EX-99.1 2 f40377exv99w1.htm EXHIBIT 99.1 exv99w1
 

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, May 1, 2008
Company Press Release
APPLIED MICRO CIRCUITS CORPORATION ANNOUNCES
FOURTH QUARTER FISCAL 2008 FINANCIAL RESULTS IN LINE WITH
REVENUE GUIDANCE
Selected Q4 Highlights
  •   Q4 net revenues of $71.5 million, up 8% sequentially
 
  •   Q4 GAAP net loss of $86.3 million or $(1.33) per share compared to a GAAP net loss of $4.3 million or $(0.06) per share in the third quarter. The Q4 GAAP net loss included an impairment charge for goodwill of $71.5 million.
 
  •   Q4 non-GAAP net income of $6.0 million or $0.09 per share compared to a non-GAAP net income of $3.9 million or $0.06 per share in the third quarter.
 
  •   Transport revenues were $27.8 million and grew 11% sequentially; Storage revenues were $13.0 million and declined 4% sequentially; Processor revenues were $30.7 million and grew 11% sequentially.
 
  •   AMCC’s PowerPC 405EX Embedded Processor Named Product of the Year by Electronic Products Magazine.
 
  •   The AMCC Storage family of 3ware RAID controllers was awarded the “”EE Times Ultimate Product of the Year” ACE Award. Additionally the AMCC 9690SA SAS controller was awarded the “PC Pro Recommended” award.
 
  •   Announced Pemaquid, a fully integrated 10G Framer/Mapper/PHY for transporting 10GbE or 10G FC over WDM and OTN networks. Pemaquid is ideal for Carrier Ethernet Switch/Router and optical systems.

 

 

SUNNYVALE, Calif., —May 1, 2008—Applied Micro Circuits Corporation [NASDAQ: AMCC] today reported its financial results for the fourth quarter of fiscal 2008.
Net revenues for the fourth quarter of fiscal 2008 were $71.5 million compared to $66.3 million reported in the third quarter of fiscal 2008, representing a sequential growth of 8% and a growth of 2% over the $70.2 million reported in the fourth quarter of fiscal 2007. Net revenues for the fiscal year ended March 31, 2008 were $246.1 million compared to $292.9 million for the prior fiscal year, representing a sequential decline of approximately 16%.
The net loss on a generally accepted accounting principles (GAAP) basis for the fourth quarter of fiscal 2008 was $86.3 million or $(1.33) per share, which includes the impact of a goodwill write-off of $71.5 million. The fourth quarter GAAP net loss compares with a net loss of $4.3 million or $(0.06) per share for the third quarter of fiscal 2008 and a net loss of $5.3 million or $(0.08) per share for the fourth quarter of fiscal 2007. The GAAP net loss was $115.1 million or $(1.70) per share for fiscal 2008 compared to $24.2 million or $(0.34) per share for fiscal 2007.
The non-GAAP net income for the fourth quarter of fiscal 2008 was $6.0 million or $0.09 per share, compared to the non-GAAP net income of $3.9 million or $0.06 per share in the third quarter of fiscal 2008. Non-GAAP net income for the fourth quarter of fiscal 2007 was $2.8 million or $0.04 per share. For fiscal 2008, the non-GAAP net loss was $0.4 million or $(0.01) per share compared to a non-GAAP net income of $30.3 million or $0.42 per share for fiscal 2007.
“I am pleased with our financial results for the March quarter. Our revenue growth was solid and in line with our expectations. Order patterns were strong and have continued into the June quarter. Inventory in the channel declined and our asset management continues to improve. Excluding the cash outflow for our stock buyback program, we were cash flow positive for the third straight quarter.” said Kambiz Hooshmand, president and chief executive officer.
Bob Gargus, chief financial officer commented, “We continued our focus on profitability, reducing our Op-Ex while improving our non-GAAP pretax profit margin from 6.1 percent of revenue last quarter to 8.7% of revenues this quarter. We accomplished this despite some unfavorable manufacturing variances that occurred during the quarter and are now behind us. Overall, we are definitely moving in the right direction.”
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, goodwill impairment, stock-based compensation charges, gains on sale of strategic equity investment, strategic investment written off, gain on renegotiated design tool agreement, other than temporary impairment on investments, 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.
For More Information
AMCC management will be holding a conference call today, May 1, 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 fourth quarter of fiscal 2008 and to provide guidance for the first quarter of fiscal 2009. You may access the conference call via any of the following:
         
