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Press release from GlobeNewswire (a Nasdaq OMX company)

Applied Micro Circuits Corporation Reports Second Quarter Fiscal 2013 Financial Results

Thursday, October 25, 2012

Applied Micro Circuits Corporation Reports Second Quarter Fiscal 2013 Financial Results13:05 EDT Thursday, October 25, 2012SUNNYVALE, Calif., Oct. 25, 2012 (GLOBE NEWSWIRE) -- Applied Micro Circuits Corporation (Nasdaq:AMCC) ("AppliedMicro") today reported its financial results for the second quarter of fiscal 2013, ended September 30, 2012. Q2 2013 net revenues were $46.3 million, up approximately 12% sequentially and down approximately 29% year over year.   Q2 2013 GAAP net loss was $21.6 million or $0.33 per share compared to net loss of $23.4 million or $0.37 per share for the first quarter of fiscal 2013.   Q2 2013 non-GAAP EPS was $0.16 per share on net loss of $10.5 million, compared to a loss of $0.18 per share on a net loss of $11.4 million, for the first quarter of fiscal 2013.   Total cash, cash equivalents and short-term investments was approximately $90 million as of September 30, 2012 compared to $96 million as of June 30, 2012.   During the quarter, the Company announced the world's fastest CMOS transmitter IC's for Dense Wavelength Division Multiplexing line-side applications which support power-efficient, cost-effective deployments in 100-Gigabit per second optical metro, regional and long-haul networks. Net revenues for the second quarter of fiscal 2013 were $46.3 million compared to $41.3 million in the first quarter of fiscal 2013, representing a sequential increase of 12.2% and a decrease of 28.7% over the $64.9 million in net revenues reported in the second quarter of fiscal 2012. Net revenues for the first six months of fiscal 2013 were $87.6 million, compared to $125.8 million for the same period last year, representing a decrease of 30.3%. The net loss on a generally accepted accounting principles (GAAP) basis for the second quarter and for the first six months of fiscal 2013 were $21.6 million and $44.9 million or $0.33 and $0.71 per share, respectively. This compares with a net loss of $23.4 million or $0.37 per share for the first quarter of fiscal 2013 and net loss of $1.2 million or $0.02 per share and net loss of $8.0 million or $0.13 per share for the second quarter and first six months of fiscal 2012, respectively. Non-GAAP loss for the second quarter and the first six months of fiscal 2013 was $10.5 million or $0.16 per share and $22.0 million or $0.34 per share, respectively, compared to non-GAAP loss of $11.4 million or $0.18 per share in the first quarter of fiscal 2013 and non-GAAP net income of $1.1 million or $0.02 per diluted share and $1.7 million or $0.03 per diluted share for the second quarter and first six months of fiscal 2012, respectively. "We recovered nicely from the low point of our first quarter. We are making excellent progress in the development of our disruptive 64bit server product which will tape-out this quarter and I have been very pleased with the level of interest from the industry including several key players," said Dr. Paramesh Gopi, President and Chief Executive Officer. Bob Gargus, Chief Financial Officer commented, "We are slightly ahead of plan and are progressing towards our commitment of achieving cash break even in the upcoming March quarter. Our overall Data Center convergence strategy is also coming together nicely with several new products beginning to ramp." AppliedMicro 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, stock-based compensation charges, other-than-temporary impairment on investments, one-time acquisition related recoveries, Veloce Acquisition consideration, warrant expense, payroll taxes on certain stock option exercises and non-cash tax adjustments. 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.  AppliedMicro management will be holding a conference call today, October 25, 2012 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 2013 and to provide guidance for the third quarter of fiscal 2013. You may access the conference call via any of the following: Teleconference: 866-831-5605 Conference ID: 76439144 Web Broadcast: http://www.apm.com Replay: 888-286-8010 (access code: 60491743, available through November 1, 2012)AppliedMicro Overview AppliedMicro is a global leader in energy conscious computing solutions for telco, enterprise, data center, consumer and SMB applications. With a heritage of innovation in high-speed connectivity and high-performance computing, AppliedMicro delivers silicon solutions that dramatically lower total cost of ownership for service provider and data center infrastructures. AppliedMicro's corporate headquarters are located in Sunnyvale, California. Sales and engineering offices are located throughout the world. For further information regarding AppliedMicro, visit the company's Web site at http://www.apm.com. ©2012 Applied Micro Circuits Corporation. AppliedMicro, and the AppliedMicro logo are trademarks or registered trademarks of Applied Micro Circuits Corporation. All other product or service names 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 the Company's focus, product cycles, design-win pipeline, strategic re-focus and future revenues. 