10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

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

For the fiscal year ended March 31, 2014

OR

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

For the transition period from                    to                    

Commission file number: 000-23193

APPLIED MICRO CIRCUITS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	94-2586591
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
215 Moffett Park Drive, Sunnyvale, CA	94089
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:

(408) 542-8600

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $0.01 par value	The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  þ    No  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  þ

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	þ	Accelerated filer	o
Non-accelerated filer	o    (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).    Yes  ¨    No  þ

The aggregate market value of the voting common stock held by non-affiliates of the registrant, based upon the closing sale price of the registrant’s common stock on September 30, 2013 (the last day of the registrant’s second quarter of fiscal 2014) as reported on the Nasdaq Global Select Market, was approximately $800,837,000. Shares of common stock held by each officer and director and by each person who then owned 10% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. The registrant has no non-voting common stock.

There were 77,972,678 shares of the registrant’s common stock issued and outstanding as of May 20, 2014.

Documents Incorporated by Reference

The following document is incorporated by reference in Part III (Items 10, 11, 12, 13 and 14) of this Annual Report on Form 10-K: portions of registrant’s definitive proxy statement for its annual meeting of stockholders to be held on August 12, 2014 which will be filed with the Securities and Exchange Commission within 120 days of March 31, 2014.

APPLIED MICRO CIRCUITS CORPORATION

ANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED

March 31, 2014

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business	1
Item 1A.	Risk Factors	10
Item 1B.	Unresolved Staff Comments	29
Item 2.	Properties	29
Item 3.	Legal Proceedings	29
Item 4.	Mine Safety Disclosures	30
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	31
Item 6.	Selected Financial Data	33
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 7A.	Quantitative and Qualitative Disclosure About Market Risk	50
Item 8.	Financial Statements and Supplementary Data	51
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	51
Item 9A.	Controls and Procedures	51
Item 9B.	Other Information	52
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	52
Item 11.	Executive Compensation	53
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	53
Item 13.	Certain Relationships and Related Transactions and Director Independence	53
Item 14.	Principal Accountant Fees and Services	53
PART IV
Item 15.	Exhibits and Financial Statement Schedules	53
Signatures		54
Financial Statements		F- 1

i

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

All statements included or incorporated by reference in this report, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are made as of the date of this Annual Report on Form 10-K for the fiscal year ended March 31, 2014 (this “Annual Report”). Any statement that refers to an expectation, projection or other characterization of future events or circumstances, including the underlying assumptions, is a forward-looking statement. We use certain words and their derivatives such as “anticipate”, “believe”, “plan”, “expect”, “estimate”, “predict”, “intend”, “may”, “will”, “should”, “could”, “future”, “potential” and similar expressions in many of the forward-looking statements.

These forward-looking statements include, but are not limited to, statements regarding: anticipated trends and challenges in our business and the markets in which we operate; expectations regarding the growth of next-generation cloud infrastructure and global data center traffic, energy consumption and total cost of ownership; anticipated market penetration by ARM®-based cloud servers and other market and technological trends; our plans and predictions regarding the development, production and performance of our X-Gene™ Server on a Chip™ product family and development platform, our X-Weave™ product family, and other new products; the timing and scope of customer testing and adoption of such products and their total addressable market and total cost of ownership; product development cycles and schedules; design-win pipeline; our strategy, including our focus on the development of our X-Gene and X-Weave product families and our current connectivity investments in high-growth 10, 40 and 100Gbps (gigabit per second) solutions; the timing and extent of customers’ transition away from older connectivity solutions and toward higher performance solutions; our assumptions and forecasts regarding competitors’ product offerings, pricing and strategies, and our products’ ability to compete; the anticipated amount, form and timing of consideration to be paid in connection with our acquisition of Veloce, and related impact on our share dilution, research and development expense and operating results; our sales and marketing strategy; our expectations regarding adequacy of leased facilities; the impact of seasonal fluctuations and economic conditions on our business; our intellectual property; our expectations as to expenses, liquidity and capital resources, including without limitation our expected sources and uses of cash and substantial need for additional financing; our gross margin and efforts to offset reductions in gross margin; our estimates regarding eventual actual costs compared to amounts accrued in our financial statements; factors affecting demand for our products; our ability to attract and retain qualified personnel; our restructuring activities and related expense; and the impact of accounting pronouncements and our critical accounting policies, judgments, estimates and assumptions on our financial results.

The forward-looking statements are based on our current expectations, estimates and projections about our industry and our business, management's beliefs, and other assumptions made by us. In addition, some of the forward-looking statements included in the "Industry Background" section of Part I, Item 1 below are based upon statements made by industry experts, analysts, and other third party sources. All forward-looking statements in this Annual Report and the expectations, estimates, projections, beliefs and other assumptions on which they are based are subject to many risks and uncertainties and are inherently subject to change. We describe many of the risks and uncertainties that we face in Part I, Item 1A, “Risk Factors,” and elsewhere in this Annual Report. Our actual results and actual events could differ materially from those anticipated in any forward-looking statement. Readers should not place undue reliance on any forward-looking statement. All forward-looking statements in this report speak only as of the filing date of this report, and except as required by law, we undertake no obligation to update or revise any forward-looking statements to reflect events or circumstances after such date.

In this Annual Report, “Applied Micro Circuits Corporation”, “AMCC”, “APM”, “AppliedMicro”, the “Company”, “we”, “us” and “our” refer to Applied Micro Circuits Corporation and all of our consolidated subsidiaries.

PART I

Item 1. Business.

Applied Micro Circuits Corporation was incorporated and commenced operations in California in 1979 and was reincorporated in Delaware in 1987. Our principal executive offices are located at 215 Moffett Park Drive, Sunnyvale, California 94089 and our phone number is 408-542-8600. Our sales and engineering offices are located throughout the world. Our common stock trades on the Nasdaq Global Select Market under the symbol “AMCC”.

Overview

Applied Micro Circuits Corporation is a global leader in silicon solutions for next-generation cloud infrastructure and data centers, as well as connectivity products for edge, metro and long haul communications equipment. Our products include the X-Gene™ ARM® 64-bit Server on a Chip™ solution, targeted for cloud data center, high-performance computing, and enterprise applications. X-Gene began sampling in silicon to current and prospective customers as well as ecosystem partners in March 2013, and we expect to ship production units during the summer of 2014. We expect X-Gene to begin generating

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meaningful production sales revenue in the second half of our fiscal year 2015, or the December 2014 or March 2015 quarters. We believe that X-Gene is the first ARM 64-bit server solution to have sampled and to have production units being manufactured. In addition to having a time-to-market advantage, we believe X-Gene will lead the next generation cloud data center silicon market by addressing the need for high performance, lower power, and lower total cost of ownership (“TCO”).

As part of our current base business, we offer a line of embedded computing products based on Power Architecture. Our future embedded processor products will be based on the ARM Instruction Set Architecture (“ISA”). Our embedded processor products are currently deployed in applications such as control- and data-plane functionality, wireless access points, residential gateways, wireless base stations, storage controllers, network attached storage, network switches and routing products, and multi-function printers.

The connectivity portion of our base business provides high-speed, high-bandwidth, high-reliability communications products. In July 2013, we announced the X-Weave™ family of products, designed to meet the needs of public cloud, private cloud, and enterprise data centers. The X-Weave family includes products spanning 100Gbps to 240 Gbps of connectivity with unique multi-protocol features and high density.

Available Information

We maintain a web site, located at www.apm.com, to which we regularly post copies of our press releases as well as additional information about us. Our filings with the Securities and Exchange Commission (“SEC”), including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are posted on and available free of charge through the Investor Relations section of our web site and are accessible as soon as reasonably practicable after being electronically filed with or furnished to the SEC. Interested persons can subscribe on our web site to email alerts that are sent automatically when we issue press releases, file our reports with the SEC, or post certain other information to our web site. Information accessible through our web site does not constitute a part of this Annual Report.

Copies of this Annual Report are also available free of charge, upon request to our Investor Relations Department, 215 Moffett Park Drive, Sunnyvale, California 94089. In addition, our Board Guidelines, Code of Business Conduct and Ethics, other corporate policies and written charters for the various committees of our Board of Directors are accessible through the Corporate Governance tab in the Investor Relations section of our web site and are available in print free of charge to any shareholder who requests a copy.

You may read and copy materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington DC 20549. Information on the operation of the Public Reference Room is available by calling the SEC at 1-800-SEC-0330. The SEC maintains a web site that contains reports, proxy statements and other information we file with the SEC. The address of the SEC’s web site is www.sec.gov.

Industry Background

Connectivity and Computing Silicon Solutions

Global data center traffic is expected to grow from 1.2 zetabytes per year in 2012 to 5.3 zetabytes per year in 2017. This represents a compound annual growth rate (“CAGR”) of 35% through 2017. Data centers today are estimated to consume about 2% of the world's electricity production, and electricity consumption by data centers worldwide increased by an estimated 7% in 2013 compared to 2012. During that time, energy consumption growth by data centers in several emerging economies was substantial, with the Middle East and Africa usage increasing more than 17% and Latin America increasing more than 15%. In more mature markets, like the U.S. and Canada, data center owners and operators have faced increasing costs and in certain states the threat of energy consumption-related taxation. If the global cloud computing infrastructure, or “the cloud,” were a country, it would have the fifth largest electricity demand in the world, behind the U.S., China, Russia and Japan, according to a study conducted in 2012. Worldwide, data centers consume about 30 billion watts of electricity, the approximate output of 30 nuclear power plants.

Motivated by operating costs, land use restrictions and environmental concerns, data center operators are keenly aware of the need to reduce power consumption while increasing hardware density and, at the same time, maintain or improve the user experience. We believe these trends create opportunities for high-performance, high-density, lower TCO cloud infrastructure and data center solutions.

Cloud industry experts believe that server solutions that can successfully combine ARM 64-bit processor hardware, high-speed input/output ("I/O") and software-defined networking capabilities onto a single chip will provide significant benefits over existing solutions. By combining the ARM v8 ISA with on-chip networking capabilities, such next generation server solutions

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are expected to deliver significantly lower TCO for typical cloud workloads. According to the Gartner, Inc., low-energy server processor unit growth will experience a CAGR of greater than 90% through the year ending 2017.

Cloud infrastructure growth also creates opportunities for new connectivity approaches within the data center. Emerging technologies include high-speed switch fabrics, 100Gbps Ethernet and RoCE (Remote Direct Memory Access over Converged Ethernet). These new technologies will allow for faster data transfer between processor nodes, semiconductor components, blades, racks, and appliances, substantially lowering TCO and allowing more efficient use of physical space.

Communications technology between the user and the data center has also evolved considerably. Consumers demand ubiquitous access to content such as information, photographs and streaming high-definition media through a proliferation of smart mobile and at-home devices. As a result, carrier networks face increasing challenges to support the rapid and cost-effective delivery of voice, data and media to meet this demand.

In wireline communications, the edge, metro and core networks have shifted towards packet-based services that are fundamentally less expensive than the transitional synchronous optical network (“SONET”) and the synchronous data hierarchy (“SDH”) networks, but provide the same level of quality and guarantee of content delivery. OTN technology has emerged as a compelling layer one protocol and has substantially replaced SONET/SDH in the metro and core. Combined with Wavelength-Division Multiplexing ("WDM") and Dense Wavelength-Division Multiplexing ("DWDM"), OTN allows service providers to support the vast increases in bandwidth requirements at a lower cost per bit and with easier configurability.

Wireless networks are also moving to Long Term Evolution (“LTE”) infrastructure in order to support a wide range of high-speed wireless devices from smartphones to tablets. Further, carrying all the data traffic from the base station requires higher bandwidth and packet-based wireline connectivity for supporting Ethernet and Internet Protocol.

As the pace of these transitions increases, original equipment manufacturers ("OEMs") are partnering with merchant silicon solution providers to help address the need for more complex, higher performance devices that feature lower power consumption and operating costs. We believe these trends have created a significant opportunity for silicon suppliers that can design cost-effective solutions for the processing and transport of data.

AppliedMicro Strategy

ARM-based Server on a Chip Solutions

Our strategy is to leverage our existing core competencies in creating high performance multi-GHz enterprise class processors and high-speed analog/mixed-signal designs to create disruptive new technologies that will define and lead the market for silicon solutions addressing cloud data center, high-performance computing and enterprise applications.

We believe our early and substantial investments in X-Gene development create a unique market position while creating substantial barriers to entry for potential competitors. We commenced our investment in the X-Gene program in 2010, and thereafter actively supported the program's research and development ("R&D") until we were ready to publicly announce our development of the disruptive X-Gene technology in late 2011. During and after this development period, our financial reporting reflected abnormally high R&D expenses relative to ongoing revenue levels. Our investment in X-Gene has yielded substantial value for the Company on all fronts. It has given us a unique, differentiated, and sustainable first-mover advantage in the ARM server market. It also provides growth in coming years to offset the structural decline in our embedded Power Architecture business, which is the result of an industry-wide transition away from Power Architecture.

We believe X-Gene is the world's first ARM 64-bit Server on a Chip solution in production today. X-Gene provides enterprise class ARM 64-bit high performance processor cores, memory subsystem, on-chip switch fabric and high-speed networking capabilities that we believe will deliver substantially lower power consumption and significant TCO savings.

As of May 2014, there is a robust hardware and software ecosystem available and in development for X-Gene. The ecosystem includes various software, hardware, systems and services companies that are engaged in the development, adoption or promotion of technology that supports ARMv8 64-bit server technology. Facilitated by our X-C1 Development Platform that started shipping in June 2013, multiple OEMs, original design manufacturers (“ODMs”) and systems integrators are developing X-Gene-based systems for hyperscale cloud, high-performance computing and storage. Hardware system partners/customers include HP and Dell.

The ARM 64-bit server software ecosystem has demonstrated substantial progress in the operating system, middleware and application layers. Red Hat has been a visible supporter of ARM 64-bit servers since 2012, to date offering Fedora 17 remix through Fedora 19 versions. At its 2014 Summit, Red Hat used X-Gene to demonstrate an internal development release of Red Hat Server on ARM, foreshadowing Red Hat Enterprise Linux. Also in 2014, Canonical announced Ubuntu 14.04LTS

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with AppliedMicro as the only certified ARM 64-bit silicon partner, a month later announcing AppliedMicro as the only ARM 64-bit silicon partner in its Ubuntu OpenStack Interoperability Lab. Microsoft announced in early 2014 its membership in the ARM Server Based System Architecture, signaling the Seattle-based company’s commitment to the ARM 64-bit ISA. Over the last twelve months, additional public statements of commitment and live demonstrations have been made regarding software development on X-Gene and X-Gene compatibility: KVM (Kernel Virtual Machine), Citrix Xen, OpenJDK and Oracle Java. Application software stacks have included LAMP, Search, Video streaming, Blog, Apache Hadoop, OpenStack, Small Medium Business (SMB) applications such as Bugzilla, Elasticsearch Kibana, Logstash, MediaWiki and Enterprise class applications such as SugarCRM and GlusterFS.

The entries of Microsoft, Oracle Java and OpenStack are important precursors for the adoption of ARM 64-bit servers in the enterprise market. X-Gene has enterprise-class hardware features including: RAS, four channels of high speed ECC memory, brawny, single-threaded processors, on-chip fabric, high speed I/O, and the availability of enterprise-class software developed on the X-Gene hardware platform. As such, we expect the enterprise market will significantly accelerate and expand the Total Available Market (“TAM”) for X-Gene products.

Embedded Computing

New embedded processor products will be based on the ARM ISA, leveraging intellectual property and experience derived from our development of X-Gene. We have design wins that have been awarded for embedded products based on ARM 64-bit technology.

As customers migrate away from Power Architecture, we have strategically reallocated development resources towards other market opportunities. As such, we expect our Power Architecture related sales to decline over time. We intend to leverage our existing intellectual property and address embedded opportunities with ARM-based offerings, which we expect will help to eventually offset the expected roll-off of Power Architecture sales.

Connectivity

Our X-Weave™ family of products leverages our technology heritage to create products optimized to address challenges in next-generation data centers. Our product focus is in the data center as our newer solutions continue to gain traction.

Data center and enterprise networks continue to deploy computing and storage assets. To address the rapidly increasing volume of information, data center network infrastructures are migrating from 1Gbps Ethernet to 10Gbps and 100Gbps Ethernet. Ethernet is increasingly used for connectivity between processor nodes, semiconductor components, blades, racks and appliances. Our data center connectivity technology portfolio, consisting of optical, backplane and short reach copper solutions, is specifically targeted to provide high-speed connectivity with increased port density, at lower power and operating cost points, to enable greater penetration into the present and future data center infrastructure markets.

In the service provider market segment, emerging metro Ethernet and OTN deployments are driving substantial investments in optical infrastructure. These new deployments are increasingly based on OTN with highly integrated framing, mapping, and multiplexing functions. High-speed physical layer capabilities in combination with our Forward Error Correction (“FEC”) experience play a critical role in providing cost-and power-optimized solutions for the leading edge platforms in the Wide Area Network ("WAN").

Products and Customers

We develop products for computing and high-speed connectivity. These products are used in a wide variety of communications and other networking applications such as the infrastructure for data centers, wide area networks, carrier access networks, and enterprise networks.

Most of our products can be grouped into the functional categories listed below.

Server on a Chip Products: In March 2013, we began shipping samples of X-Gene to customers and partners. X-Gene is the world's first ARM 64-bit Server on a Chip platform, featuring eight high-performance cores operating at up to 2.4GHz, coupled with network and storage offload engines and integrated Ethernet. X-Gene represents a new, grounds-up Cloud Server^TM solution tailored for the rapid growth of structured and unstructured compute requirements in next generation data centers. We have commenced manufacturing initial production units of our X-Gene Server on a Chip solution and expect to begin generating meaningful sales revenue from X-Gene in the December quarter of 2014 or the March quarter of 2015.

Power PC Embedded Computing Products: Our embedded processors are widely deployed in a variety of critical applications in target markets such as wireless LAN, residential, data centers, and enterprise. In networking equipment such as edge, core, and enterprise routers, our embedded processors handle overall system maintenance and management functions.

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Our processors are also targeted at large opportunities in RAID storage processing, multi-function printers, and a variety of other embedded applications. In wireless LAN applications, our embedded processors are installed in a significant share of all enterprise class access points shipped worldwide. Embedded processor customers include Brocade, Cisco, Ericsson, Fujitsu, Hewlett-Packard, Kyocera, Netgear, Q-Logic, Toshiba, TEC and Western Digital.

Connectivity Products: Our high-speed connectivity products include a broad array of physical layer, framer and mapper solutions. Our highly integrated framer-PHY silicon solutions transmit and receive signals and are used in high-speed optical network infrastructure equipment. For OTN applications, our framer products incorporate our industry-leading FEC technology to significantly improve reach. Building on the success of our prior single and dual port framer-PHY products, our PQX product family has become the de facto standard for multiprotocol and variable distance connectivity in edge routers and packet optical equipment. In July 2013, we announced the X-Weave™ family of products, designed to meet the needs of public cloud, private cloud, and enterprise data centers. Our connectivity products span 10Gbps, 40Gbps and 100Gbps to 240Gbps of connectivity with unique multi-protocol features. Due to the competitive advantage of our products, our products can be found in major platforms at leading networking OEMs, such as Cisco, Huawei, Alcatel-Lucent, Ciena, Fujitsu, Juniper, NEC, Coriant, ZTE, and many others.

Competition

The X-Gene product is targeted to serve existing and emerging hyperscale cloud, high performance computing and enterprise applications. Existing data centers currently rely primarily on Xeon® server processors and related chipsets developed and marketed by Intel. As a result, in the cloud and enterprise server market, we will compete primarily with Intel Xeon, in addition to low-power server silicon products from Intel, AMD, and a number of ARM-based server silicon vendors, including AMD, Broadcom, and Cavium. We believe X-Gene is well-positioned to address the performance capabilities and enterprise features demanded by today's cloud infrastructure providers, offering high-speed networking, software-defined networking capabilities, and enterprise-class security, along with significant projected TCO savings. We believe X-Gene is a compelling solution in both the existing and emerging cloud and enterprise infrastructure market opportunities.

In the embedded computing silicon solutions market, we compete with technology companies such as Cavium and Freescale Semiconductor.

In the connectivity silicon solutions market segment, we compete primarily against companies such as Broadcom, Cortina, and PMC-Sierra.

Many of our competitors have larger workforces, intellectual property portfolios and other resources than we do, and in some cases operate their own fabrication facilities. In addition, some of our customers and potential customers have internal integrated circuit designs or manufacturing capabilities with which we compete.

While design cycles in the communications market segment often last for years, the communications silicon solutions market is highly competitive and is subject to rapid technological change. We typically face competition at the design stage when customers are selecting components for their next-generation products.

We believe that the principal factors of competition for the markets we serve include product performance and capability, TCO, and time-to-market, as well as engineering expertise, reputation, and prior customer satisfaction.

Our ability to successfully compete in these markets will depend on our ability to design and oversee the manufacture of new products that successfully implement new technologies and gain end-market acceptance in a time-efficient and cost-effective manner.

Technology

We use our technology and design expertise in high performance processors, high-speed analog, and mixed-signal to create compelling silicon solutions. Our deep integration capabilities combined with our systems and software knowledge enable us to deliver innovative solutions for data centers, communication networks and data storage applications.

Our technical teams have a long history of delivering significant technological advances for our customers’ benefit. For example, our computing team has delivered a multi-core processor running up to 2.4Ghz based on ARM 64-bit architecture and complementary metal-oxide semiconductor (“CMOS”) process technology. Our analog and connectivity teams have created and delivered the industry’s first 100Gbps production silicon, also in CMOS. Our systems architects, design engineers, technical marketing and applications engineers have a deep understanding of the data center, as well as copper and fiber optic communications systems. Using this expertise, we develop semiconductor connectivity devices to meet OEMs' high-bandwidth requirements, and the data center-related needs of OEMs and data center operators. By understanding the systems into which

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our products are designed, the end application of our products, and the service level requirements of data center operators and service providers, we are better able to anticipate and develop solutions for our customers. We believe that our systems knowledge enables us to develop more comprehensive, interoperable solutions.

Our products incorporate a combination of internally developed and licensed technologies. For our embedded processor products, we are a licensee of Power Architecture along with ARM's 32-bit cores. For our Server on a Chip and embedded computing products, we hold an ARM 64-bit (v8) architectural license. We also license various other technology components used in our products, as well as various engineering design and verification tools.

Research and Development

Our R&D expertise and efforts are focused on the development and commercialization of X-Gene™ ARM® 64-bit Server on a Chip™ products as well as high-performance solutions for the communications market. We also develop libraries and design methodologies that are optimized for applications within the Connectivity and Computing markets. Our primary R&D facilities are located in Sunnyvale and San Diego, California, and Wilmington, Massachusetts in the United States; Ottawa in Canada; Ho Chi Minh City in Vietnam; and Pune and Bangalore in India. During the fiscal years ended March 31, 2014, 2013 and 2012, we expensed $146.6 million, $187.4 million and $175.7 million, respectively, on R&D activities.

Manufacturing

Manufacturing of Integrated Circuits

The manufacturing of integrated circuits requires a combination of competencies in advanced silicon technologies, package design, high-speed test, and characterization. We have obtained access to advanced CMOS manufacturing technology through foundry relationships. Each of our integrated circuit products is generally only qualified for production at a single foundry. We have substantial experience in the development and use of plastic and ceramic packages for high-performance applications. The selection of the optimal package solution is a vital element of the delivery of high-performance products and involves balancing cost, size, thermal management, and technical performance. We purchase our ceramic and plastic packages from several vendors including Advanced Semiconductor Engineering (“ASE”), Siliconware Precision Industries Co Ltd. (“SPIL”), IBM, Unimicron and Nanya.

Wafer Fabrication

We do not own or operate foundries for the production of silicon wafers from which our products are made. We use external foundries such as Taiwan Semiconductor Manufacturing Corporation (“TSMC”) for the majority of our silicon wafer needs. Subcontracting our manufacturing requirements eliminates the high fixed cost of owning and operating a semiconductor wafer fabrication facility and enables us to focus our resources on designing silicon solutions and applications, where we believe we have greater core competencies and competitive advantages. For some products, we may procure manufacturing capacity through a third party in order to obtain more favorable pricing.

Assembly and Testing

Our wafer probe and other product testing are conducted at independent test subcontractors. After wafer testing is complete, the majority of our products are sent to multiple subcontractors for assembly, predominantly in Asia. Following assembly, the devices are tested at subcontractors and returned to us ready for shipment to our customers. Certain of these services are available from a limited number of sources and lead times are occasionally extended.

Sales and Marketing

Our sales and marketing strategy is to develop strong, engineering-intensive relationships with our customers’ design teams for the creation of market leading platforms. We maintain close working relationships with these customers to identify and define new products that will meet their requirements in the future. This allows us to often be involved in the early stages of our customers' plans to design new equipment. We sell our products both directly and through a network of independent manufacturers' representatives and distributors. Our direct sales force has strong technical skills. Expert technical support is critical to our customers' success and we provide such support through our field applications engineers, technical marketing team and engineering staff, as well as through our extranet technical support web site.

We augment this strategic account sales approach with U.S. and non-U.S. distributors that service some of our accounts purchasing standard silicon solutions. Typically, these distributors handle a wide variety of products, including those that compete with our products, and fill orders for many customers. Most of our sales to distributors are made under agreements allowing for price protection and stock rotation of unsold merchandise. We use marketing programs to augment the distribution effort to reach many of our customers. Our sales headquarters is located in Sunnyvale, California. We maintain sales offices

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throughout the world. Information regarding net revenues generated from each category of our products and from our most significant customers and a geographic breakdown of our net revenues is summarized in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.

Backlog

Our sales are made primarily pursuant to standard purchase orders for the delivery of products. Quantities of our products to be delivered and delivery schedules are frequently revised to reflect changes in customers’ needs; customer orders generally can be cancelled or rescheduled without significant penalty to the customer. For these reasons, our backlog as of any particular date is not representative of actual sales for any succeeding period.

Intellectual Property

We rely in part on patents to protect our intellectual property (“IP”). We currently hold approximately 290 issued patents, which principally cover aspects of the design and architecture of our integrated circuit ("IC") and enterprise storage products. In addition, we have over 195 inventions in various stages of the patenting process in the United States and abroad. There can be no assurance that any of our pending patent applications or any future applications will be approved, or that any issued patents will provide us with competitive advantages or will not be challenged by third parties, or that if challenged, such patents will be found to be valid and enforceable. There also can be no assurance that others will not independently develop similar products or processes, duplicate our products or processes or design around any patents that may be issued to us, or that patents issued to others will not have an adverse effect on our ability to do business.

To protect our IP, we also rely on a combination of mask work protection under the Federal Semiconductor Chip Protection Act of 1984, trademarks, copyrights, trade secret laws, employee and third-party nondisclosure agreements and licensing arrangements. In the United States, our trademarks and registered trademarks include AppliedMicro, AMCC, APM, X-Gene, X-Weave, Server on a Chip, Cloud Server, Cloud Processor, OTNsec, Arming the Cloud, and HardSilicon, among others. In addition to our IP, we also rely upon licensing certain third-party technologies for the development of our products. See Technology, above, for further information about such licenses.

As a general matter, the semiconductor and enterprise storage industries are characterized by substantial litigation regarding patent and other IP rights. In the past we have been, and in the future may be, notified that we may be infringing on the IP rights of third parties. In some cases, the third parties have demanded that we pay significant patent license fees in order to avoid litigation asserting IP infringement. To date, we have refused to enter into any such patent license agreements. We have certain indemnification obligations to customers with respect to the infringement of third party IP rights by our products, and have been subject to related indemnification claims in the past. There can be no assurance that infringement claims by third parties or claims for indemnification by customers or end users of our products resulting from infringement claims will not be asserted in the future or that such claims, if successful, will not have a material adverse effect on our business, financial condition, or operating results. In the event of any adverse ruling in any such matter, we could be required to pay substantial damages, which could include treble damages, cease the manufacture, use, and sale of infringing products, discontinue the use of certain processes or obtain a license under the IP rights of the third party claiming infringement. There can be no assurance that a license would be available on reasonable terms, or at all. Any limitations on our ability to market our products, delays and costs associated with redesigning our products, or payments of license fees to third parties, or failures to develop or license a substitute technology on commercially reasonable terms could have a material adverse effect on our business, financial condition, and operating results.

Environmental Matters

We are subject to a variety of federal, state and local governmental regulations related to the use, storage, discharge and disposal of toxic, volatile, or otherwise hazardous chemicals that are and were used in our manufacturing process, and the use of hazardous substances, such as lead, in our products. Any failure to comply with present or future regulations could result in the imposition of fines, the suspension of production or a cessation of operations. Such regulations could require us to acquire costly equipment or incur other significant expenses to comply with environmental regulations or clean up prior discharges. We are also subject to regulatory developments, including recent SEC disclosure regulations relating to so-called “conflict minerals,” relating to ethically responsible sourcing of the components and materials used in our products. For more information, see our disclosures under the heading, “Customer requirements and new regulations related to conflict-free minerals may force us to incur additional expenses or cause us to lose business” in Part I, Item 1A, Risk Factors, below.

Since 1993, we have been named as a potentially responsible party (“PRP”) along with a large number of other companies that used Omega Chemical Corporation in Whittier, California to handle and dispose of certain hazardous waste material. We are a member of a large group of PRPs that has agreed to fund certain remediation efforts at the Omega Chemical Corporation site and the surrounding groundwater aquifers, which efforts are ongoing. For more information, see our

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disclosures under the heading, “We could incur substantial fines, litigation costs and remediation expenses associated with our storage, use and disposal of hazardous materials” in Part I, Item 1A, Risk Factors, below, and refer to footnote 11, “Legal Proceedings,” to the financial statements contained in this report.

Employees

As of March 31, 2014, we had 591 full-time employees: 66 in administration, 457 in R&D, 13 in operations and 55 in marketing and sales. Our ability to attract and retain qualified personnel is essential to our continued success. None of our employees is covered by a collective bargaining agreement, nor have we ever experienced any work stoppage.

Executive Officers of the Registrant

Our current executive officers and their ages as of March 31, 2014 are as follows:

Name	Age	Position(s)
Paramesh Gopi	45	President and Chief Executive Officer, Member of the Board of Directors
Douglas T. Ahrens	47	Vice President and Chief Financial Officer
L. William Caraccio	55	Vice President, General Counsel and Secretary
Michael Major	57	Vice President, Corporate Marketing and Human Resources

Dr. Paramesh Gopi joined us as Senior Vice President and Chief Operating Officer in June 2008 and was promoted to President and Chief Executive Officer in May 2009. On April 29, 2009, Dr. Gopi became a member of our Board of Directors. From September 2002 to June 2008, he was with Marvell Semiconductor, a provider of mixed-signal and digital signal processing integrated circuits to broadband digital data networking markets, where he most recently served as Vice President and General Manager of the Embedded and Emerging Business Unit. At Marvell, Dr. Gopi held several executive-level positions including Chief Technology Officer of Embedded and Emerging Business Unit and Director of Technology Strategy. From June 2001 to August 2002, Dr. Gopi was Executive Director of Strategic Marketing and Applications at Conexant Systems, Inc., a mixed-signal processing company. He joined Conexant Systems, Inc. as part of its acquisition of Entridia Corporation in 2001. Dr. Gopi founded Entridia, a provider of Network Processing ASICs for Optical Networks, in 1999. Prior to Entridia, Dr. Gopi held principal engineering positions at Western Digital and Texas Instruments where he was responsible for the development of key mixed signal networking products. Dr. Gopi holds a PhD in Electrical and Computing Engineering and a Masters and Bachelor of Science degree in Electrical Engineering from the University of California, Irvine.

Douglas T. Ahrens joined us in October of 2013 as Vice President, Chief Financial Officer. From 2001 to 2013 he was with Maxim Integrated, a leading provider of high performance analog and mixed-signal products for a broad base of end markets and customers, where he held a number of executive positions. Most recently, he was Vice President of Finance, leading the entire finance organization. From 1995 to 2001, he held a number of positions of increasing responsibility at Intel Corporation, one of the largest semiconductor companies in the world. From 1990 to 1993, he was an environmental engineer at Chevron Corporation. Mr. Ahrens holds an MBA from Harvard Business School and a BS in Mechanical Engineering from the University of California, San Diego. He is a Certified Public Accountant (CPA) and a Registered Professional Civil Engineer.

L. William Caraccio joined us in June 2010 as Vice President, General Counsel and Secretary. In December 2002, he was a co-founder of RMI Corporation (formerly Raza Microelectronics, Inc.), a privately held fabless semiconductor company where he was most recently Senior Vice President, General Counsel and Secretary, and, following RMI Corporation’s acquisition by Netlogic Microsystems, Inc. in October 2009, he served a transition role at Netlogic as Senior Counsel until January 2010. From March 2000 to January 2003, he was Vice President, General Counsel and Secretary of Foundry Holdings, Inc., a privately held investment firm and incubator of high technology companies. From June 1992 to March 2000, he was at Pillsbury Madison & Sutro LLP (now Pillsbury Winthrop Shaw Pittman LLP), an international law firm where he was most recently a Partner and co-chair of the firm’s Corporate Securities and Technologies Group. Mr. Caraccio earned his Juris Doctor degree from the University of California, Berkeley and holds a Bachelor of Arts degree from the University of California, Irvine.

Michael Major oversees the corporate marketing team at AppliedMicro, and is responsible for the strategic direction and implementation of brand management; marketing communications; public relations and industry analyst relations. He joined AppliedMicro in 2006 and has also served as vice president of human resources, leading the company's talent, compensation and internal communications functions. He has more than 35 years of experience with human resources and communications-related activities. Previously, Mr. Major was with Silicon Image and Netscape Communications. Mr. Major's experience includes 20 years consulting to companies on matters relating to human resources and communications. He holds a bachelor's

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degree in economics from Stanford University and is a graduate of the University of Michigan's Advanced Human Resources Executive Program.

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Item 1A. Risk Factors.

Before deciding to invest in us or to maintain or increase your investment, you should carefully consider the risks described below, in addition to the other information contained in this Annual Report and in our other filings with the SEC. We update our descriptions of the risks and uncertainties facing us in our periodic reports filed with the SEC. The risks and uncertainties described below and in our other filings are not the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business. If any of these known or unknown risks or uncertainties actually occurs, our business, financial condition and results of operations could be seriously harmed. In that event, the market price for our common stock could decline and you may lose all or part of your investment.

Our liquidity may deteriorate based on our future uses of cash.

Our cash, cash equivalents and short-term investments balance on March 31, 2014 was approximately $106.6 million. Although we currently believe we have adequate liquidity to meet our capital requirements and fund our operations for at least the next twelve months, our cash balances could decrease significantly if our normal operations or unforeseen events require us to expend more cash than anticipated. In addition, approximately $24.4 million of the $178.5 million in total Veloce acquisition consideration remains to be paid, and our cash balance will likely decrease further depending upon how much of this remaining balance we decide to pay in cash instead of our common stock. As a result of any of the above, we may be faced with liquidity issues requiring us to pursue various options to raise additional capital or generate cash. In addition, we may elect to raise additional capital or attempt to generate additional cash in order to augment our cash reserves for purposes of enabling future business expansion and providing additional liquidity assurances to our current and prospective customers, suppliers and partners. There can be no assurance that any of the options that we currently believe to be available are now, or in the future will be, viable on commercially reasonable terms or at all.

During the fiscal years ended March 31, 2014 and 2013, our cash used in operating activities was approximately $43.5 million and $33.1 million, respectively. Excluding the acquisition consideration for Veloce, our cash provided by operating activities was approximately $20.2 million for the fiscal year ended March 31, 2014 and our cash used in operating activities was approximately $16.5 million for the fiscal year ended March 31, 2013.

If we are unable to timely develop new products or new versions of products to replace our current products, our operating results and competitive position will be materially harmed.

Our industry is characterized by intense competition, rapidly evolving technology and continually changing customer requirements. These factors could render our existing products less competitive or obsolete. Some of our existing products have experienced weakening overall demand, and revenues from these products can be expected to decline further over time. Accordingly, our future operating results and ability to compete will depend in large part on our ability to identify and develop new products or new generations and versions of our existing products that achieve market acceptance on a timely and cost-effective basis, and to respond to changing requirements. If we are unable to do so, our business, operating results and financial condition will be negatively affected. In particular, our inability to productize and generate demand for our X-Gene^TM Server on a Chip^TM solution and related products in a timely manner would have a material adverse effect on our operating results and financial condition.

The successful development and market acceptance of our products depend on a number of factors, including, but not limited to:

• our successful collaboration with our ecosystem and technology partners;

• availability, quality, price, performance, power consumption, size and total cost of ownership of our products relative to competing products and technologies;

• our accurate prediction of changing customer requirements;

• timely development of new designs;

• timely qualification and certification of our products for use in electronic systems;

• continued availability on commercially reasonable terms of the manufacturing services purchased from and the technology components and tools licensed from third party suppliers;

• commercial acceptance and production of the electronic systems into which our products are incorporated;

• our customer service and support capabilities and responsiveness;

• successful development of relationships with existing and potential new customers;

• maintaining compliance and compatibility with new and changing industry standards and requirements;

• our maintaining close working relationships with key customers so that they will design our products into their future products;

• our ability to develop, gain access to and use leading technologies in a cost-effective and timely manner; and

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• retention of key technical and design expertise, both internally and within third-party technology development partners.

We have in recent years devoted substantial engineering and financial resources to designing, developing and rolling out new products and technologies and introducing several new products in our Connectivity and Computing business units. However, there can be no assurance that our product development efforts will be successful or that the products and technologies we have recently developed and which we are currently developing will achieve market acceptance. If these products and technologies fail to achieve market acceptance, or if we are unable to continue developing new products and technologies that achieve market acceptance, our business, financial condition and operating results will be materially and adversely affected. In addition, for our X-Gene^™ and X-Weave™ product families, we are a licensee of the ARM® v8 64-bit architecture and will depend upon our continuing license rights to that instruction set architecture, or ISA, including without limitation the timely delivery by ARM of various updates and other support under the license agreement. The success of our ARM-based products, including X-Gene and X-Weave, will depend, among other things, on customers’ willingness to incorporate products based on the ARM architecture into their products and systems. For many customers, this would represent a change from their existing technology, and therefore the adoption of ARM-based products such as ours is inherently uncertain. Furthermore, the development and commercialization of new products incorporating ARM architecture could be delayed if the ecosystem partners who rely on this architecture are unable to successfully establish their own operations on a timely basis including their continued access to and the use of the ARM architectural licenses or if they are unable to work successfully with ARM in developing their products.

Our significant investment in Veloce may not result in the successful development and commercialization of new technologies or products.

In June 2012, we completed the acquisition of Veloce under a merger agreement we entered into with Veloce in May 2009, as amended in November 2010 and April 2012. Pursuant to the merger agreement, the third and final post-closing product development milestone was completed during the fiscal quarter ended March 31, 2014.

Even after the completion of the acquisition of Veloce as described above, we may fail to realize the benefits of the integration of the Veloce personnel and operations with the Company. The departure from us of one or more Veloce management or engineering personnel could materially adversely affect our product development efforts for X-Gene and next-generation Cloud Processor™ products. Although we have spent considerable time and resources in the developmental effort, eventually we may be unsuccessful in developing, marketing and selling the products that are described in the merger agreement, in which case our investment in Veloce would not provide any significant value to our business and would have a material adverse impact on our financial results and condition.

If we issue additional shares of stock in the future, it may have a dilutive effect on our stockholders.

We have a significant number of authorized and unissued shares of our common stock available. These shares will provide us with the flexibility to issue our common stock for proper corporate purposes, which may include making acquisitions (including, without limitation, discharging our remaining purchase price obligations in the Veloce acquisition) through the use of stock, adopting additional equity incentive plans and raising equity capital. Any issuance of our common stock will result in immediate dilution of our stockholders. In addition, the issuance of a significant amount of our common stock may result in additional regulatory requirements, such as stockholder approval. Currently, we have the ability to issue up to approximately 3.3 million additional shares of our common stock as Veloce acquisition consideration without obtaining stockholder approval. In the event stockholder approval is required but not obtained, we likely will be forced to use a greater portion of our cash than currently anticipated in order to satisfy our Veloce payment obligations. The actual amount and timing of additional share issuances to be made in connection with Veloce acquisition payments will be based upon numerous factors including, without limitation, the total amount of acquisition consideration to be paid, the market price of our common stock as of each payment date, and our available cash balances and liquidity requirements as of such dates, some of which are not determinable at this time.

The markets in which we compete are highly competitive, and we expect competition to increase in these markets in the future.

The markets in which we compete are highly competitive, and we expect that domestic and international competition will increase in these markets, due in part to rapid technological advances, price erosion, changing customer preferences, deregulation, and evolving industry standards.

Increased competition could result in significant price competition, reduced revenues, lower profit margins or loss of market share. Our ability to compete successfully in our markets depends on a number of factors, including:

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• our ability to partner with OEM, ecosystem and channel partners who are successful in the market;

• success in designing and subcontracting the manufacture of new products that implement new technologies;

• product quality, interoperability, reliability, performance and certification;

• our ability to attract and retain key engineering, operations, sales and marketing employees and management;

• pricing decisions or other actions taken by competitors;

• customer support;

• time-to-market;

• price;

• production efficiency;

• design wins;

• expansion of production of our products for particular systems manufacturers;

• end-user acceptance of the systems manufacturers' products;

• market acceptance of competitors' products; and

• general economic conditions.

We designed X-Gene for existing and emerging cloud and enterprise data centers. Existing data centers currently rely primarily on Xeon server processors and related chipsets developed and marketed by Intel. Intel also offers lower-performance products for lower-intensity data center applications. As a result, Intel is a significant competitor in the cloud and enterprise server infrastructure market. In addition to Intel, in the cloud and enterprise server market, we will compete with a number of ARM-based server silicon vendors, including AMD, Broadcom and Cavium. In the embedded computing silicon solutions market, we compete with technology companies such as Cavium and Freescale Semiconductor. In addition, some of our customers and potential customers have internal integrated circuit design or manufacturing capabilities with which we compete. In the connectivity silicon solutions market segment, we compete primarily against companies such as Broadcom, Cortina and PMC-Sierra. Many of these companies have substantially greater financial, marketing and distribution resources than we have. We may also face competition from new entrants to our target markets, including larger technology companies that may develop or acquire differentiating technology and then apply their resources to our detriment.

Many of our competitors have longer operating histories and presences in key markets, greater name recognition, and larger customer bases, workforces and intellectual property portfolios, and in some cases operate their own fabrication facilities. Our competitors may offer enhancements to existing products, or offer new products based on new technologies, industry standards or customer requirements more quickly than comparable products from us or that could replace or provide lower cost alternatives to our products. Competitors’ introduction of enhancements, new products or new pricing structures could render our existing and future products obsolete or unmarketable. In addition, large competitors could use their existing market share and influence to discourage potential ecosystem partners and customers from supporting or purchasing our products. We and our customers also face intense price pressure and competition from companies in lower cost countries such as China. In response to these price pressures, our customers could require us to reduce prices which could adversely affect our financial results. Furthermore, our discrete legacy products are being and could continue to be integrated into ASICs or combined into single chip solutions that could cause our revenues from such products to decline at a faster rate.

As a result of each of these factors, we cannot assure you that we will be able to continue to compete successfully against current or new competitors. If we do not compete successfully, we may lose market share in our existing and target markets and our revenues may fail to increase or may decline, which could have a material adverse effect on our business, financial condition and results of operations.

Our dependence on third-party manufacturing and supply relationships increases the risk that we will not have an adequate supply of products to meet demand or that our cost of materials will be higher than expected.

We depend upon third parties to manufacture, assemble, package or test certain of our products. As a result, we are subject to risks associated with our dependence on third-party manufacturing and supply relationships, including:

• pricing of foundry services and of other supply chain services such as packaging and testing, from vendors such as TSMC, IBM, ASE and SPIL;

• reduced control over the supply chain process, delivery schedules and quality;

• potentially inadequate manufacturing yields and excessive costs;

• the risks associated with transitioning our manufacturing supply from one foundry or other supplier to another, which may be extremely difficult to accomplish, particularly on short notice and when cutting-edge process technologies are involved;

• our ability to retain key personnel with specialized knowledge of our products and processes;

• difficulties selecting and integrating new subcontractors;

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• the potential lack of adequate capacity at the foundry during periods of high demand, resulting in significant increases in lead time requirements and production delays, which can be expected to cause difficulties with our customers, including reduced revenues and higher expenses;

• increased risk of excess and obsolete inventory charges due to the higher level of inventories in response to the increased lead times;

• limited warranties on products supplied to us, which may not match the warranties that our customers require from us;

• potential instability and business disruption in countries where third-party manufacturers are located;

• potential misappropriation of our intellectual property; and

• potential foundry shortages when we commence volume manufacturing of new products, especially those with 28nm or anticipated smaller geometry technologies, which could delay the supply of products to our customers.

Our outside foundries and manufacturing, packaging and test service providers generally operate on a purchase order basis, and we have few long-term supply arrangements with these suppliers. We have less control over delivery schedules, manufacturing yields and costs than our competitors that use their own fabrication facilities or provide larger volumes of business to their outside foundries. A manufacturing disruption or capacity constraint experienced by one or more of our outside foundries or service providers or a disruption of our relationship with an outside foundry or service provider, including discontinuance of our products by that foundry or service provider, would negatively impact the production and cost structure of certain of our products for a substantial period of time.

As our third-party manufacturing suppliers extend their lead time requirements, we will likely need to also extend our lead time requirements to our customers. This could cause our customers to lower their competitive assessment of us as a supplier and, as a result, we may not be considered for future design awards.

Each of our integrated circuit, or IC, products is generally only qualified for production at a single foundry. These suppliers can allocate, and in the past have allocated, capacity to the production of other companies' products while reducing deliveries to us on short notice. There is also the potential that they may discontinue manufacturing our products or go out of business. Because establishing relationships, designing or redesigning silicon solutions, and ramping production with new outside foundries may take over a year, there is no readily available alternative source of supply for these products.

Difficulties associated with adapting our technology and product design to the proprietary process technology and design rules of outside foundries can lead to reduced yields of our IC products. This risk is substantially higher with respect to the manufacture of our new X-Gene products at 40 and 28 nanometers, and would be even higher when using anticipated smaller geometries such as 16 nanometers and more complicated processes such as FinFET. The process technology of an outside foundry is typically proprietary to the manufacturer. Since low yields may result from either design or process technology failures, yield problems may not be effectively determined or resolved until an actual product exists that can be analyzed and tested to identify process sensitivities relating to the design rules that are used. As a result, yield problems may not be identified until well into the production process, and resolution of yield problems may require cooperation between us and our manufacturer. This risk could be compounded by the offshore location of certain of our manufacturers, increasing the effort and time required to identify, communicate and resolve manufacturing yield problems. Manufacturing defects that we do not discover during the manufacturing or testing process may lead to costly product recalls. These risks may lead to increased costs or delayed product delivery, which would harm our profitability and customer relationships.

If the foundries or subcontractors we use to manufacture our products discontinue the manufacturing processes needed to meet our demands, fail to upgrade their technologies needed to manufacture our products, or otherwise fail to perform the necessary manufacturing or operations services on a timely basis, we may be unable to deliver products to our customers, which would materially adversely affect our operating results and harm our reputation. The transition to the next generation of manufacturing technologies at one or more of our outside foundries could be unsuccessful or delayed.

Our requirements typically represent a very small portion of the total production of the third-party foundries and related service providers. As a result, we are subject to the risk that a producer or service provider will cease production of an older or lower-volume process that it uses to produce our parts, cease performing the supply services currently provided, or raise the prices it charges us. We cannot assure you that our external foundries and related service providers will continue to devote resources to the production of parts for our products or continue to advance the process design technologies on which the manufacturing of our products are based. Each of these events could increase our costs, lower our gross margin, cause us to hold more inventory or reduce our ability to deliver our products on time. As our volumes decrease with any third-party foundry, the likelihood of unfavorable pricing or service levels increases.

Our customers’ products incorporate components from other suppliers. If these other suppliers cannot access sufficient production capacity or have other production or delivery issues, our customers may reduce orders for our products.

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Our restructuring activities could result in management distractions, operational disruptions and other difficulties.

Over the past several years, we have initiated several restructuring activities in an effort to reduce operating costs and such restructuring activities are likely to continue. For example, we implemented Board-approved reductions in force of between 5% and 10% of our workforce on three occasions from December 2012 to April 2014. Additional reductions in force and senior level employee replacements are likely to occur as we continue to realign our business organization, operations and product lines. Employees whose positions were or will be eliminated in connection with these restructuring activities may seek employment with our competitors, customers or suppliers. Although each of our employees is required to sign a confidentiality agreement with us at the time of employment, which agreement contains covenants prohibiting among other things the disclosure or use of our confidential information and the solicitation of our employees, we cannot guarantee that the confidential nature of our proprietary information will be maintained in the course of such future employment, or that our key continuing employees will not be solicited to terminate their employment with us. Any restructuring effort could also cause disruptions with customers and other business partners, divert the attention of our management away from our operations, harm our reputation, expose us to increased risk of legal claims by terminated employees, increase our expenses, increase the workload placed upon remaining employees and cause our remaining employees to lose confidence in the future performance of the Company and decide to leave. We cannot guarantee that any restructuring activities undertaken in the future will be successful, or that we will be able to realize the cost savings and other anticipated benefits from our previous, current or future restructuring plans. In addition, if we continue to reduce our workforce, it may adversely impact our ability to respond rapidly to new growth opportunities or remain competitive.

We may experience difficulties in transitioning to smaller geometry processes or in achieving higher levels of design integration and, as a result, may experience reduced manufacturing yields, delays in product deliveries and increased expenses.

We may not be able to achieve higher levels of design integration or deliver new integrated circuit products on a timely basis. We periodically evaluate the benefits, on a product-by-product basis, of migrating to smaller geometry process technologies to reduce our costs and increase performance. Currently, we are shipping samples of our X-Gene 40 nanometer product and our 28 nanometer version of the product has taped out is expected to begin sampling in the first quarter of fiscal 2015. As smaller line‑width geometry processes, such as 16 nanometer, and more sophisticated designs, such as FinFET and FDSOI, are introduced to and become more prevalent in the industry, we expect to integrate greater levels of functionality into our IC products and to transition our IC products to smaller geometries.

We have in the past experienced difficulties in shifting to smaller geometry process technologies and new manufacturing processes. These difficulties resulted in reduced manufacturing yields, delays in product deliveries and increased expenses. The transition to even smaller geometries is inherently more expensive and as we manufacture more products using smaller geometries, the incremental costs could have an adverse impact on our earnings. We may face similar difficulties, delays and expenses with respect to the 28 nanometer and smaller versions of X-Gene and X-Weave and as we continue to transition our other IC products to smaller geometry processes and at competitive pricing. Transitions to more sophisticated designs, such as FinFET and FDSOI, could result in similar difficulties. We are dependent on our relationships with our foundries to transition to smaller geometry processes and new designs successfully and at competitive pricing. We cannot assure you that our foundries will be able to effectively manage the transition or that we will be able to maintain our relationships with our foundries. If we or our foundries experience significant delays in this transition or fail to implement this transition and at competitive pricing, our business, financial condition and results of operations could be materially and adversely affected.

The gross margins for our products could decrease rapidly or not increase as forecasted, which will negatively impact our business, financial conditions and results of operations.

The gross margins for our solutions have declined in the past and may do so again in the future. Factors that we expect to cause downward pressure on the gross margins for our products include competitive pricing pressures, the cost sensitivity of our customers, particularly in the higher-volume markets, new product introductions by us or our competitors, the overall mix of our products sold during a particular quarter, and other factors. From time to time, for strategic reasons, we may accept orders at less than optimal gross margins in order to facilitate the introduction of new products or the market penetration of existing products. To maintain acceptable operating results, we will need to offset any reduction in gross margins of our products by reducing costs, increasing sales volume, developing and introducing new products and developing new generations and versions of existing products on a timely basis. If the gross margins for our products decline or not increase as anticipated and we are unable to offset those reductions, our business, financial condition and results of operations will be materially and adversely affected.

Adverse economic and financial market conditions could harm our revenues, operating results and financial condition.

The economies of the United States and other countries have experienced an economic downturn for the last several years, which has negatively affected our business. While the U.S. economy has recently begun to rebound from the economic

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downturn, we cannot predict whether this recovery will be sustained or will reverse course. Deteriorating economic conditions in certain countries, including several countries in Europe, could hinder the nascent global recovery, which could in turn adversely impact our business, operating results and financial condition.

Our current operating plans are based on assumptions concerning levels of consumer and corporate spending. If weak global and domestic economic and market conditions persist or deteriorate, our business, operating results and financial condition could suffer materially, which in turn could result in a decline in the price of our common stock. If economic conditions worsen, we may have to implement additional cost reduction measures or delay certain R&D spending, which may adversely impact our ability to introduce new products and technologies. Because we expect to depend on new products for a substantial portion of our future revenues, this could have a material and adverse effect on us.

We maintain an investment portfolio of various holdings, types of instruments and maturities. These securities are generally classified as available-for-sale and, consequently, are recorded on our consolidated balance sheets at fair value with unrealized gains or losses reported as a separate component of accumulated other comprehensive (loss) income. Our portfolio primarily includes fixed income securities, closed end bond funds, mutual funds and preferred stock, the values of which are subject to market price volatility. The deterioration of these market prices may have an unfavorable impact on our portfolio and may cause us to record impairment charges to our earnings. During the fiscal year ended March 31, 2013, we recorded approximately $1.1 million in other-than-temporary impairment charges of our short-term investments and marketable securities. During the fiscal year ended March 31, 2014, we did not record any other-than-temporary impairment charges. If market prices continue to decline or securities continue to be in a loss position over time, we may recognize impairments in the fair value of our investments.

Our sales are concentrated among a few large customers, and we expect that our largest customers will continue to account for a substantial portion of our net revenue for the foreseeable future. Adverse economic conditions affecting these large customers could have a particularly significant effect on our business and operating results. Among other things, these conditions could impair the ability of our customers to pay for our products, causing our allowances for doubtful accounts and write-offs of accounts receivable to increase. In addition, adverse economic conditions could cause our contract manufacturers and other suppliers to experience financial difficulties that negatively affect their operations and their ability to supply us with necessary products and services.

Generally to enhance our IP portfolio and to augment our R&D resources, we have invested, and will continue to invest, in privately-held companies, most of which can still be considered to be in startup or developmental stages. These investments are inherently risky as the markets for the technologies or products they have under development are typically in the early stages and may never materialize. In some cases, we have determined to write off all or substantially all of the value of our investment, and similar risks exist with respect to the other companies in which we have invested.

Our operating results may fluctuate because of a number of factors, many of which are beyond our control.

If our operating results are below the expectations of research analysts or investors, then the market price of our common stock could decline. Some of the factors that affect our quarterly and annual results, but which are often difficult to control or predict, include those discussed elsewhere in this “Risk Factors” section, as well as the following:

• fluctuations in the timing and amount of customer requests for product shipments;

• the reduction, rescheduling or cancellation of orders by customers, including as a result of slowing demand for our products or our customers' products or over-ordering or double booking of our products or our customers' products;

• changes in the timing and amounts of shipments due to our decision to phase out a particular product, which often results in near-term “last-time-buy” orders for the “end-of-life” product that would otherwise have been placed and shipped in later periods;

• changes in the mix of product orders;

• the gain or loss of one or more key customers or their key customers, or significant changes in the financial condition of one or more of our key customers or their key customers;

• our ability to introduce, certify and deliver new products and technologies, including without limitation our X-Gene products, on a timely basis;

• the announcement or introduction of new products and technologies by our competitors;

• competitive pressures on selling prices;

• the ability of our customers to obtain components from their other suppliers;

• market acceptance of our products and our customers' products, including without limitation any failure of X-Gene to be commercially accepted at the levels we anticipate;

• risks associated with our or our customers' dependence on third-party manufacturing and supply relationships;

• increases in the costs of mask sets and products or the discontinuance of products, services or components by our suppliers;

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• the amounts and timing of meeting the specifications and expense recovery on non-recurring engineering projects;

• following the expiration or earlier termination of our headquarters facilities lease, potentially significant increase in our rent obligations;

• the amounts and timing of costs associated with warranties and product returns;

• the amounts and timing of investments in R&D;

• the product lifecycle and recoverability of architectural licenses, technology access fees and mask set costs;

• the amounts and timing of the costs associated with payroll taxes related to stock option exercises or settlement of restricted stock units;

• the impact of potential one-time charges related to purchased intangibles;

• the impact on interest income of a significant use of our cash for an acquisition, stock repurchase or other purpose;

• the effects of changes in interest rates or credit worthiness on the value and yield of our short-term investment portfolio;

• the effects of changes in accounting standards; and

• the availability of ecosystem partners.

Our business, financial condition and operating results would be harmed if we do not achieve anticipated revenues.

