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Applied Micro Circuits Corporation Reports Second Quarter Fiscal 2015 Financial Results

SUNNYVALE, Calif., Oct. 28, 2014 (GLOBE NEWSWIRE) -- Applied Micro Circuits Corporation (Nasdaq:AMCC) ("AppliedMicro") today reported its financial results for the second quarter of fiscal 2015, ended September 30, 2014.

  • Consolidated net revenue of $40.9 million
  • GAAP net loss of $11.7 million or $0.15 per share
  • Non-GAAP net loss of $5.0 million or $0.06 per share

Commenting on AppliedMicro's second quarter operations, Dr. Paramesh Gopi, President and Chief Executive Officer, said, "Following a very robust June quarter, our Connectivity business was impacted by weak service provider order patterns. We view this difficult environment as transitory." Dr. Gopi continued, "We are very pleased with our ARM 64-bit processor success with strong sequential X-GeneTM revenue growth and our HeliXTM family product launch."

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 results and business and financial outlook today, October 28, 2014, at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time.

DIAL-IN: (877) 415-3182
(857) 244-7325
PASSCODE: 76367505
WEBCAST: Investor Relations section of the Company's website at www.apm.com

A replay of the call will be available starting around 6:00 p.m. Pacific Time / 9:00 p.m. Eastern Time and can be accessed by dialing 888-286-8010 or 617-801-6888 and using the access code 15365763. The replay will be available through November 4, 2014.

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 Sunnyvale, California. www.apm.com.

