Exhibit 99.1
FOR ADDITIONAL INFORMATION:
Investor Relations Contact: | Media Contact: | |
| Applied Micro Circuits Corporation | Applied Micro Circuits Corporation | |
| Bob Gargus | Gilles Garcia | |
| Phone: (408) 542-8752 | Phone: (408) 542-8687 | |
| E-Mail: bgargus@amcc.com | E-Mail: ggarcia@amcc.com |
Thursday, January 29, 2009
Company Press Release
APPLIED MICRO CIRCUITS CORPORATION REPORTS
THIRD QUARTER FISCAL 2009 FINANCIAL RESULTS
THIRD QUARTER FISCAL 2009 FINANCIAL RESULTS
SUNNYVALE, Calif., —January 29, 2009—Applied Micro Circuits Corporation [NASDAQ: AMCC] today reported its financial results for the third quarter of fiscal 2009 ended December 31th, 2008.
| • | Q3 net revenues were $57.6 million down 13% year over year. | ||
| • | Q3 GAAP net loss of $274.5 million or $(4.20) per share primarily due to a $264.1 million non-cash write-down of Goodwill and an other than temporary $10.1 million impairment of investments. | ||
| • | Q3 non-GAAP net income of $3.9 million or $0.06 per share. | ||
| • | Total cash was approximately $188 million. | ||
| • | AMCC further demonstrated its 10G OTN product leadership with the announcement that its Pemaquid S19258, a member of the Metro Ethernet (MEtrON) family of products, received the PRODUCT OF THE YEAR 2008 award from Electronic Products Magazine. |
Net revenues for the third quarter of fiscal 2009 were $57.6 million compared to $76.9 million in the second quarter of fiscal 2009, representing a sequential decline of 25% and a decline of 13% over the $66.3 million reported in the third quarter of fiscal 2008. Revenues for the first nine months were $208.6 million compared to $174.6 million for the comparable period last year, a 19% increase.
The net loss on a generally accepted accounting principles (GAAP) basis for the third quarter of fiscal 2009 was $274.5 million or $(4.20) per share. The third quarter GAAP net loss compares with a net loss of $2.3 million or $(0.04) per share for the second quarter of fiscal 2009 and a net loss of $4.3 million or $(0.06) per share for the third quarter of fiscal 2008. Year to date, GAAP net loss was $281.9 million or $(4.33) per share compared to $28.8 million or $(0.42) per share for the first nine months of fiscal 2008. The large loss was due primarily to a $264.1 million write-down of goodwill and a $10.1 million impairment of cash investments.
The non-GAAP net income for the third quarter of fiscal 2009 was $3.9 million or $0.06 per share, compared to the non-GAAP net income of $10.3 million or $0.16 per share in the second quarter of fiscal 2009 and a net income of $3.9 million or $0.06 per share for the third quarter of fiscal 2008. Year to date, non-GAAP net income was $22.0 million or $0.34 per share compared to non-GAAP net loss of $6.4 million or $(0.09) per share for the first nine months of fiscal 2008.
“This was a difficult quarter across the board. General economic conditions continue to be unpredictable and order visibility remains very low. As a result we do not believe we have seen the bottom of this fallout and expect a further decline in our March quarter revenues. However, I am confident our solid product cycles and design win pipeline will enable us to emerge from this crisis in a stronger position.” said Kambiz Hooshmand, president and chief executive officer.
Bob Gargus, chief financial officer commented, “This was a challenging quarter but we did an excellent job of controlling costs and managing our working capital. As the global economic crisis continues to evolve, we will continue to focus on prudent Op-Ex management while executing our long range plan.”
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, stock-based compensation charges, impairment of goodwill, gain on renegotiated tool agreement, other than temporary impairment on investments, realized gain on strategic equity investment, tax provision related to the creation of deferred tax liability relating to a prior asset purchase acquisition transaction, payroll tax on certain stock option exercises and expenses related to stock option investigation and other litigation. 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 and other litigation relates to an accrual made for a potential litigation settlement. 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.