We can have revenue shortfalls for a variety of reasons, including:

• shortages of raw materials or production capacity constraints that lead our suppliers to allocate available supplies or capacity to their other customers, which may disrupt our ability to meet our production obligations;

• our customers may experience shortages from their suppliers that may cause them to delay orders or deliveries of our products;

• delays in the availability of our products or our customers' products;

• delays in the availability of the software elements from third party vendors and ecosystem partners that may cause delays in customers using our hardware products resulting in further delays of bringing our product to market;

• the reduction, rescheduling or cancellation of customer orders;

• declines in the average selling prices of our products;

• delays in the introduction of new products, or lower than expected demand for new products;

• delays when our customers are transitioning from old products to new products;

• a decrease in demand for our products or our customers' products due to technological changes, competitive developments, trends in our customers’ businesses or other factors;

• a decline in the financial condition or liquidity of our customers or their customers;

• the failure of our products to be qualified in our customers' systems or certified by our customers;

• excess inventory of our products held by our customers, resulting in a reduction in their order patterns as they work through the excess inventory of our products;

• decisions to phase out “end-of-life” particular products, which may result in higher near-term revenues due to customers’ final, “last-time-buy” orders, but a cessation of revenues from those products in later periods;

• fabrication, test, product yield, or assembly constraints for our products that adversely affect our ability to meet our production obligations;

• the failure of one or more of our subcontract manufacturers to perform its obligations to us;

• our failure to successfully integrate acquired companies, products and technologies; and

• global economic and industry conditions.

Our business is characterized by short-term orders and shipment schedules. Customer orders typically can be cancelled or rescheduled without significant penalty to the customer. Because we do not have substantial non-cancellable backlog, we typically plan our production and inventory levels based on internal forecasts of customer demand, which is highly unpredictable and can fluctuate substantially. We generally recognize revenue upon shipment of products to a customer. If a customer refuses to accept shipped products or does not pay for these products, we could miss future revenue projections or incur significant charges against our income, which could materially and adversely affect our operating results.

Our expense levels are relatively fixed in the short-term and are based on our expectations of future revenues. We have limited ability to reduce expenses quickly in response to any revenue shortfalls. Changes to production volumes and impact of overhead absorption may result in a decline in our financial condition or liquidity.

We are dependent on orders that are received and shipped in the same quarter and are therefore limited in our visibility of future product shipments.

Our net sales in any given quarter depend upon a combination of shipments from backlog and orders received in that quarter for shipment in that quarter, which we refer to as turns business. We measure turns business at the beginning of a quarter based on the orders needed to meet the shipment forecasts that we set entering the quarter. Historically, we have relied

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on our ability to respond quickly to customer orders as part of our competitive strategy, resulting in customers placing orders with relatively short delivery schedules. Shorter lead times generally mean that turns orders as a percentage of our business are relatively high in any particular quarter and reduce our backlog visibility on future product shipments. Turns business correlates to overall semiconductor industry conditions and product lead times. Because turns business is difficult to predict, varying levels of turns business make our net sales more difficult to forecast. If we do not achieve a sufficient level of turns business in a particular quarter relative to our revenue forecasts, our revenue and operating results may suffer.

Our business faces challenges due to declining sales of our older products and the evolving dynamics of the networking and communications industries.

Each of our Connectivity and Compute businesses faces industry-specific challenges, in addition to the risks applicable to our business as a whole. For our Connectivity products, order patterns historically have been uneven from period to period. The unpredictable nature of demand in this sector makes it more difficult to forecast our revenues, and may cause us to incur additional expenses for inventory that may need to be written off. Our Connectivity business is also subject to technology transitions within the communications industry. For example, now that the communications industry has completed its shift away from the SONET/SDH standard to the higher speed, lower power optical transport network (OTN) standard, substantially all of our new Connectivity product designs utilize the OTN standard. However, as a result of this transition, many of our older, SONET-based Connectivity products are experiencing declining sales, while our newer Connectivity products, such as the X-Weave product family, have not yet generated significant revenue. Moreover, the transition to OTN, resulting in higher sales volumes and increased competition from integrated solutions providers, is in turn leading to price and margin erosion challenges. The introduction of other technological standards may also affect demand for our products. For our Compute business, as well, the migration of the networking industry away from products utilizing the PowerPC architecture and towards products utilizing other architectures such as ARM, has presented challenges. In line with such migration, we are no longer introducing new PowerPC product designs and are reducing our resources equipped to support our older PowerPC product lines. Moreover, as many of our older, PowerPC-based Compute products are experiencing declining sales, we will increasingly depend on revenues from our new ARM-based products, such as the X-Gene product family. If we are unable to develop and deliver new Connectivity and Compute products that meet changing customer needs and generate sufficient revenue to offset the decline in sales of our older product lines, our business, results of operations and financial condition would be materially and adversely affected. Our sales of Connectivity and Compute products are also concentrated among a few large customers. Changes in a large customer’s financial condition, budgeting or technology strategy may materially affect our sales and could result in our holding higher than expected unsold inventory, which could result in higher expenses.

Our business may suffer due to downturns in the technology industry, which is cyclical.

The technology equipment industry is cyclical and has in the past experienced significant and extended downturns. The most recent downturn caused a reduction in capital spending on information technology generally, which affected demand for our products. Future downturns may materially and adversely affect our business, operating results and financial condition. We sell our communications IC products primarily to communications equipment manufacturers that in turn sell their equipment to customers that depend on the growth of the Internet and other communications services. We are also developing and introducing new products for the cloud server and data center market. If those end markets fail to grow as expected, or experience downturns, demand for our products would be reduced.

Interruptions, delays, security breaches or other unauthorized activities at third-party data centers or other cloud computing infrastructure providers, or other failures within our information technology systems, could materially harm our business.

Our business depends upon the reliable operation of internal and third-party information technology (“IT”) systems, but we have limited control over the integrity and reliability of those systems. We conduct significant business functions and computer operations, including without limitation data storage and email, using the infrastructure systems of third-party vendors, such as remote data centers, virtual servers and other “cloud computing” resources. “Cloud computing” is an information technology hosting and delivery system in which data is stored outside of the user's physical infrastructure and is delivered to and used by the user as an internet-based application service. These third-party systems may experience cyber-attacks and other security breaches, along with the possible risk of loss, theft or unauthorized publication of our confidential information or that of our employees, customers, suppliers and other business partners. Any interruptions or problems at such data centers or other cloud computing facilities could result in significant disruptions to our business operations and potential liabilities to our employees and business partners. We do not control the operation of these third-party providers, and each is vulnerable to damage or interruption from earthquakes, floods, fires, vandalism, power loss, telecommunications failures and similar events. These third-party vendor relationships present further risk and management challenges for us, including, among others: confirming and monitoring the third party's security measures; the potential for improper handling of or access to our data; and data location uncertainty, including the possibility of data storage in inappropriate jurisdictions, where laws or security measures may be inadequate, or the unauthorized movement of technical data between locations in violation of

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applicable export laws. In addition, third-party data center and other providers have no obligation to renew their agreements with us on commercially reasonable terms, or at all. If we are unable to renew these agreements on commercially reasonable terms, we may experience costs or down-time in connection with the transfer to new third-party providers.

There can be no assurance that we will be successful in preventing cyber attacks, security breaches or other unauthorized activities involving our information technology systems, or detecting and stopping them once they have begun. Any failure of our outsourced service providers or our internal information technology systems to properly protect our data or the confidential information of our employees and business partners may adversely affect our business, financial condition and results of operations, as well as significant expenses including governmental penalties.

In addition to the risk of cyber attacks or other unauthorized activities, our internally maintained IT infrastructure may experience interruptions of service or errors in connection with systemic failures (which may be caused by third-party actions including viruses or other externally introduced problems, hardware or software failures, telecommunications or Internet connectivity issues, natural disasters or other causes), systems integration or migration work. In such an event, we may be unable to implement new systems or transition data and processes promptly, which could be expensive, time consuming and disruptive. These disruptions could impair our ability to fulfill orders and interrupt other business functions, resulting in delayed or lost sales, lower margins or lost customers, which could adversely affect our reputation and financial results.

Our business is dependent on selling to distributors and any disruption in their operations could materially harm our business.

Sales to distributors accounted for approximately 54%, 66% and 58% of our revenues for the fiscal years ended March 31, 2014, 2013 and 2012, respectively. Our largest distributor accounted for approximately 27%, 27% and 20% of our revenues for the fiscal years ended March 31, 2014, 2013 and 2012, respectively. We do not have long-term agreements with our distributors, and either party can terminate the relationship with little advance notice.

Any future adverse conditions in the U.S. and global economies or in the U.S. and global credit markets could materially impact the operations of our distributors. Any deterioration in the financial condition of our distributors or any disruption in their operations could adversely impact the flow of our products to our end customers and adversely impact our results of operations. In addition, during an industry or economic downturn, it is possible there will be an oversupply of products and a decrease in sell-through of our products by our distributors, which could cause them to hold excess inventories and reduce our net sales in a given period and result in an increase in stock rotations.

The loss of one or more key customers, diminished demand for our products from a key customer, or the failure to obtain certifications from a key customer or its distribution channel could significantly reduce our revenues and profits.

A relatively small number of customers have accounted for a significant portion of our net revenues in any particular period. Based on direct shipments, net revenues to customers that were equal to or greater than 10% of total net revenues were as follows:

	2014		2013		2012
Wintec (global logistics provider)**	22	%	19	%	20	%
Avnet (distributor)	27	%	27	%	20	%
Flextronics (sub-contract manufacturer)	*		*		11	%

* Less than 10% of total net revenues for period indicated.

** Wintec provides vendor managed inventory support primarily for Cisco Systems, Inc.

We have no long-term volume purchase commitments from our key customers. One or more of our key customers may discontinue operations as a result of consolidation, bankruptcy or otherwise. Reductions, delays and cancellation of orders from our key customers or the loss of one or more key customers could significantly reduce our revenues and profits. Our agreements with customers typically are non-exclusive and do not require them to purchase a minimum quantity of our products. We cannot assure you that our current customers will continue to place orders with us, that orders by existing customers will continue at current or historical levels or that we will be able to obtain orders from new customers.

Our ability to maintain or increase sales to key customers and attract significant new customers is subject to a variety of factors, including:

• customers may stop incorporating our products into their own products with limited notice to us;

• customers or prospective customers may not incorporate our products into their future product designs;

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• the timing and success of new product introductions by customers;

• some of our customers may reduce or eliminate future purchase orders or design wins placed with us as an adverse reaction to our having sold patents to third parties that thereafter asserted the acquired patents in infringement actions brought against such customers, or due to other adverse intellectual property developments;

• sales of customer product lines incorporating our products may rapidly decline or such product lines may be phased out;

• our agreements with customers typically are non-exclusive and do not require them to purchase a minimum quantity of our products;

• many of our customers have pre-existing relationships or may establish relationships with our current or potential competitors that may cause our customers to switch from using our products to using competing products;

• some of our OEM customers may develop products internally that would replace our products;

• we may not be able to successfully develop relationships with additional network equipment vendors;

• our relationships with some of our larger customers may deter other potential customers (who compete with these customers) from buying our products; and

• the impact of terminating certain sales representatives or sales personnel as a result of our workforce reduction or otherwise.

The occurrence of any one of the factors above could have a material adverse effect on our business, financial condition and results of operations.

Any significant order cancellations or order deferrals could cause unplanned inventory growth resulting in excess inventory, which may adversely affect our operating results.

Our customers may increase orders during periods of product shortages or cancel orders if their inventories are too high. Major inventory corrections by our customers are not uncommon and can last for significant periods of time and affect demand for our products. Customers may also cancel or delay orders in anticipation of new products or for other reasons. Cancellations or deferrals could cause us to hold excess inventory, which could reduce our profit margins by reducing sales prices, incurring inventory write-downs or writing off additional obsolete products.

The book-to-bill ratio is commonly used by investors to compare and evaluate technology and semiconductor companies. The book-to-bill ratio is a demand-to-supply ratio that compares the total amount of orders received to the total amount of orders filled. This ratio tells whether we have more orders than we delivered (if greater than 1), have the same amount of orders than we delivered (equals 1), or have less orders than we delivered (under 1). Though the ratio provides an indicator of whether orders are rising or falling, it does not consider the timing of, or if the order will result in, future revenues or the effect of changing lead times and product phase-out decisions on bookings. As lead times increase, customers will place orders sooner, and when we declare a product to be “end-of-life,” customers may place final, non-recurring orders for such product, thereby increasing our bookings and book-to-bill ratio.

Increasing lead times from our suppliers cause us to make commitments for inventory purchases earlier in our production cycle which in turn increases our risk of having excess inventory. In addition, from time to time some of our suppliers deliver to us based on allocations which in turn causes us to increase our inventory levels. We must balance our inventory levels between the risk of losing a significant customer to a competitor because we cannot meet our customer's requirements and the risk of having excess inventory if a significant order is cancelled.

In addition, from time to time, in response to anticipated long lead times to obtain inventory and materials from our outside contract manufacturers, suppliers and foundries, we may order materials in advance of anticipated customer demand. This advance ordering has in the past resulted and may in the future result in excess inventory levels or unanticipated inventory write-downs if expected orders fail to materialize, or other factors render our products less marketable. If we are forced to hold excess inventory or we incur unanticipated inventory write-downs, our financial condition and operating results could be materially and adversely affected.

Inventory fluctuations could affect our results of operations and restrict our ability to fund our operations. Inventory management remains an area of focus as we balance the need to maintain strategic inventory levels to ensure competitive lead times and meet customer expectations against the risk of inventory obsolescence because of changing technology and customer requirements. Customer orders for our products typically have non-standard lead times, which make it difficult for us to predict revenues and plan inventory levels and production schedules. If we are unable to plan inventory levels and production schedules effectively, our business, financial condition and operating results could be materially and adversely affected.

There is no guarantee that design wins will become actual orders and sales.

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A “design win” occurs when a customer or prospective customer notifies us that our product has been selected to be integrated with the customer's product. There can be delays of several months or more between the design win and when a customer initiates actual orders of our product. Following a design win, we will commit significant resources to the integration of our product into the customer's product before receiving the initial order. Receipt of an initial order from a customer following a design win, however, is dependent on a number of factors, including the success of the customer's product, which cannot be guaranteed. The design win may never result in an actual order or sale of our products. If we fail to generate revenues after incurring substantial expenses to develop a product or to achieve a design win, our business and operating results would suffer.

Our customers' products typically have lengthy design cycles. A customer may decide to cancel or change its product plans, which could cause us to lose anticipated sales.

After we have developed and delivered a product to a customer, the customer will usually test and evaluate our product prior to designing its own equipment to incorporate our product. Our customers may need more than six months to test, evaluate and adopt our product and an additional nine months or more to begin volume production of the equipment or devices that incorporate our product. Due to this generally lengthy design cycle, we may experience significant delays from the time we increase our operating expenses and make investments in inventory until the time that we generate revenue from these products. It is possible that we may never generate any revenue from these products after incurring such expenditures. Even if a customer selects our product to incorporate into its equipment, we cannot guarantee that the customer will ultimately market and sell its equipment or devices, and that such efforts by our customer will be successful. The delays inherent in this lengthy design cycle increases the risk that a customer will decide to cancel or change its product plans. Such a cancellation or change in plans by a customer could cause us to lose sales that we had anticipated. While our customers' design cycles are typically long, some of our product life cycles tend to be short as a result of the rapidly changing technology environment in which we operate. As a result, the resources devoted to R&D, product sales and marketing may not generate material revenue for us, and from time to time, we may need to write off excess and obsolete inventory. If we incur significant R&D and marketing expenses and investments in inventory in the future that we are not able to recover, and we are not able to mitigate those expenses, our operating results could be adversely affected. In addition, if we sell our products at reduced prices in anticipation of cost reductions but still hold higher cost products in inventory, our operating results would be harmed.

An important part of our strategy is to focus on data center markets. If we are unable to further expand our share of these markets or accurately anticipate or react timely or properly to emerging trends, our revenues may not grow and could decline.

Our target markets, including the data center market, frequently undergo transitions in which products rapidly incorporate new features and performance standards on an industry-wide basis. If our products are unable to support the new features or performance levels required by OEMs or end customers in these markets, or if our products fail to be certified by OEMs, we will lose business from an existing or potential customer and may not have the opportunity to compete for new design wins or certification until the next product transition occurs. If we fail to develop products with required features or performance standards, or if we experience a delay as short as a few months in certifying or bringing a new product to market, or if our customers fail to achieve market acceptance of their products, our revenues could be significantly reduced for a substantial period.

We expect a significant portion of our revenues to continue to be derived from sales of products based on current, widely accepted transmission standards. If the communications market evolves to new standards, we may not be able to successfully design and manufacture new products that address the needs of our customers or gain substantial market acceptance.

If we do not identify and pursue the correct emerging trends and align ourselves with the correct market leaders, we may not be successful and our business, financial condition and results of operations could be materially and adversely affected.

We face competition from customers developing products internally.

Data center customers for our products, and other customers, generally have substantial technological capabilities and financial resources. Some customers have traditionally used these resources to develop their own products internally. The future prospects for our products in these markets are dependent upon our customers' acceptance of our products as an alternative to their internally developed products. Future sales prospects also are dependent upon acceptance of third-party sourcing for products as an alternative to in-house development. Customers may in the future continue to use internally developed components. They also may decide to develop or acquire components, technologies or products that are similar to, or that may be substituted for, our products. If our customers fail to accept our products as an alternative, if they develop or acquire the technology to develop such components internally rather than purchase our products, or if we are otherwise unable to develop

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or maintain strong relationships with them, our business, financial condition and results of operations would be materially and adversely affected.

Our business strategy contemplates the potential acquisition of other companies, products and technologies, as well as the divestitures of subsidiaries or operations that no longer are material to our core business. Merger and acquisition activities involve numerous risks and we may not be able to conduct these activities successfully without substantial expense, delay or other operational or financial problems that could disrupt our business and harm our results of operations and financial condition.

Acquiring products, technologies or businesses from third parties, making and increasing equity investments in companies developing such products, technologies or businesses, and divesting business units or subsidiaries and selling product lines and technologies that are no longer material to our core business, are all part of our long-term business strategy. The risks involved with merger and acquisition, equity investment and divestiture activities include:

• diversion of management's attention from our core businesses;

• failure to integrate or potential loss of key employees, particularly those of the acquired companies;

• potential difficulties resulting from the divestiture of business operations, with respect to protecting the confidentiality of proprietary information and trade secrets not subject to the divestiture;

• difficulties and risks associated with the methods, estimates and judgments we use in applying critical accounting policies, such as the methods and judgments we used in valuing the Veloce merger consideration, which affected our R&D expense in certain periods in fiscal 2013 and 2014;

• difficulty in completing an acquired company's in-process research or development projects;

• customer dissatisfaction or performance problems with an acquired company's products or services;

• both expected and unanticipated adverse effects from the loss of technologies, patents and other intellectual property, and personnel relating to divested subsidiaries, product lines and businesses;

• adverse effects on existing business relationships with suppliers and customers;

• costs associated with acquisitions, investments and divestitures;

• difficulties associated with combining, integrating or separating acquired or divested operations, products or technologies;

• difficulties and risks associated with entering and competing in markets that are unfamiliar to us; and

• ability of the acquired companies to meet their financial projections and the effect of divesting subsidiaries and businesses on our revenues and margins.

In addition, as a result of our acquisition and investment activities, we could:

• issue stock that would dilute, in some cases significantly, our current stockholders' percentage ownership;

• use a significant portion of our cash reserves or incur debt;

• assume liabilities, including unanticipated third-party litigation and other unknown liabilities and unanticipated costs, events or circumstances;

• incur adverse tax consequences;

• incur amortization or impairment expenses related to goodwill and other intangible assets, depreciation and deferred compensation; and

• incur large one-time charges and immediate write-offs.

Any of these risks could materially harm our business, financial condition and results of operations.

Our past acquisitions required us to capitalize significant amounts of goodwill and purchased intangible assets. As a result of the past slowdown in our industry and reduction of our market capitalization, we have been required to record significant impairment charges against these assets as noted in our previous financial statements. Additionally, the past deterioration in market values has had an unfavorable impact on our valuations which are part of the goodwill and purchased intangible asset impairment tests. There can be no assurances that market conditions will not deteriorate further or that our market capitalization will not decline further. At March 31, 2014, we had $11.5 millionof goodwill and purchased intangible assets. We cannot assure you that we will not be required to take significant charges as a result of impairment to the carrying value of the goodwill and purchased intangible assets, due to further adverse changes in market conditions.

We have expended significant effort and expense on divestitures, and may do so in the future. For example, in April 2013, we completed the sale of 100% of the issued and outstanding shares of TPack A/S, a wholly-owned subsidiary of us, and certain intellectual property assets owned by us related to TPack's business for an aggregate consideration of $33.5 million, payable in cash. Of this amount, $30.2 million was paid at the closing and the remaining $3.4 million - which had been held back to secure our indemnification obligations - was released to us in April 2014. In January 2013, we sold certain assets

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relating to our active optical technology platform to Volex Plc for a purchase price of approximately $2.0 million. We may be unable to accomplish future strategic divestitures on favorable terms or at all.

Our industry and markets are subject to consolidation, which may result in stronger competitors, fewer customers and reduced demand.

There has been industry consolidation among communications IC companies, network equipment companies and telecommunications companies in the past, such as the acquisition of Seamicro Inc. by Advanced Micro Devices in February 2012, Netlogic Microsystems, Inc. by Broadcom Corporation in February 2012, Gennum Corporation by Semtech Corporation in March 2012, Standard Microsystems by Microchip Technology in August 2012, Passif Semiconductor by Apple in July 2013, and Volterra Semiconductor by Maxim Integrated in October 2013. In addition, Calxeda, a privately held developer of ARM-based processors, shut down in late 2013. We expect this consolidation to continue as companies attempt to benefit from economies of scale, gain improved or more comprehensive product portfolios, increase the size of their serviceable markets, and otherwise strengthen or hold their positions in an evolving technology landscape. In addition, we may become a target for a company looking to improve its competitive position. Consolidation may result in stronger competitors, fewer customers and reduced demand, which in turn could have a material adverse effect on our business, operating results, and financial condition.

Our operating results are subject to fluctuations because we rely heavily on international sales.

International sales account for a significant part of our revenues and may account for an increasing portion of our future revenues. The revenues we derive from international sales are subject to certain risks, including:

• foreign currency exchange fluctuations to the extent that this impacts our customers purchasing power;

• changes in regulatory requirements;

• tariffs, rising protectionism and other trade barriers;

• timing and availability of export licenses;

• political and economic instability;

• natural disasters;

• increased exposure to liability under U.S and foreign anti-corruption laws and regulations;

• difficulties in staffing and managing foreign operations;

• difficulties in managing distributors;

• reduced or uncertain protection for intellectual property rights in some countries;

• longer payment cycles and difficulties in collecting accounts receivable in some countries;

• burdens of complying with a wide variety of complex foreign laws and treaties;

• potentially adverse tax consequences; and

• uncertain economic conditions that may worsen or sustain improvements which trail those in the United States.

Because sales of our products have been denominated to date primarily in United States dollars, increases in the value of the United States dollar could increase the price of our products so that they become relatively more expensive to customers in the local currency of a particular country, leading to a reduction in sales in that country. Future international activity may result in increased foreign currency denominated sales. Gains and losses on the conversion to United States dollars of accounts payable and other monetary assets and liabilities arising from international operations may contribute to fluctuations in our results of operations.

Some of our customer purchase orders and agreements are governed by foreign laws, which may differ significantly from laws in the United States, or may require that dispute resolution occur in a foreign country. As a result, our ability to enforce our rights under such agreements may be limited compared with our ability to enforce our rights under agreements governed by laws in the United States and adjudicated in the United States.

Our foreign operations may subject us to risks relating to the U.S. Foreign Corrupt Practices Act, other U.S. and foreign anti-bribery statutes and similar foreign regulations that may have a material adverse impact on our business, financial condition or results of operations.

Our international operations are subject to laws regarding the conduct of business overseas, such as the U.S. Foreign Corrupt Practices Act, or FCPA, and other anti-bribery regulations in foreign jurisdictions where we do business, such as China, India, Vietnam, and Europe. The FCPA prohibits the provision of illegal or improper inducements to foreign government officials in connection with obtaining or retaining business overseas or to secure an improper commercial advantage. The FCPA also requires us to keep accurate books and records of business transactions and maintain an adequate system of internal accounting controls. Violations of the FCPA, anti-bribery statutes or other similar laws by us, any of our foreign subsidiaries, or any of our or their employees, executive officers, distributors or other agents or intermediaries could subject us and the individuals involved to significant criminal or civil liability. In recent years, the Department of Justice and SEC have

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significantly stepped up their investigation and prosecution of alleged FCPA violations. Any such allegations of non-compliance with the FCPA, anti-bribery statutes or other similar laws could harm our reputation, divert management attention and result in significant expenses, and could therefore materially harm our business, financial condition or results of operations.

Our portfolio of short-term investments is exposed to certain market risks.

We maintain an investment portfolio of various holdings, types of instruments and maturities. These securities are recorded on our consolidated balance sheets at fair value with unrealized gains or losses reported as a separate component of accumulated other comprehensive (loss) income, net of tax. Our investment portfolio is exposed to market risks related to changes in interest rates and credit ratings of the issuers, as well as to the risks of default by the issuers and lack of overall market liquidity. Substantially all of these securities are subject to interest rate and credit rating risk and will decline in value if interest rates increase or one of the issuers' credit ratings is reduced. Increases in interest rates or decreases in the credit worthiness of one or more of the issuers in our investment portfolio could have a material adverse impact on our financial condition or results of operations. As of March 31, 2014 the unrealized losses on these securities that were not previously written down as an other-than-temporary impairment charge were approximately $0.4 million, of which a substantial amount has been at an unrealized loss for less than 12 months. If the fair value of any of these securities does not recover to at least the amortized cost of such security or we are unable to hold these securities until they recover, we may be required to record a decline in the carrying value of these securities.

Our operating results depend on manufacturing output and yields of our ICs and printed circuit board assemblies, which may not meet expectations.

The yields on wafers we have manufactured decline whenever a substantial percentage of wafers must be rejected or a significant number of die on each wafer are nonfunctional. Such declines can be caused by many factors, including minute levels of contaminants in the manufacturing environment, design issues, defects in masks used to print circuits on a wafer and difficulties in the fabrication process. Design iterations and process changes by our suppliers can cause a risk of defects. Many of these problems are difficult to diagnose, are time consuming and expensive to remedy and can result in shipment delays.

We estimate yields per wafer and final packaged parts in order to estimate the value of inventory. If yields are materially different than projected, work-in-process inventory may need to be re-valued. We may have to take inventory write-downs as a result of decreases in manufacturing yields. We may suffer periodic yield problems in connection with new or existing products or in connection with the commencement of production using a new design geometry or at a new manufacturing facility.

The complexity of our products may lead to errors, defects and bugs, which could negatively impact our reputation with customers and result in liability.

Products as complex as ours may contain errors, defects and bugs when first introduced or as new versions are released. Our products have in the past experienced such errors, defects and bugs. Delivery of products with production defects or reliability, quality or compatibility problems could significantly delay or hinder market acceptance of the products or result in a costly recall and could damage our reputation and adversely affect our ability to retain existing customers and attract new customers. Errors, defects or bugs could cause problems with device functionality, resulting in interruptions, delays or cessation of sales to our customers. We may also be required to make significant expenditures of capital and resources to resolve such problems. We cannot assure you that problems will not be found in new products, both before and after commencement of commercial production, despite testing by us, our suppliers or our customers. Any such problems could result in:

• delays in development, manufacture and roll-out of new products;

• additional development costs;

• loss of, or delays in, market acceptance;

• diversion of technical and other resources from our other development efforts;

• claims by our customers or others against us; and

• loss of credibility with our current and prospective customers.

Any such event could have a material adverse effect on our business, financial condition and results of operations.

Regulatory authorities in jurisdictions into or from which we ship our products could levy fines or restrict our ability to import and export products.

A significant majority of our sales are made outside of the U.S. through the exporting and re-exporting of products. In addition to local jurisdictions' export regulations, our U.S.-manufactured products and products based on U.S. technology are subject to U.S. laws and regulations governing international trade and exports. These laws and regulations include, but are not limited to, the Export Administration Regulations (“EAR”), and trade sanctions against embargoed countries and destinations

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administered by the U.S. Department of the Treasury, Office of Foreign Assets Control (“OFAC”). Licenses or proper license exceptions are required for the shipment of our products to certain countries as well as for the transfer of certain information and technology to certain foreign countries, foreign nationals or other prohibited persons within the United States or abroad. A determination by the U.S. or local government that we have failed to comply with these or other import or export regulations can result in penalties which may include denial of import or export privileges, fines, civil and criminal penalties and seizure of products. Such penalties could have a material adverse effect on our business, including our ability to meet our sales and earnings forecasts. Further, a change in these laws and regulations could restrict our ability to export to previously permitted countries, customers, distributors or other third parties. Any one or more of these sanctions or a change in laws or regulations could have a material adverse effect on our business, financial condition and results of operations. We cannot predict whether quotas, duties, taxes or other charges or restrictions upon the importation or exportation of our products will be implemented by the United States or other countries.

If our internal control over financial reporting is not considered effective, our business and stock price could be adversely affected.

Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate the effectiveness of our internal control over financial reporting as of the end of each fiscal year, and to include a management report assessing the effectiveness of our internal control over financial reporting in our Annual Report on Form 10-K for that fiscal year. Section 404 also requires our independent registered public accounting firm to attest to and report on the effectiveness of our internal control over financial reporting.

Our management, including our chief executive officer and chief financial officer, does not expect that our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of control must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal control can provide absolute assurance that all control issues and instances of fraud involving a company have been, or will be, detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and we cannot assure you that any design will succeed in achieving its stated goals under all potential future conditions. Over time, our internal control over financial reporting may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. In addition, as a result of the reduction in the number of employees assigned to financial reporting and regulatory compliance functions in connection with recently completed and anticipated future restructuring activities, we may be at increased risk of failures in our internal control systems. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Our management has concluded, and our independent registered public accounting firm has attested, that our internal control over financial reporting was effective as of March 31, 2014. We cannot be certain in future periods that any control deficiencies that may constitute one or more “significant deficiencies” (as defined by the relevant auditing standards) or material weaknesses in our internal control over financial reporting will not be identified by us or our independent registered public accounting firm. If we fail to maintain the adequacy of our internal controls, including any failure to implement or difficulty in implementing required new or improved controls, our business and results of operations could be harmed, the results of operations we report could be subject to adjustments, and we could fail to be able to provide reasonable assurance as to our financial results or the effectiveness of our internal controls or meet our reporting obligations. A material weakness in our internal control over financial reporting would require management and our independent registered public accounting firm to report our internal control over financial reporting as ineffective. If our internal control over financial reporting is not considered effective, we may experience a restatement like we have in the past of our financial statements. Any restatement or actual or perceived weakness or adverse conditions in our internal control over financial reporting, or in management's assessment thereof, could result in a loss of public confidence in our reported financial information, and have a material adverse effect on our business, the market price of our common stock, and our ability to access capital markets, and may result in litigation claims, regulatory actions and diversion of management attention and resources.

Our future success depends in part on the continued service of our key senior management, design engineering, sales, marketing, and manufacturing personnel, our ability to identify, hire and retain additional, qualified personnel and successful succession planning.

Our future success depends to a significant extent upon the continued service of our senior management and engineering personnel and successful succession planning. In addition, as our core business and technologies continue to evolve, including without limitation with respect to our growth and expansion into next-generation cloud infrastructure and data center markets, our success will depend on effectively transitioning to certain new management and engineering personnel who are most capable of supporting that evolution. There is intense competition for qualified personnel in the semiconductor industry, in

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particular design, product and test engineers. We may not be able to continue to identify, attract and retain engineers or other qualified personnel necessary for the development of our business, or to replace engineers or other qualified personnel who may leave our employment in the future. Also, the departure from the Company of one or more Veloce management or engineering personnel could materially adversely affect our product development efforts for X-Gene and next-generation products.

We also face the risks associated with our former employees assisting their new employers to recruit our key talent, in violation of their contractual non-solicitation and confidentiality covenants and other legal obligations to us. Our efforts to enforce these contractual covenants and legal obligations has required, and may in the future require, us to incur significant litigation expenses and devote significant management attention. Furthermore, while we encourage our employees to abide by all contractual and legal obligations owed to their former employers, there can be no assurance that we will not be the target of allegations made by other companies that we have, directly or indirectly, unlawfully solicited their employees to join us. There are significant costs associated with recruiting, hiring and retaining personnel, as well as significant actual and potential losses to our business arising from the delays in or cancellation of technology development, product completion and roll-out, customer design wins and product orders, and sales revenues caused by the departure of key engineering resources.

Periods of contraction in our business may also inhibit our ability to attract and retain our personnel. As we respond to declining revenues and/or implement additional cost improvement measures such as reductions in force, our remaining key employees may lose confidence in the future performance of the Company and decide to leave. Loss of the services of, or failure to recruit, key design engineers or other technical and management personnel could be significantly detrimental to our product development or other aspects of our business. To manage our operations effectively, we will be required to continue to improve our operational, financial and management systems and to successfully hire, train, motivate, manage and retain our employees.

Our ability to supply a sufficient number of products to meet customer demand, and customer demand itself, could be severely hampered by natural disasters or other catastrophes, the effects of war, acts of terrorism, global threats or shortages of water, electricity or other supplies.

A significant portion of our R&D and supply chain operations are located in Asia. These areas are subject to natural disasters such as earthquakes, floods and tsunamis, like those that struck Japan and Thailand. In addition, our headquarters and satellite offices in California are located in areas containing known earthquake fault lines. We do not have earthquake insurance for these facilities, because adequate coverage is not offered at economically justifiable rates. A significant natural disaster, shortage of water or other catastrophic event affecting us, our suppliers or our customers could have a material adverse impact on our business, financial condition and operating results.

The effects of war, acts of terrorism or global threats, including, but not limited to, the outbreak of epidemic disease, could have a material adverse effect on our business, operating results and financial condition. The continued threat of terrorism and heightened security and military action in response to this threat, or any future acts of terrorism, may cause further disruptions to local and global economies and create further uncertainties. To the extent that such disruptions or uncertainties result in delays or cancellations of customer orders, or the manufacture or shipment of our products, our business, operating results and financial condition could be materially and adversely affected.

We could incur substantial fines, litigation costs and remediation expenses associated with our storage, use and disposal of hazardous materials.

We are subject to a variety of federal, state and local governmental regulations related to the use, storage, discharge and disposal of toxic, volatile or otherwise hazardous chemicals used in our manufacturing process. Any failure to comply with present or future regulations could result in the imposition of fines, the suspension of production or a cessation of operations. These regulations could require us to acquire costly equipment or incur other significant expenses to comply with environmental regulations or clean up prior discharges.

Since 1993, we have been named as a potentially responsible party (“PRP”) along with more than 100 other companies that used Omega Chemical Corporation waste treatment facility in Whittier, California (the “Omega Site”). The U.S. Environmental Protection Agency (“EPA”) has alleged that the Omega Site failed to properly treat and dispose of certain hazardous waste material. We are a member of a large group of PRPs, known as OPOG, that has agreed to fund certain ongoing remediation efforts at the Omega Site and with respect to the regional groundwater allegedly contaminated thereby.

In 2007, the PRPs were sued by a chemical company located downstream from the Omega Site, seeking a judicial determination that the Omega PRPs are responsible for some or all of the plaintiff's potential liability to clean up groundwater contamination beneath the plaintiff's site; that action has been stayed since March 2008 to allow for further delineation of the

25

regional groundwater contamination. In September 2011, EPA issued an interim remedial action proposal, designed to arrest the further spread of groundwater contamination; and in September 2012, it issued a special notice letter that triggered the commencement of good faith settlement negotiations with OPOG. In July 2013, the EPA rejected a good faith offer (“GFO”) to settle the matter that OPOG had submitted in February 2013. In October 2013, OPOG submitted a revised GFO that EPA is currently reviewing. Settlement negotiations are expected to continue through fiscal year 2015. In December 2013, OPOG retained legal counsel to pursue legal claims against numerous other PRPs for the regional groundwater contamination; we have elected to participate in the costs and recoveries associated with this litigation. In September 2012, a toxic tort litigation that was commenced in 2010 against Omega and the PRP group by individuals alleging injuries caused by the Omega Site was settled and dismissed with prejudice.

Based on currently available information, we have a loss accrual for the Omega site that is not material and we believe that the actual amount of our costs and liabilities will not be materially different from the amount accrued. However, proceedings are ongoing and the eventual outcome of the clean-up efforts and the pending litigation matter is uncertain at this time. Based on currently available information, we do not believe that any eventual outcome will have a material adverse effect on our operations but we cannot guarantee this result. In 2009, the U.S. Supreme Court decided U.S. v. Burlington Northern & Santa Fe Railway Co., 129 S.Ct. 1870, which determined that hazardous substance cleanup liability need not be joint and several in all cases. As a result of this decision, the liability is potentially divisible among the PRPs at an earlier stage in superfund cases such as Omega. At this time we do not know and cannot predict the full impact of this decision on our liability. In addition, in January 2012, as a result of the PRP group's modification of its liability allocation formulae and the withdrawal of PRP group members, our proportional allocation of responsibility among the PRPs for the current remediation obligations increased. Subsequently, certain other PRPs withdrew from OPOG, and settlement negotiations with these parties are continuing. Any future increases to our proportional allocation of responsibility among the PRPs or the future reduction of parties participating in the PRP group due to additional member withdrawals could materially increase our potential liability relating to the Omega Site.

Although we believe that we have been and currently are in material compliance with applicable environmental laws and regulations, we cannot guarantee that we are or will be in material compliance with these laws or regulations or that our future obligations to fund any remediation efforts, including those at the Omega Site, or expenses and potential liabilities relating to the pending litigation matter, will not have a material adverse effect on our business and financial condition.

Customer requirements and new regulations related to conflict-free minerals may force us to incur additional expenses or cause us to lose business.

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC adopted new requirements for companies that use certain minerals and derivative metals (referred to as “conflict minerals”) in their products, including products that are manufactured by third parties. These new regulations require companies to investigate, disclose and report whether or not such minerals or metals originated from the Democratic Republic of Congo or adjoining countries, and mandate independent audits under certain circumstances, to confirm that trade in such minerals or metals does not fund armed conflict in those countries. Although a U.S. federal appeals court recently struck down one aspect of these rules, the SEC has stated that it still expects companies to file reports addressing the other aspects. The first report is due on June 2, 2014 for the 2013 calendar year.

The implementation of these requirements, and any similar requirements that other jurisdictions may impose in the future, will require us to incur additional compliance-related expenses. They could also adversely affect the availability and cost of metals used in the manufacture of many semiconductor devices, including ours. As there may be only a limited number of suppliers offering metals from sources outside of the relevant countries or that have been independently verified as not funding armed conflict in those countries, we cannot be sure that our contract manufacturers and other suppliers will be able to obtain those metals in sufficient quantities or at competitive prices. Also, since our supply chain is complex and some suppliers will not share their confidential supplier information, we may face challenges with our customers and suppliers if we are unable to sufficiently verify the origin of the metals used in our products. Some customers may choose to disqualify us as a supplier, and we may have to write off inventory in the event that it becomes unsalable as a result of these regulations. We may face similar risks in connection with any other regulations focusing on social responsibility or ethical sourcing that may be adopted in the future.

Environmental laws and regulations could cause a disruption in our business and operations.

We are subject to various state, federal and international laws and regulations governing the environment, including those restricting the presence of certain substances in electronic products and making manufacturers of those products financially responsible for the collection, treatment, recycling and disposal of certain products. Such laws and regulations have been passed in several jurisdictions in which we operate, including various European Union (“EU”) member countries. For example, the EU has enacted the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment

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(“RoHS”) and the Waste Electrical and Electronic Equipment (“WEEE”) directives. RoHS prohibits the use of lead and other substances in semiconductors and other products put on the market after July 1, 2006. The WEEE directive obligates parties that place electrical and electronic equipment on the market in the EU to put a clearly identifiable mark on the equipment, register with and report to EU member countries regarding distribution of the equipment, and provide a mechanism to take back and properly dispose of the equipment. There can be no assurance that similar programs will not be implemented in other jurisdictions resulting in additional costs, possible delays in delivering products, and even the discontinuance of existing and planned future product replacements if the cost were to become prohibitive.

We may not be able to protect our intellectual property adequately.

We rely in part on patents to protect our IP. We cannot assure you that any of our issued patents will adequately protect the IP in our products and processes, will provide us with competitive advantages, will not be challenged by third parties or that, if challenged, any such patents will be found to be valid or enforceable. In our industry, the assertion of IP rights often results in the other party seeking to assert claims based on its own IP, which can be costly and disruptive. In addition, there can be no assurance our pending patent applications or any future applications will be approved or that we will successfully prepare and file patent applications with respect to new inventions potentially subject to patent protection. Others may independently develop similar products or processes, duplicate our products or processes or design around any patents we currently hold or that may be issued to us.

To protect our IP, we also rely on the combination of mask work protection under the Federal Semiconductor Chip Protection Act of 1984, trademarks, copyrights, trade secret laws, employee and third-party nondisclosure agreements, and licensing arrangements. Despite these efforts, we cannot assure you that others will not independently develop substantially equivalent IP or otherwise gain access to our trade secrets or IP, or disclose such IP or trade secrets, or that we can meaningfully protect our IP. A failure by us to meaningfully protect our IP could have a material adverse effect on our business, financial condition and operating results.

We generally enter into confidentiality and invention assignment agreements with our employees and contractors, and confidentiality agreements with other third parties including consultants, suppliers, customers, licensees and strategic partners. We also try to control access to and distribution of our technologies, pre-release products, documentation and other proprietary information, through the use of license agreements and other contracts and the implementation and enforcement of physical security measures. Despite these efforts, employees, contractors and third parties may attempt to copy, disclose, obtain or use our confidential information, products, services or technology without our authorization. In such event, any contracts we have in place with such parties might not provide us with adequate remedies to protect our intellectual property rights or to recover adequate damages for this loss. Also, former employees may seek employment with our business partners, customers or competitors and we cannot assure you that the confidential nature of our proprietary information will be maintained in the course of such future employment. Additionally, former employees or third parties could attempt to penetrate our network to misappropriate our proprietary information or interrupt our business. Because the techniques used by computer hackers to access or sabotage networks change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques. As a result, our technologies and processes may be misappropriated, particularly in foreign countries where laws may not protect our proprietary rights as fully as in the United States.

We could be harmed by litigation involving patents, proprietary rights or other claims.

In the past we have sold to third parties, including non-practicing entities (also known as "NPEs" or "patent trolls"), groups of patents previously issued to or acquired by us that we deemed to be no longer essential to our core product lines and technologies. Certain NPE acquirers have brought and may in the future bring legal actions asserting infringement of the acquired patents against various defendants, including customers or potential customers of ours. Although we are expressly licensed and our customers are similarly protected under such acquired patents with respect to all products sold by us, nevertheless certain customers, against whom the NPEs have asserted infringement of the acquired patents by products other than ours (e.g., products internally developed by the customer or purchased from third-party suppliers other than us), have reacted adversely to us based on our initial sale of the acquired patents to the NPEs. Such adverse reactions have included, among other things, demands that we reimburse the customer for expenses incurred in defending against or settling the legal action, as well as threats to reduce or discontinue the customer's current or future business with us. There can be no assurance that any such expense reimbursement payments or other financial consideration extended to such affected customers or any actual reduction or discontinuance of product sales to such affected customers would not adversely affect our business, financial condition or operating results.

In addition, litigation may be necessary to enforce our IP rights, to determine the validity and scope of the proprietary rights of others or to defend against claims that our products are infringing or misappropriating the IP rights of third parties. The semiconductor industry is characterized by substantial litigation regarding patent and other IP rights. Currently we are not a named defendant in any IP infringement lawsuits. Nevertheless, as our products and IP become instantiated in more and more

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customer products and applications, and as patent infringement litigation brought by our competitors, NPEs and patent-licensing companies is on the rise, we are at an increased risk of being named as a defendant in such litigation. Due in part to the factors described above, we have been or currently are subject to the following:

• having information about our products and technologies subpoenaed, and our employees deposed, in patent litigation between other third parties;

• demands that we enter into expensive licenses of third party patent portfolios in order to avoid being named as a defendant in future IP infringement suits;

• claims, contractual or otherwise, demanding that we indemnify or reimburse customers or end users of our products

with respect to their actual or potential liability, including without limitation defense costs, arising from third party IP infringement claims brought against them; and

• demands from customers that we enter into “springing licenses” that prospectively grant such customers and related parties automatic license rights to any patents we sell or otherwise divest control over in specified transactions.

Such claims and demands have caused and could in the future result in substantial costs and diversion of resources and could have a material adverse effect on our business, financial condition and results of operations.

Any current or future litigation relating to the IP rights of third parties would at a minimum be costly and could divert the efforts and attention of our management and technical personnel. In the event of any adverse ruling in any such litigation, we could be required to pay substantial damages, cease the manufacturing, use and sale of infringing products, discontinue the use of certain processes, expend substantial resources attempting to develop non-infringing products or technologies, or obtain a license under the IP rights of the third party claiming infringement. A license might not be available on reasonable, economic and other terms or at all. From time to time, we may be involved in litigation relating to other claims arising out of our operations in the normal course of business. The ultimate outcome of any such litigation matters could have a material, adverse effect on our business, financial condition and operating results.

Our stock price is volatile.

The market price of our common stock has fluctuated significantly. In the future, the market price of our common stock could be subject to significant fluctuations due to general economic and market conditions and in response to:

• fluctuations in our anticipated or actual operating results;

• our announcement of actual results or financial outlook that are higher or lower than market or analyst expectations;

• changes in the economic performance or market valuations of other semiconductor companies or companies perceived by investors to be comparable to us;

• announcements or introductions of new products by us or our competitors;

• fluctuations in the anticipated or actual operating results or growth rates of our customers, peers or competitors;

• technological innovations or setbacks by us or our competitors;

• conditions in the semiconductor, communications or information technology markets;

• the commencement or outcome of litigation or governmental investigations;

• changes in ratings and estimates of our performance, or loss of coverage, by securities analysts;

• positive or negative commentary about our business or prospects by industry bloggers and journalists;

• volume fluctuations due to inconsistent trading volume levels of our shares;

• announcements of merger or acquisition transactions;

• management changes;

• our inclusion in certain stock indices; and

• general economic and market conditions.

The stock market in recent years has experienced extreme price and volume fluctuations that have affected the market prices of many high technology companies, particularly semiconductor companies. In some instances, these fluctuations appear to have been unrelated or disproportionate to the operating performance of the affected companies. Whether or not our stock is part of one or more Index funds could have a significant impact on our stock. We cannot assure you that our stock will be part of any Index fund. In addition, the past decline and inconsistent recovery of the financial markets and related factors beyond our control, including the credit and mortgage crisis in both the U.S. and worldwide, may cause our stock price to decline rapidly and unexpectedly.

Delaware law and our corporate charter and bylaws contain anti-takeover provisions that could delay or discourage takeover attempts that stockholders may consider favorable.

Provisions in our certificate of incorporation, as amended, and our bylaws, as amended and restated, may have the effect of delaying or preventing a change of control or changes in our directors and management. These provisions include the following:

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• the ability of the board of directors to issue up to 2.0 million shares of “blank check” preferred stock with terms designed to prevent or delay a takeover attempt, as described further below;

• the prohibition of cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates;

• the requirement for advance notice for nominations of directors for election to the board or for proposing matters that can be acted upon at a stockholders' meeting;

• the ability of the board of directors to alter our bylaws without obtaining stockholder approval;

• the requirement that any stockholder derivative actions and certain other intra-corporate disputes be litigated solely and exclusively in Delaware state court;

• the right of the board of directors to elect a director to fill a vacancy created by the expansion of the board of directors; and

• the prohibition of the right of stockholders to call a special meeting of stockholders.

Our board of directors has the authority to issue up to 2.0 million shares of preferred stock and to determine the price, rights, preferences and privileges and restrictions, including voting rights, of those shares without any further vote or action by our stockholders. The rights of the holders of common stock will be subject to, and may be harmed by, the rights of the holders of any shares of preferred stock that may be issued in the future. The issuance of preferred stock may delay, defer or prevent a change in control, as the terms of the preferred stock that might be issued could potentially prohibit our consummation of any merger, reorganization, sale of substantially all of our assets, liquidation or other extraordinary corporate transaction without the approval of the holders of the outstanding shares of preferred stock. The issuance of preferred stock could have a dilutive effect on our stockholders.

Because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law. These provisions may prohibit, restrict or significantly delay large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us.

Although we believe these provisions in our charter and bylaws and under Delaware law collectively provide for an opportunity to receive higher bids by requiring potential acquirers to negotiate with our board of directors, they would apply even if the offer may be considered beneficial by some stockholders. In any event, these provisions may delay or prevent a third party from acquiring us. Any such delay or prevention could cause the market price of our common stock to decline.

Item 1B. Unresolved Staff Comments.

Not applicable.

Item 2. Properties.

Our corporate headquarters are located in Sunnyvale, California and we currently lease approximately 97,000square feet. The facility contains administration, sales and marketing, research and development and operations functions. The lease expires on August 31, 2015, subject to our right to terminate early upon at least 120 days’ notice.

We lease additional domestic facilities in San Diego, California and Wilmington, Massachusetts. Our foreign leased locations consist of the following: Ottawa, Canada; Tokyo, Japan; Beijing, Shenzhen and Shanghai, the People’s Republic of China; Taipei and Kaohsiung, Taiwan; Ho Chi Minh City, Vietnam and Pune and Bangalore, India.

The domestic and international leased facilities comprise an aggregate of approximately 232,000 square feet. These facilities have lease terms expiring between 2014 and 2018. We believe that the facilities under lease by us will be adequate for at least the next 12 months.

For additional information regarding our obligations under property leases, see Note 8, Commitments, to Consolidated Financial Statements, included in Part IV, Item 15, Exhibits, Financial Statement Schedules, of this Annual Report.

Item 3. Legal Proceedings.

The information set forth under Note 11, Contingencies, to Consolidated Financial Statements, included in Part IV, Item 15, Exhibits and Financial Statement Schedules, of this Annual Report, is incorporated herein by reference.

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Item 4. Mine Safety Disclosures

Not applicable

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock is traded on the Nasdaq Global Select Market under the symbol AMCC. The following table sets forth the high and low closing sales prices of our common stock as reported by Nasdaq for the periods indicated.

Fiscal Year Ended March 31, 2014	High		Low
First Quarter	$	9.73	$	6.72
Second Quarter	$	12.93	$	8.60
Third Quarter	$	14.29	$	10.53
Fourth Quarter	$	12.93	$	9.49

Fiscal Year Ended March 31, 2013	High		Low
First Quarter	$	6.87	$	5.17
Second Quarter	$	6.14	$	4.71
Third Quarter	$	8.42	$	4.38
Fourth Quarter	$	9.56	$	7.42

At May 20, 2014, there were approximately 187 holders of record of our common stock. Because most of our shares are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial stockholders represented by the record holders.

Dividend Policy

We have never declared or paid cash dividends on shares of our common stock. We currently intend to retain all of our earnings, if any, for use in our business, for the purchases of our common stock or for the acquisitions of other businesses, assets, products or technologies. We do not anticipate paying any cash dividends in the foreseeable future.

Recent Sales of Unregistered Securities

During the fiscal year ended March 31, 2014, we issued 6,665,081 shares of common stock to former holders of Veloce common stock, common stock options and stock equivalents pursuant to the Veloce merger agreement, as described above. These shares were issued without registration under the Securities Act of 1933, as amended, pursuant to the exemption afforded by Section 3(a)(10) of the Securities Act.

Securities Authorized for Issuance under Equity Compensation Plans

The information included in Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, of this Annual Report on Form 10-K is hereby incorporated herein by reference. For additional information on our stock incentive plans and activity, see Note 5, Stockholder's Equity, to Consolidated Financial Statements included in Part IV, Item 15, Exhibits and Financial Statement Schedules, of this Annual Report.

Stock Price Performance Graph

The following information is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under the Exchange Act or to the liabilities of Section 18 of the Exchange Act, and will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act except to the extent we specifically incorporate it by reference into such a filing.

The graph below matches Applied Micro Circuits Corporation’s cumulative five-year total stockholder return on common stock with the cumulative total returns of the S&P 500 index, the NASDAQ Composite index, the NASDAQ Telecommunications index and the NASDAQ Electronic Components index. The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from March 31, 2009 to March 31, 2014.

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The comparisons in the graph below are required by the SEC and are not intended to forecast or be indicative of possible future performance of our common stock.

	Fiscal Years Ending March 31,
	2009	2010	2011	2012	2013	2014
Applied Micro Circuits Corporation	100.00	177.57	213.58	142.80	152.67	203.70
S&P 500	100.00	149.77	173.20	187.99	214.24	261.06
NASDAQ Composite	100.00	158.32	185.39	210.13	226.02	296.17
NASDAQ Telecommunications	100.00	154.71	155.74	149.68	157.80	199.29
NASDAQ Electronic Components	100.00	158.85	184.71	189.24	177.48	239.48

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Item 6. Selected Financial Data.

The following table sets forth selected financial data for each of our last five fiscal years ended March 31, 2014. You should read the selected financial data set forth in the table below, together with the Consolidated Financial Statements and related Notes to Consolidated Financial Statements, included in Part IV, Item 15, Exhibits and Financial Statement Schedules, of this Annual Report, as well as Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this Annual Report (In thousands, except per share amounts).

	Fiscal Years Ended March 31,
	2014			2013			2012			2011			2010
Consolidated Statement of Operations Data:
Net revenues	$	216,150		$	195,642		$	230,887		$	247,710		$	205,598
Cost of revenues	85,189			83,048			98,804			95,282			92,931
Gross profit	130,961			112,594			132,083			152,428			112,667
Operating expenses:
Research and development	146,579			187,419			175,656			108,732			88,096
Selling, general and administrative	38,927			51,684			45,794			49,173			45,901
Gain on sale of TPack	(19,699		)	—			—			—			—
Gain on sale of building	(25,815		)	—			—			—			—
Amortization of purchased intangible assets	316			1,926			3,202			5,285			4,020
Restructuring charges, net	1,134			6,435			875			532			746
Total operating expenses	141,442			247,464			225,527			163,722			138,763
Operating loss	(10,481		)	(134,870		)	(93,444		)	(11,294		)	(26,096		)
Interest income (expense), net and other-than-temporary impairment	5,052			2,595			4,247			9,890			3,440
Other income (expense), net	354			(2,394		)	7,437			797			(1,551		)
Loss from continuing operations before income taxes	(5,075		)	(134,669		)	(81,760		)	(607		)	(24,207		)
Income tax expense (benefit)	619			(554		)	928			399			(10,610		)
Loss from continuing operations	(5,694		)	(134,115		)	(82,688		)	(1,006		)	(13,597		)
Income from discontinued operations, net of taxes	—			—			—			—			6,112
Net loss	$	(5,694	)	$	(134,115	)	$	(82,688	)	$	(1,006	)	$	(7,485	)
Basic and diluted net loss per share:
Net loss from continuing operations per share	$	(0.08	)	$	(2.06	)	$	(1.33	)	$	(0.02	)	$	(0.21	)
Net income from discontinued operations per share	—			—			—			—			0.10
Net loss per share	$	(0.08	)	$	(2.06	)	$	(1.33	)	$	(0.02	)	$	(0.11	)
Shares used in calculating basic and diluted net loss per share	72,897			65,258			62,245			65,160			66,006
	March 31,
	2014			2013			2012			2011			2010
Consolidated Balance Sheet Data:
Working capital	$	112,351		$	26,860		$	118,575		$	186,117		$	227,850
Goodwill and intangible assets, net	$	11,530		$	25,174		$	29,817		$	36,571		$	16,850
Total assets	$	207,536		$	211,380		$	269,052		$	308,657		$	316,044
Total stockholders’ equity	$	149,236		$	81,504		$	169,236		$	261,810		$	280,874

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This management’s discussion and analysis of financial condition and results of operations (“MD&A”) is provided as a supplement to the accompanying Consolidated Financial Statements and footnotes to help provide an understanding of our financial condition, changes in our financial condition and results of our operations. The MD&A is organized as follows:

• Caution concerning forward-looking statements. This section discusses how forward-looking statements made by us in the MD&A and elsewhere in this Annual Report are based on management’s present expectations about future events and are inherently susceptible to uncertainty and changes in circumstances.

• Overview. This section provides an introductory overview and context for the discussion and analysis that follows in the MD&A.

• Critical accounting policies. This section discusses those accounting policies that are both considered important to our financial condition and operating results and require significant judgment and estimates on the part of management in their application.

• Results of operations. This section provides an analysis of our results of operations for the three fiscal years ended March 31, 2014. A brief description is provided of transactions and events that impact the comparability of the results being analyzed.

• Liquidity and capital resources. This section provides an analysis of our cash position and cash flows, as well as a discussion of our financing arrangements and financial commitments.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

This MD&A should be read in conjunction with the Consolidated Financial Statements and notes thereto included in this report. This discussion contains forward-looking statements which are subject to risks and uncertainties. Refer to the Cautionary Statement about Forward-Looking Statements on page 1 for further details.

