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 19, 2004

Applied Micro Circuits Corporation

(Exact name of registrant as specified in its 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)	(Zip Code)

Registrant’s telephone number, including area code

(858) 450-9333

N/A

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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

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

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

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

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

Item 2.02. Results of Operation and Financial Condition.

On October 19, 2004, Applied Micro Circuits Corporation (“AMCC”) issued a press release regarding its financial results for the second quarter ended September 30, 2004. 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.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits

99.1 Press Release, dated October 19, 2004.

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 19, 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, dated October 19, 2004.

EX-99.1

Exhibit 99.1

FOR ADDITIONAL INFORMATION:

Investor Relations Contact:	Media/Editorial Contact:
Applied Micro Circuits Corporation	The Ardell Group
Debra Hart	Angela Edgerton
Phone: (858) 535-4217	Phone: (858) 792-2941
E-Mail: dhart@amcc.com	E-Mail: angela@ardellgroup.com

Tuesday, October 19, 2004

Company Press Release

APPLIED MICRO CIRCUITS CORPORATION ANNOUNCES

SECOND QUARTER FISCAL 2005 FINANCIAL RESULTS

SAN DIEGO—October 19, 2004—Applied Micro Circuits Corporation [NASDAQ: AMCC] today reported its financial results for the second quarter of fiscal 2005.

Net revenues for the second quarter of fiscal 2005 were $61.1 million compared to $67.4 million reported in the first quarter of fiscal 2005 and $25.1 million reported in the second quarter of fiscal 2004.

For the second quarter of fiscal 2005, on a generally accepted accounting principles (GAAP) basis, the net loss was $18.3 million or $(0.06) per share, compared with a net loss of $21.8 million or $(0.07) per share for the first quarter of fiscal 2005 and a net loss of $22.9 million or $(0.08) per share for the second quarter of fiscal 2004.

The pro forma net loss for the second quarter of fiscal 2005 was $4.1 million or $(0.01) per share, compared to the pro forma net income of $2.1 million or $0.01 per share in the first quarter of fiscal 2005 and the pro forma net loss of $6.9 million or $(0.02) per share in the second quarter of fiscal 2004.

Net revenues for the six months ended September 30, 2004 were $128.5 million compared to $45.6 million reported for the six months ended September 30, 2003.

The GAAP net loss for the six months ended September 30, 2004 was $40.1 million or $(0.13) per share, compared to the net loss of $76.3 million or $(0.25) per share for the six months ended September 30, 2003. The pro forma net loss for the six months ended September 30, 2004 was $2.0 million or $(0.01) per share, compared with the pro forma net loss of $15.9 million or $(0.05) per share for the six months ended September 30, 2003.

Commenting on the results, Tom Tullie, Chief Operating Officer, said, “The operating results we announced today are in-line with our revised expectations. Although the current economic condition of our markets is challenging, I believe that our strategy of expanding our presence in our existing markets and diversifying our revenue stream into new and emerging markets will position us for long-term success.”

On August 12, 2004, the Company announced that the board of directors had authorized a stock repurchase program for the repurchase of up to $200,000,000 of its common stock. During the second quarter of fiscal 2005, the Company repurchased and retired 5.4 million shares of its common stock for approximately $16.9 million. In addition, the Company entered into a series of agreements totaling $50.0 million that could result in the repurchase and retirement of additional shares of its common stock. On the expiration date of each agreement, depending on the closing price of the Company’s common stock, the Company will receive either a predetermined number of shares of its common stock, or a predetermined amount of cash. Collectively, under the agreements, the Company could receive up to $56.8 million of cash, or the delivery of up to 16.7 million shares of its common stock.

During the first quarter of fiscal 2005, AMCC completed the acquisition of 3ware, Inc. and the acquisition of certain intellectual property and a portfolio of assets associated with IBM’s 400 series of embedded PowerPC^® standard products for approximately $145 million in cash and $228 million in cash, respectively.

