EX-99.1 2 f37302exv99w1.htm EXHIBIT 99.1 exv99w1
 

Exhibit 99.1
FOR ADDITIONAL INFORMATION:
         
Investor Relations Contact:
      Media/Editorial Contact:
 
        
Applied Micro Circuits Corporation
Scott Dawson
Phone: (858) 535-4217
E-Mail: sdawson@amcc.com
      The Bernard Group
Diane Bernard
Phone: (512) 617-6319
E-Mail: diane@bernardgroup.com
Wednesday, January 23, 2008
Company Press Release
APPLIED MICRO CIRCUITS CORPORATION ANNOUNCES
THIRD QUARTER FISCAL 2008 FINANCIAL RESULTS
Selected Q3 Highlights
  •   Q3 net revenues of $66.3 million, up 14% sequentially
 
  •   Q3 GAAP net loss of $4.3 million or $(0.06) per share compared to a GAAP net loss of $8.1 million or $(0.12) per share in the second quarter
 
  •   Q3 non-GAAP net income of $3.1 million or $0.05 per share compared to a non-GAAP net loss of $3.0 million or $(0.04) per share in the second quarter
 
  •   Transport revenues were $18.8 million and grew 34% sequentially; Storage revenues were $13.6 million and grew 11% sequentially; Processor revenues were $24.9 million and declined 8% sequentially
 
  •   Implemented One-for-Four Reverse Stock Split
 
  •   AMCC’s PowerPC® 405EX Embedded Processor named 2007 Product of the Year by Electronic Products Magazine
SUNNYVALE, Calif., —January 23, 2008—Applied Micro Circuits Corporation [NASDAQ: AMCC] today reported its financial results for the third quarter of fiscal 2008.
Net revenues for the third quarter of fiscal 2008 were $66.3 million compared to $58.2 million reported in the second quarter of fiscal 2008 and $76.6 million reported in the third quarter of

 

 

fiscal 2007. Revenues for the first nine months were $174.6 million compared to $222.7 million for the comparable period last year.
The net loss on a generally accepted accounting principles (“GAAP”) basis for the third quarter of fiscal 2008 was $4.3 million or $(0.06) per share. The third quarter GAAP net loss compares with a net loss of $8.1 million or $(0.12) per share for the second quarter of fiscal 2008 and a net loss of $4.2 million or $(0.06) per share for the third quarter of fiscal 2007. Year to date the GAAP net loss was $28.8 million or $(0.42) per share compared to $18.9 million or $(0.27) per share for the first nine months of fiscal 2007.
The non-GAAP net income for the third quarter of fiscal 2008 was $3.1 million or $0.05 per share, compared to the non-GAAP net loss of $3.0 million or $(0.04) per share in the second quarter of fiscal 2008 and the non-GAAP net income of $9.0 million or $0.13 per share in the third quarter of fiscal 2007. Year to date the non-GAAP net loss was $7.2 million or $(0.10) per share compared to a non-GAAP net income of $27.5 million or $0.38 per share for the first nine months of fiscal 2007.
“I am pleased with our financial results for the December quarter. We achieved revenue growth at the upper end of our guidance range and returned to non-GAAP profitability. Order patterns remained strong throughout the quarter and we entered the March quarter with our strongest backlog position in more than two years. Finally, all of us are proud that AMCC’s PowerPC® 405EX Embedded Processor was named 2007 Product of the Year by Electronic Products Magazine,” said Kambiz Hooshmand, president and chief executive officer.
Bob Gargus, chief financial officer commented, “During the quarter we continued to reduce operating expenses and did better than our goal. We implemented the planned one-for-four reverse stock split and we are looking forward to growth in revenues and further improvement in our non-GAAP profitability in the March 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, realized gains on sale of strategic equity investment and gain on renegotiated design tool agreement, payroll tax on certain stock option exercises and expenses related to stock option investigation, net. 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, net of insurance recoveries. 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, January 23, 2008, 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 2008 and to provide guidance for the fourth quarter of fiscal 2008. You may access the conference call via any of the following:
         
 
   Teleconference:   913-312-1481
 
   Conference ID:   7331488
 
   Web Broadcast:   http://investor.amcc.com/events.cfm
 
   Replay:   719-457-0820 (available through January 29, 2008)
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 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, 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)
                 
    December 31,     March 31,  
    2007     2007  
ASSETS
                
 
                
Current assets:
                
Cash, cash equivalents and short-term investments
   $ 116,849     $ 284,470  
Accounts receivable, net
     31,745       32,558  
Inventories
     39,820       31,286  
Other current assets
     11,817       14,438  
 
            
Total current assets
     200,231       362,752  
Marketable securities
     69,453       —  
Property and equipment, net
     25,563       27,150  
Goodwill
     335,624       335,857  
Purchased intangibles
     61,929       79,787  
Other assets
     17,713       10,966  
 
            
Total assets
   $ 710,513     $ 816,512  
 
            
 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
 
                
Current liabilities:
                
Accounts payable
   $ 25,874     $ 26,893  
Other current liabilities
     23,567       28,797  
 
