Applied Micro Circuits Corporation Reports Second Quarter Fiscal 2010 Financial Results


SUNNYVALE, Calif., Oct. 29, 2009 (GLOBE NEWSWIRE) -- Applied Micro Circuits Corporation (Nasdaq:AMCC) today reported its financial results for the second quarter of fiscal 2010 ended September 30, 2009.



 * Q2 net revenues from continuing operations were $49.2 million up
   9% sequentially and down 23% year over year.

 * Q2 2010 GAAP net loss from continuing operations was $(8.1)
   million or $(0.12) per share. Q2 2010 net income from
   discontinued operations were $1.3 million or $0.02 per share.

 * Q2 2010 non-GAAP net income (from continuing operations) was $1.3
   million or $0.02 per share.

 * Total cash was approximately $198 million as of September 30,
   2009.

Net revenues from continuing operations for the second quarter of fiscal 2010 were $49.2 million compared to $45.1 million in the first quarter of fiscal 2010, representing a sequential increase of 9% and a decline of 23% over the $64.3 million in net revenues reported in the second quarter of fiscal 2009. Revenues for the first six months were $94.3 million compared to $125.5 million for the comparable period last year, a 25% decrease.

The net loss on a generally accepted accounting principles (GAAP) basis for the second quarter of fiscal 2010 was $(6.7) million or $(0.10) per share. The second quarter GAAP net loss compares with a net income of $2.9 million or $0.04 per share for the first quarter of fiscal 2010 and a net loss of $(2.3) million or $(0.04) per share for the second quarter of fiscal 2009. Year to date, GAAP net loss was $(3.8) million or $(0.06) per share compared to $(7.5) million or $(0.12) per share for the first six months of fiscal 2009.

Non-GAAP income from continuing operations for the second quarter of fiscal 2010 was $1.3 million or $0.02 per share, compared to non-GAAP income from continuing operations of $0.9 million or $0.01 per share in the first quarter of fiscal 2010 and non-GAAP net income from continuing operations of $9.7 million or $0.15 per share for the second quarter of fiscal 2009. Year to date, non-GAAP net income from continuing operations was $2.2 million or $0.03 per share compared to $16.7 million or $0.26 per share for the first six months of fiscal 2009.

"We executed to plan and are excited with the significant interest and traction we have been able to generate with key customers and new product platforms. We continue to lay a solid foundation for future growth," said Paramesh Gopi, president and chief executive officer.

Bob Gargus, chief financial officer commented, "We are happy with the sustained revenue growth and continue to make progress with our bottom line and overall asset management."

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, impairment of strategic investment, payroll tax on certain stock option exercises, non-cash tax adjustments and expenses related to stock option investigation and other litigation. 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 29, 2009, 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 2010 and to provide guidance for the third quarter of fiscal 2010. You may access the conference call via any of the following:



  Teleconference:  866-730-5762
  Conference ID:   93408858
  Web Broadcast:   http://www.appliedmicro.com
  Replay:          888-286-8010 (access code: 61405428,
                   available through November 5, 2009)

AppliedMicro Overview

AppliedMicro is a global leader in energy efficient sustainable solutions to process, transport, and store information for the next generation of Internet data center and carrier central office. A leader in high speed signal processing, IP and Ethernet packet processing, and embedded processors, AppliedMicro's patented innovations provide high value solutions in telecom, enterprise and consumer applications. 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.appliedmicro.com.

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, 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, 2009, 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                                             2009       2009
                                                  --------   --------

 Current assets:
   Cash, cash equivalents and
    short-term investments                        $197,696   $184,009
   Accounts receivable, net                         21,275     17,537
   Inventories                                      19,421     26,598
   Other current assets                              8,356      8,871
   Assets of discontinued operations                    --      8,558
                                                  --------   --------
     Total current assets                          246,748    245,573
 Property and equipment, net                        26,237     25,749
 Purchased intangibles, net                         24,109     32,965
 Other assets                                       20,303     20,323
                                                  --------   --------
     Total assets                                 $317,397   $324,610
                                                  ========   ========