OVERVIEW

The Company

Applied Micro Circuits Corporation (“AppliedMicro”, “APM”, “AMCC”, the “Company”, “we” or “our”) is a global leader in solutions for next-generation cloud infrastructure and data centers, as well as connectivity products for edge, metro and long haul communications equipment. Our products include the X-Gene^™ ARM® 64-bit Server on a Chip^™ solution, or X-Gene. The X-Gene product is targeted to serve existing and emerging hyperscale cloud, high performance computing and enterprise applications. X-Gene began sampling in silicon to current and prospective customers as well as ecosystem partners in March 2013. We expect X-Gene to begin generating production sales revenue during the second half of our fiscal year 2015. We believe that X-Gene is the first ARM 64-bit server solution to have sampled and to have production units being manufactured. In addition to having a time-to-market advantage, we believe X-Gene will lead the next generation cloud data center silicon market by addressing the need for high performance, lower power, and lower total cost of ownership (“TCO”).

In July 2013, we announced the X-Weave family of products, designed to meet the needs of public cloud, private cloud and enterprise data centers. The X-Weave family includes products spanning 100Gbps to 240Gbps of connectivity with unique multi protocol features and high density.

X-Gene builds upon our base business of providing high speed and high bandwidth connectivity solutions which address growth segments including 10, 40, and 100Gbps solutions serving data center and service provider markets. Our connectivity products include framer/mapper devices for Optical Transport Network (“OTN”) equipment and physical layer (“PHY”) devices that transmit and receive signals in a very high-speed serial format. Our embedded computing products are deployed in applications such as control- and data-plane functionality, wireless access points, residential gateways, wireless base-stations, storage controllers, network attached storage, network switches and routing products, and multi-function printers.

Our corporate headquarters are located in Sunnyvale, California. Sales and engineering offices are located throughout the world. As of March 31, 2014, our business had two reporting units, Computing and Connectivity.

Since the start of fiscal 2012, we have invested a total of $509.7 million in the Research and Development ("R&D") of new products, including high-speed, high-bandwidth, and low-power products that often combine the functions of multiple existing products into single highly-integrated solutions. A considerable portion of this investment is directed to our ARM 64-bit based server product development. Our products and our customers’ products are highly complex. Due to this complexity, it often takes several years to complete the development and qualification of a product before it enters into volume production. Accordingly, some major products in development during the last few years have not yet started to generate significant

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revenues. In addition, demand for our products can be impacted by economic downturns, cyclicality in the telecommunications market, competitive and technological developments, and other factors described elsewhere in this Annual Report.

Acquisition of Veloce

On June 20, 2012 (the “Closing Date”), the Company completed its acquisition of Veloce pursuant to the terms of the Agreement and Plan of Merger, (the “Merger Agreement”). Veloce has been developing specific technology for us.

The Merger Agreement provided for  the payment of the total consideration to holders of Veloce common stock options that were vested on the Closing Date and holders of Veloce common stock and stock equivalents (collectively, “Veloce Equity Holders”), and to Veloce stock equivalents that had not yet been allocated to individuals (“Unallocated Veloce Units”). During the twelve months ended March 31, 2014 and 2013, as part of the above arrangement, we paid approximately $63.7 million and $16.5 million, respectively, in cash and issued approximately 6.7 million shares and 3.0 million shares, respectively, valued at approximately $57.3 million and $16.6 million, respectively.

The total estimated consideration to be paid is based upon the benchmarks achieved during technology simulations that were performed during the third quarter of fiscal 2013 and correlating the results of the technology simulations to the contractual terms included in the Merger Agreement. As a result of higher than expected benchmarks achieved during technology simulations, the total estimated consideration to be paid was updated during fiscal 2013 from a previous estimated maximum of approximately $135.0 million to the contractual maximum of $178.5 million. The consideration that we are obligated to pay upon completion of the respective performance milestones can be settled in cash or our common stock (or a combination of cash and stock), at our election.

We have treated the Veloce merger as a “reorganization” under Section 368 of the Internal Revenue Code in our and Veloce's tax returns. We believe that the requirements to qualify as a reorganization under the Code will be met.

For accounting purposes, the costs to be incurred in connection with the development milestones relating to Veloce are considered compensatory and are recognized as R&D expense. Recognition of these costs as expense occurred when certain development and performance milestones became probable of achievement and were deemed earned. However, the value allocated to the Unallocated Veloce Units will not be recognized as R&D expense until distribution of the underlying units occurs. As of March 31, 2014, 0.9 million Unallocated Veloce Units had not been allocated, and the maximum potential additional expense to be recognized associated with these Unallocated Veloce Units was approximately $9.2 million.

We periodically evaluated the progress of the development work that was being performed in connection with our contractual arrangement with Veloce. Based on such an evaluation as well as various other qualitative factors, we estimated the total value of the development work being performed and assessed the timing and probability of attaining contractually defined performance milestones. As of March 31, 2014, we assessed that all three performance milestones were completed.

Cumulative R&D expenses recognized in connection with the achievement of the three performance milestones through March 31, 2014 were $169.3 million. Total R&D expenses recognized related to Veloce were approximately $42.7 million and $66.2 million during the twelve months ended March 31, 2014 and 2013, respectively. The Veloce accrued liability included on the Consolidated Balance Sheets is based upon the amount of R&D expense recognized in connection with the development of the Veloce performance milestones less amounts paid either in cash or our common stock. Veloce consideration that has been accrued as of March 31, 2014, is classified as long-term if payments of the consideration are expected to occur beyond a 12 month period.

As of March 31, 2014, $154.1 million has been paid and we expect that an additional $7.7 million will be paid in cash and stock by June 30, 2014. The $154.1 million paid to date includes approximately $80.2 million in cash and the issuance of 9.7 million shares of common stock valued at approximately $73.9 million.

Summary Financials

The following table presents a summary of our results of operations for the fiscal years ended March 31, 2014 and 2013 (dollars in thousands):

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	Fiscal Year Ended March 31,
	2014					2013
	Amount			% of Net Revenue		Amount			% of Net Revenue		Increase (Decrease)			% Change
Net revenues	$	216,150		100.0	%	$	195,642		100.0	%	$	20,508		10.5	%
Cost of revenues	85,189			39.4		83,048			42.4		2,141			2.6
Gross profit	130,961			60.6		112,594			57.6		18,367			16.3
Total operating expenses	141,442			65.4		247,464			126.5		(106,022		)	(42.8	)
Operating loss	(10,481		)	(4.8	)	(134,870		)	(68.9	)	(124,389		)	(92.2	)
Interest and other income (expense), net	5,406			2.5		201			0.1		5,205			2,589.6
Loss before income taxes	(5,075		)	(2.3	)	(134,669		)	(68.8	)	(129,594		)	(96.2	)
Income tax (benefit) expense	619			0.3		(554		)	(0.3	)	1,173			(211.7	)
Net loss	$	(5,694	)	(2.6	)%	$	(134,115	)	(68.5	)%	$	(128,421	)	(95.8	)%

The following table presents a summary of our results of operations for the fiscal years ended March 31, 2013 and 2012 (dollars in thousands):

	Fiscal Year Ended March 31,
	2013					2012
	Amount			% of Net Revenue		Amount			% of Net Revenue		Increase (Decrease)			% Change
Net revenues	$	195,642		100.0	%	$	230,887		100.0	%	$	(35,245	)	(15.3	)%
Cost of revenues	83,048			42.4		98,804			42.8		(15,756		)	(15.9	)
Gross profit	112,594			57.6		132,083			57.2		(19,489		)	(14.8	)
Total operating expenses	247,464			126.5		225,527			97.7		21,937			9.7
Operating loss	(134,870		)	(68.9	)	(93,444		)	(40.5	)	41,426			44.3
Interest and other income (expense), net	201			0.1		11,684			5.1		(11,483		)	(98.3	)
Loss before income taxes	(134,669		)	(68.8	)	(81,760		)	(35.4	)	52,909			64.7
Income tax expense	(554		)	(0.3	)	928			0.4		(1,482		)	(159.7	)
Net loss	$	(134,115	)	(68.5	)%	$	(82,688	)	(35.8	)%	$	51,427		62.2	%

Net Revenues. We generate revenues primarily through sales of our IC products, embedded processors and printed circuit board assemblies to OEMs, such as Cisco, Huawei, Alcatel-Lucent, Ciena, Fujitsu, Juniper, NEC, Coriant and ZTE, who in turn supply their equipment principally to communications service providers.

On a sell-through basis, excluding non-cancelable non-returnable inventory we had approximately 47 days of inventory in the distributor channel at March 31, 2014 as compared to 58 days at March 31, 2013. The decrease in inventory days was primarily due to the timing of sell-through of distributor inventory.

The gross margins for our solutions have declined from time to time in the past. Factors that have caused downward pressure on gross margins for our products include competitive pricing pressures, unfavorable product mix, the cost sensitivity of our customers particularly in the higher-volume markets, new product introductions by us or our competitors and capacity constraints in our supply chain. From time to time, for strategic reasons, we may accept initial orders at less than optimal gross margins in order to facilitate the introduction and/or market penetration of our new or existing products. To maintain acceptable operating results, we seek to offset any reduction in gross margins of our products by reducing operating costs, increasing sales volume, developing and introducing new products and developing new generations and versions of existing products on a timely basis.

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We classify our revenues into two categories based on the markets that the underlying products serve. The categories are Connectivity and Computing. We use this information to analyze our performance and success in these markets, including our strategy to focus on the transition to the high-growth data center market.

We are continuing to focus our current connectivity investments on high-growth 10Gbps, 40Gbps and faster Ethernet solutions, and on data center, OTN and enterprise market opportunities, while continuing to service the Telecom (SONET/SDH) market. We are seeing customer demand for our connectivity products transition from the SONET/SDH standard to higher speed, lower power products that utilize the OTN standard in order to support the increasing demand for transmission of data over networks. However, the timing and extent of this transition is uncertain due to the significant investment that is needed to convert networks to the OTN standard. As such, the rate of conversion to the OTN standard is, in part, greatly influenced by global economic market conditions and the financial condition of communications industry participants. Recessionary type market conditions will result in a slower transition of networks to the OTN standard. Additionally, there can be no assurance that our revenues will increase as the OTN standard is adopted.

For the fiscal years ended March 31, 2014, 2013 and 2012, our OTN and 10Gbps or faster Ethernet products represented 86%, 74% and 59%, respectively, of our Connectivity revenues, and our SONET/SDH and legacy switch products represented 14%, 26% and 41%, respectively, of our Connectivity revenues.

Based on direct shipments, net revenues to customers that were equal to or greater than 10% of total net revenues were as follows:

	Fiscal Years Ended March 31,
	2014		2013		2012
Wintec (global logistics provider)**	22	%	19	%	20	%
Avnet (distributor)	27	%	27	%	20	%
Flextronics (sub-contract manufacturer)	*		*		11	%

* Less than 10% of total net revenues for period indicated.

** Wintec provides vendor managed inventory support primarily for Cisco Systems, Inc.

We expect that our largest customers will continue to account for a substantial portion of our net revenues for the foreseeable future.

Net revenues by geographic region, which are primarily denominated in U.S. dollars, were as follows (in thousands):

	Fiscal Years Ended March 31,
	2014		2013		2012
United States of America	$	101,275	$	79,930	$	99,214
Taiwan	13,405		22,684		20,950
Hong Kong	21,477		22,044		21,458
China	6,085		2,053		4,503
Europe	33,625		35,216		41,691
Japan	23,125		13,237		13,596
Malaysia	5,788		4,733		8,276
Singapore	9,745		10,399		14,011
Other Asia	1,217		4,621		5,790
Other	408		725		1,398
	$	216,150	$	195,642	$	230,887

Change in revenues was primarily due to shift in customer demand and changes in macro-economic conditions.

Research and Development. R&D expenses consist primarily of salaries and related costs (including stock-based compensation) of employees engaged in research, design and development activities including amounts relating to Veloce, costs related to engineering licenses and design tools, subcontracting costs and facilities expenses. We believe that a continued commitment to R&D is vital to our goal of maintaining a leadership position with innovative products. In addition to our internal R&D programs, our business strategy includes acquiring products, technologies or businesses from third parties.

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Selling, General and Administrative. Selling, general and administrative (“SG&A”) expenses consist primarily of personnel related expenses (including stock-based compensation), professional and legal fees, corporate branding and facilities expenses.

Key non-GAAP measurements. We use certain non-GAAP metrics such as Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) to measure our performance. We define Adjusted EBITDA as net income (loss) less interest income, income taxes, depreciation and amortization, stock-based compensation, amortization of intangibles and other one-time and/or non-cash items.

The following table reconciles Adjusted EBITDA to the accompanying financial statements (in thousands):

	Fiscal Years Ended March 31,
	2014			2013			2012
Net loss	$	(5,694	)	$	(134,115	)	$	(82,688	)
Adjustment to net loss:
Interest and other income, net	(1,414		)	(2,540		)	(3,794		)
Stock-based compensation expense	17,021			24,236			18,374
Warrant expense	—			1,289			—
Amortization of purchased intangibles	482			4,643			6,754
Restructuring charges, net	1,134			6,435			875
Veloce accrued liability	42,684			66,188			60,400
Impairment of marketable securities*	(3,992		)	(412		)	(743		)
Acquisition related recoveries	—			(133		)	(2,532		)
Depreciation and amortization	14,204			13,542			10,009
Gain on sale of assets	(25,815		)	(1,299		)	—
Gain on sale of TPack	(19,699		)	—			—
Impairment loss (gain) on strategic investments, net	—			2,250			(7,147		)
Impairment of notes receivable and other assets	—			1,800			—
Other and income tax adjustment	631			(554		)	938
Adjusted EBITDA	$	19,542		$	(18,670	)	$	446

* For non-GAAP purposes, any gain or loss relating to marketable securities is not recognized until the underlying securities are sold and the actual gain or loss is realized. Impairments were previously recognized in accordance with GAAP and being unwound by sale/accretion of the underlying securities.

We believe that some investors have found Adjusted EBITDA to be a useful supplemental measure of our operation’s performance because it helps them evaluate and compare the results of operations from period to period by removing the accounting impact of our financing strategies, tax provisions, depreciation and amortization, restructuring charges, stock based compensation expense, Veloce accrued liability, gain on sale of assets, gain on sale of TPack and certain other operating items. We have adjusted for these excluded items because we believe that, in general, these items possess one or more of the following characteristics: their magnitude and timing is largely outside of our control; they are unrelated to the ongoing operations of the business in the ordinary course; they are unusual or infrequent and we do not expect them to occur in the ordinary course of business; or they are non-cash expenses.

Adjusted EBITDA is not a measure determined in accordance with generally accepted accounting principles, or "GAAP", in the United States and should not be considered a substitute for operating income, net income or any other measure determined in accordance with GAAP. Adjusted EBITDA should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Recently, Adjusted EBITDA has been primarily used by our management as a metric to determine the performance vesting of our three-year RSU grants issued in May 2011 (the “EBITDA2 Grants”) which expired unvested when the program concluded in May 2014.

We also assess the performance of our business on a non-GAAP basis, excluding the impact of expenditures relating to our X-Gene product development costs. Non-GAAP net income (loss) is derived by excluding certain items required by GAAP, such as stock-based compensation charges, amortization of purchased intangibles, Veloce accrued liability, restructuring charges, impairment of marketable securities, income taxes, and other one-time and/or non-cash items. In addition, when X-

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Gene product development related expenditures are excluded from the above, we derive the adjusted Non-GAAP income from our base business (“NGIBB”).

The following table reconciles GAAP net loss to the Non-GAAP income from our base business (in thousands except for per share data):

	Fiscal Years Ended March 31,
	2014			2013			2012
GAAP Net loss	$	(5,694	)	$	(134,115	)	$	(82,688	)
Adjustments:
Stock-based compensation expense	17,021			24,236			18,374
Warrant expense	—			1,289			—
Amortization of purchased intangibles	482			4,643			6,754
Restructuring charges, net	1,134			6,435			875
Veloce accrued liability	42,684			66,188			60,400
Impairment of marketable securities	(3,992		)	(412		)	(743		)
Acquisition related recoveries	—			(133		)	(2,532		)
Gain on sale of assets	(25,815		)	(1,299		)	—
Gain on sale of TPack	(19,699		)	—			—
Impairment loss (gain) on strategic investments, net	—			2,250			(7,147		)
Impairment of notes receivable and other assets	—			1,800			—
Other and income tax adjustment	(368		)	336			1,102
Total GAAP to Non-GAAP adjustments	11,447			105,333			77,083
Non-GAAP net income (loss)	5,753			(28,782		)	(5,605		)
X-Gene product development costs*	62,957			54,192			32,450
NGIBB	$	68,710		$	25,410		$	26,845
Diluted income per share	$	0.92		$	0.38		$	0.43
Shares used in calculating diluted income per share	74,371			66,049			62,762

*These amounts relate to direct expenditures associated with the X-Gene product development and does not include costs incurred relating to the Veloce accrued liability.

We believe that NGIBB has been a useful supplemental measure for investors as it helps them view the performance of the ongoing base business without the effect of unusual or infrequent costs including non-cash expenditures and also excluding an unusual and very significant R&D project. We also believe that this measure has been useful for investors to evaluate and compare our results of operations to our peers in a more meaningful way and allows investors an alternative way of assessing the health and performance of the base business. As our X-Gene R&D resources are leveraged across other product lines, we foresee NGIBB becoming less useful as a supplemental measure for investors. Therefore, we anticipate that we will discontinue providing information pertaining to NGIBB in the future.

NGIBB is not a measure determined in accordance with GAAP in the United States and should not be considered a substitute for operating income, net income or any other measure determined in accordance with GAAP. NGIBB should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP and may not be consistent with the presentation used by other companies.

The book-to-bill ratio is another metric commonly used by investors to compare and evaluate technology and semiconductor companies. The book-to-bill ratio is a demand-to-supply ratio that compares the total amount of orders received to the total amount of orders filled. This ratio tells whether the company has more orders than it delivered (if greater than 1), has the same amount of orders that it delivered (equals 1), or has less orders than it delivered (under 1). Though the ratio provides an indicator of whether orders are rising or falling, it does not consider the timing of or if the orders will result in future revenues and the effect of changing lead times on bookings. It also does not indicate the extent to which orders resulted from our product phase-out decisions, which can cause customers to place final, non-recurring “last time buy” orders for an "end of life” product. Our fourth quarter book-to-bill ratio at March 31, 2014, 2013 and 2012 was 1.0, 0.7 and 0.8, respectively. Our annual book-to-bill ratio at March 31, 2014, 2013 and 2012 was approximately 1.0, 1.1 and 0.8, respectively.

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CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in accordance with GAAP in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses in the reporting period. See Note 1, Summary of Significant Accounting Policies, to the Consolidated Financial Statements for details. The methods, estimates and judgments we use in applying these critical accounting policies have a significant impact on the results we report in our financial statements. We base our estimates and assumptions on historical experience and on various other factors that we believe to be reasonable under the circumstances, The actual results experienced by us may differ materially and adversely from management’s estimates. To the extent there are material differences between our estimates and the actual results, our future results of operations will be affected.

We believe the following critical accounting policies require us to make significant judgments and estimates in the preparation of our Consolidated Financial Statements.

Investments

We hold a variety of securities that have varied underlying investments. We review our investment portfolio periodically to assess for other-than-temporary impairment. We assess the existence of impairment of our investments in order to determine the classification of the impairment as “temporary” or “other-than-temporary”. The factors used to determine whether an impairment is temporary or other-than-temporary involve considerable judgment. The factors considered in determining whether any individual impairment is temporary or other-than-temporary are primarily the length of the time and the extent to which the market value has been less than amortized cost, the nature of underlying assets (including the degree of collateralization) and the financial condition, credit rating, market liquidity conditions and near-term prospects of the issuer. If the fair value of a security is less than its amortized cost basis at the balance sheet date, an assessment would have to be made as to whether the impairment is other-than-temporary. If we do not intend to sell the security, we shall consider available evidence to assess whether it is more likely than not, we will be required to sell the security before the recovery of the amortized cost basis due to cash, working capital requirements, contractual or regulatory obligations indicate that the security will be required to be sold before a forecasted recovery occurs. If it is more likely than not that we are required to sell the security before recovery of the amortized cost basis, an other-than-temporary impairment is considered to have occurred. We use present value cash flow models to determine whether the entire amortized cost basis of the security will be recovered. We will compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. An other-than-temporary impairment is said to have occurred if the present value of cash flows expected to be collected is less than the amortized cost basis of the security. During the fiscal years ended March 31, 2014 and 2012, we did not record any other-than-temporary impairment charges. During the fiscal year ended March 31, 2013, we recorded approximately $1.1 million in other-than-temporary impairment charges. During the fiscal years ended March 31, 2014, we did not record an impairment charge in connection with other securities in a continuous loss position (fair value less than carrying value) with unrealized losses of $0.4 million as we believe that such unrealized losses are temporary. In addition, we also had $3.5 million in unrealized gains.

Veloce Consideration

We periodically evaluated the progress of the development work that was being performed in connection with our contractual arrangement with Veloce. Based on such an evaluation as well as various other qualitative factors, we estimated the total value of the development work being performed and assessed the timing and probability of attaining contractually defined performance milestones.

Upon assessing a performance milestone as probable of achievement, R&D expense was recognized based upon the estimated stage of development of that milestone and the estimated value associated with each performance milestone. The amount of R&D costs recognized in connection with the Veloce consideration excludes any value relating to Veloce common stock equivalents that have not been allocated to individuals (“Unallocated Veloce Units”). As of March 31, 2014, the maximum potential additional expense to be recognized associated with the Unallocated Veloce Units was approximately $9.2 million. Payment of the Veloce consideration occurs based upon when a performance milestone is completed and upon satisfaction of vesting requirements, if applicable. Significant judgment was required to estimate the total value of the Veloce development work, assess when a performance milestone was probable of achievement and estimate the timing of when the performance milestones were completed. We relied on discussions with internal technical personnel and using various qualitative and quantitative factors, including, but not limited to, overall complexity, stage of development and progress made to date, results of testing, and consideration as to the nature of the remaining development work, to assess probability of attaining the performance milestones defined in the Merger Agreement. If, based on such assessment, we believed attainment of a performance milestone was probable, we recognized expenses related to the estimated stage of development for the

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performance milestone, excluding the value relating to the Unallocated Veloce Units. As of March 31, 2014, Veloce completed all three performance milestones.

The total estimated consideration to be paid is based upon the benchmarks achieved during simulations that were performed during the third quarter of fiscal 2013 and correlating the results of the simulations to the contractual terms included in the Merger Agreement. As a result of higher than expected benchmarks achieved during simulations, the total estimated consideration to be paid was updated during fiscal 2013 from a previous estimated maximum of approximately $135 million to the contractual maximum of $178.5 million. As a result of this increase in value, the estimated value relating to the first and second performance milestone was also increased.

The consideration relating to the three performance milestones, excluding the value allocated to the Unallocated Veloce Units, in the amount of $169.3 million, has been recognized as research and development expense through March 31, 2014 compared to $126.6 million as of March 31, 2013.Total R&D expenses recognized were approximately $42.7 million and $66.2 million during the twelve months ended March 31, 2014 and 2013, respectively.

Inventories

Our policy is to value inventories at the lower of cost or market on a part-by-part basis. This policy requires us to make estimates regarding the market value of our inventories, including an assessment of excess or obsolete inventories. We determine excess and obsolete inventories based on an estimate of the future demand for its products within a specified time horizon, generally 12 months. The estimates used for future demand are also used for near-term capacity planning and inventory purchasing and are consistent with revenue forecasts. If our demand forecast is greater than our actual demand, we may be required to take additional excess inventory charges, which would decrease gross margin and net operating results. Any impairment charges taken establishes a new cost basis for the underlying inventory and the cost basis for such inventory is not marked-up on changes in circumstances until a gain is realized upon its eventual sale. This accounting is consistent with the guidance provided by FASB ASC paragraph 330-10-35-14. To illustrate the sensitivity of inventory valuations to future estimates, as of March 31, 2014, reducing our future demand estimate to six months would decrease our current inventory valuation by approximately $0.1 million and increasing our future demand forecast to 18 months would increase our current inventory valuation by approximately $63,000.

Goodwill, Purchased Intangible Assets and Other Long-Lived Assets

We review our goodwill for impairment at the reporting unit level annually, or more frequently, if changes in facts and circumstances indicate that it is more likely than not that the fair value of our reporting units may be less than its carrying amount. We elected to use the Step 1 qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step goodwill impairment test. As part of our qualitative assessment, we evaluated and determined that our market capitalization was well in excess of its book value and based on this and other qualitative factors (such as revenue trends, design wins, continued utilization of developed technology acquired from the TPack A/S acquisition and subsequent to its sale in April 2013 - see Note 12, Sale of TPack A/S, to the Consolidated Financial Statements for details) determined that there was no goodwill impairment.

Our long-lived assets consist of property, plant and equipment and other acquired intangibles, excluding goodwill. Property and equipment are stated at cost and depreciated over the estimated useful lives of the assets ranging from 1 to 7 years using the straight line method. Leasehold improvements are stated at cost and amortized over the shorter of the term of the related lease or its estimated useful life. Acquired intangibles with definite lives are amortized on a straight-line basis over the remaining estimated economic life of the underlying products and technologies. We review our definite-lived long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. Recoverability of an asset group is measured by comparison of its carrying amount to the expected future undiscounted cash flows that the asset group is expected to generate. If it is determined that an asset group is not recoverable, an impairment loss is recorded in the amount by which the carrying amount of the asset group exceeds its fair value. In addition, we assess our long-lived assets for impairment if they are abandoned.

Revenue Recognition

We recognize revenue based on four basic criteria: 1) there is evidence that an arrangement exists; 2) delivery has occurred; 3) the fee is fixed or determinable; and 4) collectability is reasonably assured. We recognize revenue upon determination that all criteria for revenue recognition have been met. In addition, we do not recognize revenue until the applicable customer’s acceptance criteria have been met. The criteria are usually met at the time of product shipment. Our standard terms and conditions of sale do not allow for product returns and we generally do not allow product returns other than under warranty or stock rotation agreements. Revenue from shipments to distributors is recognized upon shipment. In addition, we record reductions to revenue for estimated allowances such as returns not pursuant to contractual rights, competitive pricing

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programs and rebates. These estimates are based on our experience with stock rotations and the contractual terms of the competitive pricing and rebate programs. Royalty revenues are recognized when cash is received only when royalty amounts cannot be reasonably estimated. Royalty revenues are based upon sales of our customers' products that include our technology.

Shipping terms are generally FCA (Free Carrier) shipping point. If actual returns or pricing adjustments exceed our estimates, we would record additional reductions to revenue.

From time to time we generate revenue from the sale of internally developed intellectual property ("IP"). We generally recognize revenue from the sale of IP when all basic criteria outlined above are met, which generally occurs when the payments are received.

Mask Costs

We incur significant costs for the fabrication of masks used by our contract manufacturers to manufacture our products. If we determine, at the time the costs for the fabrication of masks are incurred, that technological feasibility of the product has been achieved, we consider the nature of these costs to be pre-production costs. Accordingly, such costs are capitalized as property and equipment and are amortized as cost of sales over approximately three years, representing the estimated production period of the product. We periodically reassess the estimated product production period for specific mask sets capitalized. If we determine, at the time fabrication mask costs are incurred, that either technological feasibility of the product has not occurred or that the mask is not reasonably expected to be used in production manufacturing or that the commercial feasibility of the product is uncertain, the related mask costs are expensed to R&D in the period in which the costs are incurred. We will also periodically assess capitalized mask costs for impairment. During the fiscal years ended March 31, 2014 and 2013, total mask costs capitalized were $6.4 million and $3.1 million, respectively.

Stock-Based Compensation Expense

All share-based payments, including grants of stock options, restricted stock units and employee stock purchase rights, are required to be recognized in our financial statements based on their respective grant date fair values. The fair value of each employee stock option and employee stock purchase right is estimated on the date of grant using the Black-Scholes option pricing model which is affected by our stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ significantly from those estimated.

We evaluate the assumptions used to value stock-based awards on a quarterly basis. If factors change and we employ different assumptions, stock-based compensation expense may differ significantly from what we have recorded in the past. If there are any modifications or cancellations of the underlying unvested securities, we may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense. We currently estimate when and if performance-based grants will be earned. If the awards are not considered probable of achievement, no amount of stock-based compensation is recognized. If we consider the award to be probable, expense is recorded over the estimated service period. To the extent that our assumptions are incorrect, the amount of stock-based compensation recorded will be increased or decreased. To the extent that we grant additional equity securities to employees or we assume unvested securities in connection with any acquisitions, our stock-based compensation expense will be increased by the additional unearned compensation resulting from those additional grants or acquisitions.

RESULTS OF OPERATIONS

Comparison of the Fiscal Year Ended March 31, 2014 to the Fiscal Year Ended March 31, 2013

Net Revenues. Net revenues for the fiscal year ended March 31, 2014 were $216.2 million, representing an increase of 10.5% from the net revenues of $195.6 million for the fiscal year ended March 31, 2013. We classify our revenues into two categories based on the markets that the underlying products serve. The categories are Computing and Connectivity. We use this information to analyze our performance and success in these markets. See the following table (dollars in thousands):

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	Fiscal Years Ended March 31,
	2014				2013
	Amount		% of Net Revenue		Amount		% of Net Revenue		Increase		% Change
Computing	$	107,665	49.8	%	$	104,952	53.6	%	$	2,713	2.6	%
Connectivity	108,485		50.2		90,690		46.4		17,795		19.6
	$	216,150	100.0	%	$	195,642	100.0	%	$	20,508	10.5	%

During the fiscal year ended March 31, 2014, our Computing and Connectivity revenues increased by 2.6% and 19.6%, respectively. Our Computing revenues for the fiscal year ended March 31, 2014 included a significant end-of-life order compared to the fiscal year ended March 31, 2013. The increase in Connectivity revenues was a result of higher demand for our new products due to increasing capital expenditure on OTN and Ethernet in telecom and datacenter infrastructures.

Gross Profit. The following table presents net revenues, cost of revenues and gross profit for the fiscal years ended March 31, 2014 and 2013 (dollars in thousands):

	Fiscal Years Ended March 31,
	2014				2013
	Amount		% of Net Revenue		Amount		% of Net Revenue		Increase		% Change
Net revenues	$	216,150	100.0	%	$	195,642	100.0	%	$	20,508	10.5	%
Cost of revenues	85,189		39.4		83,048		42.4		2,141		2.6
Gross profit	$	130,961	60.6	%	$	112,594	57.6	%	$	18,367	16.3	%

The gross profit percentage for the fiscal year ended March 31, 2014 increased to 60.6%, compared to 57.6% for the fiscal year ended March 31, 2013. Our gross profit percentage, excluding the impact of amortization of purchased intangibles, also increased to 60.7% as compared to 58.9% for the fiscal years ended March 31, 2014 and 2013, respectively. The amortization of purchased intangible assets included in cost of revenues during the fiscal year ended March 31, 2014 was $0.2 million, compared to $2.7 million for the fiscal year ended March 31, 2013. The decrease in amortization of purchased intangible assets included in cost of revenues was primarily due to certain purchased intangible assets being fully amortized resulting in a lower amortization charge in the current fiscal year ended March 31, 2014. The increase in our gross profit percentage was primarily due to favorable product mix and the absorption of fixed costs across higher overall revenues.

Research and Development and Selling, General and Administrative Expenses. The following table presents R&D and SG&A expenses for the fiscal years ended March 31, 2014 and 2013 (dollars in thousands):

	Fiscal Years Ended March 31,
	2014				2013
	Amount		% of Net Revenue		Amount		% of Net Revenue		Decrease			% Change
Research and development	$	146,579	67.8	%	$	187,419	95.8	%	$	(40,840	)	(21.8	)%
Selling, general and administrative	$	38,927	18.0	%	$	51,684	26.4	%	$	(12,757	)	(24.7	)%

Research and Development. The decrease of 21.8% or $40.8 million of R&D expenses for the fiscal year ended March 31, 2014 compared to the fiscal year ended March 31, 2013 was mainly due to a $23.5 million decrease in Veloce related expenses, a $9.3 million decrease in personnel costs and a $5.4 million decrease in stock compensation expense.

Research and development expense recognized in connection with the Veloce consideration was $42.7 million and $66.2 million during the fiscal years ended March 31, 2014 and 2013, respectively. Refer to Note 4, Veloce, to Consolidated Financial Statements for further details.

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Selling, General and Administrative. The decrease in SG&A expenses of 24.7% or $12.8 million during the fiscal year ended March 31, 2014 compared to the fiscal year ended March 31, 2013 was mainly due to a $5.5 million decrease in personnel costs, a $5.0 million decrease in legal expenses and a $1.6 million decrease in stock compensation expense.

Stock-Based Compensation. The following table presents stock-based compensation expense for the fiscal years ended March 31, 2014 and 2013, which was included in the tables above (dollars in thousands):

	Fiscal Years Ended March 31,
	2014				2013
	Amount		% of Net Revenue		Amount		% of Net Revenue		Decrease			% Change
Cost of revenues	$	444	0.2	%	$	692	0.4	%	$	(248	)	(35.8	)%
Research and development	6,371		2.9		11,760		6.0		(5,389		)	(45.8	)
Selling, general and administrative	10,206		4.7		11,784		6.0		(1,578		)	(13.4	)
	$	17,021	7.8	%	$	24,236	12.4	%	$	(7,215	)	(29.8	)%

The decrease in stock-based compensation of 29.8% during the fiscal year ended March 31, 2014 compared to the fiscal year ended March 31, 2013 was primarily due to the effect of the expense that was recorded relating to our Performance Retention Grants during the fiscal year ended March 31, 2013, partially offset by the expense relating to Dr. Gopi's vested performance-based restricted stock units during the fiscal year ended March 31, 2014. Stock-based compensation expense will continue to have a potentially significant adverse impact on our reported results of operations, although it will have no impact on our overall cash flows.

Restructuring Charges, net. We implemented restructuring programs in August 2013 and December 2012 to reorganize our operations and reduce our workforce and related operating expenses. As a result, we recorded charges of $0.9 million and $1.7 million for employee severance expenses and $0.3 million and $4.7 million for asset impairment during the fiscal years ended March 31, 2014 and 2013, respectively. The asset impairment related to the impairment of the unamortized value of a software intellectual property license, which we no longer intend to use to develop new products. As part of our ongoing cost reduction efforts and our efforts to realign our resources to support new products, we could implement additional restructuring programs and may incur significant additional restructuring charges. For example, in April 2014, we implemented a reduction in headcount and we anticipate that the resulting restructuring charges will be approximately $1.6 million to $1.8 million in the first quarter of fiscal 2015.

We incurred cash expenditures of approximately $1.4 million and $1.2 million during the fiscal years ended March 31, 2014 and 2013 for employee severance expenses, respectively. We anticipate that the restructuring plan will reduce ongoing headcount expenses by approximately $3.0 million annually and other additional operational expenses by $0.5 million annually as a result of the August 2013 restructuring program and reduce ongoing headcount expenses by approximately $8.0 million to $9.0 million annually and other additional operational expenses by $4.0 million to $5.0 million annually as a result of the December 2012 restructuring program. As of March 31, 2014, the actual annual savings were within the range of originally expected savings relating to the December 2012 restructuring program.

Interest and Other Income, net. The following table presents interest income (expense) and other income (expense), net for the fiscal years ended March 31, 2014 and 2013 (dollars in thousands):

	Fiscal Years Ended March 31,
	2014				2013
	Amount		% of Net Revenue		Amount			% of Net Revenue		Increase		% Change
Interest income, net	$	5,052	2.3	%	$	2,595		1.3	%	$	2,457	94.7	%
Other income, net	$	354	0.2	%	$	(2,394	)	(1.2	)%	$	2,748	114.8	%

Interest Income, net. Interest income, net of management fees, reflects interest earned on cash and cash equivalents, short-term investments and marketable securities. The increase in interest income, net for the fiscal year ended March 31, 2014 compared to the fiscal year ended March 31, 2013 was primarily due to increase in realized gains from the sale of short-term investments and marketable securities during the twelve months ended March 31, 2014 and an other-than-temporary

44

impairment of short-term investments and marketable securities of $1.1 million during the twelve months ended March 31, 2013.

Other Income, net. The increase in other income for the fiscal year ended March 31, 2014, compared to the fiscal year ended March 31, 2013 was primarily due an impairment of $2.3 million relating to a strategic equity investment during the fiscal year ended March 31, 2013.

Income Taxes. The federal statutory income tax rate was 35% for the fiscal years ended March 31, 2014 and 2013. Income tax expense recorded for the fiscal year ended March 31, 2014 was an expense of $0.6 million compared to a benefit of $0.6 million for the fiscal year ended March 31, 2013. The increase in tax expense in fiscal 2014 versus fiscal 2013 was primarily related to other comprehensive income. The income tax benefit for the fiscal year ended March 31, 2013 included a tax benefit of $1.0 million in operations with the corresponding tax expense in other comprehensive income, related primarily to the tax effect on unrealized gain on investments.

Comparison of the Fiscal Year Ended March 31, 2013 to the Fiscal Year Ended March 31, 2012

Net Revenues. Net revenues for the fiscal year ended March 31, 2013 were $195.6 million, representing a decrease of 15.3% from the net revenues of $230.9 million for the fiscal years ended March 31, 2012. We classify our revenues into two categories based on the markets that the underlying products serve. The categories are Computing and Connectivity. We use this information to analyze our performance and success in these markets. See the following table (dollars in thousands):

	Fiscal Years Ended March 31,
	2013				2012
	Amount		% of Net Revenue		Amount		% of Net Revenue		(Decrease)			% Change
Computing	$	104,952	53.6	%	$	120,608	52.2	%	$	(15,656	)	(13.0	)%
Connectivity	90,690		46.4		110,279		47.8		(19,589		)	(17.8	)
	$	195,642	100.0	%	$	230,887	100.0	%	$	(35,245	)	(15.3	)%

During the fiscal year ended March 31, 2013, our Computing revenues declined by 13.0% while our Connectivity revenues declined by 17.8%. The overall revenue decline was spread across both the Computing and Connectivity product families and was a result of lower demand for our products due to overall softness in macroeconomic conditions and due to the roll-off of legacy products as we continue to focus on the development of our new products. In addition, the revenues for our Connectivity products were lower due to a delay in the overall OTN infrastructure build-out.

Gross Profit. The following table presents net revenues, cost of revenues and gross profit for the fiscal years ended March 31, 2013 and 2012 (dollars in thousands):

	Fiscal Years Ended March 31,
	2013				2012
	Amount		% of Net Revenue		Amount		% of Net Revenue		(Decrease)			% Change
Net revenues	$	195,642	100.0	%	$	230,887	100.0	%	$	(35,245	)	(15.3	)%
Cost of revenues	83,048		42.4		98,804		42.8		(15,756		)	(15.9	)
Gross profit	$	112,594	57.6	%	$	132,083	57.2	%	$	(19,489	)	(14.8	)%

The gross profit percentage for the fiscal year ended March 31, 2013 increased marginally to 57.6%, compared to 57.2% for the fiscal year ended March 31, 2012. Our gross profit percentage, excluding the impact of amortization of purchased intangibles, also increased marginally to 58.9% as compared to 58.8% for the fiscal years ended March 31, 2013 and 2012, respectively. The amortization of purchased intangible assets included in cost of revenues during the fiscal year ended March 31, 2013 was $2.7 million, compared to $3.6 million for the fiscal year ended March 31, 2012. The decrease was primarily due to certain purchased intangible assets being fully amortized resulting in a lower amortization charge in the current fiscal year ended March 31, 2013.

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Research and Development and Selling, General and Administrative Expenses. The following table presents R&D and selling, general and administrative (“SG&A”) expenses for the fiscal years ended March 31, 2013 and 2012 (dollars in thousands):

	Fiscal Years Ended March 31,
	2013				2012
	Amount		% of Net Revenue		Amount		% of Net Revenue		Increase		% Change
Research and development	$	187,419	95.8	%	$	175,656	76.1	%	$	11,763	6.7	%
Selling, general and administrative	$	51,684	26.4	%	$	45,794	19.8	%	$	5,890	12.9	%

Research and Development. Increases in R&D expenses, despite reductions in our headcount, were primarily driven by the effect of a ramp-up in the costs relating to the X-Gene 64-bit ARM Server on a Chip platform product development efforts, and costs incurred on our developmental effort relating to other new products. The increase in R&D expenses of 6.7% for the fiscal year ended March 31, 2013 compared to the fiscal year ended March 31, 2012 was primarily due to $7.1 million for Veloce merger consideration costs (which includes approximately $1.3 million of expense related to the acceleration of Veloce warrants), $2.5 million in consumable equipment and software cost, $1.5 million in development cost related to new products, $1.3 million in stock-based compensation charges, $0.5 million in third party foundry cost, $0.4 million each in packaging cost and other engineering costs and $0.2 million in customer funded non-recurring engineering payments offset by a decrease of $0.9 million each in printed circuit board cost and contractor cost and $0.4 million in small tools and supplies cost.

Research and development expense recognized in connection with the Veloce consideration was $66.2 million and $60.4 million, during the fiscal year ended March 31, 2013 and 2012. Refer to Note 4 and Note 13 to the Notes to Consolidated Financial Statements for further details relating to Veloce.

Selling, General and Administrative. The increase in SG&A expenses of 12.9% for the fiscal year ended March 31, 2013 compared to the fiscal year ended March 31, 2012 were primarily due to $4.3 million in stock-based compensation charges, $2.4 million relating to the adjustment to contingent accrued liabilities associated with an acquisition in the twelve months ended March 31, 2012 (none in the twelve months ended March 31, 2013) and $2.1 million in professional and other service fees. These increases were offset by decreases of $1.0 million in personnel cost, $0.7 million in corporate allocation expenses, $0.6 million in marketing and travel costs and $0.4 million each in provision for doubtful debts and sales commission cost.

Stock-Based Compensation. The following table presents stock-based compensation expense for the fiscal years ended March 31, 2013 and 2012, which was included in the tables above (dollars in thousands):

	Fiscal Years Ended March 31,
	2013				2012
	Amount		% of Net Revenue		Amount		% of Net Revenue		Increase		% Change
Cost of revenues	$	692	0.4	%	$	432	0.2	%	$	260	60.2	%
Research and development	11,760		6.0		10,496		4.5		1,264		12.0
Selling, general and administrative	11,784		6.0		7,446		3.2		4,338		58.3
	$	24,236	12.4	%	$	18,374	7.9	%	$	5,862	31.9	%

The increase in stock-based compensation of 31.9% during the fiscal year ended March 31, 2013 compared to the fiscal year ended March 31, 2012 was primarily due to the expense associated with new performance retention grants and other performance based awards. The stock based compensation expense of approximately $24.2 million for the twelve months ended March 31, 2013 does not include approximately $1.3 million of expense related to the acceleration of Veloce warrants. See note 5 of Notes to Consolidated Financial Statements for further details relating to the Veloce warrants. Stock-based compensation expense will continue to have a significant adverse impact on our reported results of operations, although it will have no impact on our overall cash flows.

Restructuring Charges, net. We implemented a restructuring program during December 2012 to reorganize our operations and reduce our workforce and related operating expenses. The plan includes eliminating job redundancies and reducing our

46

current workforce by approximately 70 employees. As a result, we recorded a charge of $1.7 million for employee severance expenses and $4.7 million for an asset impairment during the twelve months ended March 31, 2013. The asset impairment related to the impairment of the unamortized value of a software intellectual property license, which we no longer intend to use to develop new products. As part of our ongoing cost reduction efforts, we could implement additional restructuring programs and may incur significant additional restructuring charges. For example, we recently implemented a reduction in headcount and we anticipate that the resulting restructuring charges will be approximately $1.6 million to $1.8 million in the first quarter of fiscal 2015.

We incurred cash expenditures of approximately $1.2 million during the twelve months ended March 31, 2013 for employee severance expenses and anticipate that the restructuring plan will reduce ongoing headcount expenses by approximately $8.0 million to $9.0 million annually and other additional operational expenses by within the range of $4.0 million to $5.0 million annually. The savings from the restructuring action started in fiscal 2013, when the plan was implemented.

The restructuring charges recorded during the fiscal year ended March 31, 2012 were primarily for employee severance expenses.

Interest and Other Income, net. The following table presents interest income (expense) and other income, net for the fiscal years ended March 31, 2013 and 2012 (dollars in thousands):

	Fiscal Years Ended March 31,
	2013					2012
	Amount			% of Net Revenue		Amount		% of Net Revenue		(Decrease)			% Change
Interest income, net	$	2,595		1.3	%	$	4,247	1.8	%	$	(1,652	)	(38.9	)%
Other income, net	$	(2,394	)	(1.2	)%	$	7,437	3.2	%	$	(9,831	)	(132.2	)%

Interest Income, net. Interest income, net of management fees, reflects interest earned on cash and cash equivalents, short-term investments and marketable securities. The decrease in interest income, net for the fiscal year ended March 31, 2013, compared to fiscal year ended March 31, 2012 was primarily due to an other-than-temporary impairment of short-term investments and marketable securities of $1.1 million and our lower cash, cash equivalents and short-term investments available-for-sale balances.

Other Income, net. The decrease in other income for the fiscal year ended March 31, 2013, compared to the fiscal year ended March 31, 2012 was due to an impairment of $2.2 million relating to a strategic equity investment, an impairment of $1.8 million to notes receivable and other assets, no net gain on disposal of strategic equity investment recorded during the fiscal year ended March 31, 2013 as compared to the fiscal year ended March 31, 2012 (wherein a net gain of $7.1 million was recorded) and which was offset by a gain of $1.3 million arising from the sale of equipment and other assets.

Income Taxes. The federal statutory income tax rate was 35% for the fiscal year ended March 31, 2013 and 2012. Income tax expense recorded for the fiscal year ended March 31, 2013 was a benefit of $0.6 million compared to an expense of $0.9 million for the fiscal year ended March 31, 2012. The decrease in tax expense in fiscal 2013 versus fiscal 2012 was primarily related to other comprehensive income. The income tax benefit for the fiscal year ended March 31, 2013 included a tax benefit of $1.0 million in operations with the corresponding tax expense in other comprehensive income, related primarily to the tax effect on the unrealized gain on investments.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2014, our principal source of liquidity consisted of $106.6 million in cash, cash equivalents and short-term investments which is approximately $1.37 per share of outstanding common stock as compared to $1.26 per share at March 31, 2013. Working capital, defined as net current assets minus net current liabilities, was $112.4 million as of March 31, 2014. Total cash, cash equivalents, and short-term investments increased by $21.1 million during the fiscal year ended March 31, 2014, primarily due to net proceeds from sale of our headquarters building of $40.2 million, proceeds from sale of property, equipment and other assets of $0.1 million, net proceeds from the sale of TPack of $29.5 million, proceeds from issuance of common stock of $11.6 million, proceeds from sale of a strategic equity investment of $1.3 million, partially offset by cash used for operations of $43.5 million, funding of restricted stock units withheld for taxes of $6.6 million, purchase of property, equipment and other assets of $6.0 million and decrease in net unrealized gains of available-for-sale investments by $5.0 million. At March 31, 2014, we had contractual obligations not included on our balance sheet totaling $83.5 million, primarily

47

related to facility leases, IP licenses, engineering design software tool licenses, non-cancelable inventory purchase commitments and liability for uncertain tax positions.

Operating Activities

For the fiscal year ended March 31, 2014, we used $43.5 million of cash in our operations compared to $33.1 million used for the fiscal year ended March 31, 2013. Our net loss of $5.7 million for the fiscal year ended March 31, 2014 included $25.3 million of non-cash charges consisting of $10.3 million of depreciation, $0.5 million of amortization of purchased intangibles, $17.0 million of stock-based compensation, $42.7 million of additional Veloce compensation cost and $0.3 million of non-cash restructuring costs, partially offset by $19.7 million of net gain on sale of TPack and $25.8 million gain on the sale of our headquarters building. The remaining change in operating cash flows for the fiscal year ended March 31, 2014 primarily reflected decreases in other assets, accrued payroll and related liabilities, Veloce accrued liability and deferred revenue and increases in accounts receivable, inventory and accounts payable.

Our net loss of $134.1 million for the fiscal year ended March 31, 2013 included $113.4 million of non-cash charges consisting of $9.5 million of depreciation, $4.6 million of amortization of purchased intangibles, $25.5 million of stock-based compensation, $66.2 million of additional Veloce compensation cost, $4.7 million of restructuring costs, $2.2 million impairment of a strategic investment, $1.8 million impairment of notes receivable and other assets and $1.1 million in impairment of short-term investments and marketable securities, offset by $1.3 million gain on asset disposals, $1.0 million relating to the tax effect on other comprehensive income and $0.1 million in acquisition related adjustment (relating to our TPack acquisition in fiscal 2011). The remaining change in operating cash flows relating to changes in working capital for the fiscal year ended March 31, 2013 primarily reflected decreases in inventories, accounts payable, accrued payroll and related liabilities, Veloce accrued liability and deferred revenue and increases in accounts receivable and other assets. 

Our net loss of $82.7 million for the fiscal year ended March 31, 2012 included $84.3 million of non-cash charges consisting of $60.4 million of Veloce purchase price consideration expense, $8.4 million of depreciation, $6.8 million of amortization of purchased intangibles and $18.4 million of stock-based compensation, offset by a $2.5 million reduction to the estimated fair value of acquisition related adjustment (relating to our TPack acquisition in fiscal 2011) and a net $7.1 million gain on strategic equity investments. The remaining change in operating cash flows for the fiscal year ended March 31, 2012 primarily reflected increases in accounts receivable and other assets and decreases in inventories, accounts payable, accrued payroll and related liabilities and deferred revenue.

Our overall quarterly days sales outstanding was 44 days and 39 days for the fourth fiscal quarter ended March 31, 2014 and 2013, respectively. The primary reason for the increase in our days sales outstanding was the increase in the revenues generated during the last month of the quarter ended March 31, 2014 as compared to the same period for the quarter ended March 31, 2013.

Investing Activities

Our investing activities provided $91.4 million in cash during the fiscal year ended March 31, 2014, compared to $19.9 million during the fiscal year ended March 31, 2013. During the fiscal year ended March 31, 2014, we used $6.0 million for the purchase of property and equipment and received net proceeds of $40.2 million from the sale of our headquarters building and property, equipment and other assets, net proceeds of $29.5 million from the sale of TPack, net proceeds of $26.4 million from short-term investment activities and proceeds of $1.3 million from the sale of an equity investment.

During the fiscal year ended March 31, 2013, we used $9.0 million for the purchase of property and equipment and $0.5 million for purchase of strategic investment offset by net proceeds of $20.5 million from short-term investment activities, $7.1 million from sales of strategic equity investment and $1.8 million from the sale of equipment and other assets.

During the fiscal year ended March 31, 2012, we used $1.8 million for net short-term investment activities, $13.3 million for the purchase of property and equipment and $4.8 million for purchases of strategic investments.

Financing Activities

Our financing activities provided $4.5 million in cash during the fiscal year ended March 31, 2014, compared to $4.1 million during the fiscal year ended March 31, 2013. Cash provided by financing activities in the fiscal year ended March 31, 2014 primarily consisted of proceeds from the issuance of common stock of $11.6 million, partially offset by the withholding of restricted stock units for taxes of $6.6 million.

Cash provided by financing activities in the fiscal year ended March 31, 2013 consisted of proceeds from the issuance of common stock of $8.9 million, partially offset by the repurchase of common stock of $0.7 million, the payment of a contingent consideration of $0.5 million, restricted stock units withheld for taxes of $3.1 million and other uses of cash of $0.5 million.

48

 Cash used in financing activities in the fiscal year ended March 31, 2012 consisted of the funding of our structured stock repurchase agreements for $10.0 million, the open market repurchases of common stock of $20.9 million and restricted stock units withheld for taxes of $2.9 million, offset by proceeds from the issuances of our common stock of $6.7 million.

Sale of TPack

During the quarter ended June 30, 2013, we completed the sale of TPack and certain specified intellectual property assets owned by us related to TPack's business for an aggregate consideration of $33.5 million, net of working capital adjustments. During the quarter, we received a cash payment of $30.2 million. The remaining acquisition consideration of $3.3 million was held back by the buyer until March 2014 to secure our indemnification obligations subject to and in accordance with the terms of the purchase agreement and is included in other current assets in the Consolidated Balance Sheet. This amount was paid in full in April 2014. In connection with this sale, we recorded a gain of $19.7 million for the three months ended June 30, 2013. Refer to Note 12, Sale of TPack A/S, to the Consolidated Financial Statements for details.

Acquisition of Veloce

On June 20, 2012 , we completed our acquisition of Veloce pursuant to the Merger Agreement. Veloce has been developing specific technology for us.

The terms of the Merger Agreement include the payment of the total consideration, payable in shares of our common stock and/or cash (at our election) to the Veloce Equity Holders that have not yet been allocated to individuals.

During the twelve months ended March 31, 2014 and 2013, as part of the above arrangement, we paid approximately $63.7 million and $16.5 million, respectively, in cash and issued approximately 6.7 million shares and 3.0 million shares, respectively, valued at approximately $57.3 million and $16.6 million, respectively.

As of March 31, 2014, we assessed that all three performance milestones were completed, and payment of the remaining Veloce consideration will occur based upon satisfaction of vesting requirements.

As of March 31, 2014, $154.1 million has been paid and we expect that an additional $7.7 million will be paid in cash and stock by June 30, 2014. The $154.1 million paid to date includes approximately $80.2 million in cash and the issuance of 9.7 million shares of common stock valued at approximately $73.9 million. The Veloce accrued liability included on the Consolidated Balance Sheets is based upon the amount of R&D expense recognized in connection with the development of the Veloce performance milestones less amounts paid either in cash or our common stock.

The total estimated value of the Veloce merger consideration is based on achieving certain performance benchmarks defined under the Merger Agreement within a certain time period. We performed various technology simulations during the third quarter of fiscal 2013. The results of the technology simulations exceeded expectations for certain benchmarks defined under the Merger Agreement, and as a result the estimated maximum value of the Veloce merger consideration was increased from approximately $135.0 million to the contractual maximum of $178.5 million. The consideration that we will be obligated to pay will be payable upon the issuance of the remaining Veloce stock equivalents and any vesting requirements, if applicable, and can be settled in cash or our common stock, at the election of management.

Liquidity

We currently believe that our available cash, cash equivalents and short-term investments will be sufficient to meet our capital requirements and fund our operations for at least the next 12 months. We expect to satisfy the Veloce-related payment obligations using a combination of cash and the issuance of shares of common stock. We expect our resources to be sufficient to make the above described Veloce related payments while maintaining adequate cash to run our operations. In March, 2014, we completed the sale of our headquarters building for a purchase price of $40.8 million in cash.

Our available liquidity could be adversely affected, however, if we decide to satisfy the remaining Veloce liability using a greater proportion of cash rather than our common stock or if our normal operations or unforeseen events require us to expend more cash than currently anticipated. If our stock price declines, it could result in greater dilution to our stockholders. As a result of any of the above, we could elect or be required to pursue various options to raise additional capital or generate cash. Our liquidity could also be adversely affected if we are forced to liquidate our investments on short notice and not be able to realize fair market value and realize losses. There can be no assurance that any of the options that we currently believe to be available are now, or in the future will be, viable on commercially reasonable terms or at all.

Stock Repurchase Program

49

In August 2004, the Board of Directors authorized a stock repurchase program for the repurchase of up to $200.0 million of our common stock. Under the program, we are authorized to make purchases in the open market or enter into structured agreements. In October 2008, the Board of Directors increased the stock repurchase program by $100.0 million. There were no stock repurchases during the fiscal year ended March 31, 2014. During fiscal year ended March 31, 2013, approximately 0.1 million shares were repurchased on the open market at a weighted average price of $5.18 per share. From the time the program was first implemented in August 2004, we have repurchased on the open market a total of 17.3 million shares at weighted average price of $10.04 per share. All repurchased shares were retired upon delivery to us. As of March 31, 2014, we had $15.9 million available in our stock repurchase program.

Other

Our aggregate fixed commitments payable over the next four years for licensing fees relating to our R&D efforts, including our licensed IP, technology, product design, test and verification tools, are approximately $16.3 million. These amounts are also included in the table below.

The following table summarizes our contractual operating leases and other purchase commitments as of March 31, 2014 (in thousands):

	Operating Leases			Other Purchase Commitments			Total
Fiscal Years Ending March 31,
2015	1,901		*	75,046		**	76,947
2016	930		**	4,721			5,651
2017	504			—			504
2018	$	369		$	—		$	369
Total minimum payments	$	3,704		$	79,767		$	83,471

* Includes our headquarters building lease which expires in August 2015, subject to our right to terminate early upon at least 120 days’ notice.  

** Includes liability for uncertain tax positions of $44.4 million including interest and penalties. Due to the high degree of uncertainty regarding the timing of potential future cash flows associated with these liabilities, we are unable to make a reasonably reliable estimate of the amount and period in which these liabilities might be paid.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of March 31, 2014.

