Applied Micro Circuits Corporation Reports Second Quarter Fiscal 2017 Financial Results

Santa Clara, California, UNITED STATES


Company Delivers Seventh Sequential Quarter of Revenue Growth
GAAP Loss Narrows to $0.05 per share; Non-GAAP Earnings Total $0.02 per share

SANTA CLARA, Calif., , Oct. 27, 2016 (GLOBE NEWSWIRE) -- Applied Micro Circuits Corporation (Nasdaq:AMCC) (“AppliedMicro”) today reported financial results for its second quarter of fiscal 2017, ended September 30, 2016.

Q2 Fiscal 2017 Financial Information

  • Consolidated net revenue of $41.8 million, represented the seventh sequential quarter of revenue growth
  • GAAP net loss narrowed significantly to $4.6 million or $0.05 per share, as compared with a GAAP net loss of $10.5 million or $0.12 per share in the previous quarter
  • Non-GAAP net income improved to $2.1 million, or $0.02 per share, as compared with non-GAAP net loss of $2.5 million, or $0.03 per share in the previous quarter

Commenting on Applied Micro’s fiscal 2017 second quarter results, Dr. Paramesh Gopi, President and Chief Executive Officer, said, “In the second quarter of fiscal 2017 we achieved our seventh consecutive quarter of revenue growth. Our Connectivity business once again drove the improvement in top line results, and higher gross margins combined with greater operating efficiencies led to a return to profitability on a non-GAAP basis.” 

"We continue to lead the optical market with our PAM4 single lambda 100/400G FinFET technology, which is now slated to become the industry standard for data center and enterprise connectivity. Additionally, we announced the deployment of our X-Gene products in industry-leading enterprise storage platforms, and successfully taped out X-Gene 3, our third generation server processor,” concluded Dr. Gopi.

AppliedMicro provides non-GAAP results as additional information relating to its financial condition and business trends.  This information should be considered in conjunction with corresponding GAAP measures.  A reconciliation between GAAP and non-GAAP financial results is provided in the financial tables section of this press release. 

Conference Call and Webcast
Management will host a conference call and simultaneous webcast to discuss second quarter fiscal 2017 results and business and financial outlook today, October 27, 2016, at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time. 

DIAL-IN:(855) 777-0852
PASSCODE:83882028
WEBCAST:Investor Relations section of the Company’s website at www.apm.com

A replay of the call will be available starting at 8:00 PM Eastern Time and can be accessed by dialing 855-859-2056 or 404-537-3406 and using the access code 83882028. The replay will be available for seven days.

About AppliedMicro
Applied Micro Circuits Corporation is a global leader in computing and connectivity solutions for next-generation cloud infrastructure and data centers.  AppliedMicro delivers silicon solutions that dramatically lower total cost of ownership. Corporate headquarters are located in Santa Clara, California. www.apm.com.

(C) Copyright 2016, Applied Micro Circuits Corporation. AppliedMicro, X-Gene, X-Weave, HeliX, Server on a Chip, Cloud Processor and Cloud Server are trademarks or registered trademarks of Applied Micro Circuits Corporation. All other product or service names are the property of their respective owners.

Forward-Looking Statements
This press release contains forward-looking statements that reflect the Company's current views and expectations with respect to future events and financial performance, including statements regarding the Company's strategic focus; new product development, commercialization and customer acceptance; the development of the X-Gene and ARM ecosystems; the anticipated performance of the Company’s base business; and future revenues, expenses and liquidity. These forward-looking statements are only predictions based on current information and expectations and are subject to certain risks and uncertainties, including, but not limited to, customer demand for the Company's products, successful and timely development of products, an evolving competitive landscape, rapid technological change, increased supplier lead times and other supply chain constraints, the businesses and budgeting decisions of the Company's major customers, which may cause delays, reductions, rescheduling or cancellation of customer orders, successful management and retention of key personnel and service providers, market acceptance of new products and technologies, legal and regulatory developments, and general economic conditions, and do not take into account any restructuring or related activities that the Company may undertake. More information about potential factors that could affect the Company's business and financial results is included in the "Risk Factors" set forth in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, and its other filings with the Securities and Exchange Commission. Actual results could differ materially, as a result of such factors, from those set forth in the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement, and the Company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the issuance of this press release.