 LIABILITIES AND STOCKHOLDERS' EQUITY


 Current liabilities:
   Accounts payable                               $ 13,431   $ 16,715
   Other current liabilities                        15,861     23,925
                                                  --------   --------
     Total current liabilities                      29,292     40,640
 Stockholders' equity                              288,105    283,970
                                                  --------   --------
     Total liabilities and stockholders' equity   $317,397   $324,610
                                                  ========   ========



                  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,
                        2009      2009      2008      2009      2008
                      ----------------------------  ------------------

 Net revenues         $ 49,232  $ 45,052  $ 64,290  $ 94,284  $125,489
 Cost of revenues       23,796    22,175    28,576    45,971    57,002
                      --------  --------  --------  --------  --------
 Gross profit           25,436    22,877    35,714    48,313    68,487
 Operating expenses:
   Research and
    development         20,828    19,414    21,410    40,242    41,860
   Selling, general
    and
    administrative      11,991    10,519    13,780    22,510    27,631
   Amortization of
    purchased
    intangibles          1,005     1,005     1,005     2,010     2,010
   Restructuring
    charges
    (reversals), net      (125)     (154)      140      (279)     (118)
   Litigation
    settlement              --        --       130        --       130
   Option
    investigation
    related expenses,
    net                     --        --      (184)       --       163
                      --------  --------  --------  --------  --------
     Total operating
      expenses          33,699    30,784    36,281    64,483    71,676
                      --------  --------  --------  --------  --------

 Operating loss         (8,263)   (7,907)     (567)  (16,170)   (3,189)
 Interest and other
  (expense) income
  and other-than-
  temporary
  impairment, net       (3,425)    1,589      (550)   (1,836)   (1,877)
                      --------  --------  --------  --------  --------

 Loss from continuing
  operations before
  income taxes         (11,688)   (6,318)   (1,117)  (18,006)   (5,066)

 Income tax expense
  (benefit)             (3,617)   (3,519)      403    (7,136)      905
                      --------  --------  --------  --------  --------

 Loss from continuing
  operations            (8,071)   (2,799)   (1,520)  (10,870)   (5,971)
 Income (loss) from
  discontinued
  operations net
  of income taxes(1)     1,347     5,697      (793)    7,044    (1,516)
                      --------  --------  --------  --------  --------
 Net income (loss)    $ (6,724) $  2,898  $ (2,313) $ (3,826) $ (7,487)
                      ========  ========  ========  ========  ========

 Basic income (loss)
  per share:

   Loss per share
    from continuing
    operations        $  (0.12) $  (0.04) $  (0.02) $  (0.16) $  (0.09)
   Income (loss) per
    share from
    discontinued
    operations            0.02      0.08     (0.02)     0.10     (0.03)
                      --------  --------  --------  --------  --------

   Net income (loss)
    per share         $  (0.10) $   0.04  $  (0.04) $  (0.06) $  (0.12)
                      ========  ========  ========  ========  ========

   Shares used in
    calculating basic
    income (loss)
    per share           66,469    66,070    65,150    66,270    65,007
                      ========  ========  ========  ========  ========

 Diluted income
  (loss) per share:

   Loss per share
    from
    continuing
    operations        $  (0.12) $  (0.04) $  (0.02) $  (0.16) $  (0.09)

   Income (loss) per
    share from
    discontinued
    operations            0.02      0.08     (0.02)     0.10     (0.03)
                      --------  --------  --------  --------  --------

   Net income (loss)
    per share         $  (0.10) $   0.04  $  (0.04) $  (0.06) $  (0.12)
                      ========  ========  ========  ========  ========

   Shares used in
    calculating
    diluted income
    (loss) per share    66,469    66,733    65,150    66,270    65,007
                      ========  ========  ========  ========  ========

 ------
 (1) The following table provides information on the components of the
     loss from discontinued operations for the periods presented:

 Components of discontinued operations
 -------------------------------------

                           Three Months Ended        Six Months Ended
                      ----------------------------  ------------------
                      Sept. 30,  June 30, Sept. 30, Sept. 30, Sept. 30,
                         2009      2009      2008      2009      2008
                      ----------------------------  ------------------

