8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): October 25, 2007

Applied Micro Circuits Corporation

(Exact Name of Registrant as Specified in Charter)

DELAWARE
(State or Other Jurisdiction
of Incorporation) 000-23193
(Commission File Number) 94-2586591
(I.R.S. Employer
Identification No.)

215 Moffett Park Drive, Sunnyvale, California 94089

(Address of Principal Executive Offices)

(408) 542-8600

(Registrants telephone number, including area code)

N/A
(Former name or former address, if changed since last report)

     Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 2.02. Results of Operations and Financial Condition
	Item 9.01 Financial Statements and Exhibits
SIGNATURES
INDEX TO EXHIBITS
EXHIBIT 99.1

Item 2.02. Results of Operations and Financial Condition.

     On October 25, 2007, Applied Micro Circuits Corporation (“AMCC”) issued a press release regarding selected unaudited financial results for the three and six months ended September 30, 2007. A copy of the press release is furnished as Exhibit 99.1 to this Current Report.

     The information in this Item 2.02 and Exhibit 99.1 is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document filed with the Securities and Exchange Commission.

Item 9.01 Financial Statements and Exhibits

(d)	Exhibits.
99.1	Press release dated October 25, 2007

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Applied Micro Circuits Corporation
Date: October 25, 2007	By:	/s/ Robert G. Gargus
		Robert G. Gargus
		Senior Vice President and Chief Financial Officer

INDEX TO EXHIBITS

     99.1 Press Release dated October 25, 2007.

EX-99.1

Exhibit 99.1

FOR ADDITIONAL INFORMATION:

Investor Relations Contact:	Media/Editorial Contact:
Applied Micro Circuits Corporation	The Bernard Group
Scott Dawson	Diane Bernard
Phone: (858) 535-4217	Phone: (512) 617-6319
E-Mail: sdawson@amcc.com	E-Mail: diane@bernardgroup.com

Thursday, October 25, 2007

Company Press Release

APPLIED MICRO CIRCUITS CORPORATION ANNOUNCES
SECOND QUARTER FISCAL 2008 FINANCIAL RESULTS

Selected Q2 Highlights

• Q2 net revenues of $58.2 million, up 16% sequentially

• Q2 GAAP net loss of $8.1 million or $(0.03) per share

• Q2 non-GAAP net loss of $3.0 million or $(0.01) per share

• Processor revenues were $27.0 million and grew 55% sequentially; Transport revenues were $14.1 million and declined 7% sequentially; Storage revenues were $12.2 million and declined 7% sequentially; Non-focus revenues were $4.9 million and grew 9% sequentially

• AMCC entered the Serial Attached SCSI (SAS) market and began shipping a complete family of 3ware^® 9690SA SAS RAID controllers

• Announced the newest member of its embedded processor family of products: the PPC460GT that is designed for a wide range of high performance applications

SUNNYVALE, Calif., —October 25, 2007—Applied Micro Circuits Corporation [NASDAQ: AMCC] today reported its financial results for the second quarter of fiscal 2008.

Net revenues for the second quarter of fiscal 2008 were $58.2 million compared to $50.1 million reported in the first quarter of fiscal 2008 and $76.4 million reported in the second quarter of fiscal 2007. Revenues for the first six months were $108.3 million compared to $146.0 million for the comparable period last year.

The net loss on a generally accepted accounting principles (GAAP) basis for the second quarter of fiscal 2008 was $8.1 million or $(0.03) per share. The second quarter GAAP net loss compares with a net loss of $16.4 million or $(0.06) per share for the first quarter of fiscal 2008 and a net loss of $13.9 million or $(0.05) per share for the second quarter of fiscal 2007. Year to date the GAAP net loss was $24.5 million or $(0.09) per share compared to $14.7 million or $(0.05) per share for the first six months of fiscal year 2007.

The non-GAAP net loss for the second quarter of fiscal 2008 was $3.0 million or $(0.01) per share, compared to the non-GAAP net loss of $7.3 million or $(0.03) per share in the first quarter of fiscal 2008 and the non-GAAP net income of $10.4 million or $0.04 per share in the second quarter of fiscal 2007. Year to date the non-GAAP net loss was $10.3 million or $(0.04) per share compared to a non-GAAP net income of $18.5 million or $0.06 per share for the first six months of fiscal year 2007.

