Selected Q2 Highlights
* Q2 net revenues of $58.2 million, up 16% sequentially
* Q2 GAAP net loss of $8.1 million or $(0.03) per share
* Q2 non-GAAP net loss of $3.0 million or $(0.01) per share
* Processor revenues were $27.0 million and grew 55% sequentially;
Transport revenues were $14.1 million and declined 7%
sequentially; Storage revenues were $12.2 million and declined 7%
sequentially; Non-focus revenues were $4.9 million and grew 9%
sequentially
* AMCC entered the Serial Attached SCSI (SAS) market and began
shipping a complete family of 3ware(R) 9690SA SAS RAID
controllers
* Announced the newest member of its embedded processor family of
products: the PPC460GT that is designed for a wide range of high
performance applications
SUNNYVALE, Calif., Oct. 25, 2007 (PRIME NEWSWIRE) -- Applied Micro Circuits Corporation (Nasdaq:AMCC) today reported its financial results for the second quarter of fiscal 2008.
Net revenues for the second quarter of fiscal 2008 were $58.2 million compared to $50.1 million reported in the first quarter of fiscal 2008 and $76.4 million reported in the second quarter of fiscal 2007. Revenues for the first six months were $108.3 million compared to $146.0 million for the comparable period last year.
The net loss on a generally accepted accounting principles (GAAP) basis for the second quarter of fiscal 2008 was $8.1 million or $(0.03) per share. The second quarter GAAP net loss compares with a net loss of $16.4 million or $(0.06) per share for the first quarter of fiscal 2008 and a net loss of $13.9 million or $(0.05) per share for the second quarter of fiscal 2007. Year to date the GAAP net loss was $24.5 million or $(0.09) per share compared to $14.7 million or $(0.05) per share for the first six months of fiscal year 2007.
The non-GAAP net loss for the second quarter of fiscal 2008 was $3.0 million or $(0.01) per share, compared to the non-GAAP net loss of $7.3 million or $(0.03) per share in the first quarter of fiscal 2008 and the non-GAAP net income of $10.4 million or $0.04 per share in the second quarter of fiscal 2007. Year to date the non-GAAP net loss was $10.3 million or $(0.04) per share compared to a non-GAAP net income of $18.5 million or $0.06 per share for the first six months of fiscal year 2007.
"I am pleased with our overall results. First, we achieved the revenue growth we were projecting and second, we saw a healthy increase in our backlog and order patterns. With the correction cycle now behind us, we are focused on further expanding our revenues and returning to non-GAAP profitability. We also entered a key new product cycle by shipping our SAS product family and we are very pleased with our customer traction," said Kambiz Hooshmand, president and chief executive officer.
Bob Gargus, chief financial officer commented, "The second quarter was a challenge operationally as we put in place the planned initiatives to reduce operating expenses. With this now in place I anticipate that further revenue growth combined with reduced operating expenses will return us to non-GAAP profitability in the December quarter."
AMCC reports its financial results in accordance with GAAP and also provides additional financial data that have not been prepared in accordance with GAAP. The non-GAAP results and other financial measures reported by the Company exclude certain items that are required by GAAP, such as restructuring charges, amortization of purchased intangibles, acquired in-process research and development, stock-based compensation charges, gains on sale of equity investment and renegotiated design tool agreement, payroll tax on certain stock option exercises and expenses related to stock option investigation. Expenses related to stock option investigation consist primarily of fees paid to professional service firms in connection with the Company's internal investigation of historical stock option grant practices and the resulting restatement of the Company's financial statements, the investigations by the Securities and Exchange Commission and the U.S. Attorney's office arising from the internal investigation and the defense of derivative lawsuits arising from the Company's internal investigation. Income taxes are adjusted to an estimated non-GAAP effective tax rate. These non-GAAP measures are not a substitute for GAAP measures and may not be consistent with the presentation used by other companies. The Company uses the non-GAAP financial measures to evaluate and manage its operations. The Company is providing this information to allow investors to perform additional financial analysis and because it is consistent with the financial models and estimates published by analysts who follow the Company. The attached schedule reconciles non-GAAP results and other financial measures reported by the Company with the most directly comparable GAAP financial measures.