 
   Teleconference:   719-325-4870
 
   Conference ID:   6524238
 
   Web Broadcast:   http://investor.amcc.com/events.cfm
 
   Replay:   719-457-0820 (available through May 8, 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)
                 
 
            
    March 31,     March 31,  
    2008     2007  
ASSETS
                
Current assets:
                
Cash, cash equivalents and short-term investments
   $ 142,889     $ 284,470  
Accounts receivable, net
     28,800       32,558  
Inventories
     37,966       31,286  
Other current assets
     11,340       14,438  
 
            
Total current assets
     220,995       362,752  
Marketable securities
     51,919       —  
Property and equipment, net
     25,995       27,150  
Goodwill
     264,130       335,857  
Purchased intangibles
     56,026       79,787  
Other assets
     13,782       10,966  
 
            
Total assets
   $ 632,847     $ 816,512  
 
            
 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
 
                
Current liabilities
                
Accounts payable
   $ 25,518     $ 26,893  
Other current liabilities
     22,659       28,797  
 
            
Total current liabilities
     48,177       55,690  
Deferred tax liability
     3,958       —  
Stockholders’ equity
     580,712       760,822  
 
            
Total liabilities and stockholders’ equity
   $ 632,847     $ 816,512  
 
            

 

 

APPLIED MICRO CIRCUITS CORPORATION
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
                                         
    Three Months Ended     Fiscal Year Ended  
    March 31,     December 31,     March 31,     March 31,     March 31,  
    2008     2007     2007     2008     2007  
Net revenues
   $ 71,534     $ 66,267     $ 70,167     $ 246,146     $ 292,852  
Cost of revenues
     36,531       33,311       35,851       126,668       140,714  
 
                              
Gross profit
     35,003       32,956       34,316       119,478       152,138  
Operating expenses:
                                        
Research and development
     22,892       24,696       24,176       97,550       96,418  
Selling, general and administrative
     15,869       14,125       18,008       61,907       67,971  
Amortization of purchased intangibles
     1,320       1,320       1,350       5,321       4,995  
Acquired in-process research and development
     —       —       —       —       13,300  
Impairment of goodwill
     71,494       —       —       71,494       —  
Restructuring charges
     1,516       125       (1,442 )     2,985       1,291  
Litigation settlement
     1,125       —       —       1,125       —  
Option investigation related expenses, net
     1,363       (792 )     939       1,072       5,344  
 
                              
Total operating expenses
     115,579       39,474       43,031       241,454       189,319  
 
                              
Operating loss
     (80,576 )     (6,518 )     (8,715 )     (121,976 )     (37,181 )
Interest and other income, net
     (1,551 )     2,148       3,460       10,579       13,375  
 
                              
Loss before income taxes
     (82,127 )     (4,370 )     (5,255 )     (111,397 )     (23,806 )
Income tax expense (benefit)
     4,182       (31 )     75       3,724       402  
 
                              
Net loss
   $ (86,309 )   $ (4,339 )   $ (5,330 )   $ (115,121 )   $ (24,208 )
 
                              
 
                                        
Basic and diluted loss per share:
                                        
 
                                        
Loss per share
   $ (1.33 )   $ (0.06 )   $ (0.08 )   $ (1.70 )   $ (0.34 )
 
                              
Shares used in calculating basic and diluted loss per share
     64,886       67,015       70,618       67,775       71,076  
 
                              

 

 

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     Fiscal Year Ended  
    March 31,     December 31,     March 31,     March 31,     March 31,  
    2008     2007     2007     2008     2007  
GAAP net loss
   $ (86,309 )   $ (4,339 )   $ (5,330 )   $ (115,121 )   $ (24,208 )
Adjustments:
                                        