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: restructuring costs, on-going amortization of purchased intangibles, acquired in-process research and development charges, stock-based compensation charges related to acquired companies and payroll tax effects of certain stock option exercises. Income taxes are adjusted to an estimated pro forma effective tax rate. See the attached reconciliation of the GAAP net loss to the pro forma net income or loss, which quantifies the amounts excluded from pro forma basis results.

For More Information

AMCC management will be holding a conference call today, October 19, 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 second quarter of fiscal 2005 and to provide guidance for the third quarter of fiscal 2005. You may access the conference call via any of the following:

Teleconference:	913-981-4901
Conference ID:	886200
Web Broadcast:	http://www.amcc.com
Replay:	719-457-0820
	(available for 7 days following the call)

AMCC Overview

AMCC provides the essential building blocks for the processing, moving and storing of information worldwide. The company blends systems and software expertise with high-performance, high-bandwidth silicon integration to deliver silicon, hardware and software solutions for global wide area networks (WAN), embedded applications, storage area networks (SAN), and high-growth storage markets such as Serial ATA (SATA) RAID. 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.

This news release contains forward-looking statements 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, integration of acquired businesses, 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, 2004, 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)

	Sept 30, 2004		March 31, 2004
	(unaudited)
ASSETS
Current assets:
Cash, cash equivalents and short-term investments	$	410,576	$	861,041
Accounts receivable, net		27,872		23,284
Inventories		18,842		8,490
Other current assets		17,362		16,208
Total current assets		474,652		909,023
Property and equipment, net		39,762		37,271
Other assets		1,769		1,616
Purchased intangibles		578,206		240,193
Total assets	$	1,094,389	$	1,188,103
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	26,163	$	18,164
Other current liabilities		44,820		49,089
Current portion of long-term debt & capital leases		171		303
Total current liabilities		71,154		67,556
Stockholders’ equity		1,023,235		1,120,547
Total liabilities and stockholders’ equity	$	1,094,389	$	1,188,103

APPLIED MICRO CIRCUITS CORPORATION

GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share data)

	Three months ended									Six Months ended
	Sept 30, 2004			June 30, 2004			Sept 30, 2003			Sept 30, 2004			Sept 30, 2003
Net revenues	$	61,069		$	67,402		$	25,119		$	128,471		$	45,634
Cost of revenues		31,529			31,492			9,485			63,021			19,268
Gross profit		29,540			35,910			15,634			65,450			26,366
Operating expenses:
Research and development		31,702			30,990			26,102			62,692			55,228
Selling, general and administrative		15,298			14,378			11,037			29,676			21,399
Stock-based compensation:
Research and development		915			1,032			3,579			1,947			12,704
Selling, general and administrative		2,202			1,323			1,043			3,525			4,451
Amortization of purchased intangibles		1,962			1,557			—			3,519			—
Acquired in-process research and development		—			13,400			5,700			13,400			5,700
Restructuring charges		310			—			—			310			23,498
Total operating expenses		52,389			62,680			47,461			115,069			122,980
Operating loss		(22,849	)		(26,770	)		(31,827	)		(49,619	)		(96,614	)
Interest and other income, net		4,530			5,281			8,919			9,811			20,314
Loss before income taxes		(18,319	)		(21,489	)		(22,908	)		(39,808	)		(76,300	)
Income tax expense		—			335			—			335			—
Net loss	$	(18,319	)	$	(21,824	)	$	(22,908	)	$	(40,143	)	$	(76,300	)
Basic and diluted loss per share:
Loss per share	$	(0.06	)	$	(0.07	)	$	(0.08	)	$	(0.13	)	$	(0.25	)
Shares used in calculating diluted loss per share		310,128			311,519			305,195			310,824			304,498

APPLIED MICRO CIRCUITS CORPORATION

PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share data)