Item 7A. Quantitative and Qualitative Disclosure About Market Risk.

Market risk is the potential loss arising from adverse changes in market rates and prices, such as foreign currency exchange rates, interest rates and a decline in the stock market. We are exposed to market risks related to changes in interest rates and foreign currency exchange rates.

We maintain an investment portfolio of various holdings, types of instruments and maturities. These securities are classified as available-for-sale and, consequently, are recorded on our Consolidated Balance Sheets at fair value with unrealized gains or losses reported as a separate component of accumulated other comprehensive income or loss. We have established guidelines relative to diversification and maturities that attempt to maintain safety and liquidity. These guidelines are periodically reviewed and modified to take advantage of interest rate trends. We invest our excess cash in debt instruments of the U.S. Treasury, corporate bonds, commercial paper, mortgage-backed and asset backed securities, with credit ratings as specified in our investment policy. We also have invested in preferred stocks which pay quarterly fixed rate dividends and in closed-end bond funds. We generally do not utilize derivatives to hedge against increases in interest rates which decrease market values.

We are exposed to market risk as it relates to changes in the market value of our investments. At March 31, 2014, our investment portfolio included short-term securities classified as available-for-sale investments with an aggregate fair market value of $35.0 million and a cost basis of $32.0 million. Substantially all of these securities are subject to interest rate risk, as

50

well as credit risk and liquidity risk, and will decline in value if interest rates increase or an issuer’s credit rating or financial condition is weakened.

The following table presents the hypothetical changes in fair value of our short-term investments held at March 31, 2014 (in thousands):

	Valuation of Securities Given an Interest Rate Decrease of X Basis Points (“BPS”)						Fair Value as of March 31, 2014		Valuation of Securities Given an Interest Rate Increase of X Basis Points (“BPS”)
	(150 BPS)		(100 BPS)		(50 BPS)				50 BPS		100 BPS		150 BPS
Available-for-sale investments	$	36,682	$	36,162	$	35,602	$	35,044	$	34,426	$	33,841	$	33,258

The modeling technique used measures the change in fair market value arising from selected potential changes in interest rates. Market changes reflect immediate hypothetical parallel shifts in the yield curve of plus or minus 50 basis points, 100 basis points and 150 basis points. While this modeling technique provides a measure of our exposure to market risk, the current economic turbulence could cause interest rates to shift by more than 150 basis points.

We also invest in equity instruments of private companies for business and strategic purposes. These investments are valued based on our historical cost less any recognized impairments. The estimated fair values are not necessarily representative of the amounts that we could realize in a current transaction.

We generally conduct business, including sales to foreign customers, in U.S. dollars, and as a result, we have limited foreign currency exchange rate risk. We did not enter into any forward currency exchange contract during the fiscal year ended March 31, 2014. Gains and losses are recognized in income or expenses in the Consolidated Statements of Operations in the current period.

Item 8. Financial Statements and Supplementary Data.

Refer to Item 15 and the Index to Financial Statements on Page F-l.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, or the Exchange Act, that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Our disclosure controls and procedures have been designed to meet reasonable assurance standards. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

As required by Exchange Act Rule 13a-15(b), we conducted an evaluation, under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2014. Based on their evaluation as of the end of the period covered by this

51

Annual Report on Form 10-K, our CEO and CFO concluded that as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria in Internal Control - Integrated Framework(1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation using the criteria in Internal Control - Integrated Framework (1992), our management concluded that our internal control over financial reporting was effective as of March 31, 2014.

The effectiveness of our internal control over financial reporting as of March 31, 2014 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in its report, which is included herein.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the most recent quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

(a) Executive Officers — See the section entitled “Executive Officers of the Registrant” in Part I, Item 1, Business, of this Annual Report.

(b) Directors — The information required by this Part III, Item 10 is contained in the section entitled “Election of Directors” in our Definitive Proxy Statement to be filed with the SEC in connection with the Annual Meeting of Stockholders to be held on August 12, 2014, which will be filed with the SEC within 120 days of March 31, 2014 (the “Proxy Statement”) and is incorporated herein by reference.

Item 405 of Regulation S-K calls for disclosure of any known late filing or failure by an insider to file a report required by Section 16(a) of the Exchange Act. This disclosure is contained in the section entitled “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement and is incorporated herein by reference.

We have adopted a code of business conduct and ethics that all executive officers and management employees must review and abide by (including our principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions), which we refer to as our Code of Business Conduct and Ethics. The Code of Business Conduct and Ethics is available free of charge on our website at www.apm.com in the Investor Relations section under the heading “Corporate Governance”. To date, there have been no waivers under our Code of Business Conduct and Ethics. We will promptly disclose on our website (1) the nature of any amendment to the Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, and (2) the nature of any waiver, including an implicit waiver, from a provision of the Code of Business Conduct and Ethics that is granted to one of these specified officers and the name of such person who is granted the waiver.

We have a separately-designated standing Audit Committee, comprised of H.K. Desai, Fred Shlapak, Dr. Robert F. Sproull and Duston Williams. The Board of Directors has determined that each such member qualifies as an “independent director” under the current rules of the NASDAQ Stock Market and the rules and regulations of the Securities and Exchange Commission. In addition, the Board of Directors has determined that each of Messrs. Desai, Shlapak, Sproull and Williams qualifies as an “audit committee financial expert” under the definition outlined by the Securities and Exchange Commission.

52

Item 11. Executive Compensation.

The information required by this Part III, Item 11 is incorporated herein by reference from the sections entitled “Executive Compensation”, “Report of the Compensation Committee” and “Compensation Committee Interlocks and Insider Participation” in the Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this Part III, Item 12 is incorporated herein by reference from the sections entitled “Security Ownership of Management and Directors” and “Equity Compensation Plan Information” in the Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by this Part III, Item 13 is incorporated by reference from the sections entitled “Certain Relationships and Related Transactions" and “Corporate Governance” in the Proxy Statement.

Item 14. Principal Accountant Fees and Services.

The information required by this Part III, Item 14 is contained in the section entitled “Audit and Other Fees,” in the Proxy Statement and is incorporated herein by reference.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a) The following documents are filed as part of this Annual Report:

(1) Financial Statements. See Index to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K

(2) Financial Statement Schedule. See Schedule II - Valuation and Qualifying Accounts of this Form 10-K

(3) Exhibits.The exhibits listed in the accompanying Exhibit Index are filed or incorporated by reference as part of this Form 10-K

53

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

APPLIED MICRO CIRCUITS CORPORATION
By:	/S/    DR. PARAMESH GOPI
	Dr. Paramesh Gopi
	President and Chief Executive Officer

Date: May 30, 2014

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Dr. Paramesh Gopi and Douglas T. Ahrens, jointly and severally, his attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/S/    DR. PARAMESH GOPI	Chief Executive Officer, President and Director (Principal Executive Officer)	May 30, 2014
Dr. Paramesh Gopi
/S/    DOUGLAS T. AHRENS	Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)	May 30, 2014
Douglas T. Ahrens
/S/     CESAR CESARATTO	Chairman of the Board	May 30, 2014
Cesar Cesaratto
/s/    H.K. DESAI	Director	May 30, 2014
H.K. Desai
/s/    DR. PAUL GRAY	Director	May 30, 2014
Dr. Paul Gray
/s/    FRED SHLAPAK	Director	May 30, 2014
Fred Shlapak
/s/    DR. ROBERT F. SPROULL	Director	May 30, 2014
Dr. Robert F. Sproull
/s/    DUSTON WILLIAMS	Director	May 30, 2014
Duston Williams

54

INDEX TO FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	F- 2
Consolidated Balance Sheets as of March 31, 2014 and 2013	F- 3
Consolidated Statements of Operations for the fiscal years ended March 31, 2014, 2013 and 2012	F- 4
Consolidated Statements of Comprehensive Loss for the fiscal years ended March 31, 2014, 2013 and 2012	F- 5
Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2014, 2013 and 2012	F- 6
Consolidated Statements of Stockholders’ Equity for the fiscal years ended March 31, 2014, 2013 and 2012	F- 7
Notes to Consolidated Financial Statements	F- 8

F- 1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Applied Micro Circuits Corporation:

We have audited the accompanying consolidated balance sheets of Applied Micro Circuits Corporation and its subsidiaries (the Company) as of March 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive loss, stockholders' equity, and cash flows for each of the years in the three‑year period ended March 31, 2014. In connection with our audits of the consolidated financial statements, we also have audited the consolidated financial statement schedule of valuation and qualifying accounts. We also have audited the Company's internal control over financial reporting as of March 31, 2014, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express an opinion on these consolidated financial statements and the consolidated financial statement schedule and an opinion on the Company's internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Applied Micro Circuits Corporation as of March 31, 2014 and 2013, and the results of its operations and its cash flows for each of the years in the three‑year period ended March 31, 2014, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2014, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

/s/ KPMG LLP

Santa Clara, California

May 30, 2014

F- 2

APPLIED MICRO CIRCUITS CORPORATION

CONSOLIDATED BALANCE SHEETS

	March 31,
	2014			2013
	(In thousands, except par value)
ASSETS
Current assets:
Cash and cash equivalents	$	71,539		$	19,065
Short-term investments-available-for-sale	35,044			66,411
Accounts receivable, net	25,178			24,575
Inventories	18,946			12,900
Other current assets	16,799			17,998
Total current assets	167,506			140,949
Property and equipment, net	20,746			34,391
Goodwill	11,425			13,183
Purchased intangibles	105			11,991
Other assets	7,754			10,866
Total assets	$	207,536		$	211,380
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	26,194		$	17,650
Accrued payroll and related liabilities	5,532			6,158
Veloce accrued liability	11,985			78,082
Other accrued liabilities	10,877			10,730
Deferred revenue	567			1,469
Total current liabilities	55,155			114,089
Veloce and other non-current liabilities	3,145			15,787
Commitments and contingencies (Notes 8)
Stockholders’ equity:
Preferred stock, $0.01 par value:
Authorized shares — 2,000, none issued and outstanding	—			—
Common stock, $0.01 par value:
Authorized shares — 375,000 at March 31, 2014 and March 31, 2013
Issued and outstanding shares — 77,677 at March 31, 2014 and 67,952 at March 31, 2013	777			680
Additional paid-in capital	6,005,365			5,926,630
Accumulated other comprehensive loss	(6,143		)	(737		)
Accumulated deficit	(5,850,763		)	(5,845,069		)
Total stockholders’ equity	149,236			81,504
Total liabilities and stockholders’ equity	$	207,536		$	211,380

See Accompanying Notes to Consolidated Financial Statements

F- 3

APPLIED MICRO CIRCUITS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

	Fiscal Years Ended March 31,
	2014			2013			2012
	(In thousands, except per share data)
Net revenues	$	216,150		$	195,642		$	230,887
Cost of revenues	85,189			83,048			98,804
Gross profit	130,961			112,594			132,083
Operating expenses:
Research and development	146,579			187,419			175,656
Selling, general and administrative	38,927			51,684			45,794
Gain on sale of TPack	(19,699		)	—			—
Gain on sale of building	(25,815		)	—			—
Amortization of purchased intangible assets	316			1,926			3,202
Restructuring charges, net	1,134			6,435			875
Total operating expenses	141,442			247,464			225,527
Operating loss	(10,481		)	(134,870		)	(93,444		)
Interest income (expense), net and other-than-temporary impairment	5,052			2,595			4,247
Other income (expense), net	354			(2,394		)	7,437
Loss before income taxes	(5,075		)	(134,669		)	(81,760		)
Income tax expense (benefit)	619			(554		)	928
Net loss	$	(5,694	)	$	(134,115	)	$	(82,688	)
Basic and diluted net loss per share	$	(0.08	)	$	(2.06	)	$	(1.33	)
Shares used in calculating basic and diluted net loss per share	72,897			65,258			62,245

See Accompanying Notes to Consolidated Financial Statements

F- 4

APPLIED MICRO CIRCUITS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

	Fiscal Years Ended March 31,
	2014			2013			2012
	(In thousands)
Net loss	$	(5,694	)	$	(134,115	)	$	(82,688	)
Other comprehensive (loss) gain, net of tax:
Unrealized (loss) gain on short-term investments, net of tax*	(5,039		)	1,314			186
Loss on foreign currency translation	(367		)	(286		)	(354		)
Other comprehensive (loss) gain, net of tax	(5,406		)	1,028			(168		)
Total comprehensive loss	$	(11,100	)	$	(133,087	)	$	(82,856	)

* The amounts reclassified from accumulated other comprehensive loss and recorded in interest income (expense), net in the Consolidated Statements of Operations relating to short-term investments were $3.4 million, $1.4 million and $0.6 million for the fiscal years ended March 31, 2014, 2013 and 2012, respectively. Refer to Note 3, Certain Financial Statement Information, to the Consolidated Financial Statements for additional details.

See Accompanying Notes to Consolidated Financial Statements

F- 5

APPLIED MICRO CIRCUITS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

	Fiscal Years Ended March 31,
	2014			2013			2012
	(In thousands)
Operating activities:
Net loss	$	(5,694	)	$	(134,115	)	$	(82,688	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	10,273			9,542			8,436
Amortization of purchased intangibles	482			4,643			6,754
Stock-based compensation expense:
Stock options	2,505			3,469			5,298
Restricted stock units	14,516			20,767			13,076
Warrants	—			1,289			—
Veloce acquisition consideration	42,684			66,188			60,400
Acquisition related adjustment	—			(133		)	(2,532		)
Gain on sale of TPack	(19,699		)	—			—
Gain on sale of building	(25,815		)	—			—
Net (gain) loss on disposals of property, equipment and other assets	(23		)	(1,293		)	10
Impairment loss (gain) on strategic investments, net	—			2,250			(7,147		)
Tax effect on other comprehensive income	(40		)	(989		)	(123		)
Restructuring charges-asset impairment	298			4,719			—
Impairment of short-term investments and marketable securities	—			1,143			—
Impairment of notes receivable and other assets	—			1,800			—
Changes in operating assets and liabilities:
Accounts receivable	(837		)	(1,909		)	(2,669		)
Inventories	(6,049		)	10,344			3,317
Other assets	3,232			(2,871		)	(3,903		)
Accounts payable	5,778			(622		)	(4,451		)
Accrued payroll and related liabilities	(671		)	(82		)	(2,860		)
Veloce accrued liability	(63,657		)	(16,537		)	—
Deferred revenue	(770		)	(668		)	(270		)
Net cash used in operating activities	(43,487		)	(33,065		)	(9,352		)
Investing activities:
Proceeds from sales and maturities of short-term investments	44,450			42,164			101,222
Purchases of short-term investments	(18,081		)	(21,633		)	(103,046		)
Proceeds from sale of property, equipment and other assets	70			1,800			—
Purchase of property, equipment and other assets	(5,952		)	(9,045		)	(13,264		)
Proceeds from sale of strategic investment	1,286			7,146			—
Proceeds from the sale of TPack, net	29,498			—			—
Proceeds from sale of building, net	40,176			—			—
Purchases of strategic investment(s)	—			(500		)	(4,750		)
Net cash provided by (used in) investing activities	91,447			19,932			(19,838		)
Financing activities:
Proceeds from issuance of common stock	11,619			8,873			6,736
Funding of restricted stock units withheld for taxes	(6,550		)	(3,121		)	(2,864		)
Repurchase of common stock	—			(653		)	(20,852		)
Funding of structured stock repurchase agreements	—			—			(10,000		)
Payment of contingent consideration	—			(485		)	—
Other	(555		)	(481		)	(167		)
Net cash provided by (used in) financing activities	4,514			4,133			(27,147		)
Net increase (decrease) in cash and cash equivalents	52,474			(9,000		)	(56,337		)
Cash and cash equivalents at beginning of year	19,065			28,065			84,402
Cash and cash equivalents at end of year	$	71,539		$	19,065		$	28,065
Supplementary cash flow disclosures:
Cash paid for income taxes	$	870		$	987		$	692
Shares issued for Veloce merger consideration	57,348			16,565			—

See Accompanying Notes to Consolidated Financial Statements

F- 6

APPLIED MICRO CIRCUITS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

	Common Stock					Additional Paid in Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders’ Equity
	Shares		Amount
	(in thousands)
Balance, March 31, 2011	63,666		$	637		$	5,891,036		$	(1,597	)	$	(5,628,266	)	$	261,810
Issuance of common stock	2,727		27			3,846			—			—			3,873
Repurchase of common stock	(3,487	)	(35		)	(20,817		)	—			—			(20,852		)
Funding of structured stock repurchase agreements	(1,027	)	(10		)	(9,990		)	—			—			(10,000		)
Stock-based compensation expense	—		—			17,261			—			—			17,261
Other comprehensive loss	—		—			—			(168		)	—			(168		)
Net loss	—		—			—			—			(82,688		)	(82,688		)
Balance, March 31, 2012	61,879		$	619		$	5,881,336		$	(1,765	)	$	(5,710,954	)	$	169,236
Issuance of common stock	6,199		62			22,379			—			—			22,441
Repurchase of common stock	(126	)	(1		)	(652		)	—			—			(653		)
Stock-based compensation expense*	—		—			23,567			—			—			23,567
Other comprehensive gain	—		—			—			1,028			—			1,028
Net loss	—		—			—			—			(134,115		)	(134,115		)
Balance, March 31, 2013	67,952		$	680		$	5,926,630		$	(737	)	$	(5,845,069	)	$	81,504
Issuance of common stock	9,725		97			62,823			—			—			62,920
Stock-based compensation expense	—		—			15,912			—			—			15,912
Other comprehensive loss	—		—			—			(5,406		)	—			(5,406		)
Net loss	—		—			—						(5,694		)	(5,694		)
Balance, March 31, 2014	77,677		$	777		$	6,005,365		$	(6,143	)	$	(5,850,763	)	$	149,236

* Veloce’s stock-based compensation expense related to warrants is included in issuance of common stock.

See Accompanying Notes to Consolidated Financial Statements

F- 7

APPLIED MICRO CIRCUITS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Basis of Presentation

The Consolidated Financial Statements include all the accounts of AppliedMicro and its wholly-owned subsidiaries including Veloce Technologies Inc. (“Veloce”), which was consolidated in prior accounting periods prior to its merger with the Company, as a variable interest entity (“VIE”) since the Company was determined to be its primary beneficiary. On June 20, 2012, the Company completed the acquisition of Veloce which became a wholly owned subsidiary of the Company as of this date. See Note 4, Veloce, to Consolidated Financial Statements. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to its:

• capitalized mask sets including its useful lives, which affects cost of goods sold and property and equipment or Research and Development ("R&D") expenses, if not capitalized;

• inventory valuation, warranty liabilities and revenue reserves, which affects cost of sales, gross margin and revenues;

• allowance for doubtful accounts, which affects operating expenses;

• unrealized losses or other-than-temporary impairments of short-term investments available for sale, which affects interest income (expense), net;

• valuation of purchased intangibles and goodwill, which affects amortization and impairments of purchased intangibles, impairments of goodwill and apportionment of goodwill related to divestitures;

• Veloce accrued liability which considers: (i) estimating the total value of the expected Veloce consideration, (ii) determining the stage at which a milestone is deemed to be probable of attainment, (iii) the estimated progress towards achieving the milestone at the time such milestone was deemed probable of achievement and (iv) estimating the approximate timing of the expected completion of the milestones and related payments;

• potential costs of litigation, which affects operating expenses;

• valuation of deferred income taxes, which affects income tax expense (benefit); and

• stock-based compensation, which affects gross margin and operating expenses.

The Company bases its estimates and assumptions on historical experience and on various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from management’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity from the date of purchase of 90 days or less to be cash equivalents.

Veloce Consideration

The Company periodically evaluated the progress of the development work that was being performed in connection with its contractual arrangement with Veloce. Based on such an evaluation as well as various other qualitative factors, the Company estimated the total value of the development work being performed and assessed the timing and probability of attaining contractually defined performance milestones.

Upon assessing a performance milestone as probable of achievement, R&D expense was recognized based upon the estimated stage of development of that milestone and the estimated value associated with each performance milestone. The amount of R&D costs recognized in connection with the Veloce consideration excludes any value relating to Veloce common

F- 8

APPLIED MICRO CIRCUITS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

stock equivalents that have not been allocated to individuals (“Unallocated Veloce Units”). Payment of the Veloce consideration occurs based upon when a performance milestone is completed and upon satisfaction of vesting requirements. Significant judgment was required to estimate the total value of the Veloce development work, assess when a performance milestone was probable of achievement and estimate the timing of when the performance milestones were completed. The Company relied on discussions with internal technical personnel and using various qualitative and quantitative factors, including, but not limited to, overall complexity, stage of development and progress made to date, results of testing, and consideration as to the nature of the remaining development work, to assess probability of attaining the performance milestones defined in the Merger Agreement. If, based on such assessment, the Company believed attainment of a performance milestone was probable, the Company recognized expenses related to the estimated stage of development for the performance milestone, excluding the value relating to the Unallocated Veloce Units. As of March 31, 2014, the Company assessed that all three performance milestones were completed.

The total estimated consideration to be paid was based upon the benchmarks achieved during technology simulations that were performed during the third quarter of fiscal 2013 and correlating the results of the technology simulations to the contractual terms included in the Merger Agreement. As a result of higher than expected benchmarks achieved during technology simulations, the total estimated consideration to be paid was updated during fiscal 2013 from a previous estimated maximum of approximately $135.0 million to the contractual maximum of $178.5 million. As a result of this increase in value, the estimated value relating to the first and second performance milestones were also increased.

The consideration relating to the three performance milestones, excluding the value allocated to the Unallocated Veloce Units, in the amount of $169.3 million, has been recognized as research and development expense through March 31, 2014 compared to $126.6 million as of March 31, 2013. Total R&D expenses recognized were approximately $42.7 million and $66.2 million during the twelve months ended March 31, 2014 and 2013, respectively.

Investments

The Company holds a variety of securities that have varied underlying investments. The Company reviews its investment portfolio periodically to assess for other-than-temporary impairment. The Company assesses the existence of impairment of its

investments in order to determine the classification of the impairment as “temporary” or “other-than-temporary”. The factors

used to determine whether an impairment is temporary or other-than-temporary involves considerable judgment. The factors considered in determining whether any individual impairment is temporary or other-than-temporary are primarily the length of the time and the extent to which the market value has been less than amortized cost, the nature of underlying assets (including the degree of collateralization), the financial condition, credit rating, market liquidity conditions and near-term prospects of the issuer. If the fair value of a security is less than its amortized cost basis at the balance sheet date, an assessment would have to be made as to whether the impairment is other-than-temporary. If the Company does not intend to sell the security, the Company shall consider available evidence to assess whether it is more likely than not, it will be required to sell the security before the recovery of the amortized cost basis due to cash, working capital requirements, contractual or regulatory obligations indicate that the security will be required to be sold before a forecasted recovery occurs. If it is more likely than not that the Company is required to sell the security before recovery of the amortized cost basis, an other-than-temporary impairment is considered to have occurred. The Company uses present value cash flow models to determine whether the entire amortized cost basis of the security will be recovered. The Company will compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. An other-than-temporary impairment is said to have occurred if the present value of cash flows expected to be collected is less than the amortized cost basis of the security. During the fiscal years ended March 31, 2014 and 2012, the Company did not record any other-than-temporary impairment charges. During the fiscal year ended March 31, 2013, the Company recorded approximately $1.1 million in other-than-temporary impairment charges. During the fiscal year ended March 31, 2014, the Company did not record an impairment charge in connection with other securities in a continuous loss position (fair value less than carrying value) with unrealized losses of $0.4 million as the Company believes that such unrealized losses are temporary. In addition, the Company also had $3.5 million in unrealized gains. If the fair value of a debt security is less than its amortized cost basis at the balance sheet date, an assessment would have to be made as to whether the impairment is other-than-temporary.

Fair Value of Financial Instruments

Short-term investments are recorded at fair value in the Company’s Consolidated Balance Sheets and are categorized based upon the level of judgment associated with the inputs used to measure their fair values. ASC Subtopic 820-10 defines a three-level valuation hierarchy for disclosure of fair value measurements. The Company currently classifies inputs to derive fair values for short-term investments as Level 1 and 2. Instruments classified as Level 1 include highly liquid government and agency securities, money market funds and publicly traded closed end bond funds in active markets. Instruments classified as Level 2 include corporate notes, mortgage-backed securities, asset-backed securities and preferred stock. The Company did not have any Level 3 short-term investments as of any of the periods presented.

F- 9

APPLIED MICRO CIRCUITS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of available-for-sale securities and trade receivables. The Company believes that the credit risk in its trade receivables is mitigated by the Company’s credit evaluation process, relatively short collection terms and dispersion of its customer base. The Company generally does not require collateral and losses on trade receivables have historically been within management’s expectations.

The Company invests its excess cash in debt instruments of the U.S. Treasury, corporate bonds, mutual funds, mortgage-backed securities, asset-backed securities, preferred stocks and closed-end bond funds primarily with investment grade credit ratings. The Company has established guidelines relative to diversification and maturities that attempt to maintain safety, yield and liquidity. These guidelines are periodically reviewed and modified to take advantage of trends in yields and interest rates.

Inventories

The Company’s policy is to value inventories at the lower of cost or market on a part-by-part basis. This policy requires the Company to make estimates regarding the market value of its inventories, including an assessment of excess or obsolete inventories. The Company determines excess and obsolete inventories based on an estimate of the future demand for its products within a specified time horizon, generally 12 months. The estimates used for future demand are also used for near-term capacity planning and inventory purchasing and are consistent with revenue forecasts. If the Company’s demand forecast is greater than its actual demand the Company may be required to take additional excess inventory charges, which would decrease gross margin and net operating results. Any impairment charges taken establishes a new cost basis for the underlying inventory and the cost basis for such inventory is not marked-up on changes in circumstances until a gain is realized upon its eventual sale. This accounting is consistent with the guidance provided by FASB ASC paragraph 330-10-35-14.

Strategic Investments

The Company has entered into certain equity investments in privately held businesses to achieve certain strategic business objectives. The Company’s investments in equity securities of privately held businesses are accounted for under the cost method. Under the cost method, strategic investments in which the Company holds less than a 20% voting interest and in which the Company does not have the ability to exercise significant influence are carried at cost reduced by other-than-temporary impairments, as appropriate. These investments are included in other assets on the Company’s Consolidated Balance Sheets. The Company periodically reviews these investments for other-than-temporary declines in fair value based on the specific identification method and writes down investments when an other-than-temporary decline has occurred. The Company recorded other-than-temporary impairment charges of its strategic investments of zero, $2.3 million and $1.0 million during the fiscal years ended March 31, 2014, 2013, and 2012, respectively, and a net gain on disposal of strategic equity investment of $7.1 million during the fiscal year ended 2012 in other income (expense), net. The fair value was estimated on a non-recurring basis based on Level 3 inputs. The Level 3 inputs used to estimate the fair value of these investments included consideration of the current cash position, recent operational performance, and forecasts of the investees. During the fiscal years ended March 31, 2014 and 2013, the Company invested zero and $0.5 million, respectively, in non-marketable strategic investments and these amounts were carried at adjusted cost. Refer to Other Assets in Note 3, Certain Financial Statement Information, to Consolidated Financial Statements for the total value of the Company's strategic investments carried at cost as of March 31, 2014.

Goodwill, Purchased Intangible Assets and Other Long-Lived Assets

The Company reviews its goodwill for impairment at the reporting unit level annually, or more frequently, if changes in facts and circumstances indicate that it is more likely than not that the fair value of the Company’s reporting units may be less than its carrying amount. The Company elected to use the qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step goodwill impairment test. As part of its qualitative assessment, the Company evaluated and determined that its market capitalization was well in excess of its book value and based on this and other qualitative factors (such as revenue trends, design wins, continued utilization of developed technology acquired from the TPack A/S acquisition and subsequent to its sale in April 2013 - see Note 12, Sale of TPack A/S, to the Consolidated Financial Statements for details) determined that there was no goodwill impairment.

The Company’s long-lived assets consist of property, plant and equipment and other acquired intangibles, excluding goodwill. Property and equipment are stated at cost and depreciated over the estimated useful lives of the assets ranging from 1 to 7 years using the straight line method. Leasehold improvements are stated at cost and amortized over the shorter of the term of the related lease or its estimated useful life. Acquired intangibles with definite lives are amortized on a straight-line basis over the remaining estimated economic life of the underlying products and technologies. The Company reviews its definite-

F- 10

APPLIED MICRO CIRCUITS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

lived long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. Recoverability of an asset group is measured by comparison of its carrying amount to the expected future undiscounted cash flows that the asset group is expected to generate. If it is determined that an asset group is not recoverable, an impairment loss is recorded in the amount by which the carrying amount of the asset group exceeds its fair value. In addition, the Company assesses its long-lived assets for impairment if they are abandoned. The Company completed its annual impairment test in the fourth quarter of fiscal 2014 and determined that there was no impairment of long-lived assets. 

Revenue Recognition

The Company recognizes revenue based on four basic criteria: 1) there is evidence that an arrangement exists; 2) delivery has occurred; 3) the fee is fixed or determinable; and 4) collectability is reasonably assured. The Company recognizes revenue upon determination that all criteria for revenue recognition have been met. In addition, the Company does not recognize revenue until the applicable customer’s acceptance criteria have been met. The criteria are usually met at the time of product shipment. The Company’s standard terms and conditions of sale do not allow for product returns and it generally does not allow product returns other than under warranty or stock rotation agreements. Revenue from shipments to distributors is recognized upon shipment. In addition, the Company records reductions to revenue for estimated allowances such as returns not pursuant to contractual rights, competitive pricing programs and rebates. These estimates are based on the Company's experience with stock rotations and the contractual terms of the competitive pricing and rebate programs. Royalty revenues are recognized when cash is received only when royalty amounts cannot be reasonably estimated. Royalty revenues are based upon sales of the Company's customers' products that include its technology.

Shipping terms are generally FCA (Free Carrier) shipping point. If actual returns or pricing adjustments exceed the Company's estimates, it would record additional reductions to revenue.

From time to time the Company generates revenue from the sale of internally developed intellectual property ("IP"). The Company generally recognizes revenue from the sale of IP when all basic criteria outlined above are met, which generally occurs when the payments are received.

Research and Development ('R&D")

R&D costs are expensed as incurred. Substantially all R&D expenses are related to new product development and designing significant improvements to existing products. Also refer to Note 4, Veloce, to the Consolidated Financial Statements.

Mask Costs

The Company incurs significant costs for the fabrication of masks used by its contract manufacturers to manufacture its products. If the Company determines, at the time the costs for the fabrication of masks are incurred, that technological feasibility of the product has been achieved, it considers the nature of these costs to be pre-production costs. Accordingly, such costs are capitalized as property and equipment under machinery and equipment and are amortized as cost of sales over approximately three years, representing the estimated production period of the product. The Company periodically reassesses the estimated product production period for specific mask sets capitalized. If the Company determines, at the time fabrication mask costs are incurred, that either technological feasibility of the product has not occurred or that the mask is not reasonably expected to be used in production manufacturing or that the commercial feasibility of the product is uncertain, the related mask costs are expensed to R&D in the period in which the costs are incurred. The Company will also periodically assess capitalized mask costs for impairment. During the fiscal years ended March 31, 2014 and 2013, total mask costs capitalized were $6.4 million and $3.1 million, respectively.

Stock-Based Compensation

Stock-based compensation cost is measured at the grant date based on the fair value of the award. The Company uses the Black-Scholes model to value stock-based compensation for options and employee stock purchase rights under the employee stock purchase plan ("ESPP"), and the fair market value of the Company's common stock for restricted stock units ("RSUs"). The market stock units ("MSUs") were valued using the Monte Carlo pricing model, which uses the Company's stock price, the Index value, expected volatilities of the Company's stock price and the Index, correlation coefficients and risk free interest rates to determine the fair value. The Black-Scholes model determines the fair value of share-based payment awards based on the stock price on the date of grant and is affected by assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the Company’s stock price, volatility over the term of the awards and actual and projected employee stock option exercise behaviors. Option-pricing models were developed for use in estimating the value of traded options that have no vesting or hedging restrictions and are fully transferable. Although the fair value of stock options

F- 11

APPLIED MICRO CIRCUITS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

granted by the Company is estimated by the Black-Scholes model, the estimated fair value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction.

The following tables summarize the allocation of the stock-based compensation expense (in thousands):

	Fiscal Year Ended March 31,
	2014			2013		2012
Stock-based compensation expense by type of award:
Option grants and employee stock purchase rights	$	2,520		$	3,469	$	5,289
Restricted stock units	14,517			20,620		13,148
Total stock-based compensation	17,037			24,089		18,437
Stock-based compensation expensed from (capitalized to) inventory	(16		)	147		(63		)
Total stock-based compensation expense	$	17,021		$	24,236	$	18,374

	Fiscal Year Ended March 31,
	2014			2013		2012
Stock-based compensation expense by cost centers:
Cost of revenues	$	460		$	545	$	495
Research and development	6,371			11,760		10,496
Selling, general and administrative	10,206			11,784		7,446
Total stock-based compensation	17,037			24,089		18,437
Stock-based compensation expensed from (capitalized to) inventory	(16		)	147		(63		)
Total stock-based compensation expense	$	17,021		$	24,236	$	18,374

The stock based compensation expense of approximately $24.2 million for the twelve months ended March 31, 2013 does not include approximately $1.3 million expense related to the acceleration of Veloce warrants.

The fair values of the options and employee stock purchase rights granted are estimated as of the grant date using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	Options									Employee Stock Purchase Rights
	Fiscal Years Ended March 31,									Fiscal Years Ended March 31,
	2014			2013			2012			2014			2013			2012
Expected life (years)	4.4			4.4			3.8			0.5			0.5			0.5
Risk-free interest rate	0.6		%	0.7		%	1.4		%	—		%	—		%	0.1		%
Volatility	0.49			0.54			0.48			0.56			0.50			0.55
Dividend yield	—		%	—		%	—		%	—		%	—		%	—		%
Expected forfeiture rate	5.8		%	6.6		%	6.8		%	—		%	—		%	—		%
Weighted average fair value	$	2.95		$	2.47		$	3.83		$	3.40		$	1.77		$	2.13

Compensation Amortization Period. All stock-based compensation is amortized over the requisite service period of the awards, which is generally the same as the vesting period of the awards. The Company amortizes the fair value cost on a straight-line basis over the expected service periods.

Expected Life. The expected life of stock options granted represents the expected weighted average period of time from the date of grant to the estimated date that the stock option would be fully exercised. To calculate the expected term, the Company utilizes historical actual exercise data and assumes that unexercised stock options would be exercised at the midpoint of the valuation date of its analysis and the full contractual term of the option.

Expected Volatility. Expected volatility is a measure of the amount by which the stock price is expected to fluctuate. The Company estimates the expected volatility of its stock options at their grant date by equally weighting the historical volatility

F- 12

APPLIED MICRO CIRCUITS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

and the implied volatility of its stock. The historical volatility is calculated using the weekly stock price of its stock over a recent historical period equal to its expected life. The implied volatility is calculated from the implied market volatility of exchange-traded call options on its common stock.

Risk-Free Interest Rate. The risk-free interest rate is the implied yield currently available on zero-coupon government issues with a remaining term equal to the expected life.

Expected Dividends. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero percent in valuation models.

Expected Forfeitures. As stock-based compensation expense recognized in the Consolidated Statements of Operations for the fiscal years ended March 31, 2014, 2013 and 2012 is based on awards that are ultimately expected to vest, it should be reduced for estimated forfeitures. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Pre-vesting forfeiture rates were based upon the average of expected forfeiture data using the Company’s current demographics and standard probabilities of employee turnover and the annual forfeiture rate based on the Company’s historical forfeiture rates.

Effective April 1, 2013, the Company revised the estimated forfeiture rate used to determine the amount of stock-based compensation from 6.6% to 5.8% as a result of a decreasing rate of forfeitures in recent periods, which the Company believes is indicative of the rate it will experience during the remaining vesting period of currently outstanding unvested grants.

The weighted average fair value per share of the restricted stock units awarded in the fiscal years ended March 31, 2014, 2013 and 2012 was $9.46, $6.11 and $9.00, respectively. The weighted average fair value per share was calculated based on the fair market value of the Company’s common stock on the respective grant dates.

The amount of unrecognized stock-based compensation cost estimated to be expensed from April 1, 2014 through fiscal 2018, including time, performance and market based awards that are expected to vest, is $24.1 million which will be recognized over a weighted-average period of 1.5 years. If there are any modifications or cancellations of the underlying unvested securities, the Company may be required to accelerate, increase or cancel any remaining unrecognized stock-based compensation expense. Future stock-based compensation expense and unrecognized stock-based compensation will increase to the extent that the Company grants additional equity awards or assumes unvested equity awards in connection with acquisitions.

Income Taxes

The Company utilizes the asset and liability method of accounting for income taxes as set forth in ASC Subtopic 740-10 (“ASC 740-10”). Under the asset and liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates. A valuation allowance is recorded when it is more likely than not that some or all of the deferred tax assets will not be realized.

Segments of a Business Enterprise

The Company has two operating segments, Connectivity and Computing, and under the aggregation criteria set forth in ASC 280-10 (as the two operating segments share similar economic characteristics related to the nature of their products, production processes, customers and methods of distribution), has one reportable operating segment. The Company’s Chief Operating Decision Maker, the Chief Executive Officer, evaluates performance of the Company and makes decisions regarding allocation of resources based on total Company results.

New Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2013-02 (ASU 2013-02), Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU 2013-02 requires an entity to present either on the face of the statement where comprehensive income is presented or in the notes to the financial statements, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income. The adoption of ASU 2013-02, which involves presentation and disclosures only, did not have a significant impact on the Company's Consolidated Financial Statements.

F- 13

APPLIED MICRO CIRCUITS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standards setting bodies that are adopted by the Company as of the specified effective date. The Company believes the impact of recently issued standards that are not yet effective will not have a material impact on its Consolidated Financial Statements.

2. Investments

The Company classifies its short-term investments as “available-for-sale” and records such assets at the estimated fair value with unrealized gains and losses excluded from net loss and reported, net of tax, in comprehensive loss. The portion of such unrealized losses that are deemed to be other-than-temporary in nature are charged to the Consolidated Statements of Operations. The basis for computing realized gains or losses is by specific identification. In addition, the Company had approximately $1.1 million and $1.0 million in restricted cash related to its voluntary disability insurance as of March 31, 2014 and 2013, respectively, and included in cash and cash equivalents on the Consolidated Balance Sheets.

The following is a summary of cash, cash equivalents and available-for-sale investments by type of instrument (in thousands):

	March 31, 2014									March 31, 2013
	Amortized Cost		Gross Unrealized					Estimated Fair Value		Amortized Cost		Gross Unrealized					Estimated Fair Value
			Gains		Losses							Gains		Losses
Cash	$	65,867	$	—	$	—		$	65,867	$	8,529	$	—	$	—		$	8,529
Cash equivalents	5,672		—		—			5,672		10,536		—		—			10,536
U.S. Treasury securities and agency bonds	2,838		—		—			2,838		12,363		10		—			12,373
Corporate bonds	10,599		30		(2		)	10,627		15,567		63		(2		)	15,628
Mortgage-backed and asset-backed securities*	1,793		297		(16		)	2,074		3,655		355		(7		)	4,003
Closed-end bond funds	14,373		2,392		(402		)	16,363		21,914		5,340		(39		)	27,215
Preferred stock	2,406		736		—			3,142		4,878		2,314		—			7,192
	$	103,548	$	3,455	$	(420	)	$	106,583	$	77,442	$	8,082	$	(48	)	$	85,476
Reported as:
Cash and cash equivalents								$	71,539								$	19,065
Short-term investments available-for-sale								35,044									66,411
								$	106,583								$	85,476

* At March 31, 2014 and 2013, approximately $1.1 million and $1.4 million of the estimated fair value presented were mortgage-backed securities, respectively.

The established guidelines for measuring fair value and expanded disclosures regarding fair value measurements are defined as a three-level valuation hierarchy for disclosure of fair value measurements as follows:

Level 1 —	Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2 —	Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.
Level 3 —	Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Valuation of instruments includes unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities.

F- 14

APPLIED MICRO CIRCUITS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following is a summary of cash, cash equivalents and available-for-sale investments by type of instruments measured at fair value on a recurring basis (in thousands):

	March 31, 2014								March 31, 2013
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Level 1
Cash	$	65,867	$	—	$	—	$	65,867	$	8,529	$	—	$	—	$	8,529
Cash equivalents	5,672		—		—		5,672		9,508		1,028		—		10,536
U.S. Treasury securities and agency bonds	2,838		—		—		2,838		12,373		—		—		12,373
Corporate bonds	—		10,627		—		10,627		—		15,628		—		15,628
Mortgage-backed and asset-backed securities	—		2,074		—		2,074		—		4,003		—		4,003
Closed-end bond funds	16,363		—		—		16,363		27,215		—		—		27,215
Preferred stock	—		3,142		—		3,142		—		7,192		—		7,192
	$	90,740	$	15,843	$	—	$	106,583	$	57,625	$	27,851	$	—	$	85,476

There were no significant transfers in and out of Level 1 and Level 2 fair value measurements during the fiscal year ended March 31, 2014.

The following is a summary of the cost and estimated fair values of available-for-sale securities with stated maturities, which include U.S. Treasury securities and agency bonds, corporate bonds and mortgage-backed and asset-backed securities, by contractual maturity as of March 31, 2014 (in thousands):

	March 31, 2014
	Cost		Estimated Fair Value
Less than 1 year	$	6,888	$	7,024
Mature in 1 – 2 years	6,580		6,618
Mature in 3 – 5 years	529		542
Mature after 5 years	1,233		1,355
	$	15,230	$	15,539

The following is a summary of gross unrealized losses (in thousands):

	Less Than 12 Months of Unrealized Losses					12 Months or More of Unrealized Losses					Total
As of March 31, 2014	Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses
U.S. Treasury securities and agency bonds	$	—	$	—		$	—	$	—		$	—	$	—
Corporate bonds	992		(2		)	—		—			992		(2		)
Mortgage-backed and asset-backed securities	431		(16		)	—		—			431		(16		)
Closed-end bond funds	4,819		(333		)	405		(69		)	5,224		(402		)
	$	6,242	$	(351	)	$	405	$	(69	)	$	6,647	$	(420	)

F- 15

APPLIED MICRO CIRCUITS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Less Than 12 Months of Unrealized Losses					12 Months or More of Unrealized Losses					Total
As of March 31, 2013	Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses
U.S. Treasury securities and agency bonds	$	300	$	—		$	—	$	—		$	300	$	—
Corporate bonds	2,276		(2		)	113		—			2,389		(2		)
Mortgage-backed and asset-backed securities	647		(3		)	—		(4		)	647		(7		)
Closed-end bond funds	—		—			6,991		(39		)	6,991		(39		)
	$	3,223	$	(5	)	$	7,104	$	(43	)	$	10,327	$	(48	)

Other-Than-Temporary Impairment

Based on an evaluation of securities that have been in a loss position, the Company recognized other-than-temporary impairment charge of its short-term investments and marketable securities of $1.1 million during the fiscal year ended March 31, 2013. During the fiscal years ended March 31, 2014 and 2012, the Company did not recognize any other-than-temporary impairment charges. The Company considered various factors which included a credit and liquidity assessment of the underlying securities and the Company’s intent and ability to hold the underlying securities until the estimated date of recovery of its amortized cost. As of March 31, 2014 and 2013, the Company also had $3.5 million and $8.1 million in gross unrealized gains, respectively. The basis for computing realized gains or losses is by specific identification.

3. Certain Financial Statement Information

Accounts receivable:

	March 31,
	2014			2013
	(In thousands)
Accounts receivable	$	25,629		$	25,278
Less: allowance for bad debts	(451		)	(703		)
	$	25,178		$	24,575

Inventories:

	March 31,
	2014		2013
	(In thousands)
Finished goods	$	9,375	$	7,247
Work in process	6,510		4,098
Raw materials	3,061		1,555
	$	18,946	$	12,900

F- 16

APPLIED MICRO CIRCUITS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Other current assets:

	March 31,
	2014		2013
	(In thousands)
Prepaid expenses	$	10,978	$	13,762
Executive deferred compensation assets	1,035		693
Deposits	585		828
Proceeds receivable from sale of strategic investment	3,353		1,331
Other	848		1,384
	$	16,799	$	17,998

Property and equipment:

	Useful Life	March 31,
		2014			2013
	(In years)	(In thousands)
Machinery and equipment*	5-7	$	44,503		$	40,063
Leasehold improvements**	1-5	11,574			14,202
Computers, office furniture and equipment	3-7	43,365			43,485
Buildings**	—	—			2,756
Land**	—	—			9,800
		99,442			110,306
Less: accumulated depreciation and amortization		(78,696		)	(75,915		)
		$	20,746		$	34,391

* Includes capitalized mask costs

** In March, 2014, The Company sold its headquarters building and related parcel of land in Sunnyvale, California for a purchase price of $40.8 million in cash. The building was being depreciated over the useful life of 31.5 years and the leasehold improvements associated with the building were being depreciated over the useful life of 5 to 15 years. The net book value of the properties sold was approximately $14.3 million on the closing date and the Company recorded a gain of $25.8 million in the fiscal year ended March 31, 2014. The Company leases a portion of the space on a lease which expires in August, 2015.

Goodwill and purchased intangibles:

Goodwill is as follows:

	March 31,
	2014		2013
	(In thousands)
Goodwill	$	11,425	$	13,183

The reduction in goodwill of $1.8 million relates to the sale of TPack. See Note 12, Sale of TPack A/S, to the Consolidated Financial Statements for details.

Purchase-related intangibles are as follows:

F- 17

APPLIED MICRO CIRCUITS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	March 31, 2014								March 31, 2013
	Gross		Accumulated Amortization and Impairments			Net		Weighted average remaining useful life	Gross		Accumulated Amortization and Impairments			Net		Weighted average remaining useful life
	(In thousands)							(In years)	(In thousands)							(In years)
Developed technology/in-process research and development	$	425,000	$	(425,000	)	$	—	0	$	441,300	$	(431,771	)	$	9,529	3.5
Customer relationships	6,330		(6,225		)	105		0.4	12,830		(10,507		)	2,323		2.1
Patents/core technology rights/trade name	62,306		(62,306		)	—		0	63,206		(63,067		)	139		0.3
	$	493,636	$	(493,531	)	$	105		$	517,336	$	(505,345	)	$	11,991

During the quarter ended June 30, 2013, $11.4 million of purchased intangibles were written off pursuant to the sale of TPack. See Note 12, Sale of TPack A/S, to the Consolidated Financial Statements for details.

The estimated future amortization expense of purchased intangible assets to be charged to operating expenses as of March 31, 2014, was as follows (in thousands):

	Operating Expenses
Fiscal Years Ending March 31, 2015	$	105

Other Assets:

	March 31,
	2014		2013
	(In thousands)
Non-current portion of prepaid expenses	$	4,235	$	7,866
Strategic investments*	3,000		3,000
Other	$	519	$	—
	$	7,754	$	10,866

*During the fiscal years ended March 31, 2014 and 2013, the Company recognized an impairment charge on its non-marketable strategic investment of $0.0 million and $2.3 million, respectively. Refer to Note 2, Investments, to the Consolidated Financial Statements for details.

Other accrued liabilities:

	March 31,
	2014		2013
	(In thousands)
Employee related liabilities	$	1,733	$	2,236
Executive deferred compensation	1,314		1,284
Income taxes	962		903
Professional fees	1,259		3,840
Other	5,609		2,467
	$	10,877	$	10,730

Warranty Reserves:

The Company’s products typically carry a one-year warranty. The Company establishes reserves for estimated product warranty costs at the time revenue is recognized. Although the Company engages in extensive product quality programs and

F- 18

APPLIED MICRO CIRCUITS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

processes, its warranty obligation is affected by product failure rates, use of materials and service delivery costs incurred in correcting any product failure. Should actual product failure rates, use of materials or service delivery costs differ from the Company’s estimates, additional warranty reserves could be required, which could reduce its gross margin.

The following table summarizes warranty reserve activity:

	March 31,
	2014			2013
	(In thousands)
Beginning balance	$	220		$	454
Charged (capitalized) to costs of revenues	58			(94		)
Costs incurred	(79		)	(140		)
Ending balance	$	199		$	220

Interest income (expense), net and other-than-temporary impairments:

	Fiscal Years Ended March 31,
	2014		2013			2012
	(In thousands)
Interest income	$	1,692	$	2,347		$	3,601
Net realized gain on short-term investments	3,360		1,391			646
Impairments of short-term investments and marketable securities	—		(1,143		)	—
	$	5,052	$	2,595		$	4,247

Other income (expense), net:

	Fiscal Years Ended March 31,
	2014		2013			2012
	(In thousands)
Net (impairment) gain on strategic investments*	$	—	$	(2,250	)	$	7,147
Impairment of notes receivable and other assets**	—		(1,800		)	—
Net (loss) gain on disposals of property	67		(21		)	(10		)
Other, net	287		1,677			300
	$	354	$	(2,394	)	$	7,437

*During the fiscal years ended March 31, 2014, 2013 and 2012, the Company recognized an impairment charge of its non-marketable strategic investment of $0.0 million, $2.3 million and $1.0 million, respectively. Refer to Note 1, Summary of Significant Accounting Policies, to the Consolidated Financial Statements for details.

**During the fiscal year ended March 31, 2013, the Company wrote-off $1.5 million of notes receivable due from an investee and $0.3 million related to a prepaid intellectual property license from this investee. The Company also impaired the related equity investment of $2.3 million in this investee - see * above.

Net loss per share:

Shares used in basic net loss per share are computed using the weighted average number of common shares outstanding during each period. Shares used in diluted net loss per share include the dilutive effect of common shares potentially issuable upon the exercise of stock options, vesting of RSUs and outstanding warrants. The reconciliation of shares used to calculate basic and diluted net loss per share consists of the following (in thousands, except per share data):

F- 19

APPLIED MICRO CIRCUITS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Fiscal Years Ended March 31,
	2014			2013			2012
Net loss	$	(5,694	)	$	(134,115	)	$	(82,688	)
Shares used in net loss per share computation:
Weighted average common shares outstanding, basic	72,897			65,258			62,245
Net effect of dilutive common share equivalents	—			—			—
Weighted average common shares outstanding, diluted	72,897			65,258			62,245
Basic and diluted net loss per share	$	(0.08	)	$	(2.06	)	$	(1.33	)

The effect of anti-dilutive securities (comprised of options and restricted stock units) totaling 4.5 million, 7.2 million and 9.0 million equivalent shares for the fiscal years ended March 31, 2014, 2013 and 2012, respectively, have been excluded from the net loss per share computation, as the impact would be anti-dilutive.

The effect of dilutive securities (comprised of options and restricted stock units) totaling 1.5 million, 0.8 million and 0.5 million shares for the fiscal years ended March 31, 2014, 2013 and 2012, respectively, have been excluded from the net loss per share computation, as the impact would be anti-dilutive because the Company has incurred losses in the periods presented.

Total equivalent shares excluded from the net loss per share computation are 6.0 million, 8.0 million and 9.5 million for the fiscal years ended March 31, 2014, 2013 and 2012, respectively.

4. Veloce

On June 20, 2012 (the “Closing Date”), the Company completed its acquisition of Veloce pursuant to the terms of the Agreement and Plan of Merger (the “Merger Agreement”). Veloce has been developing specific technology for the Company.

The terms of the Merger Agreement include the payment of the total consideration, payable to holders of Veloce common stock options that were vested on the Closing Date and holders of Veloce common stock and stock equivalents (collectively “Veloce Equity Holders”), and to Veloce stock equivalents that have not yet been allocated to individuals (“Unallocated Veloce Units”). The Merger Agreement further provides for payments of additional merger consideration contingent upon the achievement of certain post-closing product development milestones relating to the Veloce development project.

The total estimated consideration to be paid was based upon the benchmarks achieved during technology simulations that were performed during the third quarter of fiscal 2013 and correlating the results of the technology simulations to the contractual terms included in the Merger Agreement. As a result of higher than expected benchmarks achieved during technology simulations, the total estimated consideration to be paid was updated during fiscal 2013 from a previous estimated maximum of approximately $135.0 million to the contractual maximum of $178.5 million. Significant judgment was required in assessing when a performance milestone was probable of achievement and estimating the percentage of completion of the milestone and the timing of when the performance milestones were completed. These determinations were based on discussions with internal technical personnel that addressed various qualitative and quantitative factors, including, but not limited to, overall complexity associated with the assessment, stage of development, progress made to date, results of testing and consideration as to the nature of the remaining development work.

Veloce completed all three performance milestones relating to the project as of March 31, 2014. The consideration relating to the three performance milestones, excluding the value allocated to the Unallocated Veloce Units, in the amount of $169.3 million, has been recognized as research and development expense through March 31, 2014 compared to $126.6 million as of March 31, 2013. During the twelve months ended March 31, 2014 and 2013, as part of the above arrangement, the Company paid approximately $63.7 million and $16.5 million, respectively, in cash and issued approximately 6.7 million shares and 3.0 million shares, respectively, valued at approximately $57.3 million and $16.6 million, respectively.

The consideration that the Company will be obligated to pay will be allocated equally to each of the Veloce Equity Holders and the Unallocated Veloce Units. The Company is contractually required to distribute all Unallocated Veloce Units within a certain time period. During the twelve months ended March 31, 2014, the Company distributed an additional 0.5 million Unallocated Veloce Units which had a related expense of $5.9 million. Veloce Equity Holders subject to vesting requirements will receive their distribution upon satisfaction of such vesting requirements.

F- 20

APPLIED MICRO CIRCUITS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For accounting purposes, the costs incurred in connection with the development milestones relating to Veloce are considered compensatory and are recognized as R&D expense. Recognition of these costs as expense occurred when certain development and performance milestones became probable of achievement and were deemed earned. However, the value allocated to the Unallocated Veloce Units will not be recognized as R&D expense until distribution of the underlying units occurs. As of March 31, 2014, 0.9 million Unallocated Veloce Units had not been allocated, and the maximum potential additional expense to be recognized associated with these Unallocated Veloce Units was approximately $9.2 million.

Total R&D expenses recognized related to Veloce were approximately $42.7 million and $66.2 million during the twelve months ended March 31, 2014 and 2013, respectively. The Veloce accrued liability included on the Consolidated Balance Sheets is based upon the amount of R&D expense recognized in connection with the development of the Veloce performance milestones less amounts paid either in cash or in common stock. Veloce consideration that has been accrued as of March 31, 2014, is classified as long-term if payments of the consideration are expected to occur beyond a 12 month period.

5. Stockholders' Equity

Preferred Stock

The Certificate of Incorporation allows for the issuance of up to two million shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences, and the number of shares constituting any series of the designation of such series, without further vote or action by the stockholders. At March 31, 2014, there were no preferred shares outstanding.

Common Stock

At March 31, 2014, the Company had 375.0 million shares authorized for issuance and approximately 77.7 million shares issued and outstanding. At March 31, 2013, there were approximately 68.0 million shares issued and outstanding.

Stock Repurchase Program

In August 2004, the Board of Directors authorized a stock repurchase program for the repurchase of up to $200.0 million of the Company's common stock. Under the program, the Company is authorized to make purchases in the open market or enter into structured agreements. In October 2008, the Board of Directors increased the stock repurchase program by $100.0 million. There were no stock repurchases during the fiscal year ended March 31, 2014. During the fiscal year ended March 31, 2013, approximately 0.1 million shares were repurchased on the open market at a weighted average price of $5.18 per share. From the time the program was first implemented in August 2004, the Company has repurchased on the open market a total of 17.3 million shares at weighted average price of $10.04 per share. All repurchased shares were retired upon delivery to the Company. As of March 31, 2014, the Company had $15.9 million available in its stock repurchase program.

Stock Options

The Company has granted stock options to employees and non-employee directors under several plans. These equity plans include three stockholder-approved plans (the 1992 Stock Option Plan and 1997 Directors’ Stock Option Plan and 2011 Equity Incentive Plan) and four plans not approved by stockholders (the 2000 Equity Incentive Plan, Cimaron Communications Corporation’s 1998 Stock Incentive Plan assumed in the fiscal 1999 merger, and JNI Corporation’s 1997 and 1999 Stock Option Plans assumed in the fiscal 2004 merger). Certain other outstanding options were assumed through the Company’s various acquisitions.

In May 2009, Dr. Gopi, the Company's CEO, was awarded 300,000 stock options for “Extraordinary Accomplishment.” The Black-Scholes value of these stock options was $1.1 million. These options vest only if Company performance milestones are satisfied; otherwise they expire unvested. The first milestone for vesting of 75,000 shares is when it is determined that the Company achieved an annual revenue target of $270.0 million or more for any fiscal year from fiscal 2010 through fiscal 2013. The next milestone for vesting of another 75,000 shares is when it is determined that the Company achieved an annual revenue target of $310.0 million or more for any fiscal year from fiscal 2010 through fiscal 2013 or an annual revenue target of $350.0 million or more for fiscal 2014. The last milestone for vesting of 150,000 shares is when it is determined that the Company achieved an annual operating margin of 13.5% of annual revenue or higher in fiscal 2013 or 15% or higher for any fiscal year from fiscal 2010 through fiscal 2012. All options issued under the above award expired unvested when it concluded in fiscal 2014.

