8-K

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): January 20, 2004

APPLIED MICRO CIRCUITS CORPORATION

(Exact Name of Registrant as Specified in Charter)

Delaware	000-23193	94-2586591
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

6290 Sequence Drive

San Diego, California 92121

(Address of Principal Executive Offices and Zip Code)

Registrant’s telephone number, including area code: (858) 450-9333

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

(c) Exhibits.

99.1 Press  Release of Applied Micro Circuits Corporation issued on January 20, 2004.

Item 12. Results of Operations and Financial Condition

On January 20, 2004, Applied Micro Circuits Corporation (“AMCC”) issued a press release regarding its financial results for the quarter ended December 31, 2003. A copy of the press release is furnished as Exhibit 99.1 to this Current Report.

AMCC reports its financial results in accordance with GAAP and additionally on a non-GAAP basis referred to as pro forma. These pro forma measures are not in accordance with, nor are they a substitute for, GAAP measures and may not be consistent with the presentation used by other companies. AMCC uses the pro forma financial measures to evaluate and manage its operations. AMCC is providing this information to investors to allow for the performance of additional financial analysis and because it is consistent with the financial models and estimates published by analysts who follow AMCC.

The information in this Current Report 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 Commission.

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:	January 20, 2004	By:	/s/    Stephen M. Smith
			Stephen M. Smith Senior Vice President, Finance and Administration, and Chief Financial Officer

INDEX TO EXHIBITS

99.1 Press Release of Applied Micro Circuits Corporation issued on January 20, 2004.

EX-99.1

EXHIBIT 99.1

FOR ADDITIONAL INFORMATION:

Investor Relations Contact:	Media/Editorial Contact:
Applied Micro Circuits Corporation Debra Hart	The Ardell Group Amy Peterson
Phone: (858) 535-4217	Phone: (858) 792-4974
E-Mail: dhart@amcc.com	E-Mail: amy@ardellgroup.com

Tuesday, January 20, 2004

Company Press Release

APPLIED MICRO CIRCUITS CORPORATION ANNOUNCES

THIRD QUARTER FISCAL 2004 FINANCIAL RESULTS

SAN DIEGO—January 20, 2004—Applied Micro Circuits Corporation [NASDAQ: AMCC] today reported its financial results for the third quarter of fiscal 2004.

Net revenues for the third quarter of fiscal 2004 were $38.2 million, up 52% sequentially from the $25.1 million reported in the second quarter of fiscal 2004. Year over year, net revenues for the third quarter of fiscal 2004 were up 81% from the $21.1 million reported in the third quarter of fiscal 2003.

The net loss for the third quarter of fiscal 2004 on a generally accepted accounting principles (GAAP) basis was $26.4 million or $0.09 per share, compared with a net loss of $22.9 million or $0.08 per share for the second quarter of fiscal 2004 and a net loss of $39.1 million or $0.13 per share for the third quarter of fiscal 2003. The pro forma net loss for the third quarter of fiscal 2004 was $7.1 million or $0.02 per share, compared to the pro forma net loss of $6.9 million or $0.02 per share in the second quarter of fiscal 2004 and the pro forma net loss $15.1 million or $0.05 per share in the third quarter of fiscal 2003.

Net revenues for the nine months ended December 31, 2003 were $83.8 million compared to $81.5 million reported for the nine months ended December 31, 2002.

The GAAP net loss for the nine months ended December 31, 2003 was $102.7 million or $0.34 per share, compared to the net loss of $516.4 million or $1.72 per share for the nine months ended December 31, 2002. The pro forma net loss for the nine months ended December 31, 2003 was $23.1 million or $0.08 per share, compared with the pro forma net loss of $41.7 million or $0.14 per share for the nine months ended December 31, 2002.

On September 30, 2003, AMCC acquired certain assets and licenses to property associated with IBM’s PowerPRS Switch Fabric product line. The consolidated operating results for the quarter ended December 31, 2003 reflect the operating results of the PRS business from the date of acquisition. On October 28, 2003, AMCC completed the acquisition of JNI Corporation for a purchase price of approximately $213.7 million, consisting of $196.4 million in cash and options to purchase approximately 4.3 million shares of AMCC’s common stock. The consolidated operating results for the quarter ended December 31, 2003 reflect the operating results of JNI Corporation subsequent to the date of the acquisition.