 Net revenues         $    703  $    516  $ 12,641  $  1,219  $ 25,502
 Cost of revenues           51       733     7,405       784    14,829
                      --------  --------  --------  --------  --------
 Gross profit (loss)       652      (217)    5,236       435    10,673
 Operating expenses:
   Research and
    development             83       594     3,051       677     6,082
   Selling, general
    and
    administrative         238       545     2,554       783     5,316
   Amortization of
    purchased
    intangibles             --        --       315        --       630
                      --------  --------  --------  --------  --------
     Total operating
      expenses             321     1,139     5,920     1,460    12,028
                      --------  --------  --------  --------  --------
 Operating income
  (loss)                   331    (1,356)     (684)   (1,025)   (1,355)
 Gain on sale of
  Storage Business         712    10,654        --    11,366        --
                      --------  --------  --------  --------  --------
 Income (loss) from
  discontinued
  operations before
  income taxes           1,043     9,298      (684)   10,341    (1,355)
 Income tax expense
  (benefit)               (304)    3,601       109     3,297       161
                      --------  --------  --------  --------  --------
 Net income (loss)
  from discontinued
  operations, net of
  income taxes        $  1,347  $  5,697  $   (793) $  7,044  $ (1,516)
                      ========  ========  ========  ========  ========



                  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
                      ----------------------------  ------------------
                      Sept. 30,  June 30, Sept. 30, Sept. 30, Sept. 30,
                         2009      2009      2008      2009      2008
                      ----------------------------  ------------------
 GAAP net loss from
  continuing
  operations          $ (8,071) $ (2,799) $ (1,520) $(10,870) $ (5,971)
 Adjustments:
   Stock-based
    compensation
    charges              3,767     2,615     2,693     6,382     5,562
   Amortization of
    purchased
    intangibles          4,269     4,588     4,863     8,857     9,724
   Restructuring
    charges
    (reversals), net      (125)     (154)      140      (279)     (118)
   Impairment of
    strategic
    investment           2,000        --        --     2,000        --
   Other-than-
    temporary
    investment
    impairment           3,133       175     3,444     3,308     6,837
   Litigation
    settlement              --        --       130        --       130
   Option
    investigation
    related expenses,
    net                     --        --      (184)       --       163
   Income tax
    adjustments         (3,658)   (3,546)      104    (7,204)      388
                      --------  --------  --------  --------  --------
   Total GAAP to
    Non-GAAP
    adjustments          9,386     3,678    11,190    13,064    22,686
                      --------  --------  --------  --------  --------

 Non-GAAP income
  (loss) from
  continuing
  operations          $  1,315  $    879  $  9,670  $  2,194  $ 16,715
                      ========  ========  ========  ========  ========

 Diluted income
  (loss) per share
  from continuing
  operations          $   0.02  $   0.01  $   0.15  $   0.03  $   0.26
                      ========  ========  ========  ========  ========

 Shares used in
  calculating diluted
  income (loss)
  per share             68,409    66,733    65,369    67,572    65,237
                      ========  ========  ========  ========  ========

 Income (loss) per
  share from
  continuing
  operations:
   GAAP income (loss)
    per share         $  (0.12) $  (0.04) $  (0.02) $  (0.16) $  (0.09)
   GAAP to non-GAAP
    adjustments           0.14      0.05      0.17      0.19      0.35
                      --------  --------  --------  --------  --------
   Non-GAAP income
    (loss) per share
    from continuing
    operations        $   0.02  $   0.01  $   0.15  $   0.03  $   0.26
                      ========  ========  ========  ========  ========

 Reconciliation of
  shares used in
  calculating
  non-GAAP income
  per share:
   Shares used in
    calculating the
    basic income
    (loss) per share    66,469    66,070    65,150    66,270    65,007
   Adjustment for
    dilutive
    securities           1,940       663       219     1,302       230
                      --------  --------  --------  --------  --------
   Non-GAAP shares
    used in the
    EPS calculation     68,409    66,733    65,369    67,572    65,237
                      ========  ========  ========  ========  ========