AMCC management will be holding a conference call today, January 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 third quarter of fiscal 2009 and to provide guidance for the fourth quarter of fiscal 2009. You may access the conference call via any of the following:
| Teleconference: | 719-325-4831 | |
| Conference ID: | 1494407 | |
| Web Broadcast: | http://investor.amcc.com/events.cfm | |
| Replay: | 719-457-0820 (available through February 6, 2009) |
AMCC Overview
AMCC 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 & Ethernet packet processing, storage controllers, and processors, AMCC’s patented innovations provide high value solutions in Telecom, Enterprise and Consumer Applications.
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.
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 backlog and future revenues, and profitability. 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, 2008, 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 CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
| December 31, | March 31, | |||||||
| 2008 | 2008 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash, cash equivalents and short-term investments | $ | 187,885 | $ | 142,889 | ||||
| Accounts receivable, net | 20,909 | 28,800 | ||||||
| Inventories | 38,769 | 37,966 | ||||||
| Other current assets | 9,330 | 11,340 | ||||||
| Total current assets | 256,893 | 220,995 | ||||||
| Marketable securities | — | 51,919 | ||||||
| Property and equipment, net | 27,644 | 25,995 | ||||||
| Goodwill | — | 264,130 | ||||||
| Purchased intangibles | 38,593 | 56,025 | ||||||
| Other assets | 25,003 | 13,783 | ||||||
| Total assets | $ | 348,133 | $ | 632,847 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 17,969 | $ | 25,518 | ||||
| Other current liabilities | 20,063 | 22,659 | ||||||
| Total current liabilities | 38,032 | 48,177 | ||||||
| Deferred tax liability | — | 3,958 | ||||||
| Stockholders’ equity | 310,101 | 580,712 | ||||||
| Total liabilities and stockholders’ equity | $ | 348,133 | $ | 632,847 | ||||
APPLIED MICRO CIRCUITS CORPORATION
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||
| 2008 | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||
| Net revenues | $ | 57,565 | $ | 76,931 | $ | 66,267 | $ | 208,556 | $ | 174,612 | ||||||||||
| Cost of revenues | 27,763 | 35,981 | 33,311 | 99,594 | 90,137 | |||||||||||||||
| Gross profit | 29,802 | 40,950 | 32,956 | 108,962 | 84,475 | |||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Research and development | 21,255 | 24,461 | 24,696 | 69,197 | 74,658 | |||||||||||||||
| Selling, general and administrative | 13,418 | 16,334 | 14,125 | 46,365 | 46,038 | |||||||||||||||
| Amortization of purchased intangibles | 1,320 | 1,320 | 1,320 | 3,960 | 4,001 | |||||||||||||||
| Impairment of goodwill | 264,130 | — | — | 264,130 | — | |||||||||||||||
| Restructuring charges, net | 1,150 | 140 | 125 | 1,032 | 1,469 | |||||||||||||||
| Litigation settlement | — | 130 | — | 130 | — | |||||||||||||||
| Option investigation related expenses, net | (79 | ) | (184 | ) | (792 | ) | 84 | (291 | ) | |||||||||||
| Total operating expenses | 301,194 | 42,201 | 39,474 | 384,898 | 125,875 | |||||||||||||||
| Operating loss | (271,392 | ) | (1,251 | ) | (6,518 | ) | (275,936 | ) | (41,400 | ) | ||||||||||