For More Information
AMCC management will be holding a conference call today, October 25, 2007, at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time to discuss additional details regarding the Company's performance for the second quarter of fiscal 2008 and to provide guidance for the third quarter of fiscal 2008. You may access the conference call via any of the following:
Teleconference: 719-325-4938 Conference ID: 2846485 Web Broadcast: http://investor.amcc.com/events.cfm Replay: 719-457-0820 (available through November 1, 2007)
AMCC Overview
AMCC is a global leader in network and embedded PowerPC(r) processing, optical transport and storage solutions. Our products enable the development of converged IP-based networks offering high-speed secure data, high-definition video and high-quality voice for carrier, metropolitan, access and enterprise applications. AMCC provides networking equipment vendors with industry-leading network and communications processing, Ethernet, SONET, OTN and switch fabric solutions. AMCC is also the leading vendor of high-port count SATA RAID controllers enabling low-cost, high-performance, high-capacity storage. AMCC's corporate headquarters are located in Sunnyvale, California. Sales and engineering offices are located throughout the world. For further information regarding AMCC, please visit our web site at http://www.amcc.com.
AMCC is a registered trademark of Applied Micro Circuits Corporation. The PowerPC name and logo are registered trademarks of IBM Corporation and used under license therefrom. All other trademarks are the property of their respective owners.
This news release contains forward-looking statements that reflect the Company's current view with respect to future events and financial performance, including statements regarding future revenues, orders, operating expenses, profitability and product cycles. These forward-looking statements are only predictions based on current information and expectations and are subject to certain risks and uncertainties, including, but not limited to, customer demand for the Company's products, the businesses of the Company's major customers, reductions, rescheduling or cancellation of orders by the Company's customers, successful and timely development of products, market acceptance of new products, and general economic conditions. More information about potential factors that could affect the Company's business and financial results is included in the "Risk Factors" set forth in the Company's Annual Report on Form 10-K for the year ended March 31, 2007, and the Company's other filings with the Securities and Exchange Commission. Actual results could differ materially, as a result of such factors, from those set forth in the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement, and the Company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the issuance of this press release.
APPLIED MICRO CIRCUITS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands)
(unaudited)
-----------------------
Sept. 30, March 31,
ASSETS 2007 2007
--------- ---------
Current assets:
Cash, cash equivalents and short-term
investments $ 140,318 $ 284,470
Accounts receivable, net 23,218 32,558
Inventories 40,481 31,286
Other current assets 11,830 14,438
--------- ---------
Total current assets 215,847 362,752
Long-term marketable securities 77,736 -
Property and equipment, net 25,655 27,150
Goodwill 335,624 335,857
Purchased intangibles 67,832 79,787
Other assets 17,152 10,966
--------- ---------
Total assets $ 739,846 $ 816,512
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 14,311 $ 26,893
Other current liabilities 24,296 28,797
--------- ---------
Total current liabilities 38,607 55,690
Stockholders' equity 701,239 760,822
--------- ---------
Total liabilities and stockholders'
equity $ 739,846 $ 816,512
========= =========
APPLIED MICRO CIRCUITS CORPORATION
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three months ended Six months ended
---------------------------- -------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2007 2007 2006 2007 2006
---------------------------- -------------------
Net revenues $ 58,210 $ 50,135 $ 76,364 $108,345 $146,043
Cost of revenues 30,328 26,498 35,536 56,826 67,064
-------- -------- -------- -------- --------
Gross profit 27,882 23,637 40,828 51,519 78,979
Operating
expenses:
Research and
development 24,480 25,482 24,853 49,962 47,692
Selling,
general and