A summary of the Company's stock option activity and related information is as follows:

F- 21

APPLIED MICRO CIRCUITS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Options Outstanding
	Number of Shares (thousands)		Weighted Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (years)	Aggregate Intrinsic Value* (millions)
Outstanding as of March 31, 2011	5,390		$	11.91
Granted	250		$	10.10
Exercised	(156	)	$	5.11		$	0.5	(1)
Cancelled	(1,320	)	$	16.20
Outstanding as of March 31, 2012	4,164		$	10.67
Granted	40		$	5.58
Exercised	(161	)	$	5.31		$	0.3	(1)
Cancelled	(551	)	$	14.49
Outstanding as of March 31, 2013	3,492		$	10.26
Granted	40		7.35
Exercised	(662	)	9.36			$	1.8	(1)
Cancelled	(461	)	12.35
Outstanding as of March 31, 2014	2,409		$	10.06	2.7	$	3.4	(2)
Vested and expected to vest as of March 31, 2014	2,409		$	10.06	2.6	$	3.4	(2)
Vested and exercisable at the end of the year	2,312		$	10.14	2.7	$	3.2	(2)

(1) The aggregate pre-tax intrinsic value is calculated as the difference between the market value on the date of exercise and the exercise price of the shares.

(2) The aggregate pre-tax intrinsic value is calculated as the difference between the market value as of the end of the fiscal period and the exercise price of the shares. The closing price of the Company’s common stock was $9.90 on March 31, 2014.

The following table summarizes the information about stock options outstanding and exercisable as of March 31, 2014 (shares in thousands):

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number of Shares	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number of Shares	Weighted Average Exercise Price
$  1.68 - $ 7.60	540	3.07	$	6.77	462	$	6.71
7.61 - 7.67	650	2.34	7.67		650	7.67
7.68 - 11.86	430	3.3	10.49		419	10.47
11.87 - 14.20	491	2.38	12.87		483	12.88
14.21 - 23.32	298	1.47	15.96		298	15.96
$  1.68 - $23.32	2,409	2.57	$	10.06	2,312	$	10.14

Restricted Stock Units

The Company has granted RSUs pursuant to its 1992 Plan, 2000 Equity Incentive Plan and 2011 Equity Incentive Plan as part of its regular annual employee equity compensation review program as well as to new hires. RSUs are share awards that, upon vesting, will deliver to the holder shares of the Company’s common stock. Generally, RSUs vest ratably on a quarterly basis over four years from the date of grant. For employees hired after May 15, 2006, RSUs will vest on a quarterly basis over four years from the date of hire provided that no shares will vest during the first year of employment, at the end of which the shares that would have vested during that year will vest and the remaining shares will vest over the remaining 12 quarters.

F- 22

APPLIED MICRO CIRCUITS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In April 2011, the Committee authorized additional three-year performance-based RSU grants, or “EBITDA2” Grants. Fiscal 2012, 2013 and 2014 were declared as zero attainment years and all shares issued under the EBITDA2 program expired unvested when the program concluded in May 2014.

In November 2011 and February 2012, the Committee authorized additional 18-month performance-based RSU grants, or “Performance Retention Grants”, which were intended to incentivize superior performance and retain key employees. In May 2012, the Committee authorized 12-month Performance Retention Grants. Vesting for the Performance Retention Grants was subject to (i) the accomplishment of goals and objectives of the individual’s business unit and (ii) individual performance as measured by the accomplishment of individual goals and objectives. The 18-month RSU shares generally vest 2/3 after one year, with certain unearned amounts able to roll over to the subsequent vesting period, and 1/3 after 18 months. The 12-month RSU shares have the opportunity to vest after 1 year. Unvested RSU shares remaining at the end of the program period will expire unvested. This program has concluded and no further grants will be made under this program.

In February 2012, Dr. Gopi was awarded 500,000 performance-based RSUs based on three underlying performance milestones. The value of these RSUs is $3.7 million. The Company evaluated the probability of achieving the milestones and recognized expense accordingly. As of March 31, 2014, all three performance milestones have been completed, and the associated stock-based compensation expense has been recorded in the Company's Consolidated Financial Statements. In November 2013, Dr. Gopi was awarded an additional 500,000 RSUs of which 200,000 RSUs were vested on the grant date and the remaining 300,000 RSUs have not vested as of March 31, 2014 and will vest upon the attainment of certain specified X-Gene and X-Weave commercialization goals. The value of these unvested performance-based RSUs is $3.3 million.

In May and November 2013, the Committee authorized performance-based MSUs. The MSUs will be earned, if at all, based on the Company's Total Shareholder Return (“TSR”) compared to that of the SPDR S&P Semiconductor Index ("Index”) over a 2-year performance period (for half of the MSU award) and a three-year performance period (for the remaining half of the MSU award). The MSUs will vest between ranges of 0% and 150% based on the Company's relative TSR compared to the Index. The value of these MSUs is $3.1 million.

In May 2013, the Committee authorized an annual incentive compensation plan (the “FY2014 Short-Term Plan”). The FY 2014 Short-Term Plan will pay out based on fiscal 2014 revenue and non-GAAP earnings per share metrics. The award payouts for each corporate financial measure range from 50% to 150% of the pre-established target level based on the Company's actual performance for fiscal 2014 and the associated stock-based compensation expense of $1.4 million has been recorded in the Company's Consolidated Financial Statements as of March 31, 2014. The FY 2014 Short-Term Plan was payable in fully vested RSUs on May 15, 2014 and was duly paid in May 2014.

A summary of the Company's RSU activity is as follows (in thousands):

	Fiscal Years Ended March 31,
	2014		2013		2011
Outstanding at the beginning of the year	6,444		9,244		3,074
Awarded	3,594		1,040		8,833
Vested	(2,397	)	(2,345	)	(1,701	)
Cancelled	(1,536	)	(1,495	)	(962	)
Outstanding at the end of the year	6,105		6,444		9,244

The weighted average remaining contractual term for the RSUs outstanding as of March 31, 2014 was 0.9 years.

As of March 31, 2014, the aggregate pre-tax intrinsic value of RSUs outstanding was $60.4 million which includes performance based awards which are subject to milestone attainment. The aggregate pretax intrinsic values were calculated based on the closing price of the Company’s common stock of $9.90 on March 31, 2014.

The aggregate pretax intrinsic values of RSUs released during the fiscal year ended March 31, 2014 was $22.4 million. This intrinsic value represents the fair market value of the Company’s common stock on the date of release.

Employee Stock Purchase Plan

Under the Company's 1998 Employee Stock Purchase Plan ("1998 Plan"), the Company had 6.3 million shares reserved for issuance. In August 2012, the Company’s stockholders approved the proposal to reserve an additional 1.8 million shares under the 2012 Employee Stock Purchase Plan ("2012 Plan"). Upon adoption of the 2012 Plan, the 1998 Plan was terminated.

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APPLIED MICRO CIRCUITS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Under the terms of the 2012 Plan, purchases are made semiannually and the purchase price of the common stock is equal to 85% of the fair market value of the common stock on the first or last day of the offering period, whichever is lower. During the fiscal years ended March 31, 2014 and 2013, 0.7 million and 0.6 million shares, respectively, were issued under the 2012 plan. During the fiscal year ended March 31, 2013, 0.4 million shares were issued under the 1998 plan prior to its termination in August 2012. At March 31, 2014, 0.5 million shares were available for future issuance from the 2012 Plan.

Warrants

On May 17, 2009, the Company entered into a development agreement with Veloce pursuant to which Veloce agreed, among other things, to perform development work for the Company on an exclusive basis for up to five years for cash and other consideration, including a warrant to purchase shares of the Company’s common stock (the “Warrant”). In connection with the Merger Agreement amendment entered into on April 5, 2012, the Company and Veloce further modified the Warrant by fully accelerating the vesting schedule resulting in the recognition of approximately $1.3 million of stock compensation expense during the quarter ended June 30, 2012.

Common Shares Reserved for Future Issuance

At March 31, 2014, the Company has the following shares of common stock reserved for issuance upon the exercise of equity instruments (in thousands):

Options granted and outstanding	2,409
Restricted Stock Units granted and outstanding	6,105
Options and RSUs authorized for future grants	355
Employee Stock Purchase Plan	498
	9,367

6. Income Taxes

Loss from operations before income tax consists of the following (in thousands):

	Fiscal Years Ended March 31,
	2014			2013			2012
Loss from operations before income tax:
Domestic loss	$	(8,976	)	$	(130,552	)	$	(78,630	)
Foreign income (loss)	3,901			(4,117		)	(3,130		)
	$	(5,075	)	$	(134,669	)	$	(81,760	)

Income tax expense (benefit) from operations consists of the following (in thousands):

	Fiscal Years Ended March 31,
	2014			2013			2012
Current:
Federal	$	(20	)	$	(1,106	)	$	147
Foreign	819			847			1,034
State	6			(129		)	60
Total Current	805			(388		)	1,241
Deferred:
Foreign	(186		)	(166		)	(313		)
State	—			—			—
Total Deferred	(186		)	(166		)	(313		)
	$	619		$	(554	)	$	928

The provision (benefit) for income taxes reconciles to the amount computed by applying the federal statutory rate of 35% to the loss before income taxes as follows for operations (in thousands):

F- 24

APPLIED MICRO CIRCUITS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Fiscal Years Ended March 31,
	2014					2013					2012
	$			%		$			%		$			%
Tax at federal statutory rate	$	(1,776	)	35	%	$	(47,134	)	35	%	$	(28,613	)	35	%
Tax benefit from loss from continuing operations	—			—		(925		)	1		(123		)	—
Other permanent differences	(6,561		)	129		1,195			(1	)	2,295			(3	)
State taxes, net of federal benefit	(214		)	4		(7,263		)	5		(3,937		)	5
Federal tax credits	(1,778		)	35		(1,909		)	1		(4,131		)	5
State tax credits	(444		)	9		(537		)	—		(622		)	1
Veloce accrued liability	16,740			(330	)	26,749			(20	)	24,046			(29	)
Sale of TPack	2,688			(53	)	—			—		—			—
Valuation allowance	(7,809		)	154		28,715			(21	)	11,600			(14	)
Change in contingency reserve	(64		)	1		74			—		52			—
Other	(163		)	4		481			—		361			(1	)
	$	619		(12	)%	$	(554	)	—	%	$	928		(1	)%

Significant components of the Company’s deferred tax assets and liabilities for federal and state income taxes are as shown below (in thousands):

	Fiscal Years Ended March 31,
	2014			2013
Deferred tax assets:
Net operating loss carryforwards	$	294,910		$	310,276
Research and development credit carryforwards	79,839			78,696
Inventory write-downs and other reserves	8,068			9,046
Capitalization of research and development costs	5,915			8,038
Goodwill	4,007			7,431
Intangible assets	32,290			40,201
Investment impairment	3,494			4,958
Stock-based compensation	26,664			31,177
Depreciation and amortization	3,253			165
Other	1,182			1,056
Total deferred tax assets	459,622			491,044
Valuation allowance	(459,081		)	(490,629		)
	$	541		$	415

At March 31, 2014, the Company has federal and state R&D tax credit carryforwards of approximately $60.7 million and $29.4 million, respectively, which begin to expire in the fiscal year ending March 31, 2019 unless previously utilized. The Company also has federal and state net operating loss carryforwards of approximately $1,137.3 million and $522.5 million, respectively, which will begin to expire in fiscal year 2018 and fiscal year 2015, respectively. Federal and state laws impose restrictions on the utilization of net operating loss and tax credit carryforwards in the event of an “ownership change” for tax purposes as defined by Section 382 of the Internal Revenue Code. The future utilization of our research and development credit carryforwards and net operating loss carryforwards to offset future taxable income may be subject to an annual limitation as a result of ownership changes that may have occurred previously or may occur in the future. The Tax Reform Act of 1986 (the "Act") limits a company’s ability to utilize certain tax credit carryforwards and net operating loss carryforwards in the event of a cumulative change in ownership in excess of 50% as defined in the Act.

As a result of the adoption of ASC 718-10, the Company recognizes excess tax benefits associated with the exercise of stock options directly to stockholders’ equity only when realized. Accordingly, deferred tax assets are not recognized for net

F- 25

APPLIED MICRO CIRCUITS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

operating loss carryforwards resulting from excess tax benefits occurring from April 1, 2006 onward. A windfall tax benefit occurs when the actual tax benefit realized upon an employee’s disposition of a share-based award exceeds the deferred tax asset, if any, associated with the award.

The Company has established a valuation allowance against most of its net deferred tax assets due to uncertainty regarding their future realization. In assessing the realizability of its deferred tax assets, management considers cumulative losses, the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies. Based on the projections for future taxable income over the periods in which the deferred tax assets are realizable and the full utilization of the Company’s loss carryback potential, management concluded that a valuation allowance should be recorded in 2014, 2013 and 2012 against most of its deferred tax assets.

The following is a tabular reconciliation of the Unrecognized Tax Benefits activity during the fiscal year ended March 31, 2014 (in thousands):

Opening Balance	$	43,382
Gross decreases - tax positions in prior period	60
Gross increases - current-period tax positions	789
Ending Balance	$	44,231

If recognized, approximately $0.6 million of the $44.2 million of unrecognized tax benefits would affect the Company’s effective tax rate.

The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in income tax expense. As of March 31, 2014, the Company has recognized $0.1 million of accrued interest and penalties related to uncertain tax positions.

The Company is subject to taxation in the U.S. and various states and foreign jurisdictions.

The Company’s U.S. federal income tax returns for tax years subsequent to 2010 are subject to examination by the Internal Revenue Service and its state income tax returns subsequent to 2009 are subject to examination by state tax authorities. Net operating losses from years for which the statute of limitations has expired (2009 and prior for federal and 2008 and prior for state) could be adjusted in the event that the taxing jurisdictions challenge the amounts of net operating loss carryforwards from such years. With few exceptions, the Company is no longer subject to foreign examinations by tax authorities for years before 2010.

The Company does not foresee significant changes to its unrecognized tax benefits within the next twelve months.

7. Restructuring Charges

The Company recognizes restructuring costs related to asset impairment and exit or disposal activities. Costs relating to facilities closure or lease commitments are recognized when the facility has been exited. Termination costs are recognized when the costs are deemed both probable and estimable.

August 2013 Restructuring Program

In August 2013, the Company implemented a restructuring program to reorganize its operations and reduced its workforce by approximately 20 employees. The plan included eliminating job redundancies, reducing the Company's workforce and impairing the unamortized value of a software intellectual property license, which the Company no longer intends to use to develop new products.The Company anticipates that the restructuring plan will reduce ongoing headcount expenses by approximately $3.0 million annually and other additional operational expenses by $0.5 million annually. Total costs incurred and expected to be incurred as of March 31, 2014 in connection with the restructuring plan were $1.0 million.

December 2012 Restructuring Program

In December 2012, the Company implemented a restructuring program to reorganize its operations and reduced its workforce by approximately 70 employees. The plan included eliminating job redundancies, reducing the Company's workforce and impairing the unamortized value of a software intellectual property license, which the Company does not intend to use to develop new products. As of March 31, 2014, the actual annual savings were within the range of originally expected savings

F- 26

APPLIED MICRO CIRCUITS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

of $8.0 million to $9.0 million for headcount expenses and $4.0 million to $5.0 million for other additional operational expenses. Total costs incurred and expected to be incurred as of March 31, 2014 in connection with the restructuring plan are $1.8 million for employee severance expenses and $4.7 million for an asset impairment.

April 2011 Restructuring Program

The April 2011 restructuring program was implemented as part of the Company’s ongoing cost reduction efforts and to better align its global operations to achieve greater efficiencies. The Company moved more of its functions offshore, which would allow it to be closer and more connected to its customers' third party subcontract manufacturers. The April 2011 restructuring plan included eliminating or relocating 25 positions. As a result of the April 2011 restructuring program, the Company recorded a charge of $0.9 million for employee severances for the fiscal year ended March 31, 2012.

The following table sets forth a summary of restructuring activities related to all of the Company's restructuring plans described above (in thousands):

	Workforce Reduction			Asset Impairment			Total
Liability, March 31, 2012	$	—		$	—		$	—
Restructuring charges	1,716			4,719			6,435
Cash payments	(1,168		)	—			(1,168		)
Non-cash items	—			(4,719		)	(4,719		)
Liability, March 31, 2013	$	548		$	—		$	548
Restructuring charges	$	862		$	272		$	1,134
Cash payments	(1,410		)	—			(1,410		)
Non-cash items	—			(272		)	(272		)
Liability, March 31, 2014	$	—		$	—		$	—

8. Commitments

The Company leases its facilities under long-term operating leases, which expire at various dates through the fiscal year ending March 31, 2017. The lease agreements frequently include renewal or other provisions, which require the Company to pay taxes, insurance, maintenance costs or defined rent increases. The Company also licenses certain engineering design software tools under non-cancelable operating leases.

The following table summarizes the Company’s contractual operating leases as of March 31, 2014 (in thousands):

	Payment Due by Period
Fiscal Years Ending March 31,
2015	$	1,901
2016	930
2017	504
2018	$	369
Total minimum payments	$	3,704

The Company did not have any off balance sheet arrangements at March 31, 2014.

Rent expense (including short-term leases and net of sublease income) for the fiscal years ended March 31, 2014, 2013, and 2012 was $1.8 million, $2.6 million, and $2.9 million, respectively.

9. Employee Retirement Plan

Effective January 1, 1986, the Company established a 401(k) defined contribution retirement plan (“Retirement Plan”) covering all full-time employees. The Retirement Plan provides for voluntary employee contributions from 1% to 50% of annual compensation, subject to a maximum limit allowed by Internal Revenue Service guidelines. The Company may

F- 27

APPLIED MICRO CIRCUITS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

contribute such amounts as determined by the Board. Employer contributions vest to participants at a rate of 33% per year of service for the first three years of service and 100% thereafter for each year of service. The Company made a plan contribution of $0.0 million, $0.2 million and $0.3 million for the three fiscal years ended March 31, 2014, 2013, and 2012, respectively.

10. Significant Customer and Geographic Information

Based on direct shipments, net revenues to customers that were equal to or greater than 10% of total net revenues were as follows:

	Fiscal Years Ended March 31,
	2014		2013		2012
Wintec (global logistics provider)**	22	%	19	%	20	%
Avnet (distributor)	27	%	27	%	20	%
Flextronics (sub-contract manufacturer)	*		*		11	%

* Less than 10% of total net revenues for period indicated.

** Wintec provides vendor managed inventory support primarily for Cisco Systems, Inc.

Net revenues by geographic region, which are primarily denominated in U.S. dollars, were as follows (in thousands):

	Fiscal Years Ended March 31,
	2014		2013		2012
United States of America	$	101,275	$	79,930	$	99,214
Taiwan	13,405		22,684		20,950
Hong Kong	21,477		22,044		21,458
China	6,085		2,053		4,503
Europe	33,625		35,216		41,691
Japan	23,125		13,237		13,596
Malaysia	5,788		4,733		8,276
Singapore	9,745		10,399		14,011
Other Asia	1,217		4,621		5,790
Other	408		725		1,398
	$	216,150	$	195,642	$	230,887

As of March 31, 2014, 2013 and 2012, long-lived assets, which represent property, plant and equipment, goodwill and intangible assets, net of accumulated depreciation and amortization, located outside the Americas were not material.

11. Contingencies

Legal Proceedings

The Company is currently a party to certain legal proceedings, including those noted in this section. While the Company presently believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm the Company's financial position, results of operations, cash flows, or overall trends, legal proceedings are subject to inherent uncertainties, unfavorable rulings or other events that could occur. In addition, legal proceedings are expensive to prosecute and defend against and can divert management attention and Company resources away from the Company's business objectives. Unfavorable resolutions could include monetary damages against the Company or injunctions or other restrictions on the conduct of the Company’s business, or preclude the Company from recovering the damages it seeks in legal proceedings it has commenced. It is also possible that the Company could conclude it is in the best interests of its stockholders, employees, and customers to settle one or more such matters, and any such settlement could include substantial payments or the surrender of rights to collect payments from third parties. However, the Company has not reached this conclusion with respect to any particular matter at this time.

F- 28

APPLIED MICRO CIRCUITS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In 1993, the Company was named as a Potentially Responsible Party (“PRP”) along with more than 100 other companies that used an Omega Chemical Corporation waste treatment facility in Whittier, California (the “Omega Site”). The U.S. Environmental Protection Agency (“EPA”) has alleged that Omega failed to properly treat and dispose of certain hazardous waste materials at the Omega Site. The Company is a member of a large group of PRPs, known as the Omega Chemical Site PRP Organized Group (“OPOG”), that has agreed to fund certain on-going remediation efforts at the Omega Site. In February 2001, the U.S. District Court for the Central District of California (the “Court”) approved a consent decree between EPA and OPOG to study the contamination and evaluate cleanup options at the Omega Site (the Operable Unit 1 or “OU1”). In January 2009, the Court approved two amendments to the consent decree, the first expanding the scope of work to mitigate volatile organic compounds affecting indoor air quality near the Omega Site (the Operable Unit 3 or “OU3”) and the second adding settling parties to the consent decree. Removal of waste materials from the Omega Site has been completed. As part of OU1 and OU3, efforts to remediate the soil and groundwater at the Omega Site, as well as the extraction of chemical vapors from the soil and improving indoor air quality in and around the site, are underway and are expected to be ongoing for several years. In addition, OPOG and EPA are investigating a regional groundwater contamination plume allegedly originating at the Omega Site (the Operable Unit 2 or “OU2”). In September 2011, EPA issued an interim Record of Decision specifying the interim clean-up actions EPA has chosen for OU2, and in September 2012, it issued a special notice letter that triggered the commencement of good faith settlement negotiations with OPOG. In July 2013, EPA rejected a good faith offer (“GFO”) to settle the matter that OPOG had submitted in February 2013. In October 2013, OPOG submitted a revised GFO that EPA currently is considering. Settlement negotiations between the parties are expected to continue through fiscal year 2015. It is anticipated that such negotiations will result in EPA and OPOG entering into a remediation consent decree with the Court regarding OU2. In December 2013, OPOG retained legal counsel to pursue legal claims against numerous other PRPs for OU2 contamination; the Company has elected to participate in the costs and recoveries resulting from such litigation. In November 2007, Angeles Chemical Company, located downstream from the Omega Site, filed a lawsuit (the “Angeles Litigation”) in the Court against OPOG and the PRPs for cost recovery and indemnification for future response costs allegedly resulting from OU2. In March 2008, the Court granted OPOG’s motion to stay the Angeles Litigation pending EPA’s determination of how to investigate and remediate OU2. In January 2012, as a result of challenges made by certain PRPs to the criteria previously used to allocate liability among OPOG members, and of the departure of certain PRPs from OPOG, OPOG approved changes to the cost allocation structure that resulted in an increase to the Company’s proportional allocation of liability. Subsequent thereto, certain other PRPs have withdrawn from OPOG; settlement discussions with these PRPs are ongoing. The subsequent departure of one or more other PRPs from OPOG could have the effect of increasing the proportional liability of the remaining PRPs, including the Company. Although the Company considers a loss relating to the Omega Site probable, its share of any financial obligations for the remediation of the Omega Site, including taking into account the allocation increases described above, is not currently believed to be material to the Company’s financial statements, based on the Company’s approximately 0.5% contribution to the total waste tonnage sent to the site and current estimates of the potential remediation costs. Based on currently available information, the Company has a loss accrual that is not material and believes that the actual amount of its costs will not be materially different from the amount accrued. However, proceedings are ongoing and the eventual outcome of the clean-up efforts and the pending litigation matters is uncertain at this time. Based on currently available information, the Company does not believe that any eventual outcome will have a material adverse effect on its operations.

12. Sale of TPack A/S

On April 22, 2013, the Company completed the sale of TPack and certain specified intellectual property assets owned by the Company related to TPack's business for an aggregate consideration of $33.5 million, payable in cash, which reflects the $34.0 million base purchase price as adjusted for the working capital adjustment mechanism set forth in the Purchase Agreement, and remains subject to a potential final, non-material post-closing adjustments. In connection with the closing, there was a working capital adjustment of $0.5 million and the Company received a cash payment of $30.2 million. The remaining cash payment of $3.4 million of the aggregate consideration was held back until March 31, 2014 to secure the Company's indemnification obligations subject to and in accordance with the terms of the Purchase Agreement. This amount was paid in full in April 2014.

TPack operated as part of the Company's Connectivity reporting unit. The sale of TPack does not represent an exit from the Connectivity business. The Company will continue to sell Connectivity technology products as an ongoing part of its business, and as such the sale of TPack is not a discontinuance of an operation.

F- 29

APPLIED MICRO CIRCUITS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In connection with the divestiture, the Company recorded a gain of $19.7 million. The following table summarizes the components of the gain (in thousands):

Total proceeds, net of working capital adjustment	$	30,175
Net assets and liabilities	(184		)
Goodwill write off	(1,758		)
Intangibles write off	(11,404		)
Holdback amount	3,353
Legal fees and other costs	(483		)
Gain on sale of TPack	$	19,699

The total assets of TPack included $0.7 million of cash, cash equivalents and short-term investments.

13. Quarterly Financial Information (unaudited)

The following table sets forth unaudited Consolidated Statements of Operations for the Company’s last eight quarters. This quarterly information is unaudited and has been prepared on the same basis as the annual Consolidated Financial Statements. In the Company’s opinion, this quarterly information reflects all adjustments necessary for a fair presentation of the periods presented. The operating results for any quarter are not necessarily indicative of results for any future period.

	Fiscal Year Ended March 31, 2014										Fiscal Year Ended March 31, 2013
	Q1 (1)		Q2 (2)			Q3 (3)			Q4		Q1			Q2			Q3(4)			Q4(5)(6)
	(In thousands, except per share data)
Net revenues	$	54,148	$	55,387		$	54,844		$	51,771	$	41,294		$	46,324		$	51,698		$	56,326
Cost of revenues	22,342		21,397			21,644			19,806		18,355			20,561			22,958			21,174
Gross profit	31,806		33,990			33,200			31,965		22,939			25,763			28,740			35,152
Total operating expenses	24,556		66,757			40,900			9,229		47,891			48,515			101,942			49,116
Operating loss	7,250		(32,767		)	(7,700		)	22,736		(24,952		)	(22,752		)	(73,202		)	(13,964		)
Interest and other income (expense)	3,795		576			617			418		1,762			835			2,258			(4,654		)
Loss before income taxes	11,045		(32,191		)	(7,083		)	23,154		(23,190		)	(21,917		)	(70,944		)	(18,618		)
Income tax expense (benefit)	188		192			201			38		200			(360		)	618			(1,012		)
Net loss	$	10,857	$	(32,383	)	$	(7,284	)	$	23,116	$	(23,390	)	$	(21,557	)	$	(71,562	)	$	(17,606	)
Basic net income (loss) per share	$	0.16	$	(0.45	)	$	(0.10	)	$	0.31	$	(0.37	)	$	(0.33	)	$	(1.08	)	$	(0.26	)
Shares used in calculating basic net income (loss) per share	69,360		72,610			73,989			75,629		62,409			64,947			66,113			67,566
Diluted net income (loss) per share	$	0.15	$	(0.45	)	$	(0.10	)	$	0.30	$	(0.37	)	$	(0.33	)	$	(1.08	)	$	(0.26	)
Shares used in calculating diluted income (loss) per share	70,234		72,610			73,989			77,193		62,409			64,947			66,113			67,566

(1) The consolidated operating results for the first quarter of fiscal 2014 included a charge of $9.3 million related to the Veloce consideration and a gain on sale of TPack of $19.7 million.

(2) The consolidated operating results for the second quarter of fiscal 2014 included a charge of $30.4 million related to the Veloce consideration.

(3) The consolidated operating results for the third quarter of fiscal 2014 included a charge of $2.9 million related to the Veloce consideration.

(4) The consolidated operating results for the third quarter of fiscal 2013 included a charge of $51.9 million related to the Veloce consideration and a charge of $6.2 million related to restructuring charges.

(5) The consolidated operating results for the fourth quarter of fiscal 2013 included a charge of $9.6 million related to the Veloce consideration.

(6) During fiscal 2012, one significant product development milestone relating to the Veloce project was considered probable of achievement and accordingly $60.4 million was recognized as research and development expense (see further discussion in Note 4, Veloce, to the Consolidated Financial Statements). However, approximately $8.0 million of the R&D expense was incorrectly recognized as this expense amount related to Unallocated Veloce Units that had not yet been distributed as of March 31, 2012. R&D expenses were also recognized during the first three quarters of fiscal 2013 in connection with further progress made in connection with the performance milestones relating to Veloce. However, the R&D expenses recognized during the first three quarters of fiscal 2013 also incorrectly included immaterial amounts related to the Unallocated Veloce Units. During the fourth quarter of fiscal 2013, the Company corrected the error impacting fiscal 2012 and the first three quarters of fiscal 2013. The correction of the errors resulted in a reduction of R&D expenses recognized by $10.4 million during the fourth quarter of fiscal 2013.

F- 30

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

Description	Balance at Beginning of Period		Charged (Credited) to Costs and Expenses			From Acquisition			Write-Offs			Balance at End of Period
	(In thousands)
Allowance for doubtful accounts
Year Ended March 31, 2014	$	703	$	(286	)	$	—		$	34		$	451
Year Ended March 31, 2013	$	1,099	$	1		$	—		$	(397	)	$	703
Year Ended March 31, 2012	$	1,324	$	(13	)	$	(28	)	$	(184	)	$	1,099

F- 31

Exhibit Index

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Date	Number	Filed Herewith
2.1+<	Agreement and Plan of Merger by and among the Company, Espresso Acquisition Corporation, Veloce Technologies, Inc. and the Stockholders' Representative named therein, dated May 17, 2009.	10-Q/A	9/4/2009	2.1
2.2	Letter Agreement dated December 20, 2012, relating to Agreement and Plan of Merger by and among the Company, Espresso Acquisition Corporation, Veloce Technologies, Inc. and the Stockholders' Representative named therein, dated May 17, 2009.	8-K	12/21/2012	2.1
2.3+<	Stock Purchase Agreement among the Company, TPack A/S, Slottsbacken Fund II KY, Slottsbacken Fund Two KB, Vaekstfonden and Novi A/S, and the Sellers' Representative named therein, dated as of August 17, 2010.	10-Q	11/3/2010	2.3
2.4+<	Amendment No. 1 to Stock Purchase Agreement by and among the Company and Vaekstfonden, as Sellers’ Representative, dated September 17, 2010.	10-Q	11/3/2010	2.4
2.5+<	Amendment No. 1 to Agreement and Plan of Merger by and among the Company, Espresso Acquisition Corporation, Veloce Technologies, Inc., and the Stockholders’ Representative named therein, dated November 8, 2010.	10-Q	1/31/2011	2.4
2.6+<	Amendment No. 2 to Agreement and Plan of Merger by and among the Company, Espresso Acquisition Corporation, Veloce Technologies, Inc., Veloce Technologies LLC and the Stockholders’ Representative named therein, dated April 5, 2012.	10-K	5/17/2012	2.5
2.7+<	Asset Purchase Agreement dated April 11, 2013 by and between the Company, Altera European Trading Company Limited, a private limited company organized under the laws of Ireland and a wholly-owned subsidiary of Altera Corporation, and AppliedMicro TPack A/S, a limited liability company (Aktieselskab) organized under the laws of Denmark and a wholly-owned subsidiary of the Company.	8-K	4/15/2013	2.1
3.1	Amended and Restated Certificate of Incorporation of the Company.	S-1	10/10/1997	3.2
3.2	Certificate of Amendment of Certificate of Incorporation of the Company.	S-4	9/12/2000	3.3
3.3	Certificate of Amendment of Certificate of Incorporation of the Company.	8-K	12/11/2007	3.1
3.4	Amended and Restated Bylaws of the Company.	10-Q	11/3/2010	3.2
4.1	Specimen Stock Certificate.	S-1/A	11/12/1997	4.1
10.1*	Form of Indemnification Agreement between the Company and each of its officers and directors.	8-K	10/2/2013	10.2
10.2*	Form of Restricted Stock Unit Agreement under the 1992 Equity Incentive Plan.	10-K	5/30/2007	10.2
10.3*	2011 Equity Incentive Plan	8-K	8/10/2011	10.66
10.4*	2011 Equity Incentive Plan, as amended and restated on October 23, 2013.	8-K	10/29/2013	10.76
10.5*	Form of Restricted Stock Unit Award Grant Notice and Agreement under the 2011 Equity Incentive Plan	8-K	11/21/2013	10.1
10.6*	Form of Option Agreement under the 1992 Equity Incentive Plan.	10-K	5/30/2007	10.3
10.7*	1992 Equity Incentive Plan.	10-K	5/30/2007	10.4
10.8(1)*	1997 Directors’ Stock Option Plan, as amended, and form of Option Agreement.
10.9*	401(k) Plan effective April 1, 1985 and form of Enrollment Agreement.	S-1/A	11/12/1997	10.6
10.10	1998 Employee Stock Purchase Plan and form of Subscription Agreement.	10-K	5/23/2001	10.24
10.11*	2000 Equity Incentive Plan, as amended, and form of Option Agreement.	10-Q	8/13/2002	10.33

F- 32

10.12*	Form of Restricted Stock Unit Agreement under the 2000 Equity Incentive Plan.	10-K	5/30/2007	10.34
10.13*	AMCC Deferred Compensation Plan.	10-Q	8/13/2002	10.38
10.14+	Patent License Agreement between the Company and IBM dated September 28, 2003.	10-Q	11/14/2003	10.42
10.15+	Intellectual Property Agreement between the Company and IBM dated September 28, 2003.	10-Q	11/14/2003	10.43
10.16*	Offer of Employment dated September 14, 2005 by and between the Company and Robert Gargus.	10-Q	2/2/2010	10.2
10.17*	Executive Severance Benefit Plan, as amended and restated on September 19, 2013.	8-K	9/25/2013	10.67
10.18+	Qualcomm Patent Purchase Agreement dated July 11, 2008.	10-Q	10/31/2008	10.60
10.19+	Qualcomm Patent Purchase Amendment dated July 11, 2008.	10-Q	10/31/2008	10.61
10.20	LSI Asset Purchase Agreement dated April 5, 2009 and Amendment No. 1 dated April 20, 2009.	10-K	5/12/2009	10.62
10.21*	Employment agreement dated December 29, 2009 by and between the Company and William Caraccio.	10-Q	8/9/2010	10.65
10.22+	Development Agreement dated May 17, 2009, by and between the Company and Veloce Technologies, Inc.	10-K/A	11/5/2012	10.66
10.23+	First Amendment to Development Agreement dated as of November 8, 2010, by and between the Company and Veloce Technologies, Inc.	10-K	5/17/2012	10.67
10.24+	Second Amendment to Development Agreement dated as of July 18, 2011, by and between the Company and Veloce Technologies, Inc.	10-K	5/17/2012	10.68
10.25+	Technology License Agreement, dated as of March 31, 2009 between ARM Limited and the Company, including without limitation Annex 1 thereto (“TLA Annex 1”).	10-K/A	11/5/2012	10.69
10.26+	Amendment One to Technology License Agreement, dated March 31, 2010 between ARM Limited and the Company.	10-K/A	11/5/2012	10.70
10.27+	Amendment Two to Technology License Agreement, dated July 14, 2010 between ARM Limited and the Company.	10-K	5/17/2012	10.71
10.28+	Amendment One to TLA Annex 1, dated August 17, 2010, between ARM Limited and the Company.	10-K	5/17/2012	10.72
10.29+	Amendment Two to TLA Annex 1, dated October 5, 2010, between ARM Limited and the Company.	10-K	5/17/2012	10.73
10.30+	Amendment Three to TLA Annex 1, dated December 1, 2011, between ARM Limited and the Company.	10-K	5/17/2012	10.74
10.31*	Applied Micro Circuits Corporation 2012 Employee Stock Purchase Plan	8-K	8/20/2012	10.67
10.32*	Shiva Natarajan Interim Chief Financial Officer Agreement	10-Q	8/8/2013	10.76
10.33*	Robert Gargus Separation Agreement	10-Q	8/8/2013	10.77
10.34*	Robert Gargus Advisory Services Agreement	10-Q	8/8/2013	10.78
10.35*	Offer Letter Agreement with Douglas T. Ahrens.	8-K	10/2/2013	10.1
10.36	Agreement of Purchase and Sale, dated January 22, 2014, between the Company and RW9REIT Acquisition, LLC. relating to the Company's headquarters building in Sunnyvale, California	8-K	1/22/2014	10.1
10.37	Form of Lease between the Company and Moffett Park Drive Owner, LLC.	8-K	1/22/2014	10.1
21.1	Subsidiaries of the Registrant.				x
23.1	Consent of Independent Registered Public Accounting Firm – KPMG LLP.				x

F- 33

24.1	Power of Attorney. Reference is made to the signature page of this Annual Report.	x
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.	x
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.	x
32.1#	Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	x
32.2#	Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	x
101.INS	XBRL Instance Document	x
101.SCH	XBRL Taxonomy Extension Schema Document	x
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	x
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	x
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	x
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	x

* Management contract or compensatory plan.

+ The Company has been granted confidential treatment for certain portions of these agreements and certain terms and conditions have been redacted from the exhibits. Omitted portions have been filed separately with the SEC.    

< Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K.

# In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Form 10-K and will not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. Such exhibits will not be deemed to be incorporated by reference into any filing under the Securities Act or Exchange Act.

(1) Effective March 31, 2005, our Board of Directors terminated our 1997 Directors’ Stock Option Plan (the “Directors Plan”). The Directors Plan provided for the automatic grant of stock options to our non-employee directors upon initial election to the Board of Directors and annually thereafter. The termination of the Directors Plan will not affect any stock options previously granted pursuant to the Directors Plan.

F- 34

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF THE REGISTRANT

Subsidiary name	Jurisdiction of Incorporation or Organization
AMCC (UK) Limited	United Kingdom
AMCC Deutschland GmbH	Germany
AMCC Japan Co., Ltd.	Japan
Applied Micro Circuits Corporation Canada	Canada
AMCC Sales Corporation	Delaware
AMCC China, Inc.	Delaware
AMCC Enterprise Corporation	Delaware
3Ware, Inc.	California
Applied Micro Circuits Corporation (AMCC) Vietnam	Vietnam
Applied Micro Circuits India Private Limited	India
Veloce Technologies LLC	Delaware

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors
Applied Micro Circuits Corporation:

We consent to the incorporation by reference in the registration statements (Nos. 333‑35408, 333-40905, 333-41572, 333‑46584, 333‑47185, 333-48912, 333-48914, 333-53282, 333-57202, 333-71878, 333-74787, 333‑76767, 333-92507, 333‑99623, 333‑110075, 333-114327, 333-130589, 333-140052, 333-147297, 333‑171960, 333‑177773, and 333-183603) on Form S‑8 of Applied Micro Circuits Corporation of our report dated May 30, 2014, with respect to the consolidated balance sheets of Applied Micro Circuits Corporation and its subsidiaries as of March 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the years in the three-year period ended March 31, 2014, the related consolidated financial statement schedule, and the effectiveness of internal control over financial reporting as of March 31, 2014, which report appears in the March 31, 2014 annual report on Form 10‑K of Applied Micro Circuits Corporation.

/s/ KPMG LLP

Santa Clara, CaliforniaMay 30, 2014

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Dr. Paramesh Gopi, certify that:

1. I have reviewed this Annual Report on Form 10-K of Applied Micro Circuits Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/S/ DR. PARAMESH GOPI

Dr. Paramesh Gopi

President and Chief Executive Officer

Date: May 30, 2014

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Douglas T. Ahrens, certify that:

1. I have reviewed this Annual Report on Form 10-K of Applied Micro Circuits Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Douglas T. Ahrens

Douglas T. Ahrens

Vice President and Chief Financial and Accounting Officer

Date: May 30, 2014

EX-32.1

Exhibit 32.1

CERTIFICATION

I, Dr. Paramesh Gopi, Chief Executive Officer of Applied Micro Circuits Corporation (the “Company”), hereby certify for the purposes of Section 1350 of chapter 63 of title 18 of the United States Code that, to the best of my knowledge:

1. This Annual Report on Form 10-K for the fiscal year ended March 31, 2014 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ DR. PARAMESH GOPI

Dr. Paramesh Gopi

President and Chief Executive Officer

Date: May 30, 2014

EX-32.2

Exhibit 32.2

CERTIFICATION

I, Douglas T. Ahrens, Chief Financial Officer of Applied Micro Circuits Corporation (the “Company”), hereby certify for the purposes of Section 1350 of chapter 63 of title 18 of the United States Code that, to the best of my knowledge:

1. This Annual Report on Form 10-K for the fiscal year ended March 31, 2014 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Douglas T. Ahrens

Douglas T. Ahrens

Vice President and Chief Financial and Accounting Officer

Date: May 30, 2014

XML

Summary of Significant Accounting Policies - Segments of a Business Enterprise (Details)	12 Months Ended
	Mar. 31, 2014 segment
Accounting Policies [Abstract]
Number of operating segments	2
Number of reportable segments	1

XML

Certain Financial Statement Information - Schedule of Interest income (expense), net and other-than-temporary impairment (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended													12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013		Sep. 30, 2013		Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2012		Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012
Schedule of Interest Income, Net
Interest income														$ 1,692	$ 2,347	$ 3,601
Net realized gain on short-term investments														3,360	1,391	646
Impairments of short-term investments and marketable securities														0	(1,143)	0
Interest income, net	$ 418	$ 617	[1]	$ 576	[2]	$ 3,795	[3]	$ (4,654)	[4],[5]	$ 2,258	[6]	$ 835	$ 1,762	$ 5,052	$ 2,595	$ 4,247

[1] The consolidated operating results for the third quarter of fiscal 2014 included a charge of $2.9 million related to the Veloce consideration.

[2] The consolidated operating results for the second quarter of fiscal 2014 included a charge of $30.4 million related to the Veloce consideration.

[3] The consolidated operating results for the first quarter of fiscal 2014 included a charge of $9.3 million related to the Veloce consideration and a gain on sale of TPack of $19.7 million.

[4] The consolidated operating results for the fourth quarter of fiscal 2013 included a charge of $9.6 million related to the Veloce consideration.

[5] During fiscal 2012, one significant product development milestone relating to the Veloce project was considered probable of achievement and accordingly $60.4 million was recognized as research and development expense (see further discussion in Note 4, Veloce, to the Consolidated Financial Statements). However, approximately $8.0 million of the R&D expense was incorrectly recognized as this expense amount related to Unallocated Veloce Units that had not yet been distributed as of March 31, 2012. R&D expenses were also recognized during the first three quarters of fiscal 2013 in connection with further progress made in connection with the performance milestones relating to Veloce. However, the R&D expenses recognized during the first three quarters of fiscal 2013 also incorrectly included immaterial amounts related to the Unallocated Veloce Units. During the fourth quarter of fiscal 2013, the Company corrected the error impacting fiscal 2012 and the first three quarters of fiscal 2013. The correction of the errors resulted in a reduction of R&D expenses recognized by $10.4 million during the fourth quarter of fiscal 2013.

[6] During the fiscal years ended March 31, 2014, 2013 and 2012, the Company recognized an impairment charge of its non-marketable strategic investment of $0.0 million, $2.3 million and $1.0 million, respectively. Refer to Note 1, Summary of Significant Accounting Policies, to the Consolidated Financial Statements for details.

XML

Certain Financial Statement Information - Schedule of Property and equipment (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended			3 Months Ended						12 Months Ended						12 Months Ended	1 Months Ended	12 Months Ended	1 Months Ended			12 Months Ended						1 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012	Jun. 30, 2013 Minimum	Jun. 30, 2013 Maximum	Mar. 31, 2014 Machinery and Equipment		Mar. 31, 2013 Machinery and Equipment		Mar. 31, 2014 Machinery and Equipment Minimum		Mar. 31, 2014 Machinery and Equipment Maximum		Mar. 31, 2014 Leasehold Improvements	Mar. 31, 2013 Leasehold Improvements	Mar. 31, 2014 Leasehold Improvements Minimum	Mar. 31, 2014 Leasehold Improvements Minimum California	Mar. 31, 2014 Leasehold Improvements Maximum	Mar. 31, 2014 Leasehold Improvements Maximum California	Mar. 31, 2014 Computers, Office Furniture and Equipment	Mar. 31, 2013 Computers, Office Furniture and Equipment	Mar. 31, 2014 Computers, Office Furniture and Equipment Minimum	Mar. 31, 2014 Computers, Office Furniture and Equipment Maximum	Mar. 31, 2014 Buildings		Mar. 31, 2013 Buildings		Mar. 31, 2014 Buildings California	Mar. 31, 2014 Land		Mar. 31, 2013 Land
Property, Plant and Equipment [Line Items]
Useful life				1 year	7 years					5 years	[1]	7 years	[1]			1 year	5 years	5 years	15 years			3 years	7 years	0 years				31 years 6 months
Schedule of Property and equipment
Property and equipment, gross	$ 99,442	$ 110,306				$ 44,503	[1]	$ 40,063	[1]					$ 11,574	$ 14,202					$ 43,365	$ 43,485			$ 0	[2]	$ 2,756	[2]		$ 0	[2]	$ 9,800	[2]
Less: accumulated depreciation and amortization	(78,696)	(75,915)
Property and equipment, net	20,746	34,391																										14,300
Proceeds from sale of buildings	40,176	0	0																									40,800
NBV of building sold	20,746	34,391																										14,300
Gain on sale of building	$ (25,815)	$ 0	$ 0																									$ (25,800)

[1] Includes capitalized mask costs

[2] In March, 2014, The Company sold its headquarters building and related parcel of land in Sunnyvale, California for a purchase price of $40.8 million in cash. The building was being depreciated over the useful life of 31.5 years and the leasehold improvements associated with the building were being depreciated over the useful life of 5 to 15 years. The net book value of the properties sold was approximately $14.3 million on the closing date and the Company recorded a gain of $25.8 million in the fiscal year ended March 31, 2014. The Company leases a portion of the space on a lease which expires in August, 2015.

XML

Income Taxes - Income Tax Rate Reconciliation (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended													12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013		Sep. 30, 2013		Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2012		Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012
Effective Income Tax Rate Reconciliation, Amount [Abstract]
Tax at federal statutory rate														$ (1,776)	$ (47,134)	$ (28,613)
Tax benefit from loss from continuing operations														0	(925)	(123)
Other permanent differences														(6,561)	1,195	2,295
State taxes, net of federal benefit														(214)	(7,263)	(3,937)
Federal tax credits														(1,778)	(1,909)	(4,131)
State tax credits														(444)	(537)	(622)
Veloce accrued liability														16,740	26,749	24,046
Sale of TPack														2,688	0	0
Valuation allowance														(7,809)	28,715	11,600
Change in contingency reserve														(64)	74	52
Other														(163)	481	361
Total current and deferred	$ 38	$ 201	[1]	$ 192	[2]	$ 188	[3]	$ (1,012)	[4],[5]	$ 618	[6]	$ (360)	$ 200	$ 619	$ (554)	$ 928
Effective Income Tax Rate Reconciliation, Percent [Abstract]
Tax at federal statutory rate														35.00%	35.00%	35.00%
Tax benefit from loss from continuing operations														0.00%	1.00%	0.00%
Other permanent differences														129.00%	(1.00%)	(3.00%)
State taxes, net of federal benefit														4.00%	5.00%	5.00%
Federal tax credits														35.00%	1.00%	5.00%
State tax credits														9.00%	0.00%	1.00%
Veloce accrued liability														(330.00%)	(20.00%)	(29.00%)
Sale of TPack														(53.00%)	0.00%	0.00%
Valuation allowance														154.00%	(21.00%)	(14.00%)
Change in contingency reserve														1.00%	0.00%	0.00%
Effective income tax rate														(12.00%)	0.00%	(1.00%)
Other														4.00%	0.00%	(1.00%)

[1] The consolidated operating results for the third quarter of fiscal 2014 included a charge of $2.9 million related to the Veloce consideration.

[2] The consolidated operating results for the second quarter of fiscal 2014 included a charge of $30.4 million related to the Veloce consideration.

[3] The consolidated operating results for the first quarter of fiscal 2014 included a charge of $9.3 million related to the Veloce consideration and a gain on sale of TPack of $19.7 million.

[4] The consolidated operating results for the fourth quarter of fiscal 2013 included a charge of $9.6 million related to the Veloce consideration.

[5] During fiscal 2012, one significant product development milestone relating to the Veloce project was considered probable of achievement and accordingly $60.4 million was recognized as research and development expense (see further discussion in Note 4, Veloce, to the Consolidated Financial Statements). However, approximately $8.0 million of the R&D expense was incorrectly recognized as this expense amount related to Unallocated Veloce Units that had not yet been distributed as of March 31, 2012. R&D expenses were also recognized during the first three quarters of fiscal 2013 in connection with further progress made in connection with the performance milestones relating to Veloce. However, the R&D expenses recognized during the first three quarters of fiscal 2013 also incorrectly included immaterial amounts related to the Unallocated Veloce Units. During the fourth quarter of fiscal 2013, the Company corrected the error impacting fiscal 2012 and the first three quarters of fiscal 2013. The correction of the errors resulted in a reduction of R&D expenses recognized by $10.4 million during the fourth quarter of fiscal 2013.

[6] During the fiscal years ended March 31, 2014, 2013 and 2012, the Company recognized an impairment charge of its non-marketable strategic investment of $0.0 million, $2.3 million and $1.0 million, respectively. Refer to Note 1, Summary of Significant Accounting Policies, to the Consolidated Financial Statements for details.

XML

Certain Financial Statement Information - Schedule of Other income, net (Details) (USD $)	12 Months Ended
	Mar. 31, 2014		Mar. 31, 2013		Mar. 31, 2012
Schedule of Other Income, Net
Impariment charge on non-marketable strategic investments	$ 0	[1]	$ 2,250,000	[1]	$ (7,147,000)	[1]
Impairment of notes receivable and other assets	0	[2]	(1,800,000)	[2]	0	[2]
Net gain (loss) on disposals of property	67,000		(21,000)		(10,000)
Other, net	287,000		1,677,000		300,000
Other income (expense), net	354,000		(2,394,000)		7,437,000
Notes receivable write-off			1,500,000
Asset impairment			$ 300,000

[1] During the fiscal years ended March 31, 2014, 2013 and 2012, the Company recognized an impairment charge of its non-marketable strategic investment of $0.0 million, $2.3 million and $1.0 million, respectively. Refer to Note 1, Summary of Significant Accounting Policies, to the Consolidated Financial Statements for details.

[2] During the fiscal year ended March 31, 2013, the Company wrote-off $1.5 million of notes receivable due from an investee and $0.3 million related to a prepaid intellectual property license from this investee. The Company also impaired the related equity investment of $2.3 million in this investee - see * above.

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Employee Retirement Plan - Additional Information (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012
Defined Benefit Plan Disclosure [Line Items]
Vesting period, in years	3 years
Discretionary plan contribution	$ 0	$ 0.2	$ 0.3
Years One Through Three
Defined Benefit Plan Disclosure [Line Items]
Annual vesting percentage	33.00%
Years Four and Thereafter
Defined Benefit Plan Disclosure [Line Items]
Annual vesting percentage	100.00%
Minimum
Defined Benefit Plan Disclosure [Line Items]
Maximum annual contribution per employee	1.00%
Maximum
Defined Benefit Plan Disclosure [Line Items]
Maximum annual contribution per employee	50.00%

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Certain Financial Statement Information - Schedule of Inventories (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Schedule of Inventories
Finished goods	$ 9,375	$ 7,247
Work in process	6,510	4,098
Raw materials	3,061	1,555
Inventories, total	$ 18,946	$ 12,900

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Summary of Significant Accounting Policies - Veloce Consideration (Details) (Veloce Technologies Inc., USD $) In Millions, unless otherwise specified	3 Months Ended					9 Months Ended		12 Months Ended		21 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Jun. 20, 2012
Veloce Technologies Inc.
Variable Interest Entity [Line Items]
Total consideration to be transferred				$ 178.5		$ 178.5			$ 178.5		$ 135.0
Research and development expenses incurred	$ 2.9	$ 30.4	$ 9.3	$ 9.6	$ 60.4	$ 126.6	$ 51.9	$ 42.7	$ 66.2	$ 169.3

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Significant Customer and Geographic Information - Concentration Risk (Details) (Customer concentration risk, Sales revenue)	12 Months Ended
	Mar. 31, 2014		Mar. 31, 2013		Mar. 31, 2012
Wintec (global logistics provider)
Concentration Risk [Line Items]
Concentration risk	22.00%	[1]	19.00%	[1]	20.00%	[1]
Avnet (distributor)
Concentration Risk [Line Items]
Concentration risk	27.00%		27.00%		20.00%
Flextronics (sub-contract manufacturer)
Concentration Risk [Line Items]
Concentration risk					11.00%

[1] Wintec provides vendor managed inventory support primarily for Cisco Systems, Inc.