 Discontinued operations
 -----------------------
                           Three Months Ended        Six Months Ended
                      ----------------------------  ------------------
                      Sept. 30,  June 30, Sept. 30, Sept. 30, Sept. 30,
                         2009      2009      2008      2009      2008
                      ----------------------------  ------------------
 GAAP income (loss)
  from discontinued
  operations          $  1,347  $  5,697  $   (793) $  7,044  $ (1,516)
   Adjustments:
     Stock-based
      compensation
      charges               --        --       304        --       643
     Amortization of
      purchased
      intangibles           --        --     1,040        --     2,080
     Gain on sale of
      Storage
      Business            (712)  (10,654)       --   (11,366)       --
     Income tax
      adjustments         (314)    3,642        89     3,328       120
                      --------  --------  --------  --------  --------
   Total GAAP to
    non-GAAP
    adjustments         (1,026)   (7,012)    1,433    (8,038)    2,843
                      --------  --------  --------  --------  --------

   Non-GAAP income
    (loss) from
    discontinued
    operations        $    321  $ (1,315) $    640  $   (994) $  1,327
                      ========  ========  ========  ========  ========

 Income (loss) per
  share from
  discontinued
  operations:
    GAAP income (loss)
     per share        $   0.02  $   0.08  $  (0.02) $   0.10  $  (0.03)
    GAAP to non-GAAP
     adjustments         (0.02)    (0.10)     0.03     (0.11)     0.05
                      --------  --------  --------  --------  --------
    Non-GAAP income
     (loss) per share
     from discontinued
     operations       $     --  $  (0.02) $   0.01  $  (0.01) $   0.02
                      ========  ========  ========  ========  ========



                  APPLIED MICRO CIRCUITS CORPORATION
           SCHEDULE 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
                      ----------------------------  ------------------
                      Sept. 30,  June 30, Sept. 30, Sept. 30, Sept. 30,
                         2009      2009      2008      2009      2008
                      ----------------------------  ------------------
 GROSS PROFIT:
 GAAP gross profit    $ 25,436  $ 22,877  $ 35,714  $ 48,313  $ 68,487
   Gross profit
    (loss) from
    discontinued
    operations             652      (217)    5,236       435    10,673
   Amortization of
    purchased
    intangibles          3,264     3,583     4,583     6,847     9,164
   Stock-based
    compensation
    expense                143       111       182       254       396
                      --------  --------  --------  --------  --------
 Non-GAAP gross
  profit              $ 29,495  $ 26,354  $ 45,715  $ 55,849  $ 88,720
                      ========  ========  ========  ========  ========

 OPERATING EXPENSES:
 GAAP operating
  expenses            $ 33,699  $ 30,784  $ 36,281  $ 64,483  $ 71,676
   Operating expenses
    from discontinued
    operations             321     1,139     5,920     1,460    12,028
   Stock-based
    compensation
    expense             (3,624)   (2,504)   (2,815)   (6,128)   (5,809)
   Amortization of
    purchased
    intangibles         (1,005)   (1,005)   (1,320)   (2,010)   (2,640)
   Restructuring
    charges
    (reversals), net       125       154      (140)      279       118
   Litigation
    settlement              --        --      (130)       --      (130)
   Option
    investigation
    related expenses,
    net                     --        --       184        --      (163)
                      --------  --------  --------  --------  --------
 Non-GAAP operating
  expenses            $ 29,516  $ 28,568  $ 37,980  $ 58,084  $ 75,080
                      ========  ========  ========  ========  ========

 INTEREST AND OTHER
  INCOME, NET
   GAAP interest and
    other (expense)
    income, net       $ (3,425) $  1,589  $   (550) $ (1,836) $ (1,877)
     Impairment of
      strategic
      investment         2,000        --        --     2,000        --
     Other-than-
      temporary
      investment
      impairment         3,133       175     3,444     3,308     6,837
                      --------  --------  --------  --------  --------
   Non-GAAP interest
    and other income,
    net               $  1,708  $  1,764  $  2,894  $  3,472  $  4,960
                      ========  ========  ========  ========  ========