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, increased supplier lead times and other supply chain constraints, 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, successful integration and management of recently acquired businesses, 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, 2012, 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.-Financial Tables Follow-  APPLIED MICRO CIRCUITS CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(in thousands)(unaudited)        September 30, March 31, ASSETS 2012 2012       Current assets:     Cash, cash equivalents and short-term investments  $ 89,687   $ 113,846 Accounts receivable, net  14,275  22,666 Inventories  18,437  23,244 Other current assets  26,450  31,105 Total current assets  148,849  190,861 Property and equipment, net  37,858  38,100 Goodwill  13,183  13,183 Purchased intangibles, net  14,024  16,634 Other assets  11,019  10,274 Total assets  $ 224,933  $ 269,052       LIABILITIES AND STOCKHOLDERS' EQUITY                 Current liabilities:     Accounts payable  $ 14,095   $ 21,383 Other current liabilities  33,981  50,903 Total current liabilities  48,076  72,286 Non-current liability:     Veloce accrued liability  17,894  27,530 Stockholders' equity  158,963  169,236 Total liabilities and stockholders' equity  $ 224,933  $ 269,052     APPLIED MICRO CIRCUITS CORPORATIONGAAP 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,   2012 2012 2011 2012 2011             Net revenues $ 46,324 $ 41,294 $ 64,929 $ 87,618  $ 125,773 Cost of revenues  20,561  18,355  27,704  38,916  54,035 Gross profit  25,763  22,939  37,225  48,702  71,738 Operating expenses:           Research and development  34,383  34,771  29,609  69,154  57,977 Selling, general and administrative  13,531  12,470  8,941  26,001  21,497 Amortization of purchased intangible assets  601  650  803  1,251  1,902 Restructuring (recoveries) charges, net  --  --  (40)  --  873 Total operating expenses  48,515  47,891  39,313  96,406  82,249 Operating loss  (22,752)  (24,952)  (2,088)  (47,704)  (10,511) Interest and other income (expense), net  835  1,762  1,517  2,597  2,873 Loss before income taxes  (21,917)  (23,190)  (571)  (45,107)  (7,638) Income tax (benefit) expense   (360)  200  581  (160)  391 Net loss $ (21,557)  $ (23,390)  $ (1,152) $ (44,947) $ (8,029)             Basic and diluted net loss per share:           Net loss per share $ (0.33) $ (0.37) $ (0.02) $ (0.71) $ (0.13) Shares used in calculating basic and diluted net loss per share  64,947  62,409  62,526  63,678  63,202    APPLIED MICRO CIRCUITS CORPORATIONRECONCILIATION OF GAAP NET (LOSS) INCOME TO NON-GAAP NET (LOSS) INCOME(in thousands, except per share data)(unaudited)               Three Months Ended Six Months Ended   September 30, June 30, September 30, September 30, September 30,   2012 2012 2011 2012 2011             GAAP net loss $ (21,557)  $ (23,390) $ (1,152) $ (44,947) $ (8,029) Adjustments:           Stock-based compensation charges  7,634  7,689  3,124  15,323  7,302 Warrant expense  --  1,289  --  1,289  -- Amortization of purchased intangibles  1,280  1,329  1,482  2,609  4,096 Veloce acquisition consideration  2,325  2,325  --  4,650  -- Acquisition related recoveries  --  (133)  (2,267)  (133)  (2,267) Restructuring (recoveries) charges, net  --  --  (40)  --  873 Other-than-temporary investment impairment   (174)  (1,089)  (593)  (1,263)  (605) Income tax adjustments  (34)  553  547  519  338 Total GAAP to Non-GAAP adjustments  11,031  11,963  2,253  22,994  9,737             Non-GAAP net (loss) income $ (10,526) $ (11,427) $ 1,101 $ (21,953) $  1,708             Diluted (loss) income per share $ (0.16) $ (0.18) $ 0.02 $ (0.34) $ 0.03             Shares used in calculating diluted (loss) income per share   64,947  62,409  62,665  63,678  63,834             Net (loss) income per share:           GAAP loss per share  $ (0.33) $ (0.37) $ (0.02) $ (0.71) $ (0.13) GAAP to non-GAAP adjustments  0.17 0.19 0.04 0.36 0.16 Non-GAAP net (loss) income per share $ (0.16) $ (0.18) $ 0.02 $ (0.34) $ 0.03             Reconciliation of shares used in calculating non-GAAP (loss) income per share:       Shares used in calculating the basic loss per share   64,947  62,409  62,526  63,678  63,202 Adjustment for dilutive securities   --   --   139  --  632 Shares used in calculating non-GAAP