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Income Taxes - Additional Information (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012
Income Tax Contingency [Line Items]
Tax at federal statutory rate	35.00%	35.00%	35.00%
Accrued interest and penalties recognized	$ 0.1
2018 | Federal
Income Tax Contingency [Line Items]
Net operating loss carryforwards	1,137.3
2013 | State
Income Tax Contingency [Line Items]
Net operating loss carryforwards	522.5
Research Tax Credit Carryforward | Federal
Income Tax Contingency [Line Items]
Tax credit carryforwards	60.7
Research Tax Credit Carryforward | State
Income Tax Contingency [Line Items]
Tax credit carryforwards	$ 29.4

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Certain Financial Statement Information - Additional Information (Details) In Millions, unless otherwise specified	12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012
Certain Financial Statement Information (Textual) [Abstract]
Anti-dilutive securities that have been excluded from the net (loss) income, per share computation	6.0	8.0	9.5
Options and Restricted Stock Units
Certain Financial Statement Information (Textual) [Abstract]
Anti-dilutive securities that have been excluded from the net (loss) income, per share computation	4.5	7.2	9.0
Effect of dilutive securities that have been excluded from the net loss per share computation	1.5	0.8	0.5

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Commitments - Schedule of Contractual Operating Leases (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014
Commitments and Contingencies Disclosure [Abstract]
2015	$ 1,901
2016	930
2017	504
2018	369
Total minimum payments	$ 3,704

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Contingencies (Details)	1 Months Ended		12 Months Ended
	Jan. 31, 2012	Jan. 31, 2009 Amendments	Dec. 31, 1993 Company
Contingencies (Textual) [Abstract]
Companies named as Potentially Responsible Parties			100
Amendments approved to consent decree		2
Percent of contribution to the total waste	0.50%

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Commitments - Additional Information (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012
Commitments and Contingencies Disclosure [Abstract]
Rent expense	$ 1.8	$ 2.6	$ 2.9

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Income Taxes - Deferred Tax Assets and Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Deferred tax assets:
Net operating loss carryforwards	$ 294,910	$ 310,276
Research and development credit carryforwards	79,839	78,696
Inventory write-downs and other reserves	8,068	9,046
Capitalization of research and development costs	5,915	8,038
Goodwill	4,007	7,431
Intangible assets	32,290	40,201
Investment impairment	3,494	4,958
Stock-based compensation	26,664	31,177
Depreciation and amortization	3,253	165
Other	1,182	1,056
Total deferred tax assets	459,622	491,044
Valuation allowance	(459,081)	(490,629)
Total deferred tax benefit	$ 541	$ 415

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Certain Financial Statement Information (Tables)

12 Months Ended

Mar. 31, 2014

Certain Financial Statement Information [Abstract]

Schedule of Accounts receivable

Accounts receivable:

	March 31,
	2014			2013
	(In thousands)
Accounts receivable	$	25,629		$	25,278
Less: allowance for bad debts	(451		)	(703		)
	$	25,178		$	24,575

Schedule of Inventories

Inventories:

	March 31,
	2014		2013
	(In thousands)
Finished goods	$	9,375	$	7,247
Work in process	6,510		4,098
Raw materials	3,061		1,555
	$	18,946	$	12,900

Schedule of Other current assets

Other current assets:

	March 31,
	2014		2013
	(In thousands)
Prepaid expenses	$	10,978	$	13,762
Executive deferred compensation assets	1,035		693
Deposits	585		828
Proceeds receivable from sale of strategic investment	3,353		1,331
Other	848		1,384
	$	16,799	$	17,998

Schedule of Property and equipment

Property and equipment:

	Useful Life	March 31,
		2014			2013
	(In years)	(In thousands)
Machinery and equipment*	5-7	$	44,503		$	40,063
Leasehold improvements**	1-5	11,574			14,202
Computers, office furniture and equipment	3-7	43,365			43,485
Buildings**	—	—			2,756
Land**	—	—			9,800
		99,442			110,306
Less: accumulated depreciation and amortization		(78,696		)	(75,915		)
		$	20,746		$	34,391

* Includes capitalized mask costs

Schedule of Goodwill

Goodwill is as follows:

	March 31,
	2014		2013
	(In thousands)
Goodwill	$	11,425	$	13,183

Schedule of Purchased intangible assets

Purchase-related intangibles are as follows:

	March 31, 2014								March 31, 2013
	Gross		Accumulated Amortization and Impairments			Net		Weighted average remaining useful life	Gross		Accumulated Amortization and Impairments			Net		Weighted average remaining useful life
	(In thousands)							(In years)	(In thousands)							(In years)
Developed technology/in-process research and development	$	425,000	$	(425,000	)	$	—	0	$	441,300	$	(431,771	)	$	9,529	3.5
Customer relationships	6,330		(6,225		)	105		0.4	12,830		(10,507		)	2,323		2.1
Patents/core technology rights/trade name	62,306		(62,306		)	—		0	63,206		(63,067		)	139		0.3
	$	493,636	$	(493,531	)	$	105		$	517,336	$	(505,345	)	$	11,991

Schedule of Estimated future amortization expense of purchased intangible assets

The estimated future amortization expense of purchased intangible assets to be charged to operating expenses as of March 31, 2014, was as follows (in thousands):

	Operating Expenses
Fiscal Years Ending March 31, 2015	$	105

Schedule of Other assets

Other Assets:

	March 31,
	2014		2013
	(In thousands)
Non-current portion of prepaid expenses	$	4,235	$	7,866
Strategic investments*	3,000		3,000
Other	$	519	$	—
	$	7,754	$	10,866

Schedule of Other accrued liabilities

Other accrued liabilities:

	March 31,
	2014		2013
	(In thousands)
Employee related liabilities	$	1,733	$	2,236
Executive deferred compensation	1,314		1,284
Income taxes	962		903
Professional fees	1,259		3,840
Other	5,609		2,467
	$	10,877	$	10,730

Schedule of Warranty reserve activity

The following table summarizes warranty reserve activity:

	March 31,
	2014			2013
	(In thousands)
Beginning balance	$	220		$	454
Charged (capitalized) to costs of revenues	58			(94		)
Costs incurred	(79		)	(140		)
Ending balance	$	199		$	220

Schedule of Interest income, net and other-than-temporary impairment

Interest income (expense), net and other-than-temporary impairments:

	Fiscal Years Ended March 31,
	2014		2013			2012
	(In thousands)
Interest income	$	1,692	$	2,347		$	3,601
Net realized gain on short-term investments	3,360		1,391			646
Impairments of short-term investments and marketable securities	—		(1,143		)	—
	$	5,052	$	2,595		$	4,247

Schedule of Other income (expense), net

Other income (expense), net:

	Fiscal Years Ended March 31,
	2014		2013			2012
	(In thousands)
Net (impairment) gain on strategic investments*	$	—	$	(2,250	)	$	7,147
Impairment of notes receivable and other assets**	—		(1,800		)	—
Net (loss) gain on disposals of property	67		(21		)	(10		)
Other, net	287		1,677			300
	$	354	$	(2,394	)	$	7,437

Schedule of Reconciliation of shares used to calculate basic and diluted net loss per share

The reconciliation of shares used to calculate basic and diluted net loss per share consists of the following (in thousands, except per share data):

	Fiscal Years Ended March 31,
	2014			2013			2012
Net loss	$	(5,694	)	$	(134,115	)	$	(82,688	)
Shares used in net loss per share computation:
Weighted average common shares outstanding, basic	72,897			65,258			62,245
Net effect of dilutive common share equivalents	—			—			—
Weighted average common shares outstanding, diluted	72,897			65,258			62,245
Basic and diluted net loss per share	$	(0.08	)	$	(2.06	)	$	(1.33	)

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Certain Financial Statement Information - Schedule of Purchased Inatngible Assets (Details) (USD $)			3 Months Ended		12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Jun. 30, 2013 TPack	Mar. 31, 2014 Operating Expense	Mar. 31, 2014 Developed Technology In Process Research And Development	Mar. 31, 2013 Developed Technology In Process Research And Development	Mar. 31, 2014 Customer Relationships	Mar. 31, 2013 Customer Relationships	Mar. 31, 2014 Patents Core Technology Rights Tradename	Mar. 31, 2013 Patents Core Technology Rights Tradename
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Gross	$ 493,636,000	$ 517,336,000			$ 425,000,000	$ 441,300,000	$ 6,330,000	$ 12,830,000	$ 62,306,000	$ 63,206,000
Intangible assets, Accumulated Amortization and Impairments	493,531,000	505,345,000			425,000,000	431,771,000	6,225,000	10,507,000	62,306,000	63,067,000
Intangible assets, Net	105,000	11,991,000			0	9,529,000	105,000	2,323,000	0	139,000
Intangible assets, Weighted average useful remaining life					0 years	3 years 6 months	5 months 12 days	2 years 1 month 6 days	0 years	3 months 18 days
Intangible Assets written off due to sale of business unit			11,400,000
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
Fiscal Years Ending March 31, 2015				$ 105,000

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Investments - Summary by Type of Instruments Measured at Fair Value (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014		Mar. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Cash, cash equivalents and available-for-sale investments measured at fair value on recurring basis	$ 106,583		$ 85,476
Level 1
Schedule of Available-for-sale Securities [Line Items]
Cash, cash equivalents and available-for-sale investments measured at fair value on recurring basis	90,740		57,625
Level 2
Schedule of Available-for-sale Securities [Line Items]
Cash, cash equivalents and available-for-sale investments measured at fair value on recurring basis	15,843		27,851
Level 3
Schedule of Available-for-sale Securities [Line Items]
Cash, cash equivalents and available-for-sale investments measured at fair value on recurring basis	0		0
Cash
Schedule of Available-for-sale Securities [Line Items]
Cash and cash equivalents measured at fair value on a recurring basis	65,867		8,529
Cash | Level 1
Schedule of Available-for-sale Securities [Line Items]
Cash and cash equivalents measured at fair value on a recurring basis	65,867		8,529
Cash | Level 2
Schedule of Available-for-sale Securities [Line Items]
Cash and cash equivalents measured at fair value on a recurring basis	0		0
Cash | Level 3
Schedule of Available-for-sale Securities [Line Items]
Cash and cash equivalents measured at fair value on a recurring basis	0		0
Cash Equivalents
Schedule of Available-for-sale Securities [Line Items]
Cash and cash equivalents measured at fair value on a recurring basis	5,672		10,536
Cash Equivalents | Level 1
Schedule of Available-for-sale Securities [Line Items]
Cash and cash equivalents measured at fair value on a recurring basis	5,672		9,508
Cash Equivalents | Level 2
Schedule of Available-for-sale Securities [Line Items]
Cash and cash equivalents measured at fair value on a recurring basis	0		1,028
Cash Equivalents | Level 3
Schedule of Available-for-sale Securities [Line Items]
Cash and cash equivalents measured at fair value on a recurring basis	0		0
U.S Treasury Securities and Agency Bonds
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities	2,838		12,373
U.S Treasury Securities and Agency Bonds | Level 1
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities	2,838		12,373
U.S Treasury Securities and Agency Bonds | Level 2
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities	0		0
U.S Treasury Securities and Agency Bonds | Level 3
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities	0		0
Corporate bonds
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities	10,627		15,628
Corporate bonds | Level 1
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities	0		0
Corporate bonds | Level 2
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities	10,627		15,628
Corporate bonds | Level 3
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities	0		0
Mortgage Backed and Asset Backed Securities
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities	2,074	[1]	4,003	[1]
Mortgage Backed and Asset Backed Securities | Level 1
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities	0		0
Mortgage Backed and Asset Backed Securities | Level 2
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities	2,074		4,003
Mortgage Backed and Asset Backed Securities | Level 3
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities	0		0
Closed-end bond funds
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities	16,363		27,215
Closed-end bond funds | Level 1
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities	16,363		27,215
Closed-end bond funds | Level 2
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities	0		0
Closed-end bond funds | Level 3
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities	0		0
Preferred Stock
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities	3,142		7,192
Preferred Stock | Level 1
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities	0		0
Preferred Stock | Level 2
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities	3,142		7,192
Preferred Stock | Level 3
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities	$ 0		$ 0

[1] At March 31, 2014 and 2013, approximately $1.1 million and $1.4 million of the estimated fair value presented were mortgage-backed securities, respectively.

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Restructuring Charges - Schedule of Restructuring Activities (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Dec. 31, 2012	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012
Restructuring Reserve [Roll Forward]
Liability, Beginning of Period	$ 0	$ 548	$ 0
Restructuring charges	6,200	1,134	6,435	875
Cash payments		1,410	1,168
Non-cash items		(272)	(4,719)
Liability, End of Period		0	548	0
Workforce Reduction
Restructuring Reserve [Roll Forward]
Liability, Beginning of Period	0	548	0
Restructuring charges		862	1,716
Cash payments		1,410	1,168
Non-cash items		0	0
Liability, End of Period		0	548
Asset Impairment
Restructuring Reserve [Roll Forward]
Liability, Beginning of Period	0	0	0
Restructuring charges		272	4,719
Cash payments		0	0
Non-cash items		(272)	(4,719)
Liability, End of Period		$ 0	$ 0

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Summary of Significant Accounting Policies - Mask Costs (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Accounting Policies [Abstract]
Capitalized mask costs	$ 6.4	$ 3.1

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Certain Financial Statement Information - Schedule of Other accrued liabilities (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Schedule of other accrued liabilities
Employee related liabilities	$ 1,733	$ 2,236
Executive deferred compensation	1,314	1,284
Income taxes	962	903
Professional fees	1,259	3,840
Other	5,609	2,467
Total other accrued liabilities	$ 10,877	$ 10,730

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Stockholders' Equity - Common Shares Reserved for Issuance (Details)	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2011
Class of Stock [Line Items]
Options granted and outstanding	2,409,000	3,492,000	4,164,000	5,390,000
Employee Stock Purchase Plan	2,409,000	3,492,000	4,164,000	5,390,000
Common stock reserved for issuance	9,367,000
Stock Options
Class of Stock [Line Items]
Options granted and outstanding	2,409,000
Employee Stock Purchase Plan	2,409,000
Restricted Stock Units (RSUs)
Class of Stock [Line Items]
Restricted Stock Units granted and outstanding	6,105,000
Options and Restricted Stock Units
Class of Stock [Line Items]
Options and RSUs authorized for future grants	355,000
Employee Stock Purchase Plan
Class of Stock [Line Items]
Options granted and outstanding	498,000
Employee Stock Purchase Plan	498,000

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Stockholders' Equity - Stock Repurchase Program (Details) (August 2004, USD $) In Millions, except Share data in Thousands, unless otherwise specified	1 Months Ended		12 Months Ended		116 Months Ended
	Oct. 31, 2008	Aug. 31, 2004	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014
August 2004
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Authorized amount		$ 200.0
Increase in the amount authorized	100.0
Shares repurchased			0	100	17,300
Weighted average price per share				$ 5.18	$ 10.04
Remaining authorized repurchase amount			$ 15.9

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Certain Financial Statement Information - Schedule of Other current assets (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Schedule of Other current assets
Prepaid expenses	$ 10,978	$ 13,762
Executive deferred compensation assets	1,035	693
Deposits	585	828
Proceeds receivable from sale of strategic investment	3,353	1,331
Other	848	1,384
Other current assets, total	$ 16,799	$ 17,998

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Investments

12 Months Ended

Mar. 31, 2014

Investments, Debt and Equity Securities [Abstract]

Investments

Investments

The Company classifies its short-term investments as “available-for-sale” and records such assets at the estimated fair value with unrealized gains and losses excluded from net loss and reported, net of tax, in comprehensive loss. The portion of such unrealized losses that are deemed to be other-than-temporary in nature are charged to the Consolidated Statements of Operations. The basis for computing realized gains or losses is by specific identification. In addition, the Company had approximately $1.1 million and $1.0 million in restricted cash related to its voluntary disability insurance as of March 31, 2014 and 2013, respectively, and included in cash and cash equivalents on the Consolidated Balance Sheets.

The following is a summary of cash, cash equivalents and available-for-sale investments by type of instrument (in thousands):

	March 31, 2014									March 31, 2013
	Amortized Cost		Gross Unrealized					Estimated Fair Value		Amortized Cost		Gross Unrealized					Estimated Fair Value
			Gains		Losses							Gains		Losses
Cash	$	65,867	$	—	$	—		$	65,867	$	8,529	$	—	$	—		$	8,529
Cash equivalents	5,672		—		—			5,672		10,536		—		—			10,536
U.S. Treasury securities and agency bonds	2,838		—		—			2,838		12,363		10		—			12,373
Corporate bonds	10,599		30		(2		)	10,627		15,567		63		(2		)	15,628
Mortgage-backed and asset-backed securities*	1,793		297		(16		)	2,074		3,655		355		(7		)	4,003
Closed-end bond funds	14,373		2,392		(402		)	16,363		21,914		5,340		(39		)	27,215
Preferred stock	2,406		736		—			3,142		4,878		2,314		—			7,192
	$	103,548	$	3,455	$	(420	)	$	106,583	$	77,442	$	8,082	$	(48	)	$	85,476
Reported as:
Cash and cash equivalents								$	71,539								$	19,065
Short-term investments available-for-sale								35,044									66,411
								$	106,583								$	85,476

* At March 31, 2014 and 2013, approximately $1.1 million and $1.4 million of the estimated fair value presented were mortgage-backed securities, respectively.

The established guidelines for measuring fair value and expanded disclosures regarding fair value measurements are defined as a three-level valuation hierarchy for disclosure of fair value measurements as follows:

Level 1 —	Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2 —	Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.
Level 3 —	Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Valuation of instruments includes unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities.

The following is a summary of cash, cash equivalents and available-for-sale investments by type of instruments measured at fair value on a recurring basis (in thousands):

	March 31, 2014								March 31, 2013
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Level 1
Cash	$	65,867	$	—	$	—	$	65,867	$	8,529	$	—	$	—	$	8,529
Cash equivalents	5,672		—		—		5,672		9,508		1,028		—		10,536
U.S. Treasury securities and agency bonds	2,838		—		—		2,838		12,373		—		—		12,373
Corporate bonds	—		10,627		—		10,627		—		15,628		—		15,628
Mortgage-backed and asset-backed securities	—		2,074		—		2,074		—		4,003		—		4,003
Closed-end bond funds	16,363		—		—		16,363		27,215		—		—		27,215
Preferred stock	—		3,142		—		3,142		—		7,192		—		7,192
	$	90,740	$	15,843	$	—	$	106,583	$	57,625	$	27,851	$	—	$	85,476

There were no significant transfers in and out of Level 1 and Level 2 fair value measurements during the fiscal year ended March 31, 2014.

The following is a summary of the cost and estimated fair values of available-for-sale securities with stated maturities, which include U.S. Treasury securities and agency bonds, corporate bonds and mortgage-backed and asset-backed securities, by contractual maturity as of March 31, 2014 (in thousands):

	March 31, 2014
	Cost		Estimated Fair Value
Less than 1 year	$	6,888	$	7,024
Mature in 1 – 2 years	6,580		6,618
Mature in 3 – 5 years	529		542
Mature after 5 years	1,233		1,355
	$	15,230	$	15,539

The following is a summary of gross unrealized losses (in thousands):

	Less Than 12 Months of Unrealized Losses					12 Months or More of Unrealized Losses					Total
As of March 31, 2014	Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses
U.S. Treasury securities and agency bonds	$	—	$	—		$	—	$	—		$	—	$	—
Corporate bonds	992		(2		)	—		—			992		(2		)
Mortgage-backed and asset-backed securities	431		(16		)	—		—			431		(16		)
Closed-end bond funds	4,819		(333		)	405		(69		)	5,224		(402		)
	$	6,242	$	(351	)	$	405	$	(69	)	$	6,647	$	(420	)

	Less Than 12 Months of Unrealized Losses					12 Months or More of Unrealized Losses					Total
As of March 31, 2013	Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses
U.S. Treasury securities and agency bonds	$	300	$	—		$	—	$	—		$	300	$	—
Corporate bonds	2,276		(2		)	113		—			2,389		(2		)
Mortgage-backed and asset-backed securities	647		(3		)	—		(4		)	647		(7		)
Closed-end bond funds	—		—			6,991		(39		)	6,991		(39		)
	$	3,223	$	(5	)	$	7,104	$	(43	)	$	10,327	$	(48	)

Other-Than-Temporary Impairment

Based on an evaluation of securities that have been in a loss position, the Company recognized other-than-temporary impairment charge of its short-term investments and marketable securities of $1.1 million during the fiscal year ended March 31, 2013. During the fiscal years ended March 31, 2014 and 2012, the Company did not recognize any other-than-temporary impairment charges. The Company considered various factors which included a credit and liquidity assessment of the underlying securities and the Company’s intent and ability to hold the underlying securities until the estimated date of recovery of its amortized cost. As of March 31, 2014 and 2013, the Company also had $3.5 million and $8.1 million in gross unrealized gains, respectively. The basis for computing realized gains or losses is by specific identification.

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Stockholders' Equity - Stock Options (Details) (USD $)	12 Months Ended						1 Months Ended
	Mar. 31, 2014 Approved_Plan		Mar. 31, 2013		Mar. 31, 2012		May 31, 2009 Chief Executive Officer	May 31, 2009 First Milestone - From Fiscal 2010 To 2013	May 31, 2009 Second Milestone - From Fiscal 2010 To 2013	May 31, 2009 Second Milestone - Fiscal 2014	May 31, 2009 Third Milestone - Fiscal 2013	May 31, 2009 Third Milestone - Fiscal 2010 To 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of annual operating margin required for vesting of shares under milestone											13.50%	15.00%
Annual target revenue								$ 270,000,000	$ 310,000,000	$ 350,000,000
Value of stock options awarded							1,100,000
Number of stockholder-approved plans	3
Number of plans unapproved by stockholders	4
Schedule of Option Activity Under Stock Incentive Plans
Number of Shares, Outstanding at the beginning of the year	3,492,000		4,164,000		5,390,000
Number of Shares, Granted	40,000		40,000		250,000		300,000
Number of Shares, Exercised	(662,000)		(161,000)		(156,000)
Number of Shares, Forfeited	(461,000)		(551,000)		(1,320,000)
Number of Shares, Outstanding at the end of the period	2,409,000		3,492,000		4,164,000
Number of Shares, Vested at the end of the period	2,409,000							75,000	75,000		150,000
Schedule of Weighted Average Exercise Price Per Share Under Stock Incentive Plans
Weighted Average Exercise Price Per Share, Outstanding at the beginning of the year (USD per share)	$ 10.26		$ 10.67		$ 11.91
Weighted Average Exercise Price Per Share, Granted (USD per share)	$ 7.35		$ 5.58		$ 10.10
Weighted Average Exercise Price Per Share, Exercised (USD per share)	$ 9.36		$ 5.31		$ 5.11
Weighted Average Exercise Price Per Share, Forfeited (USD per share)	$ 12.35		$ 14.49		$ 16.20
Weighted Average Exercise Price Per Share, Outstanding at the end of the period (USD per share)	$ 10.06		$ 10.26		$ 10.67
Weighted Average Exercise Price Per Share, Vested at the end of the period (USD per share)	$ 10.06
Weighted Average Remaining Contractual Life, Outstanding at Period End (in years)	2 years 8 months 12 days
Weighted Average Remaining Contractual Life, Vested and Exercisable at Period End (in years)	2 years 7 months 12 days
Aggregate Intrinsic Value, Exercises in Period	1,800,000	[1]	300,000	[1]	500,000	[1]
Aggregate Intrinsic Value, Outstanding at Period End	3.4	[2]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number	2,312,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price	$ 10.14
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term	2 years 8 months 12 days
Aggregate Intrinsic Value, Vested and Exercisable at Period End	3.4	[2]
Common stock closing price per share	$ 9.90
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value	$ 3.2	[2]

[1] The aggregate pre-tax intrinsic value is calculated as the difference between the market value on the date of exercise and the exercise price of the shares.

[2] The aggregate pre-tax intrinsic value is calculated as the difference between the market value as of the end of the fiscal period and the exercise price of the shares. The closing price of the Company’s common stock was $9.90 on March 31, 2014.

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Investments - Schedule of Maturities (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014
Investments, Debt and Equity Securities [Abstract]
Less than 1 year, Cost	$ 6,888
Mature in 1 - 2 years, Cost	6,580
Mature in 3 - 5 years, Cost	529
Mature after 5 years, Cost	1,233
Cost, Total	15,230
Less than 1 year, Fair Value	7,024
Mature in 1 - 2 years, Fair Value	6,618
Mature in 3 - 5 years, Fair Value	542
Mature after 5 years, Fair Value	1,355
Fair Value, Total	$ 15,539

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Commitments (Tables)

12 Months Ended

Mar. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Schedule of contractual operating leases

The following table summarizes the Company’s contractual operating leases as of March 31, 2014 (in thousands):

	Payment Due by Period
Fiscal Years Ending March 31,
2015	$	1,901
2016	930
2017	504
2018	$	369
Total minimum payments	$	3,704

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Restructuring Charges (Tables)

12 Months Ended

Mar. 31, 2014

Restructuring and Related Activities [Abstract]

Schedule of restructuring activity

The following table sets forth a summary of restructuring activities related to all of the Company's restructuring plans described above (in thousands):

	Workforce Reduction			Asset Impairment			Total
Liability, March 31, 2012	$	—		$	—		$	—
Restructuring charges	1,716			4,719			6,435
Cash payments	(1,168		)	—			(1,168		)
Non-cash items	—			(4,719		)	(4,719		)
Liability, March 31, 2013	$	548		$	—		$	548
Restructuring charges	$	862		$	272		$	1,134
Cash payments	(1,410		)	—			(1,410		)
Non-cash items	—			(272		)	(272		)
Liability, March 31, 2014	$	—		$	—		$	—

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Certain Financial Statement Information - Net loss per share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended													12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013		Sep. 30, 2013		Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2012		Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012
Schedule of Reconciliation of Shares Used to Calculate Basic and Diluted Net (Loss) Income Per Share
Net loss	$ 23,116	$ (7,284)	[1]	$ (32,383)	[2]	$ 10,857	[3]	$ (17,606)	[4],[5]	$ (71,562)	[6]	$ (21,557)	$ (23,390)	$ (5,694)	$ (134,115)	$ (82,688)
Shares used in net loss per share computation:
Weighted average common shares outstanding, basic (shares)	75,629	73,989	[1]	72,610	[2]	69,360	[3]	67,566	[4],[5]	66,113	[6]	64,947	62,409	72,897	65,258	62,245
Net effect of dilutive common share equivalents (shares)														0	0	0
Weighted average common shares outstanding, diluted (shares)	77,193	73,989	[1]	72,610	[2]	70,234	[3]	67,566	[4],[5]	66,113	[6]	64,947	62,409	72,897	65,258	62,245
Basic and diluted net loss per share (USD per share)														$ (0.08)	$ (2.06)	$ (1.33)

[1] The consolidated operating results for the third quarter of fiscal 2014 included a charge of $2.9 million related to the Veloce consideration.

[2] The consolidated operating results for the second quarter of fiscal 2014 included a charge of $30.4 million related to the Veloce consideration.

[3] The consolidated operating results for the first quarter of fiscal 2014 included a charge of $9.3 million related to the Veloce consideration and a gain on sale of TPack of $19.7 million.

[4] The consolidated operating results for the fourth quarter of fiscal 2013 included a charge of $9.6 million related to the Veloce consideration.

[5] During fiscal 2012, one significant product development milestone relating to the Veloce project was considered probable of achievement and accordingly $60.4 million was recognized as research and development expense (see further discussion in Note 4, Veloce, to the Consolidated Financial Statements). However, approximately $8.0 million of the R&D expense was incorrectly recognized as this expense amount related to Unallocated Veloce Units that had not yet been distributed as of March 31, 2012. R&D expenses were also recognized during the first three quarters of fiscal 2013 in connection with further progress made in connection with the performance milestones relating to Veloce. However, the R&D expenses recognized during the first three quarters of fiscal 2013 also incorrectly included immaterial amounts related to the Unallocated Veloce Units. During the fourth quarter of fiscal 2013, the Company corrected the error impacting fiscal 2012 and the first three quarters of fiscal 2013. The correction of the errors resulted in a reduction of R&D expenses recognized by $10.4 million during the fourth quarter of fiscal 2013.

[6] During the fiscal years ended March 31, 2014, 2013 and 2012, the Company recognized an impairment charge of its non-marketable strategic investment of $0.0 million, $2.3 million and $1.0 million, respectively. Refer to Note 1, Summary of Significant Accounting Policies, to the Consolidated Financial Statements for details.

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Investments - Summary of Gross Unrealized Losses (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months of Unrealized Losses, Estimated Fair Value	$ 6,242	$ 3,223
Less Than 12 Months of Unrealized Losses, Gross Unrealized Losses	(351)	(5)
12 Months or More of Unrealized Losses, Estimated Fair Value	405	7,104
12 Months or More of Unrealized Losses, Gross Unrealized Losses	(69)	(43)
Total, Estimated Fair Value	6,647	10,327
Total, Gross Unrealized Losses	(420)	(48)
U.S Treasury Securities and Agency Bonds
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months of Unrealized Losses, Estimated Fair Value	0	300
Less Than 12 Months of Unrealized Losses, Gross Unrealized Losses	0	0
12 Months or More of Unrealized Losses, Estimated Fair Value	0	0
12 Months or More of Unrealized Losses, Gross Unrealized Losses	0	0
Total, Estimated Fair Value	0	300
Total, Gross Unrealized Losses	0	0
Corporate bonds
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months of Unrealized Losses, Estimated Fair Value	992	2,276
Less Than 12 Months of Unrealized Losses, Gross Unrealized Losses	(2)	(2)
12 Months or More of Unrealized Losses, Estimated Fair Value	0	113
12 Months or More of Unrealized Losses, Gross Unrealized Losses	0	0
Total, Estimated Fair Value	992	2,389
Total, Gross Unrealized Losses	(2)	(2)
Mortgage Backed and Asset Backed Securities
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months of Unrealized Losses, Estimated Fair Value	431	647
Less Than 12 Months of Unrealized Losses, Gross Unrealized Losses	(16)	(3)
12 Months or More of Unrealized Losses, Estimated Fair Value	0	0
12 Months or More of Unrealized Losses, Gross Unrealized Losses	0	(4)
Total, Estimated Fair Value	431	647
Total, Gross Unrealized Losses	(16)	(7)
Closed-end bond funds
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months of Unrealized Losses, Estimated Fair Value	4,819	0
Less Than 12 Months of Unrealized Losses, Gross Unrealized Losses	(333)	0
12 Months or More of Unrealized Losses, Estimated Fair Value	405	6,991
12 Months or More of Unrealized Losses, Gross Unrealized Losses	(69)	(39)
Total, Estimated Fair Value	5,224	6,991
Total, Gross Unrealized Losses	$ (402)	$ (39)

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Significant Customer and Geographic Information (Tables)

12 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Schedules of concentration of risk, by risk factor

Based on direct shipments, net revenues to customers that were equal to or greater than 10% of total net revenues were as follows:

	Fiscal Years Ended March 31,
	2014		2013		2012
Wintec (global logistics provider)**	22	%	19	%	20	%
Avnet (distributor)	27	%	27	%	20	%
Flextronics (sub-contract manufacturer)	*		*		11	%

* Less than 10% of total net revenues for period indicated.

** Wintec provides vendor managed inventory support primarily for Cisco Systems, Inc.

Schedule of revenue from external customers and long-lived assets, by geographical areas

Net revenues by geographic region, which are primarily denominated in U.S. dollars, were as follows (in thousands):

	Fiscal Years Ended March 31,
	2014		2013		2012
United States of America	$	101,275	$	79,930	$	99,214
Taiwan	13,405		22,684		20,950
Hong Kong	21,477		22,044		21,458
China	6,085		2,053		4,503
Europe	33,625		35,216		41,691
Japan	23,125		13,237		13,596
Malaysia	5,788		4,733		8,276
Singapore	9,745		10,399		14,011
Other Asia	1,217		4,621		5,790
Other	408		725		1,398
	$	216,150	$	195,642	$	230,887

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Sale of TPack A/S (Tables)

12 Months Ended

Mar. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Components of Gain from Sale

In connection with the divestiture, the Company recorded a gain of $19.7 million. The following table summarizes the components of the gain (in thousands):

Total proceeds, net of working capital adjustment	$	30,175
Net assets and liabilities	(184		)
Goodwill write off	(1,758		)
Intangibles write off	(11,404		)
Holdback amount	3,353
Legal fees and other costs	(483		)
Gain on sale of TPack	$	19,699

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Summary of Significant Accounting Policies

12 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation

The Consolidated Financial Statements include all the accounts of AppliedMicro and its wholly-owned subsidiaries including Veloce Technologies Inc. (“Veloce”), which was consolidated in prior accounting periods prior to its merger with the Company, as a variable interest entity (“VIE”) since the Company was determined to be its primary beneficiary. On June 20, 2012, the Company completed the acquisition of Veloce which became a wholly owned subsidiary of the Company as of this date. See Note 4, Veloce, to Consolidated Financial Statements. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to its:

• capitalized mask sets including its useful lives, which affects cost of goods sold and property and equipment or Research and Development ("R&D") expenses, if not capitalized;

• inventory valuation, warranty liabilities and revenue reserves, which affects cost of sales, gross margin and revenues;

• allowance for doubtful accounts, which affects operating expenses;

• unrealized losses or other-than-temporary impairments of short-term investments available for sale, which affects interest income (expense), net;

• valuation of purchased intangibles and goodwill, which affects amortization and impairments of purchased intangibles, impairments of goodwill and apportionment of goodwill related to divestitures;

• Veloce accrued liability which considers: (i) estimating the total value of the expected Veloce consideration, (ii) determining the stage at which a milestone is deemed to be probable of attainment, (iii) the estimated progress towards achieving the milestone at the time such milestone was deemed probable of achievement and (iv) estimating the approximate timing of the expected completion of the milestones and related payments;

• potential costs of litigation, which affects operating expenses;

• valuation of deferred income taxes, which affects income tax expense (benefit); and

• stock-based compensation, which affects gross margin and operating expenses.

The Company bases its estimates and assumptions on historical experience and on various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from management’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity from the date of purchase of 90 days or less to be cash equivalents.

Veloce Consideration

The Company periodically evaluated the progress of the development work that was being performed in connection with its contractual arrangement with Veloce. Based on such an evaluation as well as various other qualitative factors, the Company estimated the total value of the development work being performed and assessed the timing and probability of attaining contractually defined performance milestones.

Upon assessing a performance milestone as probable of achievement, R&D expense was recognized based upon the estimated stage of development of that milestone and the estimated value associated with each performance milestone. The amount of R&D costs recognized in connection with the Veloce consideration excludes any value relating to Veloce common stock equivalents that have not been allocated to individuals (“Unallocated Veloce Units”). Payment of the Veloce consideration occurs based upon when a performance milestone is completed and upon satisfaction of vesting requirements. Significant judgment was required to estimate the total value of the Veloce development work, assess when a performance milestone was probable of achievement and estimate the timing of when the performance milestones were completed. The Company relied on discussions with internal technical personnel and using various qualitative and quantitative factors, including, but not limited to, overall complexity, stage of development and progress made to date, results of testing, and consideration as to the nature of the remaining development work, to assess probability of attaining the performance milestones defined in the Merger Agreement. If, based on such assessment, the Company believed attainment of a performance milestone was probable, the Company recognized expenses related to the estimated stage of development for the performance milestone, excluding the value relating to the Unallocated Veloce Units. As of March 31, 2014, the Company assessed that all three performance milestones were completed.

The total estimated consideration to be paid was based upon the benchmarks achieved during technology simulations that were performed during the third quarter of fiscal 2013 and correlating the results of the technology simulations to the contractual terms included in the Merger Agreement. As a result of higher than expected benchmarks achieved during technology simulations, the total estimated consideration to be paid was updated during fiscal 2013 from a previous estimated maximum of approximately $135.0 million to the contractual maximum of $178.5 million. As a result of this increase in value, the estimated value relating to the first and second performance milestones were also increased.

The consideration relating to the three performance milestones, excluding the value allocated to the Unallocated Veloce Units, in the amount of $169.3 million, has been recognized as research and development expense through March 31, 2014 compared to $126.6 million as of March 31, 2013. Total R&D expenses recognized were approximately $42.7 million and $66.2 million during the twelve months ended March 31, 2014 and 2013, respectively.

Investments

The Company holds a variety of securities that have varied underlying investments. The Company reviews its investment portfolio periodically to assess for other-than-temporary impairment. The Company assesses the existence of impairment of its

investments in order to determine the classification of the impairment as “temporary” or “other-than-temporary”. The factors

used to determine whether an impairment is temporary or other-than-temporary involves considerable judgment. The factors considered in determining whether any individual impairment is temporary or other-than-temporary are primarily the length of the time and the extent to which the market value has been less than amortized cost, the nature of underlying assets (including the degree of collateralization), the financial condition, credit rating, market liquidity conditions and near-term prospects of the issuer. If the fair value of a security is less than its amortized cost basis at the balance sheet date, an assessment would have to be made as to whether the impairment is other-than-temporary. If the Company does not intend to sell the security, the Company shall consider available evidence to assess whether it is more likely than not, it will be required to sell the security before the recovery of the amortized cost basis due to cash, working capital requirements, contractual or regulatory obligations indicate that the security will be required to be sold before a forecasted recovery occurs. If it is more likely than not that the Company is required to sell the security before recovery of the amortized cost basis, an other-than-temporary impairment is considered to have occurred. The Company uses present value cash flow models to determine whether the entire amortized cost basis of the security will be recovered. The Company will compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. An other-than-temporary impairment is said to have occurred if the present value of cash flows expected to be collected is less than the amortized cost basis of the security. During the fiscal years ended March 31, 2014 and 2012, the Company did not record any other-than-temporary impairment charges. During the fiscal year ended March 31, 2013, the Company recorded approximately $1.1 million in other-than-temporary impairment charges. During the fiscal year ended March 31, 2014, the Company did not record an impairment charge in connection with other securities in a continuous loss position (fair value less than carrying value) with unrealized losses of $0.4 million as the Company believes that such unrealized losses are temporary. In addition, the Company also had $3.5 million in unrealized gains. If the fair value of a debt security is less than its amortized cost basis at the balance sheet date, an assessment would have to be made as to whether the impairment is other-than-temporary.

Fair Value of Financial Instruments

Short-term investments are recorded at fair value in the Company’s Consolidated Balance Sheets and are categorized based upon the level of judgment associated with the inputs used to measure their fair values. ASC Subtopic 820-10 defines a three-level valuation hierarchy for disclosure of fair value measurements. The Company currently classifies inputs to derive fair values for short-term investments as Level 1 and 2. Instruments classified as Level 1 include highly liquid government and agency securities, money market funds and publicly traded closed end bond funds in active markets. Instruments classified as Level 2 include corporate notes, mortgage-backed securities, asset-backed securities and preferred stock. The Company did not have any Level 3 short-term investments as of any of the periods presented.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of available-for-sale securities and trade receivables. The Company believes that the credit risk in its trade receivables is mitigated by the Company’s credit evaluation process, relatively short collection terms and dispersion of its customer base. The Company generally does not require collateral and losses on trade receivables have historically been within management’s expectations.

The Company invests its excess cash in debt instruments of the U.S. Treasury, corporate bonds, mutual funds, mortgage-backed securities, asset-backed securities, preferred stocks and closed-end bond funds primarily with investment grade credit ratings. The Company has established guidelines relative to diversification and maturities that attempt to maintain safety, yield and liquidity. These guidelines are periodically reviewed and modified to take advantage of trends in yields and interest rates.

Inventories

The Company’s policy is to value inventories at the lower of cost or market on a part-by-part basis. This policy requires the Company to make estimates regarding the market value of its inventories, including an assessment of excess or obsolete inventories. The Company determines excess and obsolete inventories based on an estimate of the future demand for its products within a specified time horizon, generally 12 months. The estimates used for future demand are also used for near-term capacity planning and inventory purchasing and are consistent with revenue forecasts. If the Company’s demand forecast is greater than its actual demand the Company may be required to take additional excess inventory charges, which would decrease gross margin and net operating results. Any impairment charges taken establishes a new cost basis for the underlying inventory and the cost basis for such inventory is not marked-up on changes in circumstances until a gain is realized upon its eventual sale. This accounting is consistent with the guidance provided by FASB ASC paragraph 330-10-35-14.

Strategic Investments

The Company has entered into certain equity investments in privately held businesses to achieve certain strategic business objectives. The Company’s investments in equity securities of privately held businesses are accounted for under the cost method. Under the cost method, strategic investments in which the Company holds less than a 20% voting interest and in which the Company does not have the ability to exercise significant influence are carried at cost reduced by other-than-temporary impairments, as appropriate. These investments are included in other assets on the Company’s Consolidated Balance Sheets. The Company periodically reviews these investments for other-than-temporary declines in fair value based on the specific identification method and writes down investments when an other-than-temporary decline has occurred. The Company recorded other-than-temporary impairment charges of its strategic investments of zero, $2.3 million and $1.0 million during the fiscal years ended March 31, 2014, 2013, and 2012, respectively, and a net gain on disposal of strategic equity investment of $7.1 million during the fiscal year ended 2012 in other income (expense), net. The fair value was estimated on a non-recurring basis based on Level 3 inputs. The Level 3 inputs used to estimate the fair value of these investments included consideration of the current cash position, recent operational performance, and forecasts of the investees. During the fiscal years ended March 31, 2014 and 2013, the Company invested zero and $0.5 million, respectively, in non-marketable strategic investments and these amounts were carried at adjusted cost. Refer to Other Assets in Note 3, Certain Financial Statement Information, to Consolidated Financial Statements for the total value of the Company's strategic investments carried at cost as of March 31, 2014.

Goodwill, Purchased Intangible Assets and Other Long-Lived Assets

The Company reviews its goodwill for impairment at the reporting unit level annually, or more frequently, if changes in facts and circumstances indicate that it is more likely than not that the fair value of the Company’s reporting units may be less than its carrying amount. The Company elected to use the qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step goodwill impairment test. As part of its qualitative assessment, the Company evaluated and determined that its market capitalization was well in excess of its book value and based on this and other qualitative factors (such as revenue trends, design wins, continued utilization of developed technology acquired from the TPack A/S acquisition and subsequent to its sale in April 2013 - see Note 12, Sale of TPack A/S, to the Consolidated Financial Statements for details) determined that there was no goodwill impairment.

The Company’s long-lived assets consist of property, plant and equipment and other acquired intangibles, excluding goodwill. Property and equipment are stated at cost and depreciated over the estimated useful lives of the assets ranging from 1 to 7 years using the straight line method. Leasehold improvements are stated at cost and amortized over the shorter of the term of the related lease or its estimated useful life. Acquired intangibles with definite lives are amortized on a straight-line basis over the remaining estimated economic life of the underlying products and technologies. The Company reviews its definite-lived long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. Recoverability of an asset group is measured by comparison of its carrying amount to the expected future undiscounted cash flows that the asset group is expected to generate. If it is determined that an asset group is not recoverable, an impairment loss is recorded in the amount by which the carrying amount of the asset group exceeds its fair value. In addition, the Company assesses its long-lived assets for impairment if they are abandoned. The Company completed its annual impairment test in the fourth quarter of fiscal 2014 and determined that there was no impairment of long-lived assets. 

Revenue Recognition

The Company recognizes revenue based on four basic criteria: 1) there is evidence that an arrangement exists; 2) delivery has occurred; 3) the fee is fixed or determinable; and 4) collectability is reasonably assured. The Company recognizes revenue upon determination that all criteria for revenue recognition have been met. In addition, the Company does not recognize revenue until the applicable customer’s acceptance criteria have been met. The criteria are usually met at the time of product shipment. The Company’s standard terms and conditions of sale do not allow for product returns and it generally does not allow product returns other than under warranty or stock rotation agreements. Revenue from shipments to distributors is recognized upon shipment. In addition, the Company records reductions to revenue for estimated allowances such as returns not pursuant to contractual rights, competitive pricing programs and rebates. These estimates are based on the Company's experience with stock rotations and the contractual terms of the competitive pricing and rebate programs. Royalty revenues are recognized when cash is received only when royalty amounts cannot be reasonably estimated. Royalty revenues are based upon sales of the Company's customers' products that include its technology.

Shipping terms are generally FCA (Free Carrier) shipping point. If actual returns or pricing adjustments exceed the Company's estimates, it would record additional reductions to revenue.

From time to time the Company generates revenue from the sale of internally developed intellectual property ("IP"). The Company generally recognizes revenue from the sale of IP when all basic criteria outlined above are met, which generally occurs when the payments are received.

Research and Development ('R&D")

R&D costs are expensed as incurred. Substantially all R&D expenses are related to new product development and designing significant improvements to existing products. Also refer to Note 4, Veloce, to the Consolidated Financial Statements.

Mask Costs

The Company incurs significant costs for the fabrication of masks used by its contract manufacturers to manufacture its products. If the Company determines, at the time the costs for the fabrication of masks are incurred, that technological feasibility of the product has been achieved, it considers the nature of these costs to be pre-production costs. Accordingly, such costs are capitalized as property and equipment under machinery and equipment and are amortized as cost of sales over approximately three years, representing the estimated production period of the product. The Company periodically reassesses the estimated product production period for specific mask sets capitalized. If the Company determines, at the time fabrication mask costs are incurred, that either technological feasibility of the product has not occurred or that the mask is not reasonably expected to be used in production manufacturing or that the commercial feasibility of the product is uncertain, the related mask costs are expensed to R&D in the period in which the costs are incurred. The Company will also periodically assess capitalized mask costs for impairment. During the fiscal years ended March 31, 2014 and 2013, total mask costs capitalized were $6.4 million and $3.1 million, respectively.

Stock-Based Compensation

Stock-based compensation cost is measured at the grant date based on the fair value of the award. The Company uses the Black-Scholes model to value stock-based compensation for options and employee stock purchase rights under the employee stock purchase plan ("ESPP"), and the fair market value of the Company's common stock for restricted stock units ("RSUs"). The market stock units ("MSUs") were valued using the Monte Carlo pricing model, which uses the Company's stock price, the Index value, expected volatilities of the Company's stock price and the Index, correlation coefficients and risk free interest rates to determine the fair value. The Black-Scholes model determines the fair value of share-based payment awards based on the stock price on the date of grant and is affected by assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the Company’s stock price, volatility over the term of the awards and actual and projected employee stock option exercise behaviors. Option-pricing models were developed for use in estimating the value of traded options that have no vesting or hedging restrictions and are fully transferable. Although the fair value of stock options granted by the Company is estimated by the Black-Scholes model, the estimated fair value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction.

The following tables summarize the allocation of the stock-based compensation expense (in thousands):

	Fiscal Year Ended March 31,
	2014			2013		2012
Stock-based compensation expense by type of award:
Option grants and employee stock purchase rights	$	2,520		$	3,469	$	5,289
Restricted stock units	14,517			20,620		13,148
Total stock-based compensation	17,037			24,089		18,437
Stock-based compensation expensed from (capitalized to) inventory	(16		)	147		(63		)
Total stock-based compensation expense	$	17,021		$	24,236	$	18,374

	Fiscal Year Ended March 31,
	2014			2013		2012
Stock-based compensation expense by cost centers:
Cost of revenues	$	460		$	545	$	495
Research and development	6,371			11,760		10,496
Selling, general and administrative	10,206			11,784		7,446
Total stock-based compensation	17,037			24,089		18,437
Stock-based compensation expensed from (capitalized to) inventory	(16		)	147		(63		)
Total stock-based compensation expense	$	17,021		$	24,236	$	18,374

The stock based compensation expense of approximately $24.2 million for the twelve months ended March 31, 2013 does not include approximately $1.3 million expense related to the acceleration of Veloce warrants.

The fair values of the options and employee stock purchase rights granted are estimated as of the grant date using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	Options									Employee Stock Purchase Rights
	Fiscal Years Ended March 31,									Fiscal Years Ended March 31,
	2014			2013			2012			2014			2013			2012
Expected life (years)	4.4			4.4			3.8			0.5			0.5			0.5
Risk-free interest rate	0.6		%	0.7		%	1.4		%	—		%	—		%	0.1		%
Volatility	0.49			0.54			0.48			0.56			0.50			0.55
Dividend yield	—		%	—		%	—		%	—		%	—		%	—		%
Expected forfeiture rate	5.8		%	6.6		%	6.8		%	—		%	—		%	—		%
Weighted average fair value	$	2.95		$	2.47		$	3.83		$	3.40		$	1.77		$	2.13

Compensation Amortization Period. All stock-based compensation is amortized over the requisite service period of the awards, which is generally the same as the vesting period of the awards. The Company amortizes the fair value cost on a straight-line basis over the expected service periods.

Expected Life. The expected life of stock options granted represents the expected weighted average period of time from the date of grant to the estimated date that the stock option would be fully exercised. To calculate the expected term, the Company utilizes historical actual exercise data and assumes that unexercised stock options would be exercised at the midpoint of the valuation date of its analysis and the full contractual term of the option.

Expected Volatility. Expected volatility is a measure of the amount by which the stock price is expected to fluctuate. The Company estimates the expected volatility of its stock options at their grant date by equally weighting the historical volatility and the implied volatility of its stock. The historical volatility is calculated using the weekly stock price of its stock over a recent historical period equal to its expected life. The implied volatility is calculated from the implied market volatility of exchange-traded call options on its common stock.

Risk-Free Interest Rate. The risk-free interest rate is the implied yield currently available on zero-coupon government issues with a remaining term equal to the expected life.

Expected Dividends. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero percent in valuation models.

Expected Forfeitures. As stock-based compensation expense recognized in the Consolidated Statements of Operations for the fiscal years ended March 31, 2014, 2013 and 2012 is based on awards that are ultimately expected to vest, it should be reduced for estimated forfeitures. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Pre-vesting forfeiture rates were based upon the average of expected forfeiture data using the Company’s current demographics and standard probabilities of employee turnover and the annual forfeiture rate based on the Company’s historical forfeiture rates.

Effective April 1, 2013, the Company revised the estimated forfeiture rate used to determine the amount of stock-based compensation from 6.6% to 5.8% as a result of a decreasing rate of forfeitures in recent periods, which the Company believes is indicative of the rate it will experience during the remaining vesting period of currently outstanding unvested grants.

The weighted average fair value per share of the restricted stock units awarded in the fiscal years ended March 31, 2014, 2013 and 2012 was $9.46, $6.11 and $9.00, respectively. The weighted average fair value per share was calculated based on the fair market value of the Company’s common stock on the respective grant dates.

The amount of unrecognized stock-based compensation cost estimated to be expensed from April 1, 2014 through fiscal 2018, including time, performance and market based awards that are expected to vest, is $24.1 million which will be recognized over a weighted-average period of 1.5 years. If there are any modifications or cancellations of the underlying unvested securities, the Company may be required to accelerate, increase or cancel any remaining unrecognized stock-based compensation expense. Future stock-based compensation expense and unrecognized stock-based compensation will increase to the extent that the Company grants additional equity awards or assumes unvested equity awards in connection with acquisitions.

Income Taxes

The Company utilizes the asset and liability method of accounting for income taxes as set forth in ASC Subtopic 740-10 (“ASC 740-10”). Under the asset and liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates. A valuation allowance is recorded when it is more likely than not that some or all of the deferred tax assets will not be realized.

Segments of a Business Enterprise

The Company has two operating segments, Connectivity and Computing, and under the aggregation criteria set forth in ASC 280-10 (as the two operating segments share similar economic characteristics related to the nature of their products, production processes, customers and methods of distribution), has one reportable operating segment. The Company’s Chief Operating Decision Maker, the Chief Executive Officer, evaluates performance of the Company and makes decisions regarding allocation of resources based on total Company results.

New Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2013-02 (ASU 2013-02), Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU 2013-02 requires an entity to present either on the face of the statement where comprehensive income is presented or in the notes to the financial statements, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income. The adoption of ASU 2013-02, which involves presentation and disclosures only, did not have a significant impact on the Company's Consolidated Financial Statements.

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standards setting bodies that are adopted by the Company as of the specified effective date. The Company believes the impact of recently issued standards that are not yet effective will not have a material impact on its Consolidated Financial Statements.

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Quarterly Financial Information (unaudited) (Tables)

12 Months Ended

Mar. 31, 2014

Quarterly Financial Information Disclosure [Abstract]

Schedule of Quarterly Financial Information

The operating results for any quarter are not necessarily indicative of results for any future period.

	Fiscal Year Ended March 31, 2014										Fiscal Year Ended March 31, 2013
	Q1 (1)		Q2 (2)			Q3 (3)			Q4		Q1			Q2			Q3(4)			Q4(5)(6)
	(In thousands, except per share data)
Net revenues	$	54,148	$	55,387		$	54,844		$	51,771	$	41,294		$	46,324		$	51,698		$	56,326
Cost of revenues	22,342		21,397			21,644			19,806		18,355			20,561			22,958			21,174
Gross profit	31,806		33,990			33,200			31,965		22,939			25,763			28,740			35,152
Total operating expenses	24,556		66,757			40,900			9,229		47,891			48,515			101,942			49,116
Operating loss	7,250		(32,767		)	(7,700		)	22,736		(24,952		)	(22,752		)	(73,202		)	(13,964		)
Interest and other income (expense)	3,795		576			617			418		1,762			835			2,258			(4,654		)
Loss before income taxes	11,045		(32,191		)	(7,083		)	23,154		(23,190		)	(21,917		)	(70,944		)	(18,618		)
Income tax expense (benefit)	188		192			201			38		200			(360		)	618			(1,012		)
Net loss	$	10,857	$	(32,383	)	$	(7,284	)	$	23,116	$	(23,390	)	$	(21,557	)	$	(71,562	)	$	(17,606	)
Basic net income (loss) per share	$	0.16	$	(0.45	)	$	(0.10	)	$	0.31	$	(0.37	)	$	(0.33	)	$	(1.08	)	$	(0.26	)
Shares used in calculating basic net income (loss) per share	69,360		72,610			73,989			75,629		62,409			64,947			66,113			67,566
Diluted net income (loss) per share	$	0.15	$	(0.45	)	$	(0.10	)	$	0.30	$	(0.37	)	$	(0.33	)	$	(1.08	)	$	(0.26	)
Shares used in calculating diluted income (loss) per share	70,234		72,610			73,989			77,193		62,409			64,947			66,113			67,566

(1) The consolidated operating results for the first quarter of fiscal 2014 included a charge of $9.3 million related to the Veloce consideration and a gain on sale of TPack of $19.7 million.

(2) The consolidated operating results for the second quarter of fiscal 2014 included a charge of $30.4 million related to the Veloce consideration.

(3) The consolidated operating results for the third quarter of fiscal 2014 included a charge of $2.9 million related to the Veloce consideration.

(4) The consolidated operating results for the third quarter of fiscal 2013 included a charge of $51.9 million related to the Veloce consideration and a charge of $6.2 million related to restructuring charges.

(5) The consolidated operating results for the fourth quarter of fiscal 2013 included a charge of $9.6 million related to the Veloce consideration.

(6) During fiscal 2012, one significant product development milestone relating to the Veloce project was considered probable of achievement and accordingly $60.4 million was recognized as research and development expense (see further discussion in Note 4, Veloce, to the Consolidated Financial Statements). However, approximately $8.0 million of the R&D expense was incorrectly recognized as this expense amount related to Unallocated Veloce Units that had not yet been distributed as of March 31, 2012. R&D expenses were also recognized during the first three quarters of fiscal 2013 in connection with further progress made in connection with the performance milestones relating to Veloce. However, the R&D expenses recognized during the first three quarters of fiscal 2013 also incorrectly included immaterial amounts related to the Unallocated Veloce Units. During the fourth quarter of fiscal 2013, the Company corrected the error impacting fiscal 2012 and the first three quarters of fiscal 2013. The correction of the errors resulted in a reduction of R&D expenses recognized by $10.4 million during the fourth quarter of fiscal 2013.

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Sale of TPack A/S - Components of Gain (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended			0 Months Ended	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012	Apr. 22, 2013 TPack	Jun. 30, 2013 TPack
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Total proceeds, net of working capital adjustment				$ 30,175
Net assets and liabilities				(184)
Goodwill write off				1,758
Intangibles write off				11,404
Holdback amount				3,353
Legal fees and other costs				483
Gain on sale of TPack	$ 19,699	$ 0	$ 0	$ 19,699	$ 19,700

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Investments - Additional Information (Details) (USD $)	12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012
Investments, Debt and Equity Securities [Abstract]
Restricted cash related to voluntary disability insurance program	$ 1,100,000	$ 1,000,000
Estimated fair value prested of mortgate-backed securities	1,100,000	1,400,000
Other-than-temporary impairment charges	0	1,143,000	0
Available-for-sale securities, Gross Unrealized Gains	$ 3,455,000	$ 8,082,000

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Certain Financial Statement Information - Schedule of Warranty reserve activitiy (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Schedule of Warranty Reserve Activity
Beginning balance	$ 220	$ 454
Charged to costs of revenues	58	(94)
Charges incurred	(79)	(140)
Ending balance	$ 199	$ 220

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Income Taxes - Unrecognized Tax Benefits Rollforward (Details) (USD $)	12 Months Ended
	Mar. 31, 2014
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Opening Balance	$ 43,382,000
Gross decreases - tax positions in prior period	60,000
Gross increases - current-period tax positions	789,000
Ending Balance	44,231,000
Unrecognized tax benefits that would impact effective tax rate	$ 600,000

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Current assets:
Cash and cash equivalents	$ 71,539	$ 19,065
Short-term investments-available-for-sale	35,044	66,411
Accounts receivable, net	25,178	24,575
Inventories	18,946	12,900
Other current assets	16,799	17,998
Total current assets	167,506	140,949
Property and equipment, net	20,746	34,391
Goodwill	11,425	13,183
Purchased intangibles	105	11,991
Other assets	7,754	10,866
Total assets	207,536	211,380
Current liabilities:
Accounts payable	26,194	17,650
Accrued payroll and related expenses	5,532	6,158
Veloce accrued liability	11,985	78,082
Other accrued liabilities	10,877	10,730
Deferred revenue	567	1,469
Total current liabilities	55,155	114,089
Veloce and other non-current liabilities	3,145	15,787
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, $0.01 par value: Authorized shares - 2,000, none issued and outstanding	0	0
Common stock, $0.01 par value: Authorized shares - 375,000 at March 31, 2014 and March 31, 2013 Issued and outstanding shares - 77,677 at March 31, 2014 and 67,952 at March 31, 2013	777	680
Additional paid-in capital	6,005,365	5,926,630
Accumulated other comprehensive loss	(6,143)	(737)
Accumulated deficit	(5,850,763)	(5,845,069)
Total stockholders’ equity	149,236	81,504
Total liabilities and stockholders’ equity	$ 207,536	$ 211,380

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Certain Financial Statement Information - Schedule of Accounts receivable (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Schedule of Accounts receivable
Accounts receivable	$ 25,629	$ 25,278
Less: allowance for bad debts	(451)	(703)
Accounts receivable, net	$ 25,178	$ 24,575

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Mar. 31, 2014		Mar. 31, 2013		Mar. 31, 2012
Operating activities:
Net loss	$ (5,694)		$ (134,115)		$ (82,688)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	10,273		9,542		8,436
Amortization of purchased intangibles	482		4,643		6,754
Stock-based compensation expense:
Stock options	2,505		3,469		5,298
Restricted stock units	14,516		20,767		13,076
Warrants	0		1,289		0
Veloce acquisition consideration	42,684		66,188		60,400
Acquisition related adjustment	0		133		2,532
Gain on sale of TPack	(19,699)		0		0
Gain on sale of building	(25,815)		0		0
Net (gain) loss on disposals of property, equipment and other assets	(23)		(1,293)		10
Impairment loss (gain) on strategic investments, net	0		2,250		(7,147)
Tax effect on other comprehensive income	(40)		(989)		(123)
Restructuring charges-asset impairment	298		4,719		0
Impairment of short-term investments and marketable securities	0		1,143		0
Impairment of notes receivable and other assets	0	[1]	1,800	[1]	0	[1]
Changes in operating assets and liabilities:
Accounts receivable	(837)		(1,909)		(2,669)
Inventories	(6,049)		10,344		3,317
Other assets	3,232		(2,871)		(3,903)
Accounts payable	5,778		(622)		(4,451)
Accrued payroll and related liabilities	(671)		(82)		(2,860)
Veloce accrued liability	(63,657)		(16,537)		0
Deferred revenue	(770)		(668)		(270)
Net cash used in operating activities	(43,487)		(33,065)		(9,352)
Investing activities:
Proceeds from sales and maturities of short-term investments	44,450		42,164		101,222
Purchases of short-term investments	(18,081)		(21,633)		(103,046)
Proceeds from sale of property, equipment and other assets	70		1,800		0
Purchase of property, equipment and other assets	(5,952)		(9,045)		(13,264)
Proceeds from sale of strategic investment	1,286		7,146		0
Proceeds from the sale of TPack, net	29,498		0		0
Proceeds from sale of building, net	40,176		0		0
Purchases of strategic investment(s)	0		(500)		(4,750)
Net cash provided by (used in) investing activities	91,447		19,932		(19,838)
Financing activities:
Proceeds from issuance of common stock	11,619		8,873		6,736
Funding of restricted stock units withheld for taxes	(6,550)		(3,121)		(2,864)
Repurchase of common stock	0		(653)		(20,852)
Funding of structured stock repurchase agreements	0		0		(10,000)
Payment of contingent consideration	0		(485)		0
Other	(555)		(481)		(167)
Net cash provided by (used in) financing activities	4,514		4,133		(27,147)
Net increase (decrease) in cash and cash equivalents	52,474		(9,000)		(56,337)
Cash and cash equivalents at beginning of year	19,065		28,065		84,402
Cash and cash equivalents at end of year	71,539		19,065		28,065
Supplementary cash flow disclosures:
Cash paid for income taxes	870		987		692
Shares issued for Veloce merger consideration	$ 57,348		$ 16,565		$ 0

[1] During the fiscal year ended March 31, 2013, the Company wrote-off $1.5 million of notes receivable due from an investee and $0.3 million related to a prepaid intellectual property license from this investee. The Company also impaired the related equity investment of $2.3 million in this investee - see * above.