  
APPLIED MICRO CIRCUITS CORPORATION 
CONDENSED CONSOLIDATED BALANCE SHEETS 
(in thousands) 
       
  September 30,
2016
 March 31,
2016
  
  (unaudited)    
ASSETS      
Current assets:      
Cash, cash equivalents and short-term investments $81,728  $83,845   
Accounts receivable, net  13,552   9,265   
Inventories  13,181   16,148   
Other current assets  9,929   10,775   
Total current assets  118,390   120,033   
Property and equipment, net  12,729   13,293   
Goodwill  11,425   11,425   
Other assets  1,201   1,541   
Total assets $143,745  $146,292   
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities:      
Accounts payable $8,843  $8,599   
Other current liabilities  20,877   20,862   
Total current liabilities  29,720   29,461   
Non-current liabilities  1,067   1,793   
Total liabilities  30,787   31,254   
Stockholders' equity  112,958   115,038   
Total liabilities and stockholders' equity $143,745  $146,292   
       

 

APPLIED MICRO CIRCUITS CORPORATION  
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(in thousands, except per share data)  
(unaudited) 
       
 Three Months Ended Six Months Ended 
 September 30,
2016
 June 30,
2016
 September 30,
2015
 September 30,
2016
 September 30,
2015
 
Net revenues$41,779  $41,498  $39,743  $83,277  $77,556  
Cost of revenues 14,119   16,029   17,758   30,148   34,564  
Gross profit 27,660   25,469   21,985   53,129   42,992  
Operating expenses:          
Research and development 24,037   27,485   22,411   51,522   44,028  
Selling, general and administrative 8,342   8,699   8,373   17,041   17,137  
Restructuring -   -   15   -   111  
Total operating expenses 32,379   36,184   30,799   68,563   61,276  
Operating loss (4,719)  (10,715)  (8,814)  (15,434)  (18,284) 
Interest and other income, net 257   247   265   504   1,909  
Loss before income taxes (4,462)  (10,468)  (8,549)  (14,930)  (16,375) 
Income tax provision (benefit) 178   71   (488)  249   (910) 
Net loss$(4,640) $(10,539) $(8,061) $(15,179) $(15,465) 
Basic and diluted net loss per share:$(0.05) $(0.12) $(0.10) $(0.18) $(0.19)  
Shares used in calculating basic and diluted net loss per share 85,984   84,980   82,176   85,486   81,680  
           

 

APPLIED MICRO CIRCUITS CORPORATION 
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME (LOSS) 
(in thousands, except per share data) 
(unaudited) 
     
 Three Months Ended Six Months Ended 
 September 30,
2016
 June 30,
2016
 September 30,
2015
 September 30,
2016
 September 30,
2015
 
GAAP net loss$(4,640) $(10,539) $(8,061) $(15,179) $(15,465) 
Adjustments:          
Stock-based compensation expense and other 6,790   8,165   5,934   14,955   12,026  
Restructuring -   -   15   -   111  
Reversals of impairment charges upon sales of marketable securities -   -   (267)  -   (1,694) 
Income tax effect on non-GAAP adjustments (22)  (129)  (25)  (151)  (647) 
Total GAAP to Non-GAAP adjustments 6,768   8,036   5,657   14,804   9,796  
Non-GAAP net income (loss)$2,128  $(2,503) $(2,404) $(375) $(5,669) 
Diluted non-GAAP net income (loss) per share$0.02  $(0.03) $(0.03) $(0.01) $(0.07) 
Shares used in calculating diluted non-GAAP net income (loss) per share (*) 87,014   84,980   82,176   85,486   81,680  
Diluted net income (loss) per share:          
GAAP diluted net loss per share$(0.05) $(0.12) $(0.10) $(0.18) $(0.19) 
GAAP to non-GAAP adjustments 0.07   0.09   0.07   0.17   0.12  
Non-GAAP diluted net income (loss) per share$0.02  $(0.03) $(0.03) $(0.01) $(0.07) 
           
(*) For the three months ended September 30, 2016, non-GAAP adjustments convert GAAP net loss to non-GAAP net income; therefore, fully dilutive shares are used in the calculation of non-GAAP diluted net income per share. 
  