“I am pleased with our overall results. First, we achieved the revenue growth we were projecting and second, we saw a healthy increase in our backlog and order patterns. With the correction cycle now behind us, we are focused on further expanding our revenues and returning to non-GAAP profitability. We also entered a key new product cycle by shipping our SAS product family and we are very pleased with our customer traction,” said Kambiz Hooshmand, president and chief executive officer.

Bob Gargus, chief financial officer commented, “The second quarter was a challenge operationally as we put in place the planned initiatives to reduce operating expenses. With this now in place I anticipate that further revenue growth combined with reduced operating expenses will return us to non-GAAP profitability in the December quarter.”

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, acquired in-process research and development, stock-based compensation charges, gains on sale of equity investment and renegotiated design tool agreement, payroll tax on certain stock option exercises and expenses related to stock option investigation. 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. 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.

For More Information

AMCC management will be holding a conference call today, October 25, 2007, at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time to discuss additional details regarding the Company’s performance for the second quarter of fiscal 2008 and to provide guidance for the third quarter of fiscal 2008. You may access the conference call via any of the following:

Teleconference:	719-325-4938
Conference ID:	2846485
Web Broadcast:	http://investor.amcc.com/events.cfm
Replay:	719-457-0820 (available through November 1, 2007)

AMCC Overview

AMCC is a global leader in network and embedded PowerPC^® processing, optical transport and storage solutions. Our products enable the development of converged IP-based networks offering high-speed secure data, high-definition video and high-quality voice for carrier, metropolitan, access and enterprise applications. AMCC provides networking equipment vendors with industry-leading network and communications processing, Ethernet, SONET, OTN and switch fabric solutions. AMCC is also the leading vendor of high-port count SATA RAID controllers enabling low-cost, high-performance, high-capacity storage. 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.

AMCC is a registered trademark of Applied Micro Circuits Corporation. The PowerPC name and logo are registered trademarks of IBM Corporation and used under license therefrom. All other trademarks are the property of their respective owners. 

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 future revenues, orders, operating expenses, profitability and product cycles. 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, 2007, 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)

	September 30,		March 31,
	2007		2007
ASSETS
Current assets:
Cash, cash equivalents and short-term investments	$	140,318	$	284,470
Accounts receivable, net		23,218		32,558
Inventories		40,481		31,286
Other current assets		11,830		14,438
Total current assets		215,847		362,752
Long-term marketable securities		77,736		—
Property and equipment, net		25,655		27,150
Goodwill		335,624		335,857
Purchased intangibles		67,832		79,787
Other assets		17,152		10,966
Total assets	$	739,846	$	816,512
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	14,311	$	26,893
Other current liabilities		24,296		28,797
Total current liabilities		38,607		55,690
Stockholders’ equity		701,239		760,822
Total liabilities and stockholders’ equity	$	739,846	$	816,512

APPLIED MICRO CIRCUITS CORPORATION
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

	Three months ended									Six months ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2007			2007			2006			2007			2006
Net revenues	$	58,210		$	50,135		$	76,364		$	108,345		$	146,043
Cost of revenues		30,328			26,498			35,536			56,826			67,064
Gross profit		27,882			23,637			40,828			51,519			78,979
Operating expenses:
Research and development		24,480			25,482			24,853			49,962			47,692
Selling, general and administrative		15,850			16,063			16,162			31,913			32,612
Amortization of purchased intangibles		1,336			1,345			1,188			2,681			2,295
Acquired in-process research and development		—			—			13,300			—			13,300
Restructuring charges		1,376			(32	)		1,419			1,344			2,666
Option investigation		209			292			1,150			501			1,700
Total operating expenses		43,251			43,150			58,072			86,401			100,265
Operating loss		(15,369	)		(19,513	)		(17,244	)		(34,882	)		(21,286	)
Interest and other income, net		6,906			3,076			3,429			9,982			6,794
Loss before income taxes		(8,463	)		(16,437	)		(13,815	)		(24,900	)		(14,492	)
Income tax expense (benefit)		(410	)		(17	)		74			(427	)		214
Net loss	$	(8,053	)	$	(16,420	)	$	(13,889	)	$	(24,473	)	$	(14,706	)
Basic and diluted loss per share:
Loss per share	$	(0.03	)	$	(0.06	)	$	(0.05	)	$	(0.09	)	$	(0.05	)
Shares used in calculating basic and diluted loss per share		275,132			281,656			281,762			278,394			286,470

