —  
 
                              
Non-GAAP shares used in the EPS calculation
     65,531       65,369       67,301       65,335       68,737  
 
                              

 

 

APPLIED MICRO CIRCUITS CORPORATION
SCHEDULE OF SELECTED GAAP TO NON-GAAP ADJUSTMENTS
(in thousands)
(unaudited)
The following schedule reconciles selected line items from the GAAP basis statements of operations to the non-GAAP statements of operations:
                                         
    Three Months Ended     Nine Months Ended  
    December 31,     September 30,     December 31,     December 31,     December 31,  
    2008     2008     2007     2008     2007  
         
GROSS PROFIT:
                                        
GAAP gross profit
   $ 29,802     $ 40,950     $ 32,956     $ 108,962     $ 84,475  
Amortization of purchased intangibles
     4,308       4,583       4,583       13,472       13,857  
Stock-based compensation expense
     91       182       224       487       536  
 
                              
Non-GAAP gross profit
   $ 34,201     $ 45,715     $ 37,763     $ 122,921     $ 98,868  
 
                              
 
                                        
OPERATING EXPENSES:
                                        
GAAP operating expenses
   $ 301,194     $ 42,201     $ 39,474     $ 384,898     $ 125,875  
Stock-based compensation expense
     (1,814 )     (2,815 )     (2,088 )     (7,623 )     (7,693 )
Amortization of purchased intangibles
     (1,320 )     (1,320 )     (1,320 )     (3,960 )     (4,001 )
Impairment of goodwill
     (264,130 )     —       —       (264,130 )     —  
Restructuring charges
     (1,150 )     (140 )     (125 )     (1,032 )     (1,469 )
Gain on renegotiated design tool agreement
     —       —       —       —       749  
Payroll taxes on certain stock option exercises
     —       —       —       —       (3 )
Litigation settlement
     —       (130 )     —       (130 )     —  
Option investigation related expenses, net
     79       184       792       (84 )     291  
 
                              
Non-GAAP operating expenses
   $ 32,859     $ 37,980     $ 36,733     $ 107,939     $ 113,749  
 
                              
 
                                        
INTEREST AND OTHER INCOME, NET
                                        
GAAP interest and other (expense) income, net
   $ (7,397 )   $ (550 )   $ 2,148     $ (9,274 )   $ 12,130  
Realized gain on sale of strategic equity investments
     —       —       —       —       (4,649 )
Impairment of strategic investment
     —       —       —       —       —  
Other than temporary investment impairment
     10,104       3,444       846       16,941       846  
 
                              
Non-GAAP interest and other income, net
   $ 2,707     $ 2,894     $ 2,994     $ 7,667     $ 8,327  
 
                              
 
                                        
INCOME TAX EXPENSE (BENEFIT):
                                        
GAAP income tax expense (benefit)
   $ (4,329 )   $ 512     $ (31 )   $ (3,263 )   $ (458 )
Income tax adjustments
     4,450       (193 )     152       3,942       261  
 
                              
Non-GAAP income tax expense (benefit)
   $ 121     $ 319     $ 121     $ 679     $ (197 )
 
                              
 
                                        
RESEARCH AND DEVELOPMENT
                                        
GAAP research and development
   $ 21,255     $ 24,461     $ 24,696     $ 69,197     $ 74,658  
Stock-based compensation expense
     (1,244 )     (1,098 )     (1,177 )     (3,679 )     (3,448 )
Gain on renegotiated design tool agreement
     —       —       —       —       749  
Payroll taxes on certain stock option exercises
     —       —       —       —       (2 )
 
                              
Non-GAAP research and development
   $ 20,011     $ 23,363     $ 23,519     $ 65,518     $ 71,957  
 
                              
 
                                        
SELLING, GENERAL AND ADMINISTRATIVE
                                        
GAAP selling, general and administrative
   $ 13,418     $ 16,334     $ 14,125     $ 46,365     $ 46,038  
Stock-based compensation expense
     (570 )     (1,717 )     (911 )     (3,944 )     (4,245 )
Payroll taxes on certain stock option exercises
     —       —       —       —       (1 )
 
                              
Non-GAAP selling, general and administrative
   $ 12,848     $ 14,617     $ 13,214     $ 42,421     $ 41,792  
 
                              

 

 

APPLIED MICRO CIRCUITS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
                 
    Nine Months Ended December 31,  
    2008     2007  
Operating activities:
                
Net loss
   $ (281,947 )   $ (28,812 )
Adjustments to reconcile net loss to net cash provided by (used for) operating activities Depreciation
     5,148       4,891  
Amortization of purchased intangibles
     17,432       17,858  
Impairment of goodwill
     264,130       —  
Stock-based compensation expense:
                
Stock options
     4,135       7,029  
Restricted stock units
     3,975       1,199  
Impairment of short-term investments and marketable securities
     16,941       846  
Net gain on sale of strategic equity investment
     —       (4,649 )
Non-cash restructuring charges
     57       —  
Net gain (loss) on disposal of property
     15       (8 )
Changes in operating assets and liabilities:
                
Accounts receivable
     7,891       813  
Inventories
     (803 )     (8,534 )
Other assets
     (9,210 )     1,106  
Accounts payable
     (7,549 )     (1,019 )
Accrued payroll and other accrued liabilities
     (2,705 )     (5,660 )
Deferred taxes
     (3,958 )     —  
Deferred revenue
     109       429  
 
            
Net cash provided by (used for) operating activities
     13,661       (14,511 )
 
                
Investing activities:
                
Proceeds from sales and maturities investments
     897,153       490,932  
Purchases of investments
     (855,263 )     (416,517 )
Purchase of strategic investments
     —       (5,000 )
Net proceeds from the sale of strategic equity investment
     —       5,249  
Purchase of property, equipment and other assets
     (6,812 )     (4,943 )
Proceeds from sale of property, equipment and other assets
     —       1,646  
 
            
Net cash provided by (used for) investing activities
     35,078       71,367  
 
                
Financing activities:
                
Proceeds from issuance of common stock
     1,570       3,785  
Repurchase of Company stock
     —       (56,950 )
Funding of structured stock repurchase agreements
     —       (41,830 )
Funds received from structured stock repurchase agreements including gains
     —       21,112  
Other
     (331 )     (77 )
 
            
Net cash provided by (used for) financing activities
     1,239       (73,960 )
 
            
Net decrease in cash and cash equivalents
     49,978       (17,104 )
Cash and cash equivalents at beginning of the period
     42,689       51,595  
 
            
Cash and cash equivalents at end of the period
   $ 92,667     $ 34,491