administra-
tive 15,850 16,063 16,162 31,913 32,612
Amortization
of purchased
intangibles 1,336 1,345 1,188 2,681 2,295
Acquired
in-process
research and
development -- -- 13,300 - 13,300
Restructuring
charges 1,376 (32) 1,419 1,344 2,666
Option
investiga-
tion 209 292 1,150 501 1,700
-------- -------- -------- -------- --------
Total
operating
expenses 43,251 43,150 58,072 86,401 100,265
-------- -------- -------- -------- --------
Operating loss (15,369) (19,513) (17,244) (34,882) (21,286)
Interest and
other income,
net 6,906 3,076 3,429 9,982 6,794
-------- -------- -------- -------- --------
Loss before
income taxes (8,463) (16,437) (13,815) (24,900) (14,492)
Income tax
expense
(benefit) (410) (17) 74 (427) 214
-------- -------- -------- -------- --------
Net loss $(8,053) $(16,420) $(13,889) $(24,473) $(14,706)
======== ======== ======== ======== ========
Basic and
diluted loss
per share:
Loss per
share $ (0.03) $ (0.06) $ (0.05) $ (0.09) $ (0.05)
======== ======== ======== ======== ========
Shares used in
calculating
basic and
diluted
loss per
share 275,132 281,656 281,762 278,394 286,470
======== ======== ======== ======== ========
APPLIED MICRO CIRCUITS CORPORATION
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME (LOSS)
(unaudited)
(in thousands)
Three months ended Six months ended
---------------------------- -------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2007 2007 2006 2007 2006
---------------------------- -------------------
GAAP net loss $ (8,053) $(16,420) $(13,889) $(24,473) $(14,706)
Adjustments:
Stock-based
compensation
charges 3,297 2,620 2,677 5,917 5,188
Amortization
of purchased
intangibles 5,919 6,036 5,941 11,955 10,674
Impairment
of goodwill -- -- -- -- --
Restructuring
charges 1,376 (32) 1,419 1,344 2,666
Realized
gain on
sale of
strategic
equity
investment (4,649) -- -- (4,649) --
Gain on
renegotiated
design tool
agreement (749) -- -- (749) --
Acquired
in-process
research
and
development -- -- 13,300 -- 13,300
Payroll taxes
on certain
stock option
exercises 1 2 -- 3 1
Expenses
related to
stock
option
investiga-
tion 209 292 1,150 501 1,700
Income tax
adjustments (318) 209 (212) (109) (306)
-------- -------- -------- -------- --------
Total GAAP to
Non-GAAP
adjustments 5,086 9,127 24,275 14,213 33,223
-------- -------- -------- -------- --------
Non-GAAP net
income (loss) $ (2,967) $ (7,293) $ 10,386 $(10,260) $ 18,517
======== ======== ======== ======== ========
Diluted income
(loss) per
share $ (0.01) $ (0.03) $ 0.04 $ (0.04) $ 0.06
======== ======== ======== ======== ========
Shares used in
calculating
diluted income
(loss) per
share 275,132 281,656 282,586 278,394 287,356
======== ======== ======== ======== ========
Income (loss)
per share:
GAAP income
(loss) per
share $ (0.03) $ (0.06) $ (0.05) $ (0.09) $ (0.05)
GAAP to
non-GAAP
adjustments 0.02 0.03 0.09 0.05 0.11
-------- -------- -------- -------- --------
Non-GAAP
income (loss)
per share $ (0.01) $ (0.03) $ 0.04 $ (0.04) $ 0.06
======== ======== ======== ======== ========
Reconciliation
of shares
used in
calculating
the non-GAAP
income per
share:
Shares used
in
calculating
the basic
and diluted
income (loss)
per share 275,132 281,656 281,762 278,394 286,470
Adjustment
for dilutive
securities -- -- 824 -- 886
-------- -------- -------- -------- --------
Non-GAAP
shares used
in the EPS
calculation 275,132 281,656 282,586 278,394 287,356
======== ======== ======== ======== ========
APPLIED MICRO CIRCUITS CORPORATION
SCHEDULE OF SELECTED GAAP TO NON-GAAP ADJUSTMENTS
(unaudited)
(in thousands)
The following schedule reconciles selected line items from the
GAAP basis statements of operations to the non-GAAP statements of
operations:
Three months ended Six months ended
------------------------------- --------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2007 2007 2006 2007 2006
------------------------------- --------------------
GROSS PROFIT:
GAAP gross
profit $ 27,882 $ 23,637 $ 40,828 $ 51,519 $ 78,979
Amortization
of purchased
intangibles 4,583 4,691 4,753 9,274 8,379
Stock-based
compensation
expense 240 72 157 312 291
--------- --------- --------- --------- ---------
Non-GAAP gross
profit $ 32,705 $ 28,400 $ 45,738 $ 61,105 $ 87,649
========= ========= ========= ========= =========
OPERATING
EXPENSES:
GAAP operating
expenses $ 43,251 $ 43,150 $ 58,072 $ 86,401 $ 100,265
Amortization
of purchased
intangibles (1,336) (1,345) (1,188) (2,681) (2,295)
Acquired in-
process
research and