Stock-based compensation charges
     3,078       2,312       2,440       11,307       10,351  
Amortization of purchased intangibles
     5,903       5,903       6,200       23,761       24,751  
Impairment of goodwill
     71,494       —       —       71,494       —  
Restructuring charges
     1,516       125       (1,442 )     2,985       1,291  
Other than temporary investment impairment
     836       846       —       1,682       —  
Impairment of strategic investment
     3,000       —       —       3,000       —  
Realized gain on sale of strategic equity investment
     —       —       —       (4,649 )     —  
Gain on renegotiated design tool agreement
     —       —       —       (749 )     —  
Acquired in-process research and development
     —       —       —       —       13,300  
Payroll taxes on certain stock option exercises
     —       —       6       3       7  
Litigation settlement
     1,125       —       —       1,125       —  
Option investigation related expenses, net
     1,363       (792 )     939       1,072       5,344  
Income tax adjustments
     3,996       (152 )     (12 )     3,735       (535 )
 
                              
Total GAAP to Non-GAAP adjustments
     92,311       8,242       8,131       114,766       54,509  
 
                              
 
                                        
Non-GAAP net income (loss)
   $ 6,002     $ 3,903     $ 2,801     $ (355 )   $ 30,301  
 
                              
 
                                        
Diluted income (loss) per share
   $ 0.09     $ 0.06     $ 0.04     $ (0.01 )   $ 0.42  
 
                              
 
                                        
Shares used in calculating diluted income (loss) per share
     65,039       67,301       70,968       67,775       71,353  
 
                              
 
                                        
Income (loss) per share:
                                        
GAAP income (loss) per share
   $ (1.33 )   $ (0.06 )   $ (0.08 )   $ (1.70 )   $ (0.34 )
GAAP to non-GAAP adjustments
     1.42       0.12       0.12       1.69       0.76  
 
                              
Non-GAAP income (loss) per share
   $ 0.09     $ 0.06     $ 0.04     $ (0.01 )   $ 0.42  
 
                              
 
                                        
Reconciliation of shares used in calculating the non-GAAP income per share:
                                        
Shares used in calculating the basic and diluted income(loss) per share
     64,886       67,015       70,618       67,775       71,076  
Adjustment for dilutive securities
     153       286       350       —       277  
 
                              
Non-GAAP shares used in the EPS calculation
     65,039       67,301       70,968       67,775       71,353  
 
                              

 

 

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     Fiscal Year Ended  
    March 31,     December 31,     March 31,     March 31,     March 31,  
    2008     2007     2007     2008     2007  
GROSS PROFIT:
                                        
GAAP gross profit
   $ 35,003     $ 32,956     $ 34,316     $ 119,478     $ 152,138  
Amortization of purchased intangibles
     4,583       4,583       4,850       18,440       19,756  
Stock-based compensation expense
     135       224       153       671       592  
 
                              
Non-GAAP gross profit
   $ 39,721     $ 37,763     $ 39,319     $ 138,589     $ 172,486  
 
                              
 
                                        
OPERATING EXPENSES:
                                        
GAAP operating expenses
   $ 115,579     $ 39,474     $ 43,031     $ 241,454     $ 189,319  
Amortization of purchased intangibles
     (1,320 )     (1,320 )     (1,350 )     (5,321 )     (4,995 )
Impairment of goodwill
     (71,494 )     —       —       (71,494 )     —  
Acquired in-process research and development
     —       —       —       —       (13,300 )
Stock-based compensation expense
     (2,943 )     (2,088 )     (2,287 )     (10,636 )     (9,759 )
Restructuring charges
     (1,516 )     (125 )     1,442       (2,985 )     (1,291 )
Gain on renegotiated design tool agreement
     —       —       —       749       —  
Payroll taxes on certain stock option exercises
     —       —       (6 )     (3 )     (7 )
Litigation settlement
     (1,125 )     —       —       (1,125 )     —  
Option investigation related expenses, net
     (1,363 )     792       (939 )     (1,072 )     (5,344 )
 
                              
Non-GAAP operating expenses
   $ 35,818     $ 36,733     $ 39,891     $ 149,567     $ 154,623  
 
                              
 
                                        
INTEREST AND OTHER INCOME, NET
                                        
GAAP interest and other income, net
   $ (1,551 )   $ 2,148     $ 3,460     $ 10,579     $ 13,375  
Other than temporary investment impairment
     836       846       —       1,682       —  
Impairment of strategic investment
     3,000       —       —       3,000       —  
Realized gain on sale of strategic equity investments
     —       —       —       (4,649 )     —  
 
                              
Non-GAAP interest and other income, net
   $ 2,285     $ 2,994     $ 3,460     $ 10,612     $ 13,375  
 
                              
 