| Interest and other (expense) income, net | (7,397 | ) | (550 | ) | 2,148 | (9,274 | ) | 12,130 | ||||||||||||
| Loss before income taxes | (278,789 | ) | (1,801 | ) | (4,370 | ) | (285,210 | ) | (29,270 | ) | ||||||||||
| Income tax expense (benefit) | (4,329 | ) | 512 | (31 | ) | (3,263 | ) | (458 | ) | |||||||||||
| Net loss | $ | (274,460 | ) | $ | (2,313 | ) | $ | (4,339 | ) | $ | (281,947 | ) | $ | (28,812 | ) | |||||
| Basic and diluted loss per share: | ||||||||||||||||||||
| Loss per share | $ | (4.20 | ) | $ | (0.04 | ) | $ | (0.06 | ) | $ | (4.33 | ) | $ | (0.42 | ) | |||||
| Shares used in calculating basic and diluted loss per share | 65,366 | 65,150 | 67,015 | 65,127 | 68,737 | |||||||||||||||
APPLIED MICRO CIRCUITS CORPORATION
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME (LOSS)
(in thousands, except per share data)
(unaudited)
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME (LOSS)
(in thousands, except per share data)
(unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||
| 2008 | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||
| GAAP net loss | $ | (274,460 | ) | $ | (2,313 | ) | $ | (4,339 | ) | $ | (281,947 | ) | $ | (28,812 | ) | |||||
| Adjustments: | ||||||||||||||||||||
| Stock-based compensation charges | 1,905 | 2,997 | 2,312 | 8,110 | 8,229 | |||||||||||||||
| Amortization of purchased intangibles | 5,628 | 5,903 | 5,903 | 17,432 | 17,858 | |||||||||||||||
| Impairment of goodwill | 264,130 | — | — | 264,130 | — | |||||||||||||||
| Restructuring charges | 1,150 | 140 | 125 | 1,032 | 1,469 | |||||||||||||||
| Other than temporary investment impairment | 10,104 | 3,444 | 846 | 16,941 | 846 | |||||||||||||||
| Gain on renegotiated design tool agreement | — | — | — | — | (749 | ) | ||||||||||||||
| Realized gain on sale of strategic equity investment | — | — | — | — | (4,649 | ) | ||||||||||||||
| Payroll taxes on certain stock option exercises | — | — | — | — | 3 | |||||||||||||||
| Litigation settlement | — | 130 | — | 130 | — | |||||||||||||||
| Option investigation related expenses, net | (79 | ) | (184 | ) | (792 | ) | 84 | (291 | ) | |||||||||||
| Income tax adjustments | (4,450 | ) | 193 | (152 | ) | (3,942 | ) | (261 | ) | |||||||||||
| Total GAAP to Non-GAAP adjustments | 278,388 | 12,623 | 8,242 | 303,917 | 22,455 | |||||||||||||||
| Non-GAAP net income (loss) | $ | 3,928 | $ | 10,310 | $ | 3,903 | $ | 21,970 | $ | (6,357 | ) | |||||||||
| Diluted income (loss) per share | $ | 0.06 | $ | 0.16 | $ | 0.06 | $ | 0.34 | $ | (0.09 | ) | |||||||||
| Shares used in calculating diluted income (loss) per share | 65,531 | 65,369 | 67,301 | 65,335 | 68,737 | |||||||||||||||
| Income (loss) per share: | ||||||||||||||||||||
| GAAP income (loss) per share | $ | (4.20 | ) | $ | (0.04 | ) | $ | (0.06 | ) | $ | (4.33 | ) | $ | (0.42 | ) | |||||
| GAAP to non-GAAP adjustments | 4.26 | 0.20 | 0.12 | 4.67 | 0.33 | |||||||||||||||
| Non-GAAP income (loss) per share | $ | 0.06 | $ | 0.16 | $ | 0.06 | $ | 0.34 | $ | (0.09 | ) | |||||||||
| Reconciliation of shares used in calculating the non-GAAP income per share: | ||||||||||||||||||||
| Shares used in calculating the basic and diluted income(loss) per share | 65,366 | 65,150 | 67,015 | 65,127 | 68,737 | |||||||||||||||