Revenue As Reported (in thousands):

	Quarter Ended
	Sept 30, 2003		Dec 31, 2003		Sequential % change
AMCC:
Communications	$	21,828	$	26,030	19	%
Non-Communications		3,291		2,050	-38	%
Subtotal		25,119		28,080	12	%
PRS acquisition		—		5,095	N/A
JNI (from the date of acquisition)		—		5,014	N/A
Total revenue reported	$	25,119	$	38,189	52	%

The following supplemental revenue table shows the revenue that would have been reported had AMCC and JNI been combined for each of the past two quarters (in thousands):

	Quarter Ended
	Sept 30, 2003		Dec 31, 2003		Sequential % changes
AMCC:
Communications	$	21,828	$	26,030	19	%
Non-Communications		3,291		2,050	-38	%
Subtotal		25,119		28,080	12	%
PRS acquisition		—		5,095	N/A
JNI (full quarters)		6,012		7,034	17	%
Total	$	31,131	$	40,209	—

Commenting on the results, Dave Rickey, Chairman of the Board, President and Chief Executive Officer said, “I am encouraged by the business momentum I see from our customers, as well as our product traction at the major accounts. We believe that our heavy investment in leadership products has positioned AMCC well as the industry rebounds.”

AMCC reports its financial results in accordance with GAAP and additionally on a non-GAAP basis referred to as pro forma. These pro forma measures are not in accordance with, nor are they a substitute for, GAAP measures and may not be consistent with the presentation used by other

companies. AMCC uses the pro forma financial measures to evaluate and manage the Company’s operations. AMCC is providing this information to investors to allow for the performance of additional financial analysis and because it is consistent with the financial models and estimates published by analysts who follow the Company.

The pro forma results exclude the following items which are required by GAAP: cumulative effect of accounting changes, goodwill and other purchased intangible asset impairment charges, restructuring costs, on-going amortization of purchased intangibles, acquired in-process research and development charges, stock-based compensation charges related to acquired companies, certain excess inventory charges and benefits, payroll tax effects of certain stock option exercises, and net gains and losses related to strategic equity investments and real estate transactions. Income taxes are adjusted to an estimated pro forma effective tax rate. See the attached reconciliation of GAAP to pro forma net loss, which quantifies the amounts excluded from pro forma basis results.

For More Information

AMCC management will be holding a conference call today, January 20, 2004, 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 2004 and to provide guidance for the fourth quarter of fiscal 2004. You may access the conference call via any of the following:

Teleconference:	719-457-2618
Conference ID:	616689
Web Broadcast:	http://www.amcc.com
Replay:	719-457-0820 (available for 7 days following the call)

AMCC Overview

AMCC designs, develops, manufactures, and markets silicon networking solutions for global wide area networks (WAN) and storage area networks (SAN). The Company’s proven design expertise, coupled with system-level knowledge and multiple silicon process technologies, provides integrated circuits that span the complete WAN PHY-to-fabric roadmap and a robust portfolio of networked storage products addressing Host Bus Adapters, storage array, switching, and SAN extension requirements. The Company’s system solution portfolio addresses the high-performance needs of both transport and switching and routing applications within the evolving intelligent optical network, as well as Fibre Channel hardware and software products for high-growth networked storage. AMCC’s corporate headquarters are located in San Diego, 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 or call our shareholder information line at (888) 982-AMCC (2622).

This news release contains forward-looking statements, including statements regarding customers’ business momentum and the Company’s product traction that 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, manufacturing capacity and execution, 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, 2003, 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.