                                        
INCOME TAX EXPENSE (BENEFIT):
                                        
GAAP income tax expense (benefit)
   $ 4,182     $ (31 )   $ 75     $ 3,724     $ 402  
Income tax adjustments
     (3,996 )     152       12       (3,735 )     535  
 
                              
Non-GAAP income tax expense (benefit)
   $ 186     $ 121     $ 87     $ (11 )   $ 937  
 
                              
 
                                        
RESEARCH AND DEVELOPMENT
                                        
GAAP research and development
   $ 22,892     $ 24,696     $ 24,176     $ 97,550     $ 96,418  
Stock-based compensation expense
     (1,349 )     (1,177 )     (786 )     (4,797 )     (3,765 )
Gain on renegotiated design tool agreement
     —       —       —       749       —  
Payroll taxes on certain stock option exercises
     —       —       (3 )     (2 )     (3 )
 
                              
Non-GAAP research and development
   $ 21,543     $ 23,519     $ 23,387     $ 93,500     $ 92,650  
 
                              
 
                                        
SELLING, GENERAL AND ADMINISTRATIVE
                                        
GAAP selling, general and administrative
   $ 15,869     $ 14,125     $ 18,008     $ 61,907     $ 67,971  
Stock-based compensation expense
     (1,594 )     (911 )     (1,501 )     (5,839 )     (5,994 )
Payroll taxes on certain stock option exercises
     —       —       (3 )     (1 )     (4 )
 
                              
Non-GAAP selling, general and administrative
   $ 14,275     $ 13,214     $ 16,504     $ 56,067     $ 61,973  
 
                              

 

 

APPLIED MICRO CIRCUITS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
($ in thousands)
(unaudited)
                 
    Fiscal Year Ended March 31,  
    2008     2007  
Operating activities:
                
Net loss
   $ (115,121 )   $ (24,208 )
Adjustments to reconcile net loss to net cash provided by (used for) operating activities
               
Depreciation and amortization
     6,542       8,410  
Amortization of purchased intangibles
     23,762       24,751  
Acquired in-process research and development
     —       13,300  
Impairment of goodwill
     71,494       —  
Stock-based compensation expense :
                
Stock options
     9,349       10,211  
Restricted stock units
     1,957       142  
Non-cash restructuring charges (benefit)
     316       2,798  
Litigation settlement
     1,125       —  
Net gain on strategic equity investments
     (4,649 )     —  
Impairment of strategic investment
     3,000       —  
Impairment of marketable securities
     1,682       —  
Net gain on disposal of property
     23       120  
Changes in operating assets and liabilities:
                
Accounts receivable
     3,758       (4,790 )
Inventories
     (6,680 )     (5,307 )
Other assets
     2,282       (1,336 )
Accounts payable
     (1,375 )     1,214  
Accrued payroll and other accrued liabilities
     (7,103 )     (11,566 )
Deferred tax liability
     3,958       —  
Deferred revenue
     (476 )     (1,230 )
 
            
Net cash provided by (used for) operating activities
     (6,156 )     12,509  
 
                
Investing activities:
                
Proceeds from sales and maturities of investments
     623,619       468,570  
Purchases of investments
     (550,137 )     (403,080 )
Purchase of strategic investments
     (5,000 )     (1,500 )
Net proceeds from the sale of strategic equity investments
     5,249       —  
Purchase of property, equipment and other assets
     (7,021 )     (6,732 )
Proceeds from sale of property, equipment and other assets
     1,646       4,788  
Net cash paid for acquisitions
     232       (71,971 )
 
            
Net cash provided by (used for) investing activities
     68,588       (9,925 )
 
                
Financing activities:
                
Proceeds from issuance of common stock
     6,431       2,850  
Open market repurchases of Company stock
     (56,950 )     (20,137 )
Funding of structured stock repurchase agreements
     (41,830 )     (9,398 )
Funds received from structured stock repurchase agreements including gains
     21,112       26,963  
Payments on long-term debt
     —       (289 )
Other
     (101 )     (103 )
 
            
Net cash used for financing activities
     (71,338 )     (114 )
 
            
Net decrease in cash and cash equivalents
     (8,906 )     2,470  
Cash and cash equivalents at beginning of the period
     51,595       49,125  
 
            
Cash and cash equivalents at end of the period
   $ 42,689     $ 51,595