| Adjustment for dilutive securities | 165 | 219 | 286 | 208 | — | |||||||||||||||
| Non-GAAP shares used in the EPS calculation | 65,531 | 65,369 | 67,301 | 65,335 | 68,737 | |||||||||||||||
APPLIED MICRO CIRCUITS CORPORATION
SCHEDULE OF SELECTED GAAP TO NON-GAAP ADJUSTMENTS
(in thousands)
(unaudited)
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 | Nine Months Ended | |||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||
| 2008 | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||
GROSS PROFIT: | ||||||||||||||||||||
| GAAP gross profit | $ | 29,802 | $ | 40,950 | $ | 32,956 | $ | 108,962 | $ | 84,475 | ||||||||||
| Amortization of purchased intangibles | 4,308 | 4,583 | 4,583 | 13,472 | 13,857 | |||||||||||||||
| Stock-based compensation expense | 91 | 182 | 224 | 487 | 536 | |||||||||||||||
| Non-GAAP gross profit | $ | 34,201 | $ | 45,715 | $ | 37,763 | $ | 122,921 | $ | 98,868 | ||||||||||
OPERATING EXPENSES: | ||||||||||||||||||||
| GAAP operating expenses | $ | 301,194 | $ | 42,201 | $ | 39,474 | $ | 384,898 | $ | 125,875 | ||||||||||
| Stock-based compensation expense | (1,814 | ) | (2,815 | ) | (2,088 | ) | (7,623 | ) | (7,693 | ) | ||||||||||
| Amortization of purchased intangibles | (1,320 | ) | (1,320 | ) | (1,320 | ) | (3,960 | ) | (4,001 | ) | ||||||||||
| Impairment of goodwill | (264,130 | ) | — | — | (264,130 | ) | — | |||||||||||||
| Restructuring charges | (1,150 | ) | (140 | ) | (125 | ) | (1,032 | ) | (1,469 | ) | ||||||||||
| Gain on renegotiated design tool agreement | — | — | — | — | 749 | |||||||||||||||
| Payroll taxes on certain stock option exercises | — | — | — | — | (3 | ) | ||||||||||||||
| Litigation settlement | — | (130 | ) | — | (130 | ) | — | |||||||||||||
| Option investigation related expenses, net | 79 | 184 | 792 | (84 | ) | 291 | ||||||||||||||
| Non-GAAP operating expenses | $ | 32,859 | $ | 37,980 | $ | 36,733 | $ | 107,939 | $ | 113,749 | ||||||||||
INTEREST AND OTHER INCOME, NET | ||||||||||||||||||||
| GAAP interest and other (expense) income, net | $ | (7,397 | ) | $ | (550 | ) | $ | 2,148 | $ | (9,274 | ) | $ | 12,130 | |||||||
| Realized gain on sale of strategic equity investments | — | — | — | — | (4,649 | ) | ||||||||||||||
| Impairment of strategic investment | — | — | — | — | — | |||||||||||||||
| Other than temporary investment impairment | 10,104 | 3,444 | 846 | 16,941 | 846 | |||||||||||||||
| Non-GAAP interest and other income, net | $ | 2,707 | $ | 2,894 | $ | 2,994 | $ | 7,667 | $ | 8,327 | ||||||||||
INCOME TAX EXPENSE (BENEFIT): | ||||||||||||||||||||
| GAAP income tax expense (benefit) | $ | (4,329 | ) | $ | 512 | $ | (31 | ) | $ | (3,263 | ) | $ | (458 | ) | ||||||
| Income tax adjustments | 4,450 | (193 | ) | 152 | 3,942 | 261 | ||||||||||||||
| Non-GAAP income tax expense (benefit) | $ | 121 | $ | 319 | $ | 121 | $ | 679 | $ | (197 | ) | |||||||||
RESEARCH AND DEVELOPMENT | ||||||||||||||||||||
GAAP research and development | $ | 21,255 | $ | 24,461 | $ | 24,696 | $ | 69,197 | $ | 74,658 | ||||||||||
| Stock-based compensation expense | (1,244 | ) | (1,098 | ) | (1,177 | ) | (3,679 | ) | (3,448 | ) | ||||||||||
| Gain on renegotiated design tool agreement | — | — | — | — | 749 | |||||||||||||||