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Stockholders' Equity - Preferred Stock (Details)	Mar. 31, 2014	Mar. 31, 2013
Equity [Abstract]
Preferred stock, shares authorized	2,000,000	2,000,000
Preferred stock, shares outstanding	0	0

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Summary of Significant Accounting Policies - Inventories (Details)	12 Months Ended
	Mar. 31, 2014
Accounting Policies [Abstract]
Estimated period of future demand for products	12 months

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Stockholders' Equity - Employee Stock Purchase Plan (Details)		12 Months Ended		12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013 1998 Plan Employee Stock Purchase Plan	Aug. 30, 2010 1998 Plan Employee Stock Purchase Plan	Mar. 31, 2014 2012 Plan Employee Stock Purchase Plan	Mar. 31, 2013 2012 Plan Employee Stock Purchase Plan	Aug. 30, 2012 2012 Plan Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved for issuance	9,367,000		6,300,000
Additional common stock reserved for future issuance						1,800,000
Percentage of purchase price of common stock equal to fair market value				85.00%
Common stock, shares issued, employee stock purchase plan		400,000		700,000	600,000
Shares available for future issuance				500,000

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

Basis of Presentation

The Consolidated Financial Statements include all the accounts of AppliedMicro and its wholly-owned subsidiaries including Veloce Technologies Inc. (“Veloce”), which was consolidated in prior accounting periods prior to its merger with the Company, as a variable interest entity (“VIE”) since the Company was determined to be its primary beneficiary. On June 20, 2012, the Company completed the acquisition of Veloce which became a wholly owned subsidiary of the Company as of this date. See Note 4, Veloce, to Consolidated Financial Statements. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to its:

• capitalized mask sets including its useful lives, which affects cost of goods sold and property and equipment or Research and Development ("R&D") expenses, if not capitalized;

• inventory valuation, warranty liabilities and revenue reserves, which affects cost of sales, gross margin and revenues;

• allowance for doubtful accounts, which affects operating expenses;

• unrealized losses or other-than-temporary impairments of short-term investments available for sale, which affects interest income (expense), net;

• valuation of purchased intangibles and goodwill, which affects amortization and impairments of purchased intangibles, impairments of goodwill and apportionment of goodwill related to divestitures;

• Veloce accrued liability which considers: (i) estimating the total value of the expected Veloce consideration, (ii) determining the stage at which a milestone is deemed to be probable of attainment, (iii) the estimated progress towards achieving the milestone at the time such milestone was deemed probable of achievement and (iv) estimating the approximate timing of the expected completion of the milestones and related payments;

• potential costs of litigation, which affects operating expenses;

• valuation of deferred income taxes, which affects income tax expense (benefit); and

• stock-based compensation, which affects gross margin and operating expenses.

The Company bases its estimates and assumptions on historical experience and on various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from management’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity from the date of purchase of 90 days or less to be cash equivalents.

Veloce Consideration

The Company periodically evaluated the progress of the development work that was being performed in connection with its contractual arrangement with Veloce. Based on such an evaluation as well as various other qualitative factors, the Company estimated the total value of the development work being performed and assessed the timing and probability of attaining contractually defined performance milestones.

Upon assessing a performance milestone as probable of achievement, R&D expense was recognized based upon the estimated stage of development of that milestone and the estimated value associated with each performance milestone. The amount of R&D costs recognized in connection with the Veloce consideration excludes any value relating to Veloce common stock equivalents that have not been allocated to individuals (“Unallocated Veloce Units”). Payment of the Veloce consideration occurs based upon when a performance milestone is completed and upon satisfaction of vesting requirements. Significant judgment was required to estimate the total value of the Veloce development work, assess when a performance milestone was probable of achievement and estimate the timing of when the performance milestones were completed. The Company relied on discussions with internal technical personnel and using various qualitative and quantitative factors, including, but not limited to, overall complexity, stage of development and progress made to date, results of testing, and consideration as to the nature of the remaining development work, to assess probability of attaining the performance milestones defined in the Merger Agreement. If, based on such assessment, the Company believed attainment of a performance milestone was probable, the Company recognized expenses related to the estimated stage of development for the performance milestone, excluding the value relating to the Unallocated Veloce Units. As of March 31, 2014, the Company assessed that all three performance milestones were completed.

The total estimated consideration to be paid was based upon the benchmarks achieved during technology simulations that were performed during the third quarter of fiscal 2013 and correlating the results of the technology simulations to the contractual terms included in the Merger Agreement. As a result of higher than expected benchmarks achieved during technology simulations, the total estimated consideration to be paid was updated during fiscal 2013 from a previous estimated maximum of approximately $135.0 million to the contractual maximum of $178.5 million. As a result of this increase in value, the estimated value relating to the first and second performance milestones were also increased.

The consideration relating to the three performance milestones, excluding the value allocated to the Unallocated Veloce Units, in the amount of $169.3 million, has been recognized as research and development expense through March 31, 2014 compared to $126.6 million as of March 31, 2013. Total R&D expenses recognized were approximately $42.7 million and $66.2 million during the twelve months ended March 31, 2014 and 2013, respectively.

Investments

The Company holds a variety of securities that have varied underlying investments. The Company reviews its investment portfolio periodically to assess for other-than-temporary impairment. The Company assesses the existence of impairment of its

investments in order to determine the classification of the impairment as “temporary” or “other-than-temporary”. The factors

used to determine whether an impairment is temporary or other-than-temporary involves considerable judgment. The factors considered in determining whether any individual impairment is temporary or other-than-temporary are primarily the length of the time and the extent to which the market value has been less than amortized cost, the nature of underlying assets (including the degree of collateralization), the financial condition, credit rating, market liquidity conditions and near-term prospects of the issuer. If the fair value of a security is less than its amortized cost basis at the balance sheet date, an assessment would have to be made as to whether the impairment is other-than-temporary. If the Company does not intend to sell the security, the Company shall consider available evidence to assess whether it is more likely than not, it will be required to sell the security before the recovery of the amortized cost basis due to cash, working capital requirements, contractual or regulatory obligations indicate that the security will be required to be sold before a forecasted recovery occurs. If it is more likely than not that the Company is required to sell the security before recovery of the amortized cost basis, an other-than-temporary impairment is considered to have occurred. The Company uses present value cash flow models to determine whether the entire amortized cost basis of the security will be recovered. The Company will compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. An other-than-temporary impairment is said to have occurred if the present value of cash flows expected to be collected is less than the amortized cost basis of the security. During the fiscal years ended March 31, 2014 and 2012, the Company did not record any other-than-temporary impairment charges. During the fiscal year ended March 31, 2013, the Company recorded approximately $1.1 million in other-than-temporary impairment charges. During the fiscal year ended March 31, 2014, the Company did not record an impairment charge in connection with other securities in a continuous loss position (fair value less than carrying value) with unrealized losses of $0.4 million as the Company believes that such unrealized losses are temporary. In addition, the Company also had $3.5 million in unrealized gains. If the fair value of a debt security is less than its amortized cost basis at the balance sheet date, an assessment would have to be made as to whether the impairment is other-than-temporary.

Fair Value of Financial Instruments

Short-term investments are recorded at fair value in the Company’s Consolidated Balance Sheets and are categorized based upon the level of judgment associated with the inputs used to measure their fair values. ASC Subtopic 820-10 defines a three-level valuation hierarchy for disclosure of fair value measurements. The Company currently classifies inputs to derive fair values for short-term investments as Level 1 and 2. Instruments classified as Level 1 include highly liquid government and agency securities, money market funds and publicly traded closed end bond funds in active markets. Instruments classified as Level 2 include corporate notes, mortgage-backed securities, asset-backed securities and preferred stock. The Company did not have any Level 3 short-term investments as of any of the periods presented.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of available-for-sale securities and trade receivables. The Company believes that the credit risk in its trade receivables is mitigated by the Company’s credit evaluation process, relatively short collection terms and dispersion of its customer base. The Company generally does not require collateral and losses on trade receivables have historically been within management’s expectations.

The Company invests its excess cash in debt instruments of the U.S. Treasury, corporate bonds, mutual funds, mortgage-backed securities, asset-backed securities, preferred stocks and closed-end bond funds primarily with investment grade credit ratings. The Company has established guidelines relative to diversification and maturities that attempt to maintain safety, yield and liquidity. These guidelines are periodically reviewed and modified to take advantage of trends in yields and interest rates.

Inventories

The Company’s policy is to value inventories at the lower of cost or market on a part-by-part basis. This policy requires the Company to make estimates regarding the market value of its inventories, including an assessment of excess or obsolete inventories. The Company determines excess and obsolete inventories based on an estimate of the future demand for its products within a specified time horizon, generally 12 months. The estimates used for future demand are also used for near-term capacity planning and inventory purchasing and are consistent with revenue forecasts. If the Company’s demand forecast is greater than its actual demand the Company may be required to take additional excess inventory charges, which would decrease gross margin and net operating results. Any impairment charges taken establishes a new cost basis for the underlying inventory and the cost basis for such inventory is not marked-up on changes in circumstances until a gain is realized upon its eventual sale. This accounting is consistent with the guidance provided by FASB ASC paragraph 330-10-35-14.

Strategic Investments

The Company has entered into certain equity investments in privately held businesses to achieve certain strategic business objectives. The Company’s investments in equity securities of privately held businesses are accounted for under the cost method. Under the cost method, strategic investments in which the Company holds less than a 20% voting interest and in which the Company does not have the ability to exercise significant influence are carried at cost reduced by other-than-temporary impairments, as appropriate. These investments are included in other assets on the Company’s Consolidated Balance Sheets. The Company periodically reviews these investments for other-than-temporary declines in fair value based on the specific identification method and writes down investments when an other-than-temporary decline has occurred. The Company recorded other-than-temporary impairment charges of its strategic investments of zero, $2.3 million and $1.0 million during the fiscal years ended March 31, 2014, 2013, and 2012, respectively, and a net gain on disposal of strategic equity investment of $7.1 million during the fiscal year ended 2012 in other income (expense), net. The fair value was estimated on a non-recurring basis based on Level 3 inputs. The Level 3 inputs used to estimate the fair value of these investments included consideration of the current cash position, recent operational performance, and forecasts of the investees. During the fiscal years ended March 31, 2014 and 2013, the Company invested zero and $0.5 million, respectively, in non-marketable strategic investments and these amounts were carried at adjusted cost. Refer to Other Assets in Note 3, Certain Financial Statement Information, to Consolidated Financial Statements for the total value of the Company's strategic investments carried at cost as of March 31, 2014.

Goodwill, Purchased Intangible Assets and Other Long-Lived Assets

The Company reviews its goodwill for impairment at the reporting unit level annually, or more frequently, if changes in facts and circumstances indicate that it is more likely than not that the fair value of the Company’s reporting units may be less than its carrying amount. The Company elected to use the qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step goodwill impairment test. As part of its qualitative assessment, the Company evaluated and determined that its market capitalization was well in excess of its book value and based on this and other qualitative factors (such as revenue trends, design wins, continued utilization of developed technology acquired from the TPack A/S acquisition and subsequent to its sale in April 2013 - see Note 12, Sale of TPack A/S, to the Consolidated Financial Statements for details) determined that there was no goodwill impairment.

The Company’s long-lived assets consist of property, plant and equipment and other acquired intangibles, excluding goodwill. Property and equipment are stated at cost and depreciated over the estimated useful lives of the assets ranging from 1 to 7 years using the straight line method. Leasehold improvements are stated at cost and amortized over the shorter of the term of the related lease or its estimated useful life. Acquired intangibles with definite lives are amortized on a straight-line basis over the remaining estimated economic life of the underlying products and technologies. The Company reviews its definite-lived long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. Recoverability of an asset group is measured by comparison of its carrying amount to the expected future undiscounted cash flows that the asset group is expected to generate. If it is determined that an asset group is not recoverable, an impairment loss is recorded in the amount by which the carrying amount of the asset group exceeds its fair value. In addition, the Company assesses its long-lived assets for impairment if they are abandoned. The Company completed its annual impairment test in the fourth quarter of fiscal 2014 and determined that there was no impairment of long-lived assets.

Revenue Recognition

The Company recognizes revenue based on four basic criteria: 1) there is evidence that an arrangement exists; 2) delivery has occurred; 3) the fee is fixed or determinable; and 4) collectability is reasonably assured. The Company recognizes revenue upon determination that all criteria for revenue recognition have been met. In addition, the Company does not recognize revenue until the applicable customer’s acceptance criteria have been met. The criteria are usually met at the time of product shipment. The Company’s standard terms and conditions of sale do not allow for product returns and it generally does not allow product returns other than under warranty or stock rotation agreements. Revenue from shipments to distributors is recognized upon shipment. In addition, the Company records reductions to revenue for estimated allowances such as returns not pursuant to contractual rights, competitive pricing programs and rebates. These estimates are based on the Company's experience with stock rotations and the contractual terms of the competitive pricing and rebate programs. Royalty revenues are recognized when cash is received only when royalty amounts cannot be reasonably estimated. Royalty revenues are based upon sales of the Company's customers' products that include its technology.

Shipping terms are generally FCA (Free Carrier) shipping point. If actual returns or pricing adjustments exceed the Company's estimates, it would record additional reductions to revenue.

From time to time the Company generates revenue from the sale of internally developed intellectual property ("IP"). The Company generally recognizes revenue from the sale of IP when all basic criteria outlined above are met, which generally occurs when the payments are received.

Research and Development

R&D costs are expensed as incurred. Substantially all R&D expenses are related to new product development and designing significant improvements to existing products. Also refer to Note 4, Veloce, to the Consolidated Financial Statements.

Mask Costs

The Company incurs significant costs for the fabrication of masks used by its contract manufacturers to manufacture its products. If the Company determines, at the time the costs for the fabrication of masks are incurred, that technological feasibility of the product has been achieved, it considers the nature of these costs to be pre-production costs. Accordingly, such costs are capitalized as property and equipment under machinery and equipment and are amortized as cost of sales over approximately three years, representing the estimated production period of the product. The Company periodically reassesses the estimated product production period for specific mask sets capitalized. If the Company determines, at the time fabrication mask costs are incurred, that either technological feasibility of the product has not occurred or that the mask is not reasonably expected to be used in production manufacturing or that the commercial feasibility of the product is uncertain, the related mask costs are expensed to R&D in the period in which the costs are incurred. The Company will also periodically assess capitalized mask costs for impairment. During the fiscal years ended March 31, 2014 and 2013, total mask costs capitalized were $6.4 million and $3.1 million, respectively.

Stock-Based Compensation

Stock-based compensation cost is measured at the grant date based on the fair value of the award. The Company uses the Black-Scholes model to value stock-based compensation for options and employee stock purchase rights under the employee stock purchase plan ("ESPP"), and the fair market value of the Company's common stock for restricted stock units ("RSUs"). The market stock units ("MSUs") were valued using the Monte Carlo pricing model, which uses the Company's stock price, the Index value, expected volatilities of the Company's stock price and the Index, correlation coefficients and risk free interest rates to determine the fair value. The Black-Scholes model determines the fair value of share-based payment awards based on the stock price on the date of grant and is affected by assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the Company’s stock price, volatility over the term of the awards and actual and projected employee stock option exercise behaviors. Option-pricing models were developed for use in estimating the value of traded options that have no vesting or hedging restrictions and are fully transferable. Although the fair value of stock options granted by the Company is estimated by the Black-Scholes model, the estimated fair value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction.

Compensation Amortization Period. All stock-based compensation is amortized over the requisite service period of the awards, which is generally the same as the vesting period of the awards. The Company amortizes the fair value cost on a straight-line basis over the expected service periods.

Expected Life. The expected life of stock options granted represents the expected weighted average period of time from the date of grant to the estimated date that the stock option would be fully exercised. To calculate the expected term, the Company utilizes historical actual exercise data and assumes that unexercised stock options would be exercised at the midpoint of the valuation date of its analysis and the full contractual term of the option.

Expected Volatility. Expected volatility is a measure of the amount by which the stock price is expected to fluctuate. The Company estimates the expected volatility of its stock options at their grant date by equally weighting the historical volatility and the implied volatility of its stock. The historical volatility is calculated using the weekly stock price of its stock over a recent historical period equal to its expected life. The implied volatility is calculated from the implied market volatility of exchange-traded call options on its common stock.

Risk-Free Interest Rate. The risk-free interest rate is the implied yield currently available on zero-coupon government issues with a remaining term equal to the expected life.

Expected Dividends. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero percent in valuation models.

Expected Forfeitures. As stock-based compensation expense recognized in the Consolidated Statements of Operations for the fiscal years ended March 31, 2014, 2013 and 2012 is based on awards that are ultimately expected to vest, it should be reduced for estimated forfeitures. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Pre-vesting forfeiture rates were based upon the average of expected forfeiture data using the Company’s current demographics and standard probabilities of employee turnover and the annual forfeiture rate based on the Company’s historical forfeiture rates.

Effective April 1, 2013, the Company revised the estimated forfeiture rate used to determine the amount of stock-based compensation from 6.6% to 5.8% as a result of a decreasing rate of forfeitures in recent periods, which the Company believes is indicative of the rate it will experience during the remaining vesting period of currently outstanding unvested grants.

The weighted average fair value per share of the restricted stock units awarded in the fiscal years ended March 31, 2014, 2013 and 2012 was $9.46, $6.11 and $9.00, respectively. The weighted average fair value per share was calculated based on the fair market value of the Company’s common stock on the respective grant dates.

The amount of unrecognized stock-based compensation cost estimated to be expensed from April 1, 2014 through fiscal 2018, including time, performance and market based awards that are expected to vest, is $24.1 million which will be recognized over a weighted-average period of 1.5 years. If there are any modifications or cancellations of the underlying unvested securities, the Company may be required to accelerate, increase or cancel any remaining unrecognized stock-based compensation expense. Future stock-based compensation expense and unrecognized stock-based compensation will increase to the extent that the Company grants additional equity awards or assumes unvested equity awards in connection with acquisitions.

Income Taxes

The Company utilizes the asset and liability method of accounting for income taxes as set forth in ASC Subtopic 740-10 (“ASC 740-10”). Under the asset and liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates. A valuation allowance is recorded when it is more likely than not that some or all of the deferred tax assets will not be realized.

Segments of a Business Enterprise

The Company has two operating segments, Connectivity and Computing, and under the aggregation criteria set forth in ASC 280-10 (as the two operating segments share similar economic characteristics related to the nature of their products, production processes, customers and methods of distribution), has one reportable operating segment. The Company’s Chief Operating Decision Maker, the Chief Executive Officer, evaluates performance of the Company and makes decisions regarding allocation of resources based on total Company results.

New Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2013-02 (ASU 2013-02), Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU 2013-02 requires an entity to present either on the face of the statement where comprehensive income is presented or in the notes to the financial statements, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income. The adoption of ASU 2013-02, which involves presentation and disclosures only, did not have a significant impact on the Company's Consolidated Financial Statements.

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standards setting bodies that are adopted by the Company as of the specified effective date. The Company believes the impact of recently issued standards that are not yet effective will not have a material impact on its Consolidated Financial Statements.

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Summary of Significant Accounting Policies - Property and Equipment (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Jun. 30, 2013 Minimum	Jun. 30, 2013 Maximum
Property, Plant and Equipment [Line Items]
Estimated useful lives of assets		1 year	7 years
Impairment of long-lived assets	$ 0

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Investments (Tables)

12 Months Ended

Mar. 31, 2014

Investments, Debt and Equity Securities [Abstract]

Schedule of Cash, cash equivalents and available-for-sale investments by type of instruments

The following is a summary of cash, cash equivalents and available-for-sale investments by type of instrument (in thousands):

	March 31, 2014									March 31, 2013
	Amortized Cost		Gross Unrealized					Estimated Fair Value		Amortized Cost		Gross Unrealized					Estimated Fair Value
			Gains		Losses							Gains		Losses
Cash	$	65,867	$	—	$	—		$	65,867	$	8,529	$	—	$	—		$	8,529
Cash equivalents	5,672		—		—			5,672		10,536		—		—			10,536
U.S. Treasury securities and agency bonds	2,838		—		—			2,838		12,363		10		—			12,373
Corporate bonds	10,599		30		(2		)	10,627		15,567		63		(2		)	15,628
Mortgage-backed and asset-backed securities*	1,793		297		(16		)	2,074		3,655		355		(7		)	4,003
Closed-end bond funds	14,373		2,392		(402		)	16,363		21,914		5,340		(39		)	27,215
Preferred stock	2,406		736		—			3,142		4,878		2,314		—			7,192
	$	103,548	$	3,455	$	(420	)	$	106,583	$	77,442	$	8,082	$	(48	)	$	85,476
Reported as:
Cash and cash equivalents								$	71,539								$	19,065
Short-term investments available-for-sale								35,044									66,411
								$	106,583								$	85,476

* At March 31, 2014 and 2013, approximately $1.1 million and $1.4 million of the estimated fair value presented were mortgage-backed securities, respectively.

Schedule of Cash, cash equivalents and available-for-sale investments by type of instruments measured at fair value on recurring basis

The following is a summary of cash, cash equivalents and available-for-sale investments by type of instruments measured at fair value on a recurring basis (in thousands):

	March 31, 2014								March 31, 2013
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Level 1
Cash	$	65,867	$	—	$	—	$	65,867	$	8,529	$	—	$	—	$	8,529
Cash equivalents	5,672		—		—		5,672		9,508		1,028		—		10,536
U.S. Treasury securities and agency bonds	2,838		—		—		2,838		12,373		—		—		12,373
Corporate bonds	—		10,627		—		10,627		—		15,628		—		15,628
Mortgage-backed and asset-backed securities	—		2,074		—		2,074		—		4,003		—		4,003
Closed-end bond funds	16,363		—		—		16,363		27,215		—		—		27,215
Preferred stock	—		3,142		—		3,142		—		7,192		—		7,192
	$	90,740	$	15,843	$	—	$	106,583	$	57,625	$	27,851	$	—	$	85,476

Schedule of Cost and estimated fair values of available-for-sale securities with stated maturities by contractual maturity

The following is a summary of the cost and estimated fair values of available-for-sale securities with stated maturities, which include U.S. Treasury securities and agency bonds, corporate bonds and mortgage-backed and asset-backed securities, by contractual maturity as of March 31, 2014 (in thousands):

	March 31, 2014
	Cost		Estimated Fair Value
Less than 1 year	$	6,888	$	7,024
Mature in 1 – 2 years	6,580		6,618
Mature in 3 – 5 years	529		542
Mature after 5 years	1,233		1,355
	$	15,230	$	15,539

Schedule of Gross unrealized losses

The following is a summary of gross unrealized losses (in thousands):

	Less Than 12 Months of Unrealized Losses					12 Months or More of Unrealized Losses					Total
As of March 31, 2014	Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses
U.S. Treasury securities and agency bonds	$	—	$	—		$	—	$	—		$	—	$	—
Corporate bonds	992		(2		)	—		—			992		(2		)
Mortgage-backed and asset-backed securities	431		(16		)	—		—			431		(16		)
Closed-end bond funds	4,819		(333		)	405		(69		)	5,224		(402		)
	$	6,242	$	(351	)	$	405	$	(69	)	$	6,647	$	(420	)

	Less Than 12 Months of Unrealized Losses					12 Months or More of Unrealized Losses					Total
As of March 31, 2013	Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses
U.S. Treasury securities and agency bonds	$	300	$	—		$	—	$	—		$	300	$	—
Corporate bonds	2,276		(2		)	113		—			2,389		(2		)
Mortgage-backed and asset-backed securities	647		(3		)	—		(4		)	647		(7		)
Closed-end bond funds	—		—			6,991		(39		)	6,991		(39		)
	$	3,223	$	(5	)	$	7,104	$	(43	)	$	10,327	$	(48	)

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Income Taxes - Income (Loss) Before Income Tax (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended													12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013		Sep. 30, 2013		Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2012		Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest [Abstract]
Domestic (loss) income														$ (8,976)	$ (130,552)	$ (78,630)
Foreign loss														3,901	(4,117)	(3,130)
Loss before income taxes	$ 23,154	$ (7,083)	[1]	$ (32,191)	[2]	$ 11,045	[3]	$ (18,618)	[4],[5]	$ (70,944)	[6]	$ (21,917)	$ (23,190)	$ (5,075)	$ (134,669)	$ (81,760)

[1] The consolidated operating results for the third quarter of fiscal 2014 included a charge of $2.9 million related to the Veloce consideration.

[2] The consolidated operating results for the second quarter of fiscal 2014 included a charge of $30.4 million related to the Veloce consideration.

[3] The consolidated operating results for the first quarter of fiscal 2014 included a charge of $9.3 million related to the Veloce consideration and a gain on sale of TPack of $19.7 million.

[4] The consolidated operating results for the fourth quarter of fiscal 2013 included a charge of $9.6 million related to the Veloce consideration.

[5] During fiscal 2012, one significant product development milestone relating to the Veloce project was considered probable of achievement and accordingly $60.4 million was recognized as research and development expense (see further discussion in Note 4, Veloce, to the Consolidated Financial Statements). However, approximately $8.0 million of the R&D expense was incorrectly recognized as this expense amount related to Unallocated Veloce Units that had not yet been distributed as of March 31, 2012. R&D expenses were also recognized during the first three quarters of fiscal 2013 in connection with further progress made in connection with the performance milestones relating to Veloce. However, the R&D expenses recognized during the first three quarters of fiscal 2013 also incorrectly included immaterial amounts related to the Unallocated Veloce Units. During the fourth quarter of fiscal 2013, the Company corrected the error impacting fiscal 2012 and the first three quarters of fiscal 2013. The correction of the errors resulted in a reduction of R&D expenses recognized by $10.4 million during the fourth quarter of fiscal 2013.

[6] During the fiscal years ended March 31, 2014, 2013 and 2012, the Company recognized an impairment charge of its non-marketable strategic investment of $0.0 million, $2.3 million and $1.0 million, respectively. Refer to Note 1, Summary of Significant Accounting Policies, to the Consolidated Financial Statements for details.

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Consolidated Statements of Stockholders' Equity (USD $) In Thousands, unless otherwise specified		Total	Common Stock [Member]	Additional Paid In Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Accumulated Deficit [Member]
Balance, beginning of period at Mar. 31, 2011		$ 261,810	$ 637	$ 5,891,036	$ (1,597)	$ (5,628,266)
Balance, shares, beginning of period at Mar. 31, 2011			63,666
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock		3,873	27	3,846
Issuance of common stock, shares			2,727
Repurchase of common stock		(20,852)	(35)	(20,817)
Repurchase of common stock, shares			(3,487)
Funding of structured stock repurchase agreements		(10,000)	(10)	(9,990)
Funding of structured stock repurchase agreements, shares			(1,027)
Stock-based compensation expense	[1]	17,261		17,261
Other comprehensive (loss) gain		(168)			(168)
Net loss		(82,688)				(82,688)
Balance, end of period at Mar. 31, 2012		169,236	619	5,881,336	(1,765)	(5,710,954)
Balance, shares, end of period at Mar. 31, 2012			61,879
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock		22,441	62	22,379
Issuance of common stock, shares			6,199
Repurchase of common stock		(653)	(1)	(652)
Repurchase of common stock, shares			(126)
Stock-based compensation expense	[1]	23,567		23,567
Other comprehensive (loss) gain		1,028			1,028
Net loss		(134,115)				(134,115)
Balance, end of period at Mar. 31, 2013		81,504	680	5,926,630	(737)	(5,845,069)
Balance, shares, end of period at Mar. 31, 2013			67,952
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock		62,920	97	62,823
Issuance of common stock, shares			9,725
Stock-based compensation expense	[1]	15,912		15,912
Other comprehensive (loss) gain		(5,406)			(5,406)
Net loss		(5,694)				(5,694)
Balance, end of period at Mar. 31, 2014		$ 149,236	$ 777	$ 6,005,365	$ (6,143)	$ (5,850,763)
Balance, shares, end of period at Mar. 31, 2014			77,677

[1] Veloce’s stock-based compensation expense related to warrants is included in issuance of common stock.

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Consolidated Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2014	Mar. 31, 2013
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	2,000,000	2,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	375,000,000	375,000,000
Common stock, shares issued	77,677,000	67,952,000
Common stock, shares outstanding	77,677,000	67,952,000

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Significant Customer and Geographic Information

12 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Significant Customer and Geographic Information

Significant Customer and Geographic Information

Based on direct shipments, net revenues to customers that were equal to or greater than 10% of total net revenues were as follows:

	Fiscal Years Ended March 31,
	2014		2013		2012
Wintec (global logistics provider)**	22	%	19	%	20	%
Avnet (distributor)	27	%	27	%	20	%
Flextronics (sub-contract manufacturer)	*		*		11	%

* Less than 10% of total net revenues for period indicated.

** Wintec provides vendor managed inventory support primarily for Cisco Systems, Inc.

Net revenues by geographic region, which are primarily denominated in U.S. dollars, were as follows (in thousands):

	Fiscal Years Ended March 31,
	2014		2013		2012
United States of America	$	101,275	$	79,930	$	99,214
Taiwan	13,405		22,684		20,950
Hong Kong	21,477		22,044		21,458
China	6,085		2,053		4,503
Europe	33,625		35,216		41,691
Japan	23,125		13,237		13,596
Malaysia	5,788		4,733		8,276
Singapore	9,745		10,399		14,011
Other Asia	1,217		4,621		5,790
Other	408		725		1,398
	$	216,150	$	195,642	$	230,887

As of March 31, 2014, 2013 and 2012, long-lived assets, which represent property, plant and equipment, goodwill and intangible assets, net of accumulated depreciation and amortization, located outside the Americas were not material.

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Document and Entity Information (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Mar. 31, 2014	May 20, 2014	Sep. 30, 2013
Document and Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Mar. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Entity Registrant Name	APPLIED MICRO CIRCUITS CORP
Entity Central Index Key	0000711065
Current Fiscal Year End Date	--03-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		77,972,678
Entity Public Float			$ 800,837
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes

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Contingencies

12 Months Ended

Mar. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Contingencies

Contingencies

Legal Proceedings

The Company is currently a party to certain legal proceedings, including those noted in this section. While the Company presently believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm the Company's financial position, results of operations, cash flows, or overall trends, legal proceedings are subject to inherent uncertainties, unfavorable rulings or other events that could occur. In addition, legal proceedings are expensive to prosecute and defend against and can divert management attention and Company resources away from the Company's business objectives. Unfavorable resolutions could include monetary damages against the Company or injunctions or other restrictions on the conduct of the Company’s business, or preclude the Company from recovering the damages it seeks in legal proceedings it has commenced. It is also possible that the Company could conclude it is in the best interests of its stockholders, employees, and customers to settle one or more such matters, and any such settlement could include substantial payments or the surrender of rights to collect payments from third parties. However, the Company has not reached this conclusion with respect to any particular matter at this time.

In 1993, the Company was named as a Potentially Responsible Party (“PRP”) along with more than 100 other companies that used an Omega Chemical Corporation waste treatment facility in Whittier, California (the “Omega Site”). The U.S. Environmental Protection Agency (“EPA”) has alleged that Omega failed to properly treat and dispose of certain hazardous waste materials at the Omega Site. The Company is a member of a large group of PRPs, known as the Omega Chemical Site PRP Organized Group (“OPOG”), that has agreed to fund certain on-going remediation efforts at the Omega Site. In February 2001, the U.S. District Court for the Central District of California (the “Court”) approved a consent decree between EPA and OPOG to study the contamination and evaluate cleanup options at the Omega Site (the Operable Unit 1 or “OU1”). In January 2009, the Court approved two amendments to the consent decree, the first expanding the scope of work to mitigate volatile organic compounds affecting indoor air quality near the Omega Site (the Operable Unit 3 or “OU3”) and the second adding settling parties to the consent decree. Removal of waste materials from the Omega Site has been completed. As part of OU1 and OU3, efforts to remediate the soil and groundwater at the Omega Site, as well as the extraction of chemical vapors from the soil and improving indoor air quality in and around the site, are underway and are expected to be ongoing for several years. In addition, OPOG and EPA are investigating a regional groundwater contamination plume allegedly originating at the Omega Site (the Operable Unit 2 or “OU2”). In September 2011, EPA issued an interim Record of Decision specifying the interim clean-up actions EPA has chosen for OU2, and in September 2012, it issued a special notice letter that triggered the commencement of good faith settlement negotiations with OPOG. In July 2013, EPA rejected a good faith offer (“GFO”) to settle the matter that OPOG had submitted in February 2013. In October 2013, OPOG submitted a revised GFO that EPA currently is considering. Settlement negotiations between the parties are expected to continue through fiscal year 2015. It is anticipated that such negotiations will result in EPA and OPOG entering into a remediation consent decree with the Court regarding OU2. In December 2013, OPOG retained legal counsel to pursue legal claims against numerous other PRPs for OU2 contamination; the Company has elected to participate in the costs and recoveries resulting from such litigation. In November 2007, Angeles Chemical Company, located downstream from the Omega Site, filed a lawsuit (the “Angeles Litigation”) in the Court against OPOG and the PRPs for cost recovery and indemnification for future response costs allegedly resulting from OU2. In March 2008, the Court granted OPOG’s motion to stay the Angeles Litigation pending EPA’s determination of how to investigate and remediate OU2. In January 2012, as a result of challenges made by certain PRPs to the criteria previously used to allocate liability among OPOG members, and of the departure of certain PRPs from OPOG, OPOG approved changes to the cost allocation structure that resulted in an increase to the Company’s proportional allocation of liability. Subsequent thereto, certain other PRPs have withdrawn from OPOG; settlement discussions with these PRPs are ongoing. The subsequent departure of one or more other PRPs from OPOG could have the effect of increasing the proportional liability of the remaining PRPs, including the Company. Although the Company considers a loss relating to the Omega Site probable, its share of any financial obligations for the remediation of the Omega Site, including taking into account the allocation increases described above, is not currently believed to be material to the Company’s financial statements, based on the Company’s approximately 0.5% contribution to the total waste tonnage sent to the site and current estimates of the potential remediation costs. Based on currently available information, the Company has a loss accrual that is not material and believes that the actual amount of its costs will not be materially different from the amount accrued. However, proceedings are ongoing and the eventual outcome of the clean-up efforts and the pending litigation matters is uncertain at this time. Based on currently available information, the Company does not believe that any eventual outcome will have a material adverse effect on its operations.

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Significant Customer and Geographic Information - Revenue by Geographic Region (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended													12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013		Sep. 30, 2013		Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2012		Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenues by geographic region	$ 51,771	$ 54,844	[1]	$ 55,387	[2]	$ 54,148	[3]	$ 56,326	[4],[5]	$ 51,698	[6]	$ 46,324	$ 41,294	$ 216,150	$ 195,642	$ 230,887
United States of America
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenues by geographic region														101,275	79,930	99,214
Taiwan
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenues by geographic region														13,405	22,684	20,950
Hong Kong
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenues by geographic region														21,477	22,044	21,458
China
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenues by geographic region														6,085	2,053	4,503
Europe
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenues by geographic region														33,625	35,216	41,691
Japan
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenues by geographic region														23,125	13,237	13,596
Malaysia
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenues by geographic region														5,788	4,733	8,276
Singapore
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenues by geographic region														9,745	10,399	14,011
Other Asia
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenues by geographic region														1,217	4,621	5,790
Other
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenues by geographic region														$ 408	$ 725	$ 1,398

[1] The consolidated operating results for the third quarter of fiscal 2014 included a charge of $2.9 million related to the Veloce consideration.

[2] The consolidated operating results for the second quarter of fiscal 2014 included a charge of $30.4 million related to the Veloce consideration.

[3] The consolidated operating results for the first quarter of fiscal 2014 included a charge of $9.3 million related to the Veloce consideration and a gain on sale of TPack of $19.7 million.

[4] The consolidated operating results for the fourth quarter of fiscal 2013 included a charge of $9.6 million related to the Veloce consideration.

[5] During fiscal 2012, one significant product development milestone relating to the Veloce project was considered probable of achievement and accordingly $60.4 million was recognized as research and development expense (see further discussion in Note 4, Veloce, to the Consolidated Financial Statements). However, approximately $8.0 million of the R&D expense was incorrectly recognized as this expense amount related to Unallocated Veloce Units that had not yet been distributed as of March 31, 2012. R&D expenses were also recognized during the first three quarters of fiscal 2013 in connection with further progress made in connection with the performance milestones relating to Veloce. However, the R&D expenses recognized during the first three quarters of fiscal 2013 also incorrectly included immaterial amounts related to the Unallocated Veloce Units. During the fourth quarter of fiscal 2013, the Company corrected the error impacting fiscal 2012 and the first three quarters of fiscal 2013. The correction of the errors resulted in a reduction of R&D expenses recognized by $10.4 million during the fourth quarter of fiscal 2013.

[6] During the fiscal years ended March 31, 2014, 2013 and 2012, the Company recognized an impairment charge of its non-marketable strategic investment of $0.0 million, $2.3 million and $1.0 million, respectively. Refer to Note 1, Summary of Significant Accounting Policies, to the Consolidated Financial Statements for details.

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Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012
Net revenues	$ 216,150	$ 195,642	$ 230,887
Cost of revenues	85,189	83,048	98,804
Gross profit	130,961	112,594	132,083
Operating expenses:
Research and development	146,579	187,419	175,656
Selling, general and administrative	38,927	51,684	45,794
Gain on sale of TPack	(19,699)	0	0
Gain on sale of building	(25,815)	0	0
Amortization of purchased intangible assets	316	1,926	3,202
Restructuring charges	1,134	6,435	875
Total operating expenses	141,442	247,464	225,527
Operating loss	(10,481)	(134,870)	(93,444)
Interest income (expense), net and other-than-temporary impairment	5,052	2,595	4,247
Other income (expense), net	354	(2,394)	7,437
Loss before income taxes	(5,075)	(134,669)	(81,760)
Income tax expense	619	(554)	928
Net loss	$ (5,694)	$ (134,115)	$ (82,688)
Basic and diluted net loss per share (in dollars per share)	$ (0.08)	$ (2.06)	$ (1.33)
Shares used in calculating basic and diluted net loss per share	72,897	65,258	62,245

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Stockholders' Equity

12 Months Ended

Mar. 31, 2014

Equity [Abstract]

Stockholders' Equity

Stockholders' Equity

Preferred Stock

The Certificate of Incorporation allows for the issuance of up to two million shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences, and the number of shares constituting any series of the designation of such series, without further vote or action by the stockholders. At March 31, 2014, there were no preferred shares outstanding.

Common Stock

At March 31, 2014, the Company had 375.0 million shares authorized for issuance and approximately 77.7 million shares issued and outstanding. At March 31, 2013, there were approximately 68.0 million shares issued and outstanding.

Stock Repurchase Program

In August 2004, the Board of Directors authorized a stock repurchase program for the repurchase of up to $200.0 million of the Company's common stock. Under the program, the Company is authorized to make purchases in the open market or enter into structured agreements. In October 2008, the Board of Directors increased the stock repurchase program by $100.0 million. There were no stock repurchases during the fiscal year ended March 31, 2014. During the fiscal year ended March 31, 2013, approximately 0.1 million shares were repurchased on the open market at a weighted average price of $5.18 per share. From the time the program was first implemented in August 2004, the Company has repurchased on the open market a total of 17.3 million shares at weighted average price of $10.04 per share. All repurchased shares were retired upon delivery to the Company. As of March 31, 2014, the Company had $15.9 million available in its stock repurchase program.

Stock Options

The Company has granted stock options to employees and non-employee directors under several plans. These equity plans include three stockholder-approved plans (the 1992 Stock Option Plan and 1997 Directors’ Stock Option Plan and 2011 Equity Incentive Plan) and four plans not approved by stockholders (the 2000 Equity Incentive Plan, Cimaron Communications Corporation’s 1998 Stock Incentive Plan assumed in the fiscal 1999 merger, and JNI Corporation’s 1997 and 1999 Stock Option Plans assumed in the fiscal 2004 merger). Certain other outstanding options were assumed through the Company’s various acquisitions.

In May 2009, Dr. Gopi, the Company's CEO, was awarded 300,000 stock options for “Extraordinary Accomplishment.” The Black-Scholes value of these stock options was $1.1 million. These options vest only if Company performance milestones are satisfied; otherwise they expire unvested. The first milestone for vesting of 75,000 shares is when it is determined that the Company achieved an annual revenue target of $270.0 million or more for any fiscal year from fiscal 2010 through fiscal 2013. The next milestone for vesting of another 75,000 shares is when it is determined that the Company achieved an annual revenue target of $310.0 million or more for any fiscal year from fiscal 2010 through fiscal 2013 or an annual revenue target of $350.0 million or more for fiscal 2014. The last milestone for vesting of 150,000 shares is when it is determined that the Company achieved an annual operating margin of 13.5% of annual revenue or higher in fiscal 2013 or 15% or higher for any fiscal year from fiscal 2010 through fiscal 2012. All options issued under the above award expired unvested when it concluded in fiscal 2014.

A summary of the Company's stock option activity and related information is as follows:

	Options Outstanding
	Number of Shares (thousands)		Weighted Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (years)	Aggregate Intrinsic Value* (millions)
Outstanding as of March 31, 2011	5,390		$	11.91
Granted	250		$	10.10
Exercised	(156	)	$	5.11		$	0.5	(1)
Cancelled	(1,320	)	$	16.20
Outstanding as of March 31, 2012	4,164		$	10.67
Granted	40		$	5.58
Exercised	(161	)	$	5.31		$	0.3	(1)
Cancelled	(551	)	$	14.49
Outstanding as of March 31, 2013	3,492		$	10.26
Granted	40		7.35
Exercised	(662	)	9.36			$	1.8	(1)
Cancelled	(461	)	12.35
Outstanding as of March 31, 2014	2,409		$	10.06	2.7	$	3.4	(2)
Vested and expected to vest as of March 31, 2014	2,409		$	10.06	2.6	$	3.4	(2)
Vested and exercisable at the end of the year	2,312		$	10.14	2.7	$	3.2	(2)

(1) The aggregate pre-tax intrinsic value is calculated as the difference between the market value on the date of exercise and the exercise price of the shares.

(2) The aggregate pre-tax intrinsic value is calculated as the difference between the market value as of the end of the fiscal period and the exercise price of the shares. The closing price of the Company’s common stock was $9.90 on March 31, 2014.

The following table summarizes the information about stock options outstanding and exercisable as of March 31, 2014 (shares in thousands):

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number of Shares	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number of Shares	Weighted Average Exercise Price
$  1.68 - $ 7.60	540	3.07	$	6.77	462	$	6.71
7.61 - 7.67	650	2.34	7.67		650	7.67
7.68 - 11.86	430	3.3	10.49		419	10.47
11.87 - 14.20	491	2.38	12.87		483	12.88
14.21 - 23.32	298	1.47	15.96		298	15.96
$  1.68 - $23.32	2,409	2.57	$	10.06	2,312	$	10.14

Restricted Stock Units

The Company has granted RSUs pursuant to its 1992 Plan, 2000 Equity Incentive Plan and 2011 Equity Incentive Plan as part of its regular annual employee equity compensation review program as well as to new hires. RSUs are share awards that, upon vesting, will deliver to the holder shares of the Company’s common stock. Generally, RSUs vest ratably on a quarterly basis over four years from the date of grant. For employees hired after May 15, 2006, RSUs will vest on a quarterly basis over four years from the date of hire provided that no shares will vest during the first year of employment, at the end of which the shares that would have vested during that year will vest and the remaining shares will vest over the remaining 12 quarters.

In April 2011, the Committee authorized additional three-year performance-based RSU grants, or “EBITDA2” Grants. Fiscal 2012, 2013 and 2014 were declared as zero attainment years and all shares issued under the EBITDA2 program expired unvested when the program concluded in May 2014.

In November 2011 and February 2012, the Committee authorized additional 18-month performance-based RSU grants, or “Performance Retention Grants”, which were intended to incentivize superior performance and retain key employees. In May 2012, the Committee authorized 12-month Performance Retention Grants. Vesting for the Performance Retention Grants was subject to (i) the accomplishment of goals and objectives of the individual’s business unit and (ii) individual performance as measured by the accomplishment of individual goals and objectives. The 18-month RSU shares generally vest 2/3 after one year, with certain unearned amounts able to roll over to the subsequent vesting period, and 1/3 after 18 months. The 12-month RSU shares have the opportunity to vest after 1 year. Unvested RSU shares remaining at the end of the program period will expire unvested. This program has concluded and no further grants will be made under this program.

In February 2012, Dr. Gopi was awarded 500,000 performance-based RSUs based on three underlying performance milestones. The value of these RSUs is $3.7 million. The Company evaluated the probability of achieving the milestones and recognized expense accordingly. As of March 31, 2014, all three performance milestones have been completed, and the associated stock-based compensation expense has been recorded in the Company's Consolidated Financial Statements. In November 2013, Dr. Gopi was awarded an additional 500,000 RSUs of which 200,000 RSUs were vested on the grant date and the remaining 300,000 RSUs have not vested as of March 31, 2014 and will vest upon the attainment of certain specified X-Gene and X-Weave commercialization goals. The value of these unvested performance-based RSUs is $3.3 million.

In May and November 2013, the Committee authorized performance-based MSUs. The MSUs will be earned, if at all, based on the Company's Total Shareholder Return (“TSR”) compared to that of the SPDR S&P Semiconductor Index ("Index”) over a 2-year performance period (for half of the MSU award) and a three-year performance period (for the remaining half of the MSU award). The MSUs will vest between ranges of 0% and 150% based on the Company's relative TSR compared to the Index. The value of these MSUs is $3.1 million.

In May 2013, the Committee authorized an annual incentive compensation plan (the “FY2014 Short-Term Plan”). The FY 2014 Short-Term Plan will pay out based on fiscal 2014 revenue and non-GAAP earnings per share metrics. The award payouts for each corporate financial measure range from 50% to 150% of the pre-established target level based on the Company's actual performance for fiscal 2014 and the associated stock-based compensation expense of $1.4 million has been recorded in the Company's Consolidated Financial Statements as of March 31, 2014. The FY 2014 Short-Term Plan was payable in fully vested RSUs on May 15, 2014 and was duly paid in May 2014.

A summary of the Company's RSU activity is as follows (in thousands):

	Fiscal Years Ended March 31,
	2014		2013		2011
Outstanding at the beginning of the year	6,444		9,244		3,074
Awarded	3,594		1,040		8,833
Vested	(2,397	)	(2,345	)	(1,701	)
Cancelled	(1,536	)	(1,495	)	(962	)
Outstanding at the end of the year	6,105		6,444		9,244

The weighted average remaining contractual term for the RSUs outstanding as of March 31, 2014 was 0.9 years.

As of March 31, 2014, the aggregate pre-tax intrinsic value of RSUs outstanding was $60.4 million which includes performance based awards which are subject to milestone attainment. The aggregate pretax intrinsic values were calculated based on the closing price of the Company’s common stock of $9.90 on March 31, 2014.

The aggregate pretax intrinsic values of RSUs released during the fiscal year ended March 31, 2014 was $22.4 million. This intrinsic value represents the fair market value of the Company’s common stock on the date of release.

Employee Stock Purchase Plan

Under the Company's 1998 Employee Stock Purchase Plan ("1998 Plan"), the Company had 6.3 million shares reserved for issuance. In August 2012, the Company’s stockholders approved the proposal to reserve an additional 1.8 million shares under the 2012 Employee Stock Purchase Plan ("2012 Plan"). Upon adoption of the 2012 Plan, the 1998 Plan was terminated. Under the terms of the 2012 Plan, purchases are made semiannually and the purchase price of the common stock is equal to 85% of the fair market value of the common stock on the first or last day of the offering period, whichever is lower. During the fiscal years ended March 31, 2014 and 2013, 0.7 million and 0.6 million shares, respectively, were issued under the 2012 plan. During the fiscal year ended March 31, 2013, 0.4 million shares were issued under the 1998 plan prior to its termination in August 2012. At March 31, 2014, 0.5 million shares were available for future issuance from the 2012 Plan.

Warrants

On May 17, 2009, the Company entered into a development agreement with Veloce pursuant to which Veloce agreed, among other things, to perform development work for the Company on an exclusive basis for up to five years for cash and other consideration, including a warrant to purchase shares of the Company’s common stock (the “Warrant”). In connection with the Merger Agreement amendment entered into on April 5, 2012, the Company and Veloce further modified the Warrant by fully accelerating the vesting schedule resulting in the recognition of approximately $1.3 million of stock compensation expense during the quarter ended June 30, 2012.

Common Shares Reserved for Future Issuance

At March 31, 2014, the Company has the following shares of common stock reserved for issuance upon the exercise of equity instruments (in thousands):

Options granted and outstanding	2,409
Restricted Stock Units granted and outstanding	6,105
Options and RSUs authorized for future grants	355
Employee Stock Purchase Plan	498
	9,367

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Veloce

12 Months Ended

Mar. 31, 2014

Variable Interest Entity, Measure of Activity [Abstract]

Veloce

Veloce

On June 20, 2012 (the “Closing Date”), the Company completed its acquisition of Veloce pursuant to the terms of the Agreement and Plan of Merger (the “Merger Agreement”). Veloce has been developing specific technology for the Company.

The terms of the Merger Agreement include the payment of the total consideration, payable to holders of Veloce common stock options that were vested on the Closing Date and holders of Veloce common stock and stock equivalents (collectively “Veloce Equity Holders”), and to Veloce stock equivalents that have not yet been allocated to individuals (“Unallocated Veloce Units”). The Merger Agreement further provides for payments of additional merger consideration contingent upon the achievement of certain post-closing product development milestones relating to the Veloce development project.

The total estimated consideration to be paid was based upon the benchmarks achieved during technology simulations that were performed during the third quarter of fiscal 2013 and correlating the results of the technology simulations to the contractual terms included in the Merger Agreement. As a result of higher than expected benchmarks achieved during technology simulations, the total estimated consideration to be paid was updated during fiscal 2013 from a previous estimated maximum of approximately $135.0 million to the contractual maximum of $178.5 million. Significant judgment was required in assessing when a performance milestone was probable of achievement and estimating the percentage of completion of the milestone and the timing of when the performance milestones were completed. These determinations were based on discussions with internal technical personnel that addressed various qualitative and quantitative factors, including, but not limited to, overall complexity associated with the assessment, stage of development, progress made to date, results of testing and consideration as to the nature of the remaining development work.

Veloce completed all three performance milestones relating to the project as of March 31, 2014. The consideration relating to the three performance milestones, excluding the value allocated to the Unallocated Veloce Units, in the amount of $169.3 million, has been recognized as research and development expense through March 31, 2014 compared to $126.6 million as of March 31, 2013. During the twelve months ended March 31, 2014 and 2013, as part of the above arrangement, the Company paid approximately $63.7 million and $16.5 million, respectively, in cash and issued approximately 6.7 million shares and 3.0 million shares, respectively, valued at approximately $57.3 million and $16.6 million, respectively.

The consideration that the Company will be obligated to pay will be allocated equally to each of the Veloce Equity Holders and the Unallocated Veloce Units. The Company is contractually required to distribute all Unallocated Veloce Units within a certain time period. During the twelve months ended March 31, 2014, the Company distributed an additional 0.5 million Unallocated Veloce Units which had a related expense of $5.9 million. Veloce Equity Holders subject to vesting requirements will receive their distribution upon satisfaction of such vesting requirements.

For accounting purposes, the costs incurred in connection with the development milestones relating to Veloce are considered compensatory and are recognized as R&D expense. Recognition of these costs as expense occurred when certain development and performance milestones became probable of achievement and were deemed earned. However, the value allocated to the Unallocated Veloce Units will not be recognized as R&D expense until distribution of the underlying units occurs. As of March 31, 2014, 0.9 million Unallocated Veloce Units had not been allocated, and the maximum potential additional expense to be recognized associated with these Unallocated Veloce Units was approximately $9.2 million.

Total R&D expenses recognized related to Veloce were approximately $42.7 million and $66.2 million during the twelve months ended March 31, 2014 and 2013, respectively. The Veloce accrued liability included on the Consolidated Balance Sheets is based upon the amount of R&D expense recognized in connection with the development of the Veloce performance milestones less amounts paid either in cash or in common stock. Veloce consideration that has been accrued as of March 31, 2014, is classified as long-term if payments of the consideration are expected to occur beyond a 12 month period.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

Summary of Stock-Based Compensation Expense of Stock Options and Restricted Stock Units

The following tables summarize the allocation of the stock-based compensation expense (in thousands):

	Fiscal Year Ended March 31,
	2014			2013		2012
Stock-based compensation expense by type of award:
Option grants and employee stock purchase rights	$	2,520		$	3,469	$	5,289
Restricted stock units	14,517			20,620		13,148
Total stock-based compensation	17,037			24,089		18,437
Stock-based compensation expensed from (capitalized to) inventory	(16		)	147		(63		)
Total stock-based compensation expense	$	17,021		$	24,236	$	18,374

Summary of Stock-Based Compensation Expense

	Fiscal Year Ended March 31,
	2014			2013		2012
Stock-based compensation expense by cost centers:
Cost of revenues	$	460		$	545	$	495
Research and development	6,371			11,760		10,496
Selling, general and administrative	10,206			11,784		7,446
Total stock-based compensation	17,037			24,089		18,437
Stock-based compensation expensed from (capitalized to) inventory	(16		)	147		(63		)
Total stock-based compensation expense	$	17,021		$	24,236	$	18,374

Schedule of Weighted-Average Assumptions Used to Estimate the Fair Value of Stock Options

The fair values of the options and employee stock purchase rights granted are estimated as of the grant date using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	Options									Employee Stock Purchase Rights
	Fiscal Years Ended March 31,									Fiscal Years Ended March 31,
	2014			2013			2012			2014			2013			2012
Expected life (years)	4.4			4.4			3.8			0.5			0.5			0.5
Risk-free interest rate	0.6		%	0.7		%	1.4		%	—		%	—		%	0.1		%
Volatility	0.49			0.54			0.48			0.56			0.50			0.55
Dividend yield	—		%	—		%	—		%	—		%	—		%	—		%
Expected forfeiture rate	5.8		%	6.6		%	6.8		%	—		%	—		%	—		%
Weighted average fair value	$	2.95		$	2.47		$	3.83		$	3.40		$	1.77		$	2.13

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Sale of TPack A/S (Notes)

12 Months Ended

Mar. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Sale of TPack A/S

Sale of TPack A/S

On April 22, 2013, the Company completed the sale of TPack and certain specified intellectual property assets owned by the Company related to TPack's business for an aggregate consideration of $33.5 million, payable in cash, which reflects the $34.0 million base purchase price as adjusted for the working capital adjustment mechanism set forth in the Purchase Agreement, and remains subject to a potential final, non-material post-closing adjustments. In connection with the closing, there was a working capital adjustment of $0.5 million and the Company received a cash payment of $30.2 million. The remaining cash payment of $3.4 million of the aggregate consideration was held back until March 31, 2014 to secure the Company's indemnification obligations subject to and in accordance with the terms of the Purchase Agreement. This amount was paid in full in April 2014.

TPack operated as part of the Company's Connectivity reporting unit. The sale of TPack does not represent an exit from the Connectivity business. The Company will continue to sell Connectivity technology products as an ongoing part of its business, and as such the sale of TPack is not a discontinuance of an operation.

In connection with the divestiture, the Company recorded a gain of $19.7 million. The following table summarizes the components of the gain (in thousands):

Total proceeds, net of working capital adjustment	$	30,175
Net assets and liabilities	(184		)
Goodwill write off	(1,758		)
Intangibles write off	(11,404		)
Holdback amount	3,353
Legal fees and other costs	(483		)
Gain on sale of TPack	$	19,699

The total assets of TPack included $0.7 million of cash, cash equivalents and short-term investments.