            
Total current liabilities
     49,441       55,690  
Stockholders’ equity
     661,072       760,822  
 
            
Total liabilities and stockholders’ equity
   $ 710,513     $ 816,512  
 
            

 

 

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,  
    2007     2007     2006     2007     2006  
Net revenues
   $ 66,267     $ 58,210     $ 76,642     $ 174,612     $ 222,685  
Cost of revenues
     33,311       30,328       37,799       90,137       104,863  
 
                              
Gross profit
     32,956       27,882       38,843       84,475       117,822  
Operating expenses:
                                        
Research and development
     24,696       24,480       24,550       74,658       72,242  
Selling, general and administrative
     14,125       15,850       17,351       46,038       49,963  
Amortization of purchased intangibles
     1,320       1,336       1,350       4,001       3,645  
Acquired in-process research and development
     —       —       —       —       13,300  
Restructuring charges
     125       1,376       67       1,469       2,733  
Option investigation, net
     (792 )     209       2,705       (291 )     4,405  
 
                              
Total operating expenses
     39,474       43,251       46,023       125,875       146,288  
 
                              
Operating loss
     (6,518 )     (15,369 )     (7,180 )     (41,400 )     (28,466 )
Interest and other income, net
     2,148       6,906       3,121       12,130       9,915  
 
                              
Loss before income taxes
     (4,370 )     (8,463 )     (4,059 )     (29,270 )     (18,551 )
Income tax expense (benefit)
     (31 )     (410 )     113       (458 )     327  
 
                              
Net loss
   $ (4,339 )   $ (8,053 )   $ (4,172 )   $ (28,812 )   $ (18,878 )
 
                              
 
                                        
Basic and diluted loss per share:
                                        
Loss per share
   $ (0.06 )   $ (0.12 )   $ (0.06 )   $ (0.42 )   $ (0.27 )
 
                              
Shares used in calculating basic and diluted loss per share
     67,015       68,783       70,450       68,737       71,228  
 
                              

 

 

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,  
    2007     2007     2006     2007     2006  
GAAP net loss
   $ (4,339 )   $ (8,053 )   $ (4,172 )   $ (28,812 )   $ (18,878 )
Adjustments:
                                        
Stock-based compensation charges
     2,312       3,297       2,723       8,229       7,911  
Amortization of purchased intangibles
     5,903       5,919       7,877       17,858       18,551  
Restructuring charges
     125       1,376       67       1,469       2,733  
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  
Payroll taxes on certain stock option exercises
     —       1       —       3       1  
Expenses related to stock option investigation, net
     (792 )     209       2,705       (291 )     4,405  
Income tax adjustments
     (126 )     (318 )     (217 )     (236 )     (523 )
 
                              
Total GAAP to Non-GAAP adjustments
     7,422       5,086       13,155       21,634       46,378  
 
                              
 
                                        
Non-GAAP net income (loss)
   $ 3,083     $ (2,967 )   $ 8,983     $ (7,178 )   $ 27,500  
 
                              
 
                                        
Diluted income (loss) per share
   $ 0.05     $ (0.04 )   $ 0.13     $ (0.10 )   $ 0.38  
 
                              
 
                                        
Shares used in calculating diluted income (loss) per share
     67,207       68,783       70,765       68,737       71,481  
 
                              
 
                                        
Income (loss) per share:
                                        
GAAP income (loss) per share
   $ (0.06 )   $ (0.12 )   $ (0.06 )   $ (0.42 )   $ (0.27 )
GAAP to non-GAAP adjustments
     0.11       0.08       0.19       0.32       0.65  
 
                              
Non-GAAP income (loss) per share
   $ 0.05     $ (0.04 )   $ 0.13     $ (0.10 )   $ 0.38  
 
                              
 
                                        
Reconciliation of shares used in calculating the
non-GAAP income per share:
                                        
Shares used in calculating the basic and diluted income(loss) per share
     67,015       68,783       70,450       68,737       71,228  
Adjustment for dilutive securities
     192       —       315       —       253  
 
                              
Non-GAAP shares used in the EPS calculation
     67,207       68,783       70,765       68,737       71,481  
 
                              

 

 

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,  
      2007     2007     2006     2007     2006  
GROSS PROFIT:
                                        
GAAP gross profit
   $ 32,956     $ 27,882     $ 38,843     $ 84,475     $ 117,822  
Amortization of purchased intangibles
     4,583       4,583       6,527       13,857       14,906  
Stock-based compensation expense
     224       240       148       536       439  
 
                              
Non-GAAP gross profit
   $ 37,763     $ 32,705     $ 45,518     $ 98,868     $ 133,167  
 
                              
 
                                        
OPERATING EXPENSES:
                                        
GAAP operating expenses
   $ 39,474     $ 43,251     $ 46,023     $ 125,875     $ 146,288  
Amortization of purchased intangibles
     (1,320 )     (1,336 )     (1,350 )     (4,001 )     (3,645 )
Acquired in-process research and development
     —       —       —       —       (13,300 )
Stock-based compensation expense
     (2,088 )     (3,057 )     (2,575 )     (7,693 )     (7,472 )
Restructuring charges
     (125 )     (1,376 )     (67 )     (1,469 )     (2,733 )
Gain on renegotiated design tool agreement
     —       749       —       749       —  
Payroll taxes on certain stock option exercises
     —       (1 )     —       (3 )     (1 )
Expenses related to stock option investigation, net
     792       (209 )     (2,705 )     291       (4,405 )
 