diluted (loss) income per share  64,947  62,409  62,665  63,678  63,834    APPLIED MICRO CIRCUITS CORPORATIONSCHEDULE OF SELECTED GAAP TO NON-GAAP ADJUSTMENTS(in thousands)(unaudited)             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   September 30, June 30, September 30, September 30, September 30,   2012 2012 2011 2012 2011GROSS PROFIT:           GAAP gross profit  $ 25,763 $ 22,939  $ 37,225  $ 48,702 $ 71,738 Amortization of purchased intangibles  679  679  679  1,358  2,194 Stock-based compensation expense  177  262  98  439  209 Non-GAAP gross profit $ 26,619 $ 23,880 $ 38,002 $ 50,499 $ 74,141            OPERATING EXPENSES:           GAAP operating expenses  $ 48,515 $ 47,891 $ 39,313  $ 96,406 $ 82,249 Stock-based compensation expense  (7,457)  (7,427)  (3,026)  (14,884)  (7,093) Warrant expense  --  (1,289)  --  (1,289)  -- Amortization of purchased intangibles  (601)  (650)  (803)  (1,251)  (1,902) Acquisition related expenses  --  133  2,267  133  2,267 Veloce acquisition consideration  (2,325)  (2,325)  --  (4,650)  -- Restructuring recoveries (charges), net  --  --  40  --  (873) Non-GAAP operating expenses  $ 38,132 $ 36,333 $ 37,791  $ 74,465 $ 74,648            INTEREST AND OTHER INCOME, NET        AND OTHER-THAN-TEMPORARY IMPAIRMENT:       GAAP interest and other income, net $ 835  $ 1,762 $ 1,517 $ 2,597 $ 2,873 Other-than-temporary investment impairment   (174)  (1,089)  (593)  (1,263)  (605) Non-GAAP interest and other income, net $ 661 $ 673  $ 924 $ 1,334  $ 2,268            INCOME TAX (BENEFIT) EXPENSE:         GAAP income tax (benefit) expense  $ (360) $ 200 $ 581 $ (160) $ 391 Income tax adjustments  34  (553)  (547)  (519)  (338) Non-GAAP income tax (benefit) expense $ (326) $ (353) $ 34 $ (679) $ 53            RESEARCH AND DEVELOPMENT :         GAAP research and development  $ 34,383  $ 34,771 $ 29,609 $ 69,154 $ 57,977 Stock-based compensation expense  (3,715)  (4,205)  (1,726)  (7,920)  (4,114) Warrant expense  --  (1,289)  --  (1,289)  -- Veloce acquisition consideration  (2,325)  (2,325)  --  (4,650)  -- Non-GAAP research and development   $ 28,343 $ 26,952  $ 27,883 $ 55,295 $ 53,863            SELLING, GENERAL AND ADMINISTRATIVE :       GAAP selling, general and administrative   $ 13,531 $ 12,470 $ 8,941 $ 26,001 $ 21,497 Stock-based compensation expense  (3,742)  (3,222)  (1,300)  (6,964)  (2,979) Acquisition related expenses  --  133  2,267  133  2,267 Non-GAAP selling, general and administrative  $ 9,789 $ 9,381 $ 9,908 $ 19,170 $ 20,785    APPLIED MICRO CIRCUITS CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(unaudited)         Six Months Ended September 30,   2012 2011Operating activities:     Net loss  $ (44,947)  $ (8,029) Adjustments to reconcile net loss to net cash used for operating activities:   Depreciation   4,905  3,840 Amortization of purchased intangibles   2,609  4,096 Stock-based compensation expense:     Stock options   2,172  2,579 Restricted stock units   13,151  4,723 Warrants  1,289  —  Veloce accrued liability  4,650  —  Acquisition related adjustment  (133)  (2,267) Net loss on disposals of property   3  10 Tax effect on other comprehensive income  (565)  —  Changes in operating assets and liabilities:     Accounts receivable   8,391  (8,086) Inventories   4,807  7,834 Other assets   (2,735)  (7,159) Accounts payable   (4,293)  (5,908) Accrued payroll and other accrued liabilities   (1,819)  55 Veloce accrued liability  (14,814)  —  Deferred revenue   (918)  (560) Net cash used for operating activities   (28,247)  (8,872)Investing activities:     Proceeds from sales and maturities of short-term investments  24,868  87,746 Purchases of short-term investments   (15,361)  (67,735) Purchase of property, equipment and other assets  (7,606)  (9,757) Proceeds from sale of strategic equity investment  7,146  —  Purchase of strategic equity investment  (500)  (2,500) Funding of a note receivable  —   (1,000) Net cash provided by investing activities   8,547  6,754Financing activities:     Proceeds from issuances of common stock   5,359  2,952 Funding of restricted stock units withheld for taxes  (313)  (2,441) Repurchases of common stock  (654)  (20,852) Funding of structured stock repurchase agreements   —   (10,000) Payment of contingent consideration  (485)  —  Other   (280)  (160) Net cash provided by (used for) financing activities   3,627  (30,501) Net decrease in cash and cash equivalents   (16,073)  (32,619) Cash and cash equivalents at the beginning of the period  28,065  84,402 Cash and cash equivalents at the end of the period  $ 11,992  $ 51,783CONTACT: Investor Relations Contact: Applied Micro Circuits Corporation Bob Gargus Phone: (408) 542-8752 E-Mail: rgargus@apm.com Media Contact: Applied Micro Circuits Corporation Diane Orr Phone: (408) 358-1617 E-mail: dianer@orr-co.com