-Financial Tables Follow

APPLIED MICRO CIRCUITS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

($ in thousands)

	December 31, 2003		March 31, 2003
	(unaudited)
ASSETS
Current assets:
Cash, cash equivalents and short-term investments	$	845,694	$	1,036,140
Accounts receivable, net		19,526		5,634
Inventories		7,890		7,178
Other current assets		18,452		23,623
Total current assets		891,562		1,072,575
Property and equipment, net		39,593		62,035
Other assets		2,206		759
Purchased intangibles		245,012		88,219
Total assets	$	1,178,373	$	1,223,588
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	26,575	$	12,689
Other current liabilities		51,194		37,446
Current portion of long-term debt & capital leases		265		1,265
Total current liabilities		78,034		51,400
Long-term debt & capital leases		103		—
Stockholders’ equity		1,100,236		1,172,188
Total liabilities and stockholders’ equity	$	1,178,373	$	1,223,588

Certain year-end amounts have been reclassified to conform with the current period presentation.

APPLIED MICRO CIRCUITS CORPORATION

GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share data)

	Three months ended									Nine months ended
	Dec 31, 2003			Sept 30, 2003			Dec 31, 2002			Dec 31, 2003			Dec 31, 2002
Net revenues	$	38,189		$	25,119		$	21,114		$	83,823		$	81,488
Cost of revenues		17,471			9,485			14,327			36,739			48,469
Gross profit		20,718			15,634			6,787			47,084			33,019
Operating expenses:
Research and development		30,052			26,102			32,040			85,280			100,978
Selling, general and administrative		13,493			11,037			14,467			34,892			45,782
Stock-based compensation:
Research and development		2,142			3,579			10,467			14,846			62,557
Selling, general and administrative		375			1,043			4,286			4,826			55,020
Amortization of purchased intangibles		689			—			—			689			—
Acquired in-process research and development		16,100			5,700			—			21,800			—
Impairment of goodwill and other intangible assets		—			—			—			—			204,284
Restructuring charges (benefits)		(200	)		—			—			23,298			5,500
Total operating expenses		62,651			47,461			61,260			185,631			474,121
Operating loss		(41,933	)		(31,827	)		(54,473	)		(138,547	)		(441,102	)
Interest and other income, net		15,493			8,919			15,414			35,807			26,932
Loss before income taxes		(26,440	)		(22,908	)		(39,059	)		(102,740	)		(414,170	)
Income taxes		—			—			—			—			—
Loss before cumulative effect of accounting change		(26,440	)		(22,908	)		(39,059	)		(102,740	)		(414,170	)
Cumulative effect of accounting change		—			—			—			—			(102,229	)
Net loss	$	(26,440	)	$	(22,908	)	$	(39,059	)		(102,740	)	$	(516,399	)
Basic and diluted loss per share:
Loss per share before cumulative effect of accounting change	$	(0.09	)	$	(0.08	)	$	(0.13	)	$	(0.34	)	$	(1.38	)
Loss per share	$	(0.09	)	$	(0.08	)	$	(0.13	)	$	(0.34	)	$	(1.72	)
Weighted average shares		306,823			305,195			301,622			305,273			300,711

APPLIED MICRO CIRCUITS CORPORATION

PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share data)

	Three months ended									Nine months ended
	Dec 31, 2003			Sept 30, 2003			Dec 31, 2002			Dec 31, 2003			Dec 31, 2002
Net revenues	$	38,189		$	25,119		$	21,114		$	83,823		$	81,488
Cost of revenues		14,132			8,795			12,355			30,920			41,498
Gross profit		24,057			16,324			8,759			52,903			39,990
Operating expenses:
Research and development		30,038			26,099			32,040			85,261			100,974
Selling, general and administrative		13,414			11,036			14,467			34,810			45,782
Total operating expenses		43,452			37,135			46,507			120,071			146,756
Operating loss		(19,395	)		(20,811	)		(37,748	)		(67,168	)		(106,766	)
Interest and other income, net		7,080			8,919			11,751			27,394			34,919
Loss before income taxes		(12,315	)		(11,892	)		(25,997	)		(39,774	)		(71,847	)
Income tax benefit		(5,171	)		(4,994	)		(10,918	)		(16,703	)		(30,175	)
Net loss	$	(7,144	)	$	(6,898	)	$	(15,079	)	$	(23,071	)	$	(41,672	)
Diluted loss per share:
Loss per share	$	(0.02	)	$	(0.02	)	$	(0.05	)	$	(0.08	)	$	(0.14	)
Weighted average shares		306,823			305,195			301,622			305,273			300,711

The above pro forma statements are based on the Company’s consolidated statements of operations for the periods presented. This pro forma information is not prepared in accordance with generally accepted accounting principles and may not be consistent with the presentation used by other companies. The pro forma operating results are used by the Company’s management to evaluate the operating performance of the Company and are also consistent with the financial models and estimates published by analysts who follow the Company. See the schedule of pro forma adjustments for a reconciliation of the pro forma results to the GAAP basis results.