development -- -- (13,300) -- (13,300)
Stock-based
compensation
expense (3,057) (2,548) (2,520) (5,605) (4,897)
Restructuring
charges (1,376) 32 (1,419) (1,344) (2,666)
Gain on
renegotiated
design tool
agreement 749 -- -- 749 --
Payroll taxes
on certain
stock option
exercises (1) (2) -- (3) (1)
Expenses
related to
stock option
investigation (209) (292) (1,150) (501) (1,700)
--------- --------- --------- --------- ---------
Non-GAAP
operating
expenses $ 38,021 $ 38,995 $ 38,495 $ 77,016 $ 75,406
========= ========= ========= ========= =========
INTEREST AND
OTHER INCOME,
NET
GAAP interest
and other
income, net $ 6,906 $ 3,076 $ 3,429 $ 9,982 $ 6,794
Realized
gain on sale
of strategic
equity
investments (4,649) -- -- (4,649) --
--------- --------- --------- --------- ---------
Non-GAAP
interest and
other income,
net $ 2,257 $ 3,076 $ 3,429 $ 5,333 $ 6,794
========= ========= ========= ========= =========
INCOME TAX
EXPENSE
(BENEFIT):
GAAP income tax
expense
(benefit) $ (410) $ (17) $ 74 $ (427) $ 214
Income tax
adjustments 318 (209) 212 109 306
--------- --------- --------- --------- ---------
Non-GAAP income
tax expense
(benefit) $ (92) $ (226) $ 286 $ (318) $ 520
========= ========= ========= ========= =========
RESEARCH AND
DEVELOPMENT
GAAP research
and
development $ 24,480 $ 25,482 $ 24,853 $ 49,962 $ 47,692
Stock-based
compensation
expense (1,216) (1,055) (1,028) (2,271) (2,097)
Gain on
renegotiated
design tool
agreement 749 -- -- 749 --
Payroll taxes
on certain
stock option
exercises -- (2) -- (2) --
--------- --------- --------- --------- ---------
Non-GAAP
research and
development $ 24,013 $ 24,425 $ 23,825 $ 48,438 $ 45,595
========= ========= ========= ========= =========
SELLING,
GENERAL AND
ADMINISTRATIVE
GAAP selling,
general and
administrative $ 15,850 $ 16,063 $ 16,162 $ 31,913 $ 32,612
Stock-based
compensation
expense (1,841) (1,493) (1,492) (3,334) (2,800)
Payroll taxes
on certain
stock option
exercises (1) -- -- (1) (1)
--------- --------- --------- --------- ---------
Non-GAAP
selling,
general and
administrative $ 14,008 $ 14,570 $ 14,670 $ 28,578 $ 29,811
========= ========= ========= ========= =========
APPLIED MICRO CIRCUITS CORPORATION
CONSOLIDATED STATEMENT OF CASHFLOWS
($ in thousands)
(unaudited)
Six Months ended
September 30,
-----------------------
2007 2006
--------- ---------
Operating activities:
Net loss $ (24,473) $ (14,706)
Adjustments to reconcile net loss
to net cash provided by (used for)
operating activities
Depreciation and amortization 3,227 4,678
Amortization of purchased
intangibles 11,956 10,674
Acquired in-process research and
development -- 13,300
Stock-based compensation expense:
Stock options 5,268 5,153
Restricted stock units 649 36
Non-cash restructuring charges
(benefit) (32) 1,977
Net gain on strategic equity
investments (4,649) --
Net gain on disposal of property (64) --
Changes in operating assets and
liabilities:
Accounts receivable 9,340 (9,199)
Inventories (9,195) (6,473)
Other assets 1,653 (350)
Accounts payable (12,582) 3,994
Accrued payroll and other accrued
liabilities (4,474) (5,141)
Deferred revenue 6 (415)
--------- ---------
Net cash provided by (used for)
operating activities (23,370) 3,528
Investing activities:
Proceeds from sales and maturities
of investments 345,009 281,502
Purchases of investments (286,191) (217,982)
Purchase of strategic investments (5,000) --
Net proceeds from the sale of
strategic equity investments 5,249 --
Purchase of property, equipment and
other assets (3,314) (4,293)
Proceeds from sale of property,
equipment and other assets 1,646 --
Net cash paid for acquisitions -- (71,971)
--------- ---------
Net cash provided by (used for)
investing activities 57,399 (12,744)
Financing activities:
Proceeds from issuance of common
stock 3,286 243
Open market repurchases of Company
stock (29,268) (20,137)
Funding of structured stock
repurchase agreements (23,830) --
Funds received from structured
stock repurchase agreements
including gains 13,237 17,379
Payments on long-term debt -- (289)
Other (231) (169)
--------- ---------
Net cash used for financing
activities (36,806) (2,973)
--------- ---------
Net decrease in cash
and cash equivalents (2,777) (12,189)
Cash and cash equivalents at
beginning of the period 51,595 49,125
--------- ---------
Cash and cash equivalents at end of
the period $ 48,818 $ 36,936
========= =========
Supplementary cash flow disclosure:
Cash paid for:
Interest $ 9 $ --
Income taxes $ 338 $ 357