APPLIED MICRO CIRCUITS CORPORATION
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME (LOSS)
(unaudited)
(in thousands)

	Three months ended									Six months ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2007			2007			2006			2007			2006
GAAP net loss	$	(8,053	)	$	(16,420	)	$	(13,889	)	$	(24,473	)	$	(14,706	)
Adjustments:
Stock-based compensation charges		3,297			2,620			2,677			5,917			5,188
Amortization of purchased intangibles		5,919			6,036			5,941			11,955			10,674
Restructuring charges		1,376			(32	)		1,419			1,344			2,666
Realized gain on sale of strategic equity investment		(4,649	)		—			—			(4,649	)		—
Gain on renegotiated design tool agreement		(749	)		—			—			(749	)		—
Acquired in-process research and development		—			—			13,300			—			13,300
Payroll taxes on certain stock option exercises		1			2			—			3			1
Expenses related to stock option investigation		209			292			1,150			501			1,700
Income tax adjustments		(318	)		209			(212	)		(109	)		(306	)
Total GAAP to Non-GAAP adjustments		5,086			9,127			24,275			14,213			33,223
Non-GAAP net income (loss)	$	(2,967	)	$	(7,293	)	$	10,386		$	(10,260	)	$	18,517
Diluted income (loss) per share	$	(0.01	)	$	(0.03	)	$	0.04		$	(0.04	)	$	0.06
Shares used in calculating diluted income (loss) per share		275,132			281,656			282,586			278,394			287,356
Income (loss) per share:
GAAP income (loss) per share	$	(0.03	)	$	(0.06	)	$	(0.05	)	$	(0.09	)	$	(0.05	)
GAAP to non-GAAP adjustments		0.02			0.03			0.09			0.05			0.11
Non-GAAP income (loss) per share	$	(0.01	)	$	(0.03	)	$	0.04		$	(0.04	)	$	0.06
Reconciliation of shares used in calculating the non-GAAP income per share:
Shares used in calculating the basic and diluted income(loss) per share		275,132			281,656			281,762			278,394			286,470
Adjustment for dilutive securities		—			—			824			—			886
Non-GAAP shares used in the EPS calculation		275,132			281,656			282,586			278,394			287,356

APPLIED MICRO CIRCUITS CORPORATION
SCHEDULE OF SELECTED GAAP TO NON-GAAP ADJUSTMENTS
(unaudited)
(in thousands)

The following schedule reconciles selected line items from the GAAP basis statements of operations to the non-GAAP statements of operations:

	Three months ended									Six months ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2007			2007			2006			2007			2006
GROSS PROFIT:
GAAP gross profit	$	27,882		$	23,637		$	40,828		$	51,519		$	78,979
Amortization of purchased intangibles		4,583			4,691			4,753			9,274			8,379
Stock-based compensation expense		240			72			157			312			291
Non-GAAP gross profit	$	32,705		$	28,400		$	45,738		$	61,105		$	87,649
OPERATING EXPENSES:
GAAP operating expenses	$	43,251		$	43,150		$	58,072		$	86,401		$	100,265
Amortization of purchased intangibles		(1,336	)		(1,345	)		(1,188	)		(2,681	)		(2,295	)
Acquired in-process research and development		—			—			(13,300	)		—			(13,300	)
Stock-based compensation expense		(3,057	)		(2,548	)		(2,520	)		(5,605	)		(4,897	)
Restructuring charges		(1,376	)		32			(1,419	)		(1,344	)		(2,666	)
Gain on renegotiated design tool agreement		749			—			—			749			—
Payroll taxes on certain stock option exercises		(1	)		(2	)		—			(3	)		(1	)
Expenses related to stock option investigation		(209	)		(292	)		(1,150	)		(501	)		(1,700	)
Non-GAAP operating expenses	$	38,021		$	38,995		$	38,495		$	77,016		$	75,406
INTEREST AND OTHER INCOME, NET
GAAP interest and other income, net	$	6,906		$	3,076		$	3,429		$	9,982		$	6,794
Realized gain on sale of strategic equity investments		(4,649	)		—			—			(4,649	)		—
Non-GAAP interest and other income, net	$	2,257		$	3,076		$	3,429		$	5,333		$	6,794
INCOME TAX EXPENSE (BENEFIT):
GAAP income tax expense (benefit)	$	(410	)	$	(17	)	$	74		$	(427	)	$	214
Income tax adjustments		318			(209	)		212			109			306
Non-GAAP income tax expense (benefit)	$	(92	)	$	(226	)	$	286		$	(318	)	$	520
RESEARCH AND DEVELOPMENT
GAAP research and development	$	24,480		$	25,482		$	24,853		$	49,962		$	47,692
Stock-based compensation expense		(1,216	)		(1,055	)		(1,028	)		(2,271	)		(2,097	)
Gain on renegotiated design tool agreement		749			—			—			749			—
Payroll taxes on certain stock option exercises		—			(2	)		—			(2	)		—
Non-GAAP research and development	$	24,013		$	24,425		$	23,825		$	48,438		$	45,595
SELLING, GENERAL AND ADMINISTRATIVE
GAAP selling, general and administrative	$	15,850		$	16,063		$	16,162		$	31,913		$	32,612
Stock-based compensation expense		(1,841	)		(1,493	)		(1,492	)		(3,334	)		(2,800	)
Payroll taxes on certain stock option exercises		(1	)		—			—			(1	)		(1	)
Non-GAAP selling, general and administrative	$	14,008		$	14,570		$	14,670		$	28,578		$	29,811

APPLIED MICRO CIRCUITS CORPORATION
CONSOLIDATED STATEMENT OF CASHFLOWS
($ in thousands)
(unaudited)

	Six Months ended September 30,
	2007			2006
Operating activities:
Net loss	$	(24,473	)	$	(14,706	)
Adjustments to reconcile net loss to net cash provided by (used for) operating activities
Depreciation and amortization		3,227			4,678
Amortization of purchased intangibles		11,956			10,674
Acquired in-process research and development		—			13,300
Stock-based compensation expense :
Stock options		5,268			5,153
Restricted stock units		649			36
Non-cash restructuring charges (benefit)		(32	)		1,977
Net gain on strategic equity investments		(4,649	)		—
Net gain on disposal of property		(64	)		—
Changes in operating assets and liabilities:
Accounts receivable		9,340			(9,199	)
Inventories		(9,195	)		(6,473	)
Other assets		1,653			(350	)
Accounts payable		(12,582	)		3,994
Accrued payroll and other accrued liabilities		(4,474	)		(5,141	)
Deferred revenue		6			(415	)
Net cash provided by (used for) operating activities		(23,370	)		3,528
Investing activities:
Proceeds from sales and maturities of investments		345,009			281,502
Purchases of investments		(286,191	)		(217,982	)
Purchase of strategic investments		(5,000	)		—
Net proceeds from the sale of strategic equity investments		5,249			—
Purchase of property, equipment and other assets		(3,314	)		(4,293	)
Proceeds from sale of property, equipment and other assets		1,646			—
Net cash paid for acquisitions		—			(71,971	)
Net cash provided by (used for) investing activities		57,399			(12,744	)
Financing activities:
Proceeds from issuance of common stock		3,286			243
Open market repurchases of Company stock		(29,268	)		(20,137	)
Funding of structured stock repurchase agreements		(23,830	)		—
Funds received from structured stock repurchase agreements including gains		13,237			17,379
Payments on long-term debt		—			(289	)
Other		(231	)		(169	)
Net cash used for financing activities		(36,806	)		(2,973	)
Net decrease in cash and cash equivalents		(2,777	)		(12,189	)
Cash and cash equivalents at beginning of the period		51,595			49,125
Cash and cash equivalents at end of the period	$	48,818		$	36,936
Supplementary cash flow disclosure:
Cash paid for:
Interest	$	9		$	—
Income taxes	$	338		$	357