APPLIED MICRO CIRCUITS CORPORATION

RECONCILIATION OF GAAP TO PRO FORMA NET LOSS

(unaudited)

(in thousands)

	Three months ended									Nine months ended
	Dec 31, 2003			Sept 30, 2003			Dec 31, 2002			Dec 31, 2003			Dec 31, 2002
GAAP net loss	$	(26,440	)	$	(22,908	)	$	(39,059	)	$	(102,740	)	$	(516,399	)
Adjustments:
Stock-based compensation related to acquired companies		2,670			4,793			15,153			20,214			119,833
Amortization of purchased intangibles		3,865			1,572			1,572			7,008			4,715
Impairments of goodwill and other intangibles		—			—			—			—			204,284
Cumulative effect of accounting change		—			—			—			—			102,229
Restructuring costs / (benefits)		(200	)		—			—			23,298			5,500
Valuation allowance for strategic equity investments		—			—			—			—			11,650
Gain on the sale of real estate		(7,551	)		—			(3,663	)		(7,551	)		(3,663	)
Realized gains on strategic equity investments		(862	)		—			—			(862	)		—
Sale of excess inventory benefit		—			(1,053	)		—			(1,053	)		—
Acquired in-process research and development		16,100			5,700			—			21,800			—
Payroll taxes on certain stock option exercises		103			4			—			112			4
Income tax adjustments		5,171			4,994			10,918			16,703			30,175
Total GAAP to pro forma adjustments		19,296			16,010			23,980			79,669			474,727
Pro forma net loss	$	(7,144	)	$	(6,898	)	$	(15,079	)	$	(23,071	)	$	(41,672	)

APPLIED MICRO CIRCUITS CORPORATION

SCHEDULE OF SELECTED PRO FORMA ADJUSTMENTS

(unaudited)

(in thousands)

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

	Three months ended									Nine months ended
	Dec 31, 2003			Sept 30, 2003			Dec 31, 2002			Dec 31, 2003			Dec 31, 2002
GROSS PROFIT:
GAAP gross profit	$	20,718		$	15,634		$	6,787		$	47,084		$	33,019
Amortization of purchased intangibles		3,176			1,572			1,572			6,319			4,715
Sale of excess inventory benefit		—			(1,053	)		—			(1,053	)		—
Stock-based compensation related to acquired companies		153			171			400			542			2,256
Payroll taxes on certain stock option exercises		10			—			—			11			—
Pro forma gross profit	$	24,057		$	16,324		$	8,759		$	52,903		$	39,990
OPERATING EXPENSES:
GAAP operating expenses	$	62,621		$	47,461		$	61,260		$	185,631		$	474,121
Amortization of purchased intangibles		689			—			—			689			—
Acquired in-process research and development		16,100			5,700			—			21,800			—
Impairments of goodwill and other intangible assets		—			—			—			—			204,284
Stock-based compensation related to acquired companies		2,517			4,622			14,753			19,672			117,577
Restructuring costs (benefits)		(200	)		—			—			23,298			5,500
Payroll taxes on certain stock option exercises		93			4			—			101			4
Pro forma operating expenses		43,452			37,135			46,507		$	120,071		$	146,756
OTHER INCOME (EXPENSE), NET:
GAAP other income (expense), net	$	15,493		$	8,919		$	15,414		$	35,807		$	26,932
Gain on the sale of real estate		(7,551	)		—			(3,663	)		(7,551	)		(3,663	)
Realized gains on strategic equity investments		(862	)		—			—			(862	)		—
Valuation allowance for strategic equity investments		—			—			—			—			11,650
Pro forma other income (expense), net	$	7,080		$	8,919		$	11,751		$	27,394		$	34,919