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Quarterly Financial Information (unaudited) - Operating Results (Details) (USD $) Share data in Thousands, except Per Share data, unless otherwise specified	3 Months Ended													9 Months Ended	12 Months Ended			0 Months Ended	3 Months Ended						9 Months Ended		12 Months Ended			21 Months Ended
	Mar. 31, 2014	Dec. 31, 2013		Sep. 30, 2013		Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2012		Sep. 30, 2012	Jun. 30, 2012	Dec. 31, 2012	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012	Apr. 22, 2013 TPack	Jun. 30, 2013 TPack	Dec. 31, 2013 Veloce Technologies Inc.	Sep. 30, 2013 Veloce Technologies Inc.	Jun. 30, 2013 Veloce Technologies Inc.	Mar. 31, 2013 Veloce Technologies Inc.	Mar. 31, 2012 Veloce Technologies Inc.	Mar. 31, 2013 Veloce Technologies Inc.	Dec. 31, 2012 Veloce Technologies Inc.	Mar. 31, 2014 Veloce Technologies Inc.	Mar. 31, 2013 Veloce Technologies Inc.	Mar. 31, 2012 Veloce Technologies Inc.	Mar. 31, 2014 Veloce Technologies Inc.
Schedule of Quarterly Information [Line Items]
Net revenues	$ 51,771,000	$ 54,844,000	[1]	$ 55,387,000	[2]	$ 54,148,000	[3]	$ 56,326,000	[4],[5]	$ 51,698,000	[6]	$ 46,324,000	$ 41,294,000		$ 216,150,000	$ 195,642,000	$ 230,887,000
Cost of revenues	19,806,000	21,644,000	[1]	21,397,000	[2]	22,342,000	[3]	21,174,000	[4],[5]	22,958,000	[6]	20,561,000	18,355,000		85,189,000	83,048,000	98,804,000
Gross profit	31,965,000	33,200,000	[1]	33,990,000	[2]	31,806,000	[3]	35,152,000	[4],[5]	28,740,000	[6]	25,763,000	22,939,000		130,961,000	112,594,000	132,083,000
Total operating expenses	9,229,000	40,900,000	[1]	66,757,000	[2]	24,556,000	[3]	49,116,000	[4],[5]	101,942,000	[6]	48,515,000	47,891,000		141,442,000	247,464,000	225,527,000
Operating loss	22,736,000	(7,700,000)	[1]	(32,767,000)	[2]	7,250,000	[3]	(13,964,000)	[4],[5]	(73,202,000)	[6]	(22,752,000)	(24,952,000)		(10,481,000)	(134,870,000)	(93,444,000)
Interest and other income (expense)	418,000	617,000	[1]	576,000	[2]	3,795,000	[3]	(4,654,000)	[4],[5]	2,258,000	[6]	835,000	1,762,000		5,052,000	2,595,000	4,247,000
Loss before income taxes	23,154,000	(7,083,000)	[1]	(32,191,000)	[2]	11,045,000	[3]	(18,618,000)	[4],[5]	(70,944,000)	[6]	(21,917,000)	(23,190,000)		(5,075,000)	(134,669,000)	(81,760,000)
Income tax expense	38,000	201,000	[1]	192,000	[2]	188,000	[3]	(1,012,000)	[4],[5]	618,000	[6]	(360,000)	200,000		619,000	(554,000)	928,000
Net loss	23,116,000	(7,284,000)	[1]	(32,383,000)	[2]	10,857,000	[3]	(17,606,000)	[4],[5]	(71,562,000)	[6]	(21,557,000)	(23,390,000)		(5,694,000)	(134,115,000)	(82,688,000)
Basic net income (loss) per share (in shares)	$ 0.31	$ (0.10)	[1]	$ (0.45)	[2]	$ 0.16	[3]	$ (0.26)	[4],[5]	$ (1.08)	[6]	$ (0.33)	$ (0.37)
Shares used in calculating basic net income (loss) per share (shares)	75,629	73,989	[1]	72,610	[2]	69,360	[3]	67,566	[4],[5]	66,113	[6]	64,947	62,409		72,897	65,258	62,245
Diluted net income (loss) per share (in shares)	$ 0.30	$ (0.10)	[1]	$ (0.45)	[2]	$ 0.15	[3]	$ (0.26)	[4],[5]	$ (1.08)	[6]	$ (0.33)	$ (0.37)
Shares used in calculating diluted income (loss) per share (shares)	77,193	73,989	[1]	72,610	[2]	70,234	[3]	67,566	[4],[5]	66,113	[6]	64,947	62,409		72,897	65,258	62,245
Research and development expenses incurred																				2,900,000	30,400,000	9,300,000	9,600,000	60,400,000	126,600,000	51,900,000	42,700,000	66,200,000		169,300,000
Gain on sale of TPack															19,699,000	0	0	19,699,000	19,700,000
Restructuring charges														(6,200,000)	(1,134,000)	(6,435,000)	(875,000)
Immaterial R&D expense error																							$ 10,400,000						$ 8,000,000

[1] The consolidated operating results for the third quarter of fiscal 2014 included a charge of $2.9 million related to the Veloce consideration.

[2] The consolidated operating results for the second quarter of fiscal 2014 included a charge of $30.4 million related to the Veloce consideration.

[3] The consolidated operating results for the first quarter of fiscal 2014 included a charge of $9.3 million related to the Veloce consideration and a gain on sale of TPack of $19.7 million.

[4] The consolidated operating results for the fourth quarter of fiscal 2013 included a charge of $9.6 million related to the Veloce consideration.

[5] During fiscal 2012, one significant product development milestone relating to the Veloce project was considered probable of achievement and accordingly $60.4 million was recognized as research and development expense (see further discussion in Note 4, Veloce, to the Consolidated Financial Statements). However, approximately $8.0 million of the R&D expense was incorrectly recognized as this expense amount related to Unallocated Veloce Units that had not yet been distributed as of March 31, 2012. R&D expenses were also recognized during the first three quarters of fiscal 2013 in connection with further progress made in connection with the performance milestones relating to Veloce. However, the R&D expenses recognized during the first three quarters of fiscal 2013 also incorrectly included immaterial amounts related to the Unallocated Veloce Units. During the fourth quarter of fiscal 2013, the Company corrected the error impacting fiscal 2012 and the first three quarters of fiscal 2013. The correction of the errors resulted in a reduction of R&D expenses recognized by $10.4 million during the fourth quarter of fiscal 2013.

[6] During the fiscal years ended March 31, 2014, 2013 and 2012, the Company recognized an impairment charge of its non-marketable strategic investment of $0.0 million, $2.3 million and $1.0 million, respectively. Refer to Note 1, Summary of Significant Accounting Policies, to the Consolidated Financial Statements for details.

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Commitments

12 Months Ended

Mar. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments

Commitments

The Company leases its facilities under long-term operating leases, which expire at various dates through the fiscal year ending March 31, 2017. The lease agreements frequently include renewal or other provisions, which require the Company to pay taxes, insurance, maintenance costs or defined rent increases. The Company also licenses certain engineering design software tools under non-cancelable operating leases.

The following table summarizes the Company’s contractual operating leases as of March 31, 2014 (in thousands):

	Payment Due by Period
Fiscal Years Ending March 31,
2015	$	1,901
2016	930
2017	504
2018	$	369
Total minimum payments	$	3,704

The Company did not have any off balance sheet arrangements at March 31, 2014.

Rent expense (including short-term leases and net of sublease income) for the fiscal years ended March 31, 2014, 2013, and 2012 was $1.8 million, $2.6 million, and $2.9 million, respectively.

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Stockholders' Equity - Common Stock (Details) In Thousands, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Equity [Abstract]
Common stock, shares authorized	375,000	375,000
Common stock, shares outstanding	77,677	67,952
Common stock, shares issued	77,677	67,952

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Income Taxes

12 Months Ended

Mar. 31, 2014

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Loss from operations before income tax consists of the following (in thousands):

	Fiscal Years Ended March 31,
	2014			2013			2012
Loss from operations before income tax:
Domestic loss	$	(8,976	)	$	(130,552	)	$	(78,630	)
Foreign income (loss)	3,901			(4,117		)	(3,130		)
	$	(5,075	)	$	(134,669	)	$	(81,760	)

Income tax expense (benefit) from operations consists of the following (in thousands):

	Fiscal Years Ended March 31,
	2014			2013			2012
Current:
Federal	$	(20	)	$	(1,106	)	$	147
Foreign	819			847			1,034
State	6			(129		)	60
Total Current	805			(388		)	1,241
Deferred:
Foreign	(186		)	(166		)	(313		)
State	—			—			—
Total Deferred	(186		)	(166		)	(313		)
	$	619		$	(554	)	$	928

The provision (benefit) for income taxes reconciles to the amount computed by applying the federal statutory rate of 35% to the loss before income taxes as follows for operations (in thousands):

	Fiscal Years Ended March 31,
	2014					2013					2012
	$			%		$			%		$			%
Tax at federal statutory rate	$	(1,776	)	35	%	$	(47,134	)	35	%	$	(28,613	)	35	%
Tax benefit from loss from continuing operations	—			—		(925		)	1		(123		)	—
Other permanent differences	(6,561		)	129		1,195			(1	)	2,295			(3	)
State taxes, net of federal benefit	(214		)	4		(7,263		)	5		(3,937		)	5
Federal tax credits	(1,778		)	35		(1,909		)	1		(4,131		)	5
State tax credits	(444		)	9		(537		)	—		(622		)	1
Veloce accrued liability	16,740			(330	)	26,749			(20	)	24,046			(29	)
Sale of TPack	2,688			(53	)	—			—		—			—
Valuation allowance	(7,809		)	154		28,715			(21	)	11,600			(14	)
Change in contingency reserve	(64		)	1		74			—		52			—
Other	(163		)	4		481			—		361			(1	)
	$	619		(12	)%	$	(554	)	—	%	$	928		(1	)%

Significant components of the Company’s deferred tax assets and liabilities for federal and state income taxes are as shown below (in thousands):

	Fiscal Years Ended March 31,
	2014			2013
Deferred tax assets:
Net operating loss carryforwards	$	294,910		$	310,276
Research and development credit carryforwards	79,839			78,696
Inventory write-downs and other reserves	8,068			9,046
Capitalization of research and development costs	5,915			8,038
Goodwill	4,007			7,431
Intangible assets	32,290			40,201
Investment impairment	3,494			4,958
Stock-based compensation	26,664			31,177
Depreciation and amortization	3,253			165
Other	1,182			1,056
Total deferred tax assets	459,622			491,044
Valuation allowance	(459,081		)	(490,629		)
	$	541		$	415

At March 31, 2014, the Company has federal and state R&D tax credit carryforwards of approximately $60.7 million and $29.4 million, respectively, which begin to expire in the fiscal year ending March 31, 2019 unless previously utilized. The Company also has federal and state net operating loss carryforwards of approximately $1,137.3 million and $522.5 million, respectively, which will begin to expire in fiscal year 2018 and fiscal year 2015, respectively. Federal and state laws impose restrictions on the utilization of net operating loss and tax credit carryforwards in the event of an “ownership change” for tax purposes as defined by Section 382 of the Internal Revenue Code. The future utilization of our research and development credit carryforwards and net operating loss carryforwards to offset future taxable income may be subject to an annual limitation as a result of ownership changes that may have occurred previously or may occur in the future. The Tax Reform Act of 1986 (the "Act") limits a company’s ability to utilize certain tax credit carryforwards and net operating loss carryforwards in the event of a cumulative change in ownership in excess of 50% as defined in the Act.

As a result of the adoption of ASC 718-10, the Company recognizes excess tax benefits associated with the exercise of stock options directly to stockholders’ equity only when realized. Accordingly, deferred tax assets are not recognized for net operating loss carryforwards resulting from excess tax benefits occurring from April 1, 2006 onward. A windfall tax benefit occurs when the actual tax benefit realized upon an employee’s disposition of a share-based award exceeds the deferred tax asset, if any, associated with the award.

The Company has established a valuation allowance against most of its net deferred tax assets due to uncertainty regarding their future realization. In assessing the realizability of its deferred tax assets, management considers cumulative losses, the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies. Based on the projections for future taxable income over the periods in which the deferred tax assets are realizable and the full utilization of the Company’s loss carryback potential, management concluded that a valuation allowance should be recorded in 2014, 2013 and 2012 against most of its deferred tax assets.

The following is a tabular reconciliation of the Unrecognized Tax Benefits activity during the fiscal year ended March 31, 2014 (in thousands):

Opening Balance	$	43,382
Gross decreases - tax positions in prior period	60
Gross increases - current-period tax positions	789
Ending Balance	$	44,231

If recognized, approximately $0.6 million of the $44.2 million of unrecognized tax benefits would affect the Company’s effective tax rate.

The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in income tax expense. As of March 31, 2014, the Company has recognized $0.1 million of accrued interest and penalties related to uncertain tax positions.

The Company is subject to taxation in the U.S. and various states and foreign jurisdictions.

The Company’s U.S. federal income tax returns for tax years subsequent to 2010 are subject to examination by the Internal Revenue Service and its state income tax returns subsequent to 2009 are subject to examination by state tax authorities. Net operating losses from years for which the statute of limitations has expired (2009 and prior for federal and 2008 and prior for state) could be adjusted in the event that the taxing jurisdictions challenge the amounts of net operating loss carryforwards from such years. With few exceptions, the Company is no longer subject to foreign examinations by tax authorities for years before 2010.

The Company does not foresee significant changes to its unrecognized tax benefits within the next twelve months.

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Restructuring Charges

12 Months Ended

Mar. 31, 2014

Restructuring and Related Activities [Abstract]

Restructuring Charges

Restructuring Charges

The Company recognizes restructuring costs related to asset impairment and exit or disposal activities. Costs relating to facilities closure or lease commitments are recognized when the facility has been exited. Termination costs are recognized when the costs are deemed both probable and estimable.

August 2013 Restructuring Program

In August 2013, the Company implemented a restructuring program to reorganize its operations and reduced its workforce by approximately 20 employees. The plan included eliminating job redundancies, reducing the Company's workforce and impairing the unamortized value of a software intellectual property license, which the Company no longer intends to use to develop new products.The Company anticipates that the restructuring plan will reduce ongoing headcount expenses by approximately $3.0 million annually and other additional operational expenses by $0.5 million annually. Total costs incurred and expected to be incurred as of March 31, 2014 in connection with the restructuring plan were $1.0 million.

December 2012 Restructuring Program

In December 2012, the Company implemented a restructuring program to reorganize its operations and reduced its workforce by approximately 70 employees. The plan included eliminating job redundancies, reducing the Company's workforce and impairing the unamortized value of a software intellectual property license, which the Company does not intend to use to develop new products. As of March 31, 2014, the actual annual savings were within the range of originally expected savings of $8.0 million to $9.0 million for headcount expenses and $4.0 million to $5.0 million for other additional operational expenses. Total costs incurred and expected to be incurred as of March 31, 2014 in connection with the restructuring plan are $1.8 million for employee severance expenses and $4.7 million for an asset impairment.

April 2011 Restructuring Program

The April 2011 restructuring program was implemented as part of the Company’s ongoing cost reduction efforts and to better align its global operations to achieve greater efficiencies. The Company moved more of its functions offshore, which would allow it to be closer and more connected to its customers' third party subcontract manufacturers. The April 2011 restructuring plan included eliminating or relocating 25 positions. As a result of the April 2011 restructuring program, the Company recorded a charge of $0.9 million for employee severances for the fiscal year ended March 31, 2012.

The following table sets forth a summary of restructuring activities related to all of the Company's restructuring plans described above (in thousands):

	Workforce Reduction			Asset Impairment			Total
Liability, March 31, 2012	$	—		$	—		$	—
Restructuring charges	1,716			4,719			6,435
Cash payments	(1,168		)	—			(1,168		)
Non-cash items	—			(4,719		)	(4,719		)
Liability, March 31, 2013	$	548		$	—		$	548
Restructuring charges	$	862		$	272		$	1,134
Cash payments	(1,410		)	—			(1,410		)
Non-cash items	—			(272		)	(272		)
Liability, March 31, 2014	$	—		$	—		$	—

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Employee Retirement Plan

12 Months Ended

Mar. 31, 2014

Compensation and Retirement Disclosure [Abstract]

Employee Retirement Plan

Employee Retirement Plan

Effective January 1, 1986, the Company established a 401(k) defined contribution retirement plan (“Retirement Plan”) covering all full-time employees. The Retirement Plan provides for voluntary employee contributions from 1% to 50% of annual compensation, subject to a maximum limit allowed by Internal Revenue Service guidelines. The Company may contribute such amounts as determined by the Board. Employer contributions vest to participants at a rate of 33% per year of service for the first three years of service and 100% thereafter for each year of service. The Company made a plan contribution of $0.0 million, $0.2 million and $0.3 million for the three fiscal years ended March 31, 2014, 2013, and 2012, respectively.

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Stockholders' Equity - Restricted Stock Units (Details) (USD $)	12 Months Ended				12 Months Ended			1 Months Ended		12 Months Ended			1 Months Ended	12 Months Ended			1 Months Ended			12 Months Ended	1 Months Ended													1 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2014 Restricted Stock Units (RSUs)	Mar. 31, 2013 Restricted Stock Units (RSUs)	Mar. 31, 2012 Restricted Stock Units (RSUs)	May 31, 2012 Performance-Based RSU	Feb. 29, 2012 Performance-Based RSU milestone	Mar. 31, 2014 Restricted Stock	Mar. 31, 2013 Restricted Stock	Mar. 31, 2012 Restricted Stock	Nov. 30, 2013 Performance-Based MSU	Mar. 31, 2014 RSU plan prior to May 2006 Restricted Stock Units (RSUs)	Mar. 31, 2014 RSU plan post May 2006	Mar. 31, 2014 RSU plan post May 2006 Restricted Stock Units (RSUs) quarter	Apr. 30, 2011 April 2011 Plan Performance-Based RSU	Feb. 29, 2012 November 2011 and February 2012 Plan Performance-Based RSU	Nov. 30, 2011 November 2011 and February 2012 Plan Performance-Based RSU	Mar. 31, 2014 FY2014 Short Term Plan	May 31, 2012 Minimum Performance-Based RSU	Nov. 30, 2013 Minimum Performance-Based MSU	Feb. 29, 2012 Minimum November 2011 and February 2012 Plan Restricted Stock Units (RSUs)	Nov. 30, 2011 Minimum November 2011 and February 2012 Plan Restricted Stock Units (RSUs)	May 31, 2013 Minimum FY2014 Short Term Plan	Nov. 30, 2013 Maximum Performance-Based MSU	Feb. 29, 2012 Maximum November 2011 and February 2012 Plan Restricted Stock Units (RSUs)	Nov. 30, 2011 Maximum November 2011 and February 2012 Plan Restricted Stock Units (RSUs)	May 31, 2013 Maximum FY2014 Short Term Plan	Feb. 29, 2012 Officer	Nov. 30, 2013 Officer Performance-Based RSU	Feb. 29, 2012 Officer Performance-Based RSU	Mar. 31, 2014 Officer Performance-Based RSU	May 31, 2013 First Vesting Period Performance-Based MSU	May 31, 2012 First Vesting Period November 2011 and February 2012 Plan	May 31, 2013 Second Vesting Period Performance-Based MSU	May 31, 2012 Second Vesting Period November 2011 and February 2012 Plan
Class of Stock [Line Items]
RSU share vesting period																																			66.67%		33.33%
Weighted average remaining contractual term for the restricted stock units outstanding, in years	10 months 12 days
Vesting period, in years								12 months						4 years		4 years	3 years	18 months	18 months		1 year		1 year	1 year			18 months	18 months
Schedule of Restricted Stock Unit Activity
Outstanding at the beginning of the year										6,444,000	9,244,000	3,074,000
Awarded during the year										3,594,000	1,040,000	8,833,000																			500,000
Vested during the year										(2,397,000)	(2,345,000)	(1,701,000)																			(200,000)
Cancelled during the year										(1,536,000)	(1,495,000)	(962,000)
Outstanding at the end of the year					6,105,000					6,105,000	6,444,000	9,244,000
Number of shares vested															0
Award vesting period, quarters																12
Awards granted	40,000	40,000	250,000																													500,000
Number of milestones									3
Value of stock options awarded																														$ 3,700,000
Options granted and outstanding	2,409,000	3,492,000	4,164,000	5,390,000																													300,000
Fair value													3,100,000																		3,300,000
Performance period																																		2 years		3 years
Award vesting percentage per year																						0.00%				150.00%
Award pay out percentage																									50.00%				150.00%
Share-based Compensation	17,037,000	24,089,000	18,437,000		14,517,000	20,620,000	13,148,000													1,400,000
Aggregate pre-tax intrinsic value of restricted stock units outstanding which includes performance based awards which are subject to milestone attainments	60,400,000
Common stock closing price per share	$ 9.90
Value of restricted stock issued during period	$ 22,400,000

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Schedule II - Valuation and Qualifying Accounts - Allowance Rollforward (Details) (Year Ended March 31, 2014, USD $) In Thousands, unless otherwise specified	12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012
Year Ended March 31, 2014
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance at Beginning of Period	$ 703	$ 1,099	$ 1,324
Charged (Credited) to Costs and Expenses	(286)	1	(13)
From Acquisition	0	0	(28)
Write-Offs	34	(397)	(184)
Balance at End of Period	$ 451	$ 703	$ 1,099

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Stockholders' Equity - Warrants (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended			0 Months Ended	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012	May 17, 2009 Veloce Technologies Inc.	Jun. 30, 2012 Veloce Technologies Inc.
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of years of development work to be performed				5 years
Stock-based compensation expense related to the acceleration of Veloce warrants	$ 0	$ 1,289	$ 0		$ 1,300

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Stockholders' Equity - Options Outstanding (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Mar. 31, 2014
Weighted Average Remaining Contractual Life and Weighted Average Per Share Exercise Price of Options Outstanding and Options Exercisable
Weighted Average Remaining Contractual Life	2 years 8 months 12 days
$ 1.68 - $ 7.60
Weighted Average Remaining Contractual Life and Weighted Average Per Share Exercise Price of Options Outstanding and Options Exercisable
Range of Exercise Price, minimum (USD per share)	$ 1.68
Range of Exercise Price, maximum (USD per share)	$ 7.60
Options Outstanding	540
Weighted Average Remaining Contractual Life	3 years 25 days
Weighted Average Exercise Price, Options Outstanding (USD per share)	$ 6.77
Options Exercisable	462
Weighted Average Exercise Price, Options Exercisable (USD per share)	$ 6.71
$ 7.61 - $ 7.67
Weighted Average Remaining Contractual Life and Weighted Average Per Share Exercise Price of Options Outstanding and Options Exercisable
Range of Exercise Price, minimum (USD per share)	$ 7.61
Range of Exercise Price, maximum (USD per share)	$ 7.67
Options Outstanding	650
Weighted Average Remaining Contractual Life	2 years 4 months 4 days
Weighted Average Exercise Price, Options Outstanding (USD per share)	$ 7.67
Options Exercisable	650
Weighted Average Exercise Price, Options Exercisable (USD per share)	$ 7.67
$ 7.68 - $ 11.86
Weighted Average Remaining Contractual Life and Weighted Average Per Share Exercise Price of Options Outstanding and Options Exercisable
Range of Exercise Price, minimum (USD per share)	$ 7.68
Range of Exercise Price, maximum (USD per share)	$ 11.86
Options Outstanding	430
Weighted Average Remaining Contractual Life	3 years 3 months 17 days
Weighted Average Exercise Price, Options Outstanding (USD per share)	$ 10.49
Options Exercisable	419
Weighted Average Exercise Price, Options Exercisable (USD per share)	$ 10.47
$ 11.87 - $ 14.20
Weighted Average Remaining Contractual Life and Weighted Average Per Share Exercise Price of Options Outstanding and Options Exercisable
Range of Exercise Price, minimum (USD per share)	$ 11.87
Range of Exercise Price, maximum (USD per share)	$ 14.20
Options Outstanding	491
Weighted Average Remaining Contractual Life	2 years 4 months 18 days
Weighted Average Exercise Price, Options Outstanding (USD per share)	$ 12.87
Options Exercisable	483
Weighted Average Exercise Price, Options Exercisable (USD per share)	$ 12.88
$ 14.41 - $ 23.32
Weighted Average Remaining Contractual Life and Weighted Average Per Share Exercise Price of Options Outstanding and Options Exercisable
Range of Exercise Price, minimum (USD per share)	$ 14.21
Range of Exercise Price, maximum (USD per share)	$ 23.32
Options Outstanding	298
Weighted Average Remaining Contractual Life	1 year 5 months 18 days
Weighted Average Exercise Price, Options Outstanding (USD per share)	$ 15.96
Options Exercisable	298
Weighted Average Exercise Price, Options Exercisable (USD per share)	$ 15.96
$ 1.68 - $ 23.32
Weighted Average Remaining Contractual Life and Weighted Average Per Share Exercise Price of Options Outstanding and Options Exercisable
Range of Exercise Price, minimum (USD per share)	$ 1.68
Range of Exercise Price, maximum (USD per share)	$ 23.32
Options Outstanding	2,409
Weighted Average Remaining Contractual Life	2 years 6 months 25 days
Weighted Average Exercise Price, Options Outstanding (USD per share)	$ 10.06
Options Exercisable	2,312
Weighted Average Exercise Price, Options Exercisable (USD per share)	$ 10.14

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Summary of Significant Accounting Policies - Investments (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012
Accounting Policies [Abstract]
Other-than-temporary impairment charges	$ 0	$ 1,143	$ 0
Gross unrealized loss	420	48
Gross unrealized gains	3,455	8,082
Impairment charge on non-marketable strategic investments	0	2,250	1,000
Impairment loss (gain) on strategic investments, net	0	2,250	(7,147)
Purchases of strategic investments	$ 0	$ (500)	$ (4,750)

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Certain Financial Statement Information - Schedule of Other assets (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Mar. 31, 2014		Mar. 31, 2013		Mar. 31, 2012
Schedule of other assets
Non-current portion of prepaid expenses	$ 4,235		$ 7,866
Strategic investments	3,000	[1]	3,000	[1]
Other	519		0
Total other assets	7,754		10,866
Impairment charge on non-marketable strategic investments	$ 0		$ 2,250		$ 1,000

[1] During the fiscal years ended March 31, 2014 and 2013, the Company recognized an impairment charge on its non-marketable strategic investment of $0.0 million and $2.3 million, respectively. Refer to Note 2, Investments, to the Consolidated Financial Statements for details.

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Schedule II - Valuation and Qualifying Accounts

12 Months Ended

Mar. 31, 2014

Valuation and Qualifying Accounts [Abstract]

Schedule II - Valuation and Qualifying Accounts

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

Description	Balance at Beginning of Period		Charged (Credited) to Costs and Expenses			From Acquisition			Write-Offs			Balance at End of Period
	(In thousands)
Allowance for doubtful accounts
Year Ended March 31, 2014	$	703	$	(286	)	$	—		$	34		$	451
Year Ended March 31, 2013	$	1,099	$	1		$	—		$	(397	)	$	703
Year Ended March 31, 2012	$	1,324	$	(13	)	$	(28	)	$	(184	)	$	1,099

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Stockholders' Equity (Tables)

12 Months Ended

Mar. 31, 2014

Equity [Abstract]

Schedule of Option Activity Under Stock Incentive Plans

A summary of the Company's stock option activity and related information is as follows:

	Options Outstanding
	Number of Shares (thousands)		Weighted Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (years)	Aggregate Intrinsic Value* (millions)
Outstanding as of March 31, 2011	5,390		$	11.91
Granted	250		$	10.10
Exercised	(156	)	$	5.11		$	0.5	(1)
Cancelled	(1,320	)	$	16.20
Outstanding as of March 31, 2012	4,164		$	10.67
Granted	40		$	5.58
Exercised	(161	)	$	5.31		$	0.3	(1)
Cancelled	(551	)	$	14.49
Outstanding as of March 31, 2013	3,492		$	10.26
Granted	40		7.35
Exercised	(662	)	9.36			$	1.8	(1)
Cancelled	(461	)	12.35
Outstanding as of March 31, 2014	2,409		$	10.06	2.7	$	3.4	(2)
Vested and expected to vest as of March 31, 2014	2,409		$	10.06	2.6	$	3.4	(2)
Vested and exercisable at the end of the year	2,312		$	10.14	2.7	$	3.2	(2)

Weighted Average Remaining Contractual Life and Weighted Average Per Share Exercise Price of Options Outstanding and Options Exercisable

The following table summarizes the information about stock options outstanding and exercisable as of March 31, 2014 (shares in thousands):

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number of Shares	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number of Shares	Weighted Average Exercise Price
$  1.68 - $ 7.60	540	3.07	$	6.77	462	$	6.71
7.61 - 7.67	650	2.34	7.67		650	7.67
7.68 - 11.86	430	3.3	10.49		419	10.47
11.87 - 14.20	491	2.38	12.87		483	12.88
14.21 - 23.32	298	1.47	15.96		298	15.96
$  1.68 - $23.32	2,409	2.57	$	10.06	2,312	$	10.14

Schedule of Restricted Stock Unit Activity

A summary of the Company's RSU activity is as follows (in thousands):

	Fiscal Years Ended March 31,
	2014		2013		2011
Outstanding at the beginning of the year	6,444		9,244		3,074
Awarded	3,594		1,040		8,833
Vested	(2,397	)	(2,345	)	(1,701	)
Cancelled	(1,536	)	(1,495	)	(962	)
Outstanding at the end of the year	6,105		6,444		9,244

Common Shares Reserved for Issuance

At March 31, 2014, the Company has the following shares of common stock reserved for issuance upon the exercise of equity instruments (in thousands):

Options granted and outstanding	2,409
Restricted Stock Units granted and outstanding	6,105
Options and RSUs authorized for future grants	355
Employee Stock Purchase Plan	498
	9,367

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Certain Financial Statement Information - Schedule of Goodwill (Details) (USD $)			12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014 TPack
Schedule of Goodwill
Goodwill	$ 11,425,000	$ 13,183,000
Goodwill [Line Items]
Reduction of goodwill due to sale of business unit			$ 1,800,000

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Investments - Summary of Available-for-Sale Securities (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014		Mar. 31, 2013		Mar. 31, 2012	Mar. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Cash and cash equivalents	$ 71,539		$ 19,065		$ 28,065	$ 84,402
Cash, Cash equivalents and Available-for-sale Investments, Amortized Cost	103,548		77,442
Available-for-sale securities, Gross Unrealized Gains	3,455		8,082
Available-for-sale securities, Gross Unrealized Losses	420		48
Cash, Cash equivalents and Available-for-sale Investments, Estimated Fair Value	106,583		85,476
Short-term investments available-for-sale	35,044		66,411
Cash
Schedule of Available-for-sale Securities [Line Items]
Cash and cash equivalents	65,867		8,529
Cash and cash equivalents, Estimated Fair Value	65,867		8,529
Cash Equivalents
Schedule of Available-for-sale Securities [Line Items]
Cash and cash equivalents	5,672		10,536
Cash and cash equivalents, Estimated Fair Value	5,672		10,536
U.S Treasury Securities and Agency Bonds
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost Basis	2,838		12,363
Available-for-sale securities, Gross Unrealized Gains	0		10
Available-for-sale securities, Gross Unrealized Losses	0		0
Available-for-sale Securities, Estimated Fair Value	2,838		12,373
Corporate bonds
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost Basis	10,599		15,567
Available-for-sale securities, Gross Unrealized Gains	30		63
Available-for-sale securities, Gross Unrealized Losses	2		2
Available-for-sale Securities, Estimated Fair Value	10,627		15,628
Mortgage Backed and Asset Backed Securities
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost Basis	1,793	[1]	3,655	[1]
Available-for-sale securities, Gross Unrealized Gains	297	[1]	355	[1]
Available-for-sale securities, Gross Unrealized Losses	16	[1]	7	[1]
Available-for-sale Securities, Estimated Fair Value	2,074	[1]	4,003	[1]
Closed-end bond funds
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost Basis	14,373		21,914
Available-for-sale securities, Gross Unrealized Gains	2,392		5,340
Available-for-sale securities, Gross Unrealized Losses	402		39
Available-for-sale Securities, Estimated Fair Value	16,363		27,215
Preferred Stock
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost Basis	2,406		4,878
Available-for-sale securities, Gross Unrealized Gains	736		2,314
Available-for-sale securities, Gross Unrealized Losses	0		0
Available-for-sale Securities, Estimated Fair Value	$ 3,142		$ 7,192

[1] At March 31, 2014 and 2013, approximately $1.1 million and $1.4 million of the estimated fair value presented were mortgage-backed securities, respectively.

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Consolidated Statements of Comprehensive Loss (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Mar. 31, 2014		Mar. 31, 2013		Mar. 31, 2012
Net loss	$ (5,694)		$ (134,115)		$ (82,688)
Other comprehensive gain (loss), net of tax:
Unrealized gain (loss) on short-term investments, net of tax	(5,039)	[1]	1,314	[1]	186	[1]
Loss on foreign currency translation	(367)		(286)		(354)
Other comprehensive gain (loss), net of tax	(5,406)		1,028		(168)
Total comprehensive loss	(11,100)		(133,087)		(82,856)
Reclassification adjustment from AOCI for sale of securities, Net of tax	$ (3,360)		$ (1,391)		$ (646)

[1] The amounts reclassified from accumulated other comprehensive loss and recorded in interest income (expense), net in the Consolidated Statements of Operations relating to short-term investments were $3.4 million, $1.4 million and $0.6 million for the fiscal years ended March 31, 2014, 2013 and 2012, respectively. Refer to Note 3, Certain Financial Statement Information, to the Consolidated Financial Statements for additional details.

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Certain Financial Statement Information

12 Months Ended

Mar. 31, 2014

Certain Financial Statement Information [Abstract]

Certain Financial Statement Information

Certain Financial Statement Information

Accounts receivable:

	March 31,
	2014			2013
	(In thousands)
Accounts receivable	$	25,629		$	25,278
Less: allowance for bad debts	(451		)	(703		)
	$	25,178		$	24,575

Inventories:

	March 31,
	2014		2013
	(In thousands)
Finished goods	$	9,375	$	7,247
Work in process	6,510		4,098
Raw materials	3,061		1,555
	$	18,946	$	12,900

Other current assets:

	March 31,
	2014		2013
	(In thousands)
Prepaid expenses	$	10,978	$	13,762
Executive deferred compensation assets	1,035		693
Deposits	585		828
Proceeds receivable from sale of strategic investment	3,353		1,331
Other	848		1,384
	$	16,799	$	17,998

Property and equipment:

	Useful Life	March 31,
		2014			2013
	(In years)	(In thousands)
Machinery and equipment*	5-7	$	44,503		$	40,063
Leasehold improvements**	1-5	11,574			14,202
Computers, office furniture and equipment	3-7	43,365			43,485
Buildings**	—	—			2,756
Land**	—	—			9,800
		99,442			110,306
Less: accumulated depreciation and amortization		(78,696		)	(75,915		)
		$	20,746		$	34,391

* Includes capitalized mask costs

** In March, 2014, The Company sold its headquarters building and related parcel of land in Sunnyvale, California for a purchase price of $40.8 million in cash. The building was being depreciated over the useful life of 31.5 years and the leasehold improvements associated with the building were being depreciated over the useful life of 5 to 15 years. The net book value of the properties sold was approximately $14.3 million on the closing date and the Company recorded a gain of $25.8 million in the fiscal year ended March 31, 2014. The Company leases a portion of the space on a lease which expires in August, 2015.

Goodwill and purchased intangibles:

Goodwill is as follows:

	March 31,
	2014		2013
	(In thousands)
Goodwill	$	11,425	$	13,183

The reduction in goodwill of $1.8 million relates to the sale of TPack. See Note 12, Sale of TPack A/S, to the Consolidated Financial Statements for details.

Purchase-related intangibles are as follows:

	March 31, 2014								March 31, 2013
	Gross		Accumulated Amortization and Impairments			Net		Weighted average remaining useful life	Gross		Accumulated Amortization and Impairments			Net		Weighted average remaining useful life
	(In thousands)							(In years)	(In thousands)							(In years)
Developed technology/in-process research and development	$	425,000	$	(425,000	)	$	—	0	$	441,300	$	(431,771	)	$	9,529	3.5
Customer relationships	6,330		(6,225		)	105		0.4	12,830		(10,507		)	2,323		2.1
Patents/core technology rights/trade name	62,306		(62,306		)	—		0	63,206		(63,067		)	139		0.3
	$	493,636	$	(493,531	)	$	105		$	517,336	$	(505,345	)	$	11,991

During the quarter ended June 30, 2013, $11.4 million of purchased intangibles were written off pursuant to the sale of TPack. See Note 12, Sale of TPack A/S, to the Consolidated Financial Statements for details.

The estimated future amortization expense of purchased intangible assets to be charged to operating expenses as of March 31, 2014, was as follows (in thousands):

	Operating Expenses
Fiscal Years Ending March 31, 2015	$	105

Other Assets:

	March 31,
	2014		2013
	(In thousands)
Non-current portion of prepaid expenses	$	4,235	$	7,866
Strategic investments*	3,000		3,000
Other	$	519	$	—
	$	7,754	$	10,866

*During the fiscal years ended March 31, 2014 and 2013, the Company recognized an impairment charge on its non-marketable strategic investment of $0.0 million and $2.3 million, respectively. Refer to Note 2, Investments, to the Consolidated Financial Statements for details.

Other accrued liabilities:

	March 31,
	2014		2013
	(In thousands)
Employee related liabilities	$	1,733	$	2,236
Executive deferred compensation	1,314		1,284
Income taxes	962		903
Professional fees	1,259		3,840
Other	5,609		2,467
	$	10,877	$	10,730

Warranty Reserves:

The Company’s products typically carry a one-year warranty. The Company establishes reserves for estimated product warranty costs at the time revenue is recognized. Although the Company engages in extensive product quality programs and processes, its warranty obligation is affected by product failure rates, use of materials and service delivery costs incurred in correcting any product failure. Should actual product failure rates, use of materials or service delivery costs differ from the Company’s estimates, additional warranty reserves could be required, which could reduce its gross margin.

The following table summarizes warranty reserve activity:

	March 31,
	2014			2013
	(In thousands)
Beginning balance	$	220		$	454
Charged (capitalized) to costs of revenues	58			(94		)
Costs incurred	(79		)	(140		)
Ending balance	$	199		$	220

Interest income (expense), net and other-than-temporary impairments:

	Fiscal Years Ended March 31,
	2014		2013			2012
	(In thousands)
Interest income	$	1,692	$	2,347		$	3,601
Net realized gain on short-term investments	3,360		1,391			646
Impairments of short-term investments and marketable securities	—		(1,143		)	—
	$	5,052	$	2,595		$	4,247

Other income (expense), net:

	Fiscal Years Ended March 31,
	2014		2013			2012
	(In thousands)
Net (impairment) gain on strategic investments*	$	—	$	(2,250	)	$	7,147
Impairment of notes receivable and other assets**	—		(1,800		)	—
Net (loss) gain on disposals of property	67		(21		)	(10		)
Other, net	287		1,677			300
	$	354	$	(2,394	)	$	7,437

*During the fiscal years ended March 31, 2014, 2013 and 2012, the Company recognized an impairment charge of its non-marketable strategic investment of $0.0 million, $2.3 million and $1.0 million, respectively. Refer to Note 1, Summary of Significant Accounting Policies, to the Consolidated Financial Statements for details.

**During the fiscal year ended March 31, 2013, the Company wrote-off $1.5 million of notes receivable due from an investee and $0.3 million related to a prepaid intellectual property license from this investee. The Company also impaired the related equity investment of $2.3 million in this investee - see * above.

Net loss per share:

Shares used in basic net loss per share are computed using the weighted average number of common shares outstanding during each period. Shares used in diluted net loss per share include the dilutive effect of common shares potentially issuable upon the exercise of stock options, vesting of RSUs and outstanding warrants. The reconciliation of shares used to calculate basic and diluted net loss per share consists of the following (in thousands, except per share data):

	Fiscal Years Ended March 31,
	2014			2013			2012
Net loss	$	(5,694	)	$	(134,115	)	$	(82,688	)
Shares used in net loss per share computation:
Weighted average common shares outstanding, basic	72,897			65,258			62,245
Net effect of dilutive common share equivalents	—			—			—
Weighted average common shares outstanding, diluted	72,897			65,258			62,245
Basic and diluted net loss per share	$	(0.08	)	$	(2.06	)	$	(1.33	)

The effect of anti-dilutive securities (comprised of options and restricted stock units) totaling 4.5 million, 7.2 million and 9.0 million equivalent shares for the fiscal years ended March 31, 2014, 2013 and 2012, respectively, have been excluded from the net loss per share computation, as the impact would be anti-dilutive.

The effect of dilutive securities (comprised of options and restricted stock units) totaling 1.5 million, 0.8 million and 0.5 million shares for the fiscal years ended March 31, 2014, 2013 and 2012, respectively, have been excluded from the net loss per share computation, as the impact would be anti-dilutive because the Company has incurred losses in the periods presented.

Total equivalent shares excluded from the net loss per share computation are 6.0 million, 8.0 million and 9.5 million for the fiscal years ended March 31, 2014, 2013 and 2012, respectively.

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Veloce - Additional Information (Details) (Veloce Technologies Inc., USD $) Share data in Millions, unless otherwise specified	3 Months Ended					9 Months Ended		12 Months Ended		21 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Jun. 20, 2012
Veloce Technologies Inc.
Variable Interest Entity [Line Items]
Total consideration to be transferred				$ 178,500,000		$ 178,500,000			$ 178,500,000		$ 135,000,000
Research and development expenses incurred	2,900,000	30,400,000	9,300,000	9,600,000	60,400,000	126,600,000	51,900,000	42,700,000	66,200,000	169,300,000
Payment of aggregate consideration as cash								63,700,000	16,500,000
Aggregate shares issued (shares)								6.7	3.0
Value of aggregate shares issued								57,300,000	16,600,000
Unallocated stock units distributed (shares)								0.5
UNallocated stock units distributed expense								5,900,000
Unallocated stock units (shares)								0.9		0.9
Unallocated stock units value								$ 9,200,000		$ 9,200,000

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Sale of TPack A/S - Additional Information (Details) (USD $)	12 Months Ended			0 Months Ended	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012	Apr. 22, 2013 TPack	Jun. 30, 2013 TPack
Significant Acquisitions and Disposals [Line Items]
Aggregate consideration				$ 33,500,000
Agreed upon price for sale of entity				34,000,000
Working capital adjustment				500,000
Total proceeds, net of working capital adjustment				30,175,000
Holdback amount				3,353,000
Gain on sale of TPack	19,699,000	0	0	19,699,000	19,700,000
Total assets				$ 700,000

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Income Taxes - Income Tax Expense, Current and Deferred (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended													12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013		Sep. 30, 2013		Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2012		Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012
Current:
Federal														$ (20)	$ (1,106)	$ 147
Foreign														819	847	1,034
State														6	(129)	60
Total Current														805	(388)	1,241
Deferred:
Foreign														(186)	(166)	(313)
State														0	0	0
Total Deferred														(186)	(166)	(313)
Total current and deferred	$ 38	$ 201	[1]	$ 192	[2]	$ 188	[3]	$ (1,012)	[4],[5]	$ 618	[6]	$ (360)	$ 200	$ 619	$ (554)	$ 928

[1] The consolidated operating results for the third quarter of fiscal 2014 included a charge of $2.9 million related to the Veloce consideration.

[2] The consolidated operating results for the second quarter of fiscal 2014 included a charge of $30.4 million related to the Veloce consideration.

[3] The consolidated operating results for the first quarter of fiscal 2014 included a charge of $9.3 million related to the Veloce consideration and a gain on sale of TPack of $19.7 million.

[4] The consolidated operating results for the fourth quarter of fiscal 2013 included a charge of $9.6 million related to the Veloce consideration.

[5] During fiscal 2012, one significant product development milestone relating to the Veloce project was considered probable of achievement and accordingly $60.4 million was recognized as research and development expense (see further discussion in Note 4, Veloce, to the Consolidated Financial Statements). However, approximately $8.0 million of the R&D expense was incorrectly recognized as this expense amount related to Unallocated Veloce Units that had not yet been distributed as of March 31, 2012. R&D expenses were also recognized during the first three quarters of fiscal 2013 in connection with further progress made in connection with the performance milestones relating to Veloce. However, the R&D expenses recognized during the first three quarters of fiscal 2013 also incorrectly included immaterial amounts related to the Unallocated Veloce Units. During the fourth quarter of fiscal 2013, the Company corrected the error impacting fiscal 2012 and the first three quarters of fiscal 2013. The correction of the errors resulted in a reduction of R&D expenses recognized by $10.4 million during the fourth quarter of fiscal 2013.

[6] During the fiscal years ended March 31, 2014, 2013 and 2012, the Company recognized an impairment charge of its non-marketable strategic investment of $0.0 million, $2.3 million and $1.0 million, respectively. Refer to Note 1, Summary of Significant Accounting Policies, to the Consolidated Financial Statements for details.

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Income Taxes (Tables)

12 Months Ended

Mar. 31, 2014

Income Tax Disclosure [Abstract]

Schedule of Income Before Income Tax

Loss from operations before income tax consists of the following (in thousands):

	Fiscal Years Ended March 31,
	2014			2013			2012
Loss from operations before income tax:
Domestic loss	$	(8,976	)	$	(130,552	)	$	(78,630	)
Foreign income (loss)	3,901			(4,117		)	(3,130		)
	$	(5,075	)	$	(134,669	)	$	(81,760	)

Schedule of Components of Income Tax Expense (Benefit)

Income tax expense (benefit) from operations consists of the following (in thousands):

	Fiscal Years Ended March 31,
	2014			2013			2012
Current:
Federal	$	(20	)	$	(1,106	)	$	147
Foreign	819			847			1,034
State	6			(129		)	60
Total Current	805			(388		)	1,241
Deferred:
Foreign	(186		)	(166		)	(313		)
State	—			—			—
Total Deferred	(186		)	(166		)	(313		)
	$	619		$	(554	)	$	928

Schedule of Effective Income Tax Rate Reconciliation

The provision (benefit) for income taxes reconciles to the amount computed by applying the federal statutory rate of 35% to the loss before income taxes as follows for operations (in thousands):

	Fiscal Years Ended March 31,
	2014					2013					2012
	$			%		$			%		$			%
Tax at federal statutory rate	$	(1,776	)	35	%	$	(47,134	)	35	%	$	(28,613	)	35	%
Tax benefit from loss from continuing operations	—			—		(925		)	1		(123		)	—
Other permanent differences	(6,561		)	129		1,195			(1	)	2,295			(3	)
State taxes, net of federal benefit	(214		)	4		(7,263		)	5		(3,937		)	5
Federal tax credits	(1,778		)	35		(1,909		)	1		(4,131		)	5
State tax credits	(444		)	9		(537		)	—		(622		)	1
Veloce accrued liability	16,740			(330	)	26,749			(20	)	24,046			(29	)
Sale of TPack	2,688			(53	)	—			—		—			—
Valuation allowance	(7,809		)	154		28,715			(21	)	11,600			(14	)
Change in contingency reserve	(64		)	1		74			—		52			—
Other	(163		)	4		481			—		361			(1	)
	$	619		(12	)%	$	(554	)	—	%	$	928		(1	)%

Schedule of Deferred Tax Assets and Liabilities

Significant components of the Company’s deferred tax assets and liabilities for federal and state income taxes are as shown below (in thousands):

	Fiscal Years Ended March 31,
	2014			2013
Deferred tax assets:
Net operating loss carryforwards	$	294,910		$	310,276
Research and development credit carryforwards	79,839			78,696
Inventory write-downs and other reserves	8,068			9,046
Capitalization of research and development costs	5,915			8,038
Goodwill	4,007			7,431
Intangible assets	32,290			40,201
Investment impairment	3,494			4,958
Stock-based compensation	26,664			31,177
Depreciation and amortization	3,253			165
Other	1,182			1,056
Total deferred tax assets	459,622			491,044
Valuation allowance	(459,081		)	(490,629		)
	$	541		$	415

Schedule of Unrecognized Tax Benefits Roll Forward

The following is a tabular reconciliation of the Unrecognized Tax Benefits activity during the fiscal year ended March 31, 2014 (in thousands):

Opening Balance	$	43,382
Gross decreases - tax positions in prior period	60
Gross increases - current-period tax positions	789
Ending Balance	$	44,231

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Restructuring Charges - Additional Information (Details) (USD $)	9 Months Ended	12 Months Ended							1 Months Ended	8 Months Ended	1 Months Ended			16 Months Ended	12 Months Ended				16 Months Ended	12 Months Ended
	Dec. 31, 2012	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2014 Workforce Reduction	Mar. 31, 2013 Workforce Reduction	Mar. 31, 2014 Asset Impairment	Mar. 31, 2013 Asset Impairment	Aug. 31, 2013 August 2013 Restructuring Program employee	Mar. 31, 2014 August 2013 Restructuring Program	Aug. 31, 2013 August 2013 Restructuring Program Workforce Reduction	Aug. 31, 2013 August 2013 Restructuring Program Other Expense	Dec. 31, 2012 December 2012 Restructuring Program employee	Mar. 31, 2014 December 2012 Restructuring Program Workforce Reduction	Mar. 31, 2014 December 2012 Restructuring Program Workforce Reduction Minimum	Mar. 31, 2014 December 2012 Restructuring Program Workforce Reduction Maximum	Mar. 31, 2014 December 2012 Restructuring Program Other Expense Minimum	Mar. 31, 2014 December 2012 Restructuring Program Other Expense Maximum	Mar. 31, 2014 December 2012 Restructuring Program Asset Impairment	Mar. 31, 2012 April 2011 Restructuring Program Positions	Mar. 31, 2012 April 2011 Restructuring Program Workforce Reduction
Restructuring Cost and Reserve [Line Items]
Number of positions eliminated or relocated under restructuring program									20				70							25
Effect on future earnings											$ 3,000,000	$ 500,000			$ 8,000,000	$ 9,000,000	$ 4,000,000	$ 5,000,000
Restructuring expense incurred and expected to be incurred														1,800,000					4,700,000
Restructuring charges	$ 6,200,000	$ 1,134,000	$ 6,435,000	$ 875,000	$ 862,000	$ 1,716,000	$ 272,000	$ 4,719,000		$ 1,000,000											$ 900,000

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Summary of Significant Accounting Policies - Stock-Based Compensation (Details) (USD $)	12 Months Ended												9 Months Ended	12 Months Ended									3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2014 Cost of Revenues	Mar. 31, 2013 Cost of Revenues	Mar. 31, 2012 Cost of Revenues	Mar. 31, 2014 Research and Development Expense	Mar. 31, 2013 Research and Development Expense	Mar. 31, 2012 Research and Development Expense	Mar. 31, 2014 Selling General and Administrative	Mar. 31, 2013 Selling General and Administrative	Mar. 31, 2012 Selling General and Administrative	Dec. 31, 2013 Stock Options	Mar. 31, 2014 Stock Options	Mar. 31, 2013 Stock Options	Mar. 31, 2012 Stock Options	Mar. 31, 2014 Restricted Stock Units (RSUs)	Mar. 31, 2013 Restricted Stock Units (RSUs)	Mar. 31, 2012 Restricted Stock Units (RSUs)	Mar. 31, 2014 Employee Stock Purchase Plans	Mar. 31, 2013 Employee Stock Purchase Plans	Mar. 31, 2012 Employee Stock Purchase Plans	Jun. 30, 2013 Veloce Warrants
Share-based Compensation, Allocation and Classification
Share-based Compensation	$ 17,037,000	$ 24,089,000	$ 18,437,000	$ 460,000	$ 545,000	$ 495,000	$ 6,371,000	$ 11,760,000	$ 10,496,000	$ 10,206,000	$ 11,784,000	$ 7,446,000		$ 2,520,000	$ 3,469,000	$ 5,289,000	$ 14,517,000	$ 20,620,000	$ 13,148,000
Employee Service Share-based Compensation, Allocation of Recognized Period Costs, Capitalized Amount	(16,000)	147,000	(63,000)
Allocated Share-based Compensation Expense	17,021,000	24,236,000	18,374,000																				1,300,000
Share-based Compensation Fair Value Assumptions Used
Expected life (in years)														4 years 4 months 24 days	4 years 4 months 24 days	3 years 9 months 18 days				6 months	6 months	6 months
Risk-free interest rate (percentage)														0.60%	0.70%	1.40%				0.00%	0.00%	0.10%
Volatility (percentage)														49.00%	54.00%	48.00%				56.00%	50.00%	55.00%
Dividend yield (percentage)														0.00%	0.00%	0.00%				0.00%	0.00%	0.00%
Expected forfeiture rate (percentage)													6.60%	5.80%	6.60%	6.80%				0.00%	0.00%	0.00%
Weighted average fair value (USD per share)														$ 2.95	$ 2.47	$ 3.83				$ 3.40	$ 1.77	$ 2.13
Expected dividend yield	0.00%
Weighted average grant-date fair value per share of the restricted stock units awarded (USD per share)																	$ 9.46	$ 6.11	$ 9.00
Unearned stock-based compensation	$ 24,100,000
Weighted-average period over which the unearned stock-based compensation is expected to be recognized, years	1 year 6 months 12 days

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Quarterly Financial Information (unaudited)

12 Months Ended

Mar. 31, 2014

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Information (unaudited)

Quarterly Financial Information (unaudited)

The following table sets forth unaudited Consolidated Statements of Operations for the Company’s last eight quarters. This quarterly information is unaudited and has been prepared on the same basis as the annual Consolidated Financial Statements. In the Company’s opinion, this quarterly information reflects all adjustments necessary for a fair presentation of the periods presented. The operating results for any quarter are not necessarily indicative of results for any future period.

	Fiscal Year Ended March 31, 2014										Fiscal Year Ended March 31, 2013
	Q1 (1)		Q2 (2)			Q3 (3)			Q4		Q1			Q2			Q3(4)			Q4(5)(6)
	(In thousands, except per share data)
Net revenues	$	54,148	$	55,387		$	54,844		$	51,771	$	41,294		$	46,324		$	51,698		$	56,326
Cost of revenues	22,342		21,397			21,644			19,806		18,355			20,561			22,958			21,174
Gross profit	31,806		33,990			33,200			31,965		22,939			25,763			28,740			35,152
Total operating expenses	24,556		66,757			40,900			9,229		47,891			48,515			101,942			49,116
Operating loss	7,250		(32,767		)	(7,700		)	22,736		(24,952		)	(22,752		)	(73,202		)	(13,964		)
Interest and other income (expense)	3,795		576			617			418		1,762			835			2,258			(4,654		)
Loss before income taxes	11,045		(32,191		)	(7,083		)	23,154		(23,190		)	(21,917		)	(70,944		)	(18,618		)
Income tax expense (benefit)	188		192			201			38		200			(360		)	618			(1,012		)
Net loss	$	10,857	$	(32,383	)	$	(7,284	)	$	23,116	$	(23,390	)	$	(21,557	)	$	(71,562	)	$	(17,606	)
Basic net income (loss) per share	$	0.16	$	(0.45	)	$	(0.10	)	$	0.31	$	(0.37	)	$	(0.33	)	$	(1.08	)	$	(0.26	)
Shares used in calculating basic net income (loss) per share	69,360		72,610			73,989			75,629		62,409			64,947			66,113			67,566
Diluted net income (loss) per share	$	0.15	$	(0.45	)	$	(0.10	)	$	0.30	$	(0.37	)	$	(0.33	)	$	(1.08	)	$	(0.26	)
Shares used in calculating diluted income (loss) per share	70,234		72,610			73,989			77,193		62,409			64,947			66,113			67,566

(1) The consolidated operating results for the first quarter of fiscal 2014 included a charge of $9.3 million related to the Veloce consideration and a gain on sale of TPack of $19.7 million.

(2) The consolidated operating results for the second quarter of fiscal 2014 included a charge of $30.4 million related to the Veloce consideration.

(3) The consolidated operating results for the third quarter of fiscal 2014 included a charge of $2.9 million related to the Veloce consideration.

(4) The consolidated operating results for the third quarter of fiscal 2013 included a charge of $51.9 million related to the Veloce consideration and a charge of $6.2 million related to restructuring charges.

(5) The consolidated operating results for the fourth quarter of fiscal 2013 included a charge of $9.6 million related to the Veloce consideration.

(6) During fiscal 2012, one significant product development milestone relating to the Veloce project was considered probable of achievement and accordingly $60.4 million was recognized as research and development expense (see further discussion in Note 4, Veloce, to the Consolidated Financial Statements). However, approximately $8.0 million of the R&D expense was incorrectly recognized as this expense amount related to Unallocated Veloce Units that had not yet been distributed as of March 31, 2012. R&D expenses were also recognized during the first three quarters of fiscal 2013 in connection with further progress made in connection with the performance milestones relating to Veloce. However, the R&D expenses recognized during the first three quarters of fiscal 2013 also incorrectly included immaterial amounts related to the Unallocated Veloce Units. During the fourth quarter of fiscal 2013, the Company corrected the error impacting fiscal 2012 and the first three quarters of fiscal 2013. The correction of the errors resulted in a reduction of R&D expenses recognized by $10.4 million during the fourth quarter of fiscal 2013.