 INCOME TAX EXPENSE
  (BENEFIT):
 GAAP income tax
  expense (benefit)   $ (3,617) $ (3,519) $    403  $ (7,136) $    905
   Income tax expense
    (benefit) from
    discontinued
    operations            (304)    3,601       109     3,297       161
   Income tax
    adjustments          3,972       (96)     (193)    3,876      (508)
                      --------  --------  --------  --------  --------
 Non-GAAP income tax
  expense (benefit)   $     51  $    (14) $    319  $     37  $    558
                      ========  ========  ========  ========  ========

 RESEARCH AND
  DEVELOPMENT
 GAAP research and
  development         $ 20,828  $ 19,414  $ 21,410  $ 40,242  $ 41,860
   Research and
    development from
    discontinued
    operations              83       594     3,051       677     6,082
   Stock-based
    compensation
    expense             (1,594)   (1,272)   (1,098)   (2,866)   (2,435)
                      --------  --------  --------  --------  --------
 Non-GAAP research
  and development     $ 19,317  $ 18,736  $ 23,363  $ 38,053  $ 45,507
                      ========  ========  ========  ========  ========

 SELLING, GENERAL
  AND ADMINISTRATIVE
 GAAP selling,
  general and
  administrative      $ 11,991  $ 10,519  $ 13,780  $ 22,510  $ 27,631
   Selling, general
    and administrative
    from discontinued
    operations             238       545     2,554       783     5,316
   Stock-based
    compensation
    expense             (2,030)   (1,232)   (1,717)   (3,262)   (3,374)
                      --------  --------  --------  --------  --------
 Non-GAAP selling,
  general and
  administrative      $ 10,199  $  9,832  $ 14,617  $ 20,031  $ 29,573
                      ========  ========  ========  ========  ========



                  APPLIED MICRO CIRCUITS CORPORATION
            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (in thousands)
                              (unaudited)

                                                   Six Months Ended
                                                    September 30,
                                               ----------------------
                                                  2009         2008
                                               ---------    ---------
Operating activities:
 Net income (loss)                             $  (3,826)   $  (7,487)
 Adjustments to reconcile net loss to net
  cash provided by (used for) operating
  activities:
   Depreciation                                    3,173        3,449
   Amortization of purchased intangibles           8,856       11,804
   Stock-based compensation expense:
     Stock options                                 2,090        3,703
     Restricted stock units                        4,292        2,502
   Other-than-temporary impairment of
    marketable securities                          3,454        6,837
   Impairment of strategic investment              2,000           --
   Tax benefit from other
    comprehensive income                          (4,007)
   Net loss on disposals of property                  24           29
   Net gain on sale of storage business unit     (11,366)          --
 Changes in operating assets a
  and liabilities:
   Accounts receivable                            (3,738)      (3,099)
   Inventories                                     6,720        3,485
   Other assets                                     (503)       1,050
   Accounts payable                               (4,398)      (2,059)
   Accrued payroll and other
    accrued liabilities                           (6,365)        (244)
   Deferred tax liability                             --          439
   Deferred revenue                               (1,723)         111
                                               ---------    ---------
     Net cash provided by(used for)
      operating activities                        (5,317)      20,520
                                               ---------    ---------
Investing activities:
   Proceeds from sales and maturities of
    short-term investments                       415,785      339,602
   Purchases of short-term investments          (406,143)    (335,619)
   Purchase of property, equipment
    and other assets                              (3,664)      (4,935)
   Purchases of strategic investment              (1,000)          --
   Proceeds from sale of storage
    business unit                                 21,527           --
                                               ---------    ---------
     Net cash provided by(used for)
      investing activities                        26,505         (952)
                                               ---------    ---------
Financing activities:
   Proceeds from issuance of common stock          1,767        1,615
   Funding of structured stock
    repurchase agreements                        (21,797)          --
   Funds received from structured stock
    repurchase agreements                         12,044           --
   Other                                            (721)         (63)
                                               ---------    ---------
     Net cash provided by (used for)
      financing activities                        (8,707)       1,552
                                               ---------    ---------
 Net increase (decrease) in cash and
  cash equivalents                                12,481       21,120
 Cash and cash equivalents at the
  beginning of the period                         99,337       42,689
                                               ---------    ---------
 Cash and cash equivalents at the
  end of the period                              111,818       63,809
                                               =========    =========


            

Coordonnées