	Three months ended									Six months ended
	Sept 30, 2004			June 30, 2004			Sept 30, 2003			Sept 30, 2004			Sept 30, 2003
Net revenues	$	61,069		$	67,402		$	25,119		$	128,471		$	45,634
Cost of revenues		23,823			24,635			8,795			48,458			16,788
Gross profit		37,246			42,767			16,324			80,013			28,846
Operating expenses:
Research and development		31,702			30,990			26,099			62,692			55,223
Selling, general and administrative		15,298			14,376			11,036			29,674			21,396
Total operating expenses		47,000			45,366			37,135			92,366			76,619
Operating loss		(9,754	)		(2,599	)		(20,811	)		(12,353	)		(47,773	)
Interest and other income, net		4,530			5,281			8,919			9,811			20,314
Income (loss) before income taxes		(5,224	)		2,682			(11,892	)		(2,542	)		(27,459	)
Income tax expense (benefit)		(1,149	)		590			(4,994	)		(559	)		(11,532	)
Net income (loss)	$	(4,075	)	$	2,092		$	(6,898	)	$	(1,983	)	$	(15,927	)
Diluted income (loss) per share:
Income (loss) per share	$	(0.01	)	$	0.01		$	(0.02	)	$	(0.01	)	$	(0.05	)
Shares used in calculating diluted income (loss) per share		310,128			318,327			305,195			310,824			304,498

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 INCOME/LOSS

(unaudited)

(in thousands)

	Three months ended									Six months ended
	Sept 30, 2004			June 30, 2004			Sept 30, 2003			Sept 30, 2004			Sept 30, 2003
GAAP net loss	$	(18,319	)	$	(21,824	)	$	(22,908	)	$	(40,143	)	$	(76,300	)
Adjustments:
Stock-based compensation related to acquired companies		3,246			2,510			4,793			5,756			17,544
Amortization of purchased intangibles		9,539			8,259			1,572			17,798			3,143
Restructuring costs		310			—			—			310			23,498
Excess inventory benefit		—			—			(1,053	)		—			(1,053	)
Acquired in-process research and development		—			13,400			5,700			13,400			5,700
Payroll taxes on certain stock option exercises		—			2			4			2			9
Income tax adjustments		1,149			(255	)		4,994			894			11,532
Total GAAP to pro forma adjustments		14,244			23,916			16,010			38,160			60,373
Pro forma net income (loss)	$	(4,075	)	$	2,092		$	(6,898	)	$	(1,983	)	$	(15,927	)

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								Six months ended
	Sept 30, 2004			June 30, 2004		Sept 30, 2003			Sept 30, 2004			Sept 30, 2003
GROSS PROFIT:
GAAP gross profit	$	29,540		$	35,910	$	15,634		$	65,450		$	26,366
Amortization of purchased intangibles		7,577			6,702		1,572			14,279			3,143
Excess inventory charge (benefit)		—			—		(1,053	)		—			(1,053	)
Stock-based compensation related to acquired companies		129			155		171			284			389
Payroll taxes on certain stock option exercises		—			—		—			—			1
Pro forma gross profit	$	37,246		$	42,767	$	16,324		$	80,013		$	28,846
OPERATING EXPENSES:
GAAP operating expenses	$	52,389		$	62,680	$	47,461		$	115,069		$	122,980
Amortization of purchased intangibles		1,962			1,557		—			3,519			—
Acquired in-process research and development		—			13,400		5,700			13,400			5,700
Stock-based compensation related to acquired companies		3,117			2,355		4,622			5,472			17,155
Restructuring costs		310			—		—			310			23,498
Payroll taxes on certain stock option exercises		—			2		4			2			8
Pro forma operating expenses	$	47,000		$	45,366	$	37,135		$	92,366		$	76,619
INCOME TAX EXPENSE (BENEFIT):
GAAP income tax expense (benefit)	$	—		$	335	$	—		$	335		$	—
Income tax adjustments		(1,149	)		255		(4,994	)		(894	)		(11,532	)
Pro forma income tax expense (benefit)	$	(1,149	)	$	590	$	(4,994	)	$	(559	)	$	(11,532	)