| Payroll taxes on certain stock option exercises | — | — | — | — | (2 | ) | ||||||||||||||
Non-GAAP research and development | $ | 20,011 | $ | 23,363 | $ | 23,519 | $ | 65,518 | $ | 71,957 | ||||||||||
SELLING, GENERAL AND ADMINISTRATIVE | ||||||||||||||||||||
GAAP selling, general and administrative | $ | 13,418 | $ | 16,334 | $ | 14,125 | $ | 46,365 | $ | 46,038 | ||||||||||
| Stock-based compensation expense | (570 | ) | (1,717 | ) | (911 | ) | (3,944 | ) | (4,245 | ) | ||||||||||
| Payroll taxes on certain stock option exercises | — | — | — | — | (1 | ) | ||||||||||||||
Non-GAAP selling, general and administrative | $ | 12,848 | $ | 14,617 | $ | 13,214 | $ | 42,421 | $ | 41,792 | ||||||||||
APPLIED MICRO CIRCUITS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Nine Months Ended December 31, | ||||||||
| 2008 | 2007 | |||||||
Operating activities: | ||||||||
| Net loss | $ | (281,947 | ) | $ | (28,812 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used for) operating activities Depreciation | 5,148 | 4,891 | ||||||
| Amortization of purchased intangibles | 17,432 | 17,858 | ||||||
| Impairment of goodwill | 264,130 | — | ||||||
| Stock-based compensation expense: | ||||||||
| Stock options | 4,135 | 7,029 | ||||||
| Restricted stock units | 3,975 | 1,199 | ||||||
| Impairment of short-term investments and marketable securities | 16,941 | 846 | ||||||
| Net gain on sale of strategic equity investment | — | (4,649 | ) | |||||
| Non-cash restructuring charges | 57 | — | ||||||
| Net gain (loss) on disposal of property | 15 | (8 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 7,891 | 813 | ||||||
| Inventories | (803 | ) | (8,534 | ) | ||||
| Other assets | (9,210 | ) | 1,106 | |||||
| Accounts payable | (7,549 | ) | (1,019 | ) | ||||
| Accrued payroll and other accrued liabilities | (2,705 | ) | (5,660 | ) | ||||
| Deferred taxes | (3,958 | ) | — | |||||
| Deferred revenue | 109 | 429 | ||||||
| Net cash provided by (used for) operating activities | 13,661 | (14,511 | ) | |||||
Investing activities: | ||||||||
| Proceeds from sales and maturities investments | 897,153 | 490,932 | ||||||
| Purchases of investments | (855,263 | ) | (416,517 | ) | ||||
| Purchase of strategic investments | — | (5,000 | ) | |||||
| Net proceeds from the sale of strategic equity investment | — | 5,249 | ||||||
| Purchase of property, equipment and other assets | (6,812 | ) | (4,943 | ) | ||||
| Proceeds from sale of property, equipment and other assets | — | 1,646 | ||||||
| Net cash provided by (used for) investing activities | 35,078 | 71,367 | ||||||
Financing activities: | ||||||||
| Proceeds from issuance of common stock | 1,570 | 3,785 | ||||||
| Repurchase of Company stock | — | (56,950 | ) | |||||
| Funding of structured stock repurchase agreements | — | (41,830 | ) | |||||
| Funds received from structured stock repurchase agreements including gains | — | 21,112 | ||||||
| Other | (331 | ) | (77 | ) | ||||
| Net cash provided by (used for) financing activities | 1,239 | (73,960 | ) | |||||
| Net decrease in cash and cash equivalents | 49,978 | (17,104 | ) | |||||
| Cash and cash equivalents at beginning of the period | 42,689 | 51,595 | ||||||
| Cash and cash equivalents at end of the period | $ | 92,667 | $ | 34,491 | ||||