 

APPLIED MICRO CIRCUITS CORPORATION  
SCHEDULE OF SELECTED GAAP TO NON-GAAP ADJUSTMENTS 
(in thousands) 
(unaudited) 
  
 Three Months Ended Six Months Ended  
 September 30,
2016
 June 30,
2016
 September 30,
2015
 September 30,
2016
 September 30,
2015
 
GROSS PROFIT:          
GAAP gross profit$27,660  $25,469  $21,985  $53,129  $42,992   
Stock-based compensation expense and other 172   158   116   330   209   
Non-GAAP gross profit$27,832  $25,627  $22,101  $53,459  $43,201   
OPERATING EXPENSES:          
GAAP operating expenses$32,379  $36,184  $30,799  $68,563  $61,276   
Stock-based compensation expense and other (6,618)  (8,007)  (5,818)  (14,625)  (11,817)  
Restructuring -   -   (15)  -   (111)  
Non-GAAP operating expenses$25,761  $28,177  $24,966  $53,938  $49,348   
INTEREST AND OTHER INCOME, NET          
GAAP interest and other income, net$257  $247  $265  $504  $1,909   
Reversals of impairment charges upon sales of marketable securities -   -   (267)  -   (1,694)  
Non-GAAP interest and other income, net$257  $247  $(2) $504  $215   
INCOME TAX EXPENSE (BENEFIT):          
GAAP income tax expense (benefit)$178  $71  $(488) $249  $(910)  
Income tax adjustment 22   129   25   151   647   
Non-GAAP income tax expense$200  $200  $(463) $400  $(263)  
RESEARCH AND DEVELOPMENT :          
GAAP research and development$24,037  $27,485  $22,411  $51,522  $44,028   
Stock-based compensation expense and other (4,624)  (5,993)  (3,955)  (10,617)  (8,015)  
Non-GAAP research and development$19,413  $21,492  $18,456  $40,905  $36,013   
SELLING, GENERAL AND ADMINISTRATIVE :          
GAAP selling, general and administrative$8,342  $8,699  $8,373  $17,041  $17,137   
Stock-based compensation expense and other (1,994)  (2,014)  (1,863)  (4,008)  (3,802)  
Non-GAAP selling, general and administrative$6,348  $6,685  $6,510  $13,033  $13,335   
           

 

APPLIED MICRO CIRCUITS CORPORATION  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(in thousands) 
(unaudited) 
     
 Three Months Ended Six Months Ended  
 September 30,
2016
 June 30,
2016
 September 30,
2015
 September 30,
2016
 September 30,
2015
  
Operating activities:           
Net loss$(4,640) $(10,539) $(8,061) $(15,179) $(15,465)  
Adjustments to reconcile net loss to net cash  provided by operating activities:           
Depreciation 1,570   1,570   1,833   3,140   3,671   
Amortization of bond premium 174   226   -   400   -   
Stock-based compensation expense 6,696   8,165   5,934   14,861   12,026   
Tax effect on other comprehensive loss 19   (94)  -   (75)  -   
Loss (gain) on short-term investments and other, net 137   (26)  (132)  111   (1,587)  
Changes in operating assets and liabilities:           
Accounts receivable (4,389)  102   (1,099)  (4,287)  (217)  
Inventories (584)  3,552   (574)  2,968   3,149   
Other assets 1,113   (70)  (355)  1,042   2,109   
Accounts payable 2,767   (2,382)  1,095   384   (2,358)  
Accrued payroll and other accrued liabilities (101)  1,077   (50)  977   170   
Veloce accrued liability (3,660)  (8)  (25)  (3,668)  (90)  
Deferred revenue (12)  1   (30)  (10)  (23)  
Net cash provided by (used for) operating activities (910)  1,574   (1,464)  664   1,385   
Investing activities:           
Proceeds from sales and maturities of short-term investments 9,684   18,461   40,403   28,145   47,847   
Purchases of short-term investments (11,062)  (17,739)  (62,573)  (28,801)  (63,702)  
Proceeds from sale of property and equipment -   2   6   2   31   
Purchases of property and equipment (761)  (2,547)  (492)  (3,308)  (807)  
Net cash used for investing activities (2,139)  (1,823)  (22,656)  (3,962)  (16,631)  
Financing activities:           
Proceeds from issuances of common stock 1,744   32   1,112   1,776   1,245   
Funding of restricted stock units withheld for taxes and other (431)  (623)  (207)  (1,054)  (1,419)  
Net cash provided by (used for) financing activities 1,313   (591)  905   722   (174)  
Net decrease in cash and cash equivalents (1,736)  (840)  (23,215)  (2,576)  (15,420)  
Cash and cash equivalents at beginning of the period 24,225   25,065   44,290   25,065   36,495  
Cash and cash equivalents at end of the period$22,489  $24,225  $21,075  $22,489  $21,075  
           



        

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