(C) Copyright 2014, 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; product cycles; new product development, commercialization and customer acceptance; the development of the X-Gene™ ecosystem; the anticipated performance of the Company's base business including the expected duration of weakness in service provider order patterns; 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, changes in the businesses and budgeting decisions of the Company's major customers, reductions, rescheduling or cancellation of orders by the Company's customers, successful management of key service providers and recently acquired businesses, market acceptance of new products, 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 Annual Report on Form 10-K for the year ended March 31, 2014, its Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, 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)
(unaudited)
September 30, March 31,
ASSETS 2014 2014
Current assets:
Cash, cash equivalents and short-term investments $ 89,518 $ 106,583
Accounts receivable, net 17,881 25,178
Inventories 17,592 18,946
Other current assets 13,670 16,799
Total current assets 138,661 167,506
Property and equipment, net 20,783 20,746
Goodwill 11,425 11,425
Purchased intangibles, net -- 105
Other assets 4,278 7,754
Total assets $ 175,147 $ 207,536
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 11,576 $ 26,194
Other current liabilities 23,237 28,961
Total current liabilities 34,813 55,155
Non-current liabilities:
Veloce accrued liability 3,707 3,145
Stockholders' equity 136,627 149,236
Total liabilities and stockholders' equity $ 175,147 $ 207,536
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, June 30, September 30, September 30, September 30,
2014 2014 2013 2014 2013
Net revenues $ 40,945 $ 50,272 $ 55,387 $ 91,217 $ 109,535
Cost of revenues 17,716 20,257 21,397 37,973 43,739
Gross profit 23,229 30,015 33,990 53,244 65,796
Operating expenses:
Research and development 24,711 33,205 56,550 57,916 91,056
Selling, general and administrative 7,919 9,058 9,146 16,977 18,672
Amortization of purchased intangible assets 42 62 62 104 192
Restructuring (110) 1,211 999 1,101 1,092
Gain on sale of TPack -- -- -- -- (19,699)
Total operating expenses 32,562 43,536 66,757 76,098 91,313
Operating loss (9,333) (13,521) (32,767) (22,854) (25,517)
Interest and other (expense) income, net (2,112) 315 576 (1,797) 4,371
Loss before income taxes (11,445) (13,206) (32,191) (24,651) (21,146)
Income tax expense (benefit) 272 (141) 192 131 380
Net loss $ (11,717) $ (13,065) $ (32,383) $ (24,782) $ (21,526)
Basic and diluted net loss per share: $ (0.15) $ (0.17) $ (0.45) $ (0.32) $ (0.30)
Shares used in calculating basic and diluted net loss per share 78,487 77,916 72,610 78,202 70,985
APPLIED MICRO CIRCUITS CORPORATION
RECONCILIATION OF GAAP NET (LOSS) INCOME TO NON-GAAP NET INCOME
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
September 30, June 30, September 30, September 30, September 30,
2014 2014 2013 2014 2013
GAAP net loss $ (11,717) $ (13,065) $ (32,383) $ (24,782) $ (21,526)
Adjustments:
Stock-based compensation charges 4,230 5,216 3,834 9,446 7,548
Amortization of purchased intangible assets 42 62 62 104 358
Veloce acquisition consideration -- 7,140 30,484 7,140 39,739
Restructuring (110) 1,211 999 1,101 1,092
Impairment of a strategic investment 2,500 -- -- 2,500 --
Gain on sale of TPack -- -- -- -- (19,699)
Reversals of impairment charges upon sales of marketable securities (11) (18) (940) (29) (3,959)
Income tax 22 (391) (46) (369) (108)
Total GAAP to non-GAAP adjustments 6,673 13,220 34,393 19,893 24,971
Non-GAAP net (loss) income $ (5,044) $ 155 $ 2,010 $ (4,889) $ 3,445
Diluted non-GAAP (loss) income per share $ (0.06) $ 0.00 $ 0.03 $ (0.06) $ 0.05
Shares used in calculating diluted non-GAAP (loss) income per share 78,487 79,082 74,301 78,202 72,268
Net (loss) income per share:
GAAP loss per share $ (0.15) $ (0.17) $ (0.45) $ (0.32) $ (0.30)
GAAP to non-GAAP adjustments 0.09 0.17 0.47 0.26 0.35
Non-GAAP net (loss) income per share $ (0.06) $ 0.00 $ 0.03 $ (0.06) $ 0.05
Reconciliation of shares used in calculating non-GAAP (loss) income per share:
Shares used in calculating the basic loss per share 78,487 77,916 72,610 78,202 70,985
Adjustment for dilutive securities -- 1,166 1,691 -- 1,283
Shares used in calculating diluted non-GAAP (loss) income per share 78,487 79,082 74,301 78,202 72,268
APPLIED MICRO CIRCUITS CORPORATION
SCHEDULE OF SELECTED GAAP TO NON-GAAP ADJUSTMENTS
(in thousands)
(unaudited)
The following schedule reconciles selected line items on the condensed consolidated statements of operations from the GAAP basis to the non-GAAP basis:
Three Months Ended Six Months Ended
September 30, June 30, September 30, September 30, September 30,
2014 2014 2013 2014 2013
GROSS PROFIT:
GAAP gross profit $ 23,229 $ 30,015 $ 33,990 $ 53,244 $ 65,796
Amortization of purchased intangible assets -- -- -- -- 166
Stock-based compensation expense 102 47 125 149 223
Non-GAAP gross profit $ 23,331 $ 30,062 $ 34,115 $ 53,393 $ 66,185
OPERATING EXPENSES:
GAAP operating expenses $ 32,562 $ 43,536 $ 66,757 $ 76,098 $ 91,313
Stock-based compensation expense (4,128) (5,169) (3,709) (9,297) (7,325)
Amortization of purchased intangible assets (42) (62) (62) (104) (192)
Veloce acquisition consideration -- (7,140) (30,484) (7,140) (39,739)
Gain on sale of building -- -- -- -- 19,699
Restructuring 110 (1,211) (999) (1,101) (1,092)
Non-GAAP operating expenses $ 28,502 $ 29,954 $ 31,503 $ 58,456 $ 62,664
INTEREST AND OTHER (EXPENSE) INCOME, NET
GAAP interest and other (expense) income, net $ (2,112) $ 315 $ 576 $ (1,797) $ 4,371
Impairment of a strategic investment 2,500 -- -- 2,500 --
Reversals of impairment charges upon sales of marketable securities (11) (18) (940) (29) (3,959)
Non-GAAP interest and other (expense) income, net $ 377 $ 297 $ (364) $ 674 $ 412
INCOME TAX EXPENSE (BENEFIT):
GAAP income tax expense (benefit) $ 272 $ (141) $ 192 $ 131 $ 380
Income tax adjustment (22) 391 46 369 108
Non-GAAP income tax expense $ 250 $ 250 $ 238 $ 500 $ 488
RESEARCH AND DEVELOPMENT:
GAAP research and development $ 24,711 $ 33,205 $ 56,550 $ 57,916 $ 91,056
Stock-based compensation expense (2,776) (3,271) (1,524) (6,047) (3,341)
Veloce acquisition consideration -- (7,140) (30,484) (7,140) (39,739)
Non-GAAP research and development $ 21,935 $ 22,794 $ 24,542 $ 44,729 $ 47,976
SELLING, GENERAL AND ADMINISTRATIVE:
GAAP selling, general and administrative $ 7,919 $ 9,058 $ 9,146 $ 16,977 $ 18,672
Stock-based compensation expense (1,352) (1,898) (2,185) (3,250) (3,984)
Non-GAAP selling, general and administrative $ 6,567 $ 7,160 $ 6,961 $ 13,727 $ 14,688
APPLIED MICRO CIRCUITS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
September 30, June 30, September 30, September 30, September 30,
2014 2014 2013 2014 2013
Operating activities:
Net loss $ (11,717) $ (13,065) $ (32,384) $ (24,782) $ (21,526)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation 2,227 2,174 2,659 4,401 5,283
Amortization of purchased intangible assets 42 62 62 104 358
Stock-based compensation expense 4,230 5,216 3,834 9,446 7,548
Veloce acquisition consideration -- 7,140 30,484 7,140 39,739
Tax effect on other comprehensive loss 110 (194) -- (84) --
Noncash restructuring charges -- -- 272 -- 298
Gain on sale of TPack -- -- -- -- (19,699)
Loss on disposals of property and equipment 6 16 30 22 27
Impairment of a strategic investment 2,500 -- -- 2,500 --
Changes in operating assets and liabilities:
Accounts receivable 5,051 2,246 2,108 7,297 (2,366)
Inventories 3,079 (1,745) (80) 1,334 105
Other assets (1,241) 1,994 (1,757) 753 (159)
Accounts payable (5,741) (6,163) (1,257) (11,904) (1,943)
Accrued payroll and other accrued liabilities (4,252) 1,663 (2,339) (2,589) 1,810
Veloce accrued liability (1,116) (6,383) (19,258) (7,499) (44,240)
Deferred revenue (668) 502 79 (166) (594)
Net cash used for operating activities (7,490) (6,537) (17,547) (14,027) (35,359)
Investing activities:
Proceeds from sales and maturities of short-term investments 1,238 682 7,118 1,920 21,303
Purchases of short-term investments (749) (1,320) (5,816) (2,069) (8,177)
Proceeds from sale of TPack, net -- 3,353 -- 3,353 29,498
Proceeds from sale of property and equipment 1 -- 20 1 20
Purchase of property and equipment (2,756) (4,544) (1,744) (7,300) (2,023)
Proceeds from sale of strategic equity investment -- -- 1,286 -- 1,286
Net cash (used for) provided by investing activities (2,266) (1,829) 864 (4,095) 41,907
Financing activities:
Proceeds from issuances of common stock 1,757 106 6,765 1,863 6,936
Funding of restricted stock units withheld for taxes (322) (924) (1,697) (1,246) (4,079)
Other -- (88) (150) (88) (562)
Net cash provided by (used for) financing activities 1,435 (906) 4,918 529 2,295
Net (decrease) increase in cash and cash equivalents (8,321) (9,272) (11,765) (17,593) 8,843
Cash and cash equivalents at the beginning of the period 62,267 71,539 39,673 71,539 19,065
Cash and cash equivalents at the end of the period $ 53,946 $ 62,267 $ 27,908 $ 53,946 $ 27,908

CONTACT: Investor Relations Contact: Traci Tsuchiguchi Phone: (408) 542-8353 E-Mail: ttsuchiguchi@apm.com Media Contact: Mike Major Phone: (408) 542-8831 E-mail: mmajor@apm.com

Source:Applied Micro Circuits Corporation