                              
Non-GAAP operating expenses
   $ 36,733     $ 38,021     $ 39,326     $ 113,749     $ 114,732  
 
                              
 
                                        
INTEREST AND OTHER INCOME, NET
                                        
GAAP interest and other income, net
   $ 2,148     $ 6,906     $ 3,121     $ 12,130     $ 9,915  
Realized gain on sale of strategic equity investments
     —       (4,649 )     —       (4,649 )     —  
 
                              
Non-GAAP interest and other income, net
   $ 2,148     $ 2,257     $ 3,121     $ 7,481     $ 9,915  
 
                              
 
                                        
INCOME TAX EXPENSE (BENEFIT):
                                        
GAAP income tax expense (benefit)
   $ (31 )   $ (410 )   $ 113     $ (458 )   $ 327  
Income tax adjustments
     126       318       217       236       523  
 
                              
Non-GAAP income tax expense (benefit)
   $ 95     $ (92 )   $ 330     $ (222 )   $ 850  
 
                              
 
                                        
RESEARCH AND DEVELOPMENT
                                        
GAAP research and development
   $ 24,696     $ 24,480     $ 24,550     $ 74,658     $ 72,242  
Stock-based compensation expense
     (1,177 )     (1,216 )     (882 )     (3,448 )     (2,979 )
Gain on renegotiated design tool agreement
     —       749       —       749       —  
Payroll taxes on certain stock option exercises
     —       —       —       (2 )     —  
 
                              
Non-GAAP research and development
   $ 23,519     $ 24,013     $ 23,668     $ 71,957     $ 69,263  
 
                              
 
                                        
SELLING, GENERAL AND ADMINISTRATIVE
                                        
GAAP selling, general and administrative
   $ 14,125     $ 15,850     $ 17,351     $ 46,038     $ 49,963  
Stock-based compensation expense
     (911 )     (1,841 )     (1,693 )     (4,245 )     (4,493 )
Payroll taxes on certain stock option exercises
     —       (1 )     —       (1 )     (1 )
 
                              
Non-GAAP selling, general and administrative
   $ 13,214     $ 14,008     $ 15,658     $ 41,792     $ 45,469  
 
                              

 

 

APPLIED MICRO CIRCUITS CORPORATION
CONSOLIDATED STATEMENT OF CASHFLOWS
(in thousands)
(unaudited)
                 
    Nine months ended December 31,  
    2007     2006  
Operating activities:
                
Net loss
   $ (28,812 )   $ (18,878 )
Adjustments to reconcile net loss to net cash provided by (used for) operating activities
               
Depreciation and amortization
     4,891       6,518  
Amortization of purchased intangibles
     17,859       18,551  
Acquired in-process research and development
     —       13,300  
Stock-based compensation expense:
                
Stock options
     7,029       7,854  
Restricted stock units
     1,199       59  
Non-cash restructuring charges (benefit)
     (32 )     2,521  
Realized gain on strategic equity investments
     (4,649 )     —  
Impairment of marketable securities
     846       —  
Net gain on disposal of property
     68       34  
Changes in operating assets and liabilities:
                
Accounts receivable
     813       (7,973 )
Inventories
     (8,589 )     (11,294 )
Other assets
     1,106       (3,148 )
Accounts payable
     (1,019 )     (719 )
Accrued payroll and other accrued liabilities
     (5,628 )     (6,315 )
Deferred revenue
     429       (372 )
 
            
Net cash provided by (used for) operating activities
     (14,489 )     138  
 
                
Investing activities:
                
Proceeds from sales and maturities of investments
     490,932       379,413  
Purchases of investments
     (416,517 )     (306,744 )
Purchase of strategic investments
     (5,000 )     (1,500 )
Net proceeds from the sale of strategic investments
     5,249       —  
Purchase of property, equipment
     (5,013 )     (5,783 )
Proceeds from sale of property, equipment
     1,646       —  
Net cash paid for acquisitions
     —       (71,971 )
 
            
Net cash provided by (used for) investing activities
     71,297       (6,585 )
 
                
Financing activities:
                
Proceeds from issuance of common stock
     3,785       248  
Open market repurchases of Company stock
     (56,961 )     (20,137 )
Funding of structured stock repurchase agreements
     (41,819 )     —  
Funds received from structured stock repurchase agreements including gains
     21,112       17,379  
Payments on long-term debt
     —       (289 )
Other
     (29 )     166  
 
            
Net cash used for financing activities
     (73,912 )     (2,633 )
 
            
Net decrease in cash and cash equivalents
     (17,104 )     (9,080 )
Cash and cash equivalents at beginning of the period
     51,595       49,125  
 
            
Cash and cash equivalents at end of the period
   $ 34,491     $ 40,045