EXHIBIT 99.1
FOR ADDITIONAL INFORMATION:
Investor Relations Contact: | Media/Editorial Contact: | |
Applied Micro Circuits Corporation Debra Hart | The Ardell Group Angela Edgerton | |
Phone: (858) 535-4217 | Phone: (858) 792-2941 | |
E-Mail: dhart@amcc.com | E-Mail: angela@ardellgroup.com |
Thursday, October 23, 2003
Company Press Release
APPLIED MICRO CIRCUITS CORPORATION ANNOUNCES
SECOND QUARTER FISCAL 2004 FINANCIAL RESULTS
SAN DIEGO—October 23, 2003—Applied Micro Circuits Corporation [NASDAQ: AMCC] today reported its financial results for the second quarter of fiscal 2004.
Net revenues for the second quarter of fiscal 2004 were $25.1 million, up 22% sequentially from the $20.5 million reported in the first quarter of fiscal 2004. Year over year, net revenues for the second quarter of fiscal 2004 were down 17% from the $30.2 million reported in the second quarter of fiscal 2003.
The net loss for the second quarter of fiscal 2004 on a generally accepted accounting principles (GAAP) basis was $22.9 million or $0.08 per share, compared with a net loss of $53.4 million or $0.18 per share for the first quarter of fiscal 2004 and a net loss of $72.4 million or $0.24 per share for the second quarter of fiscal 2003.The pro forma net loss for the second quarter of fiscal 2004 was reduced to $6.9 million or $0.02 per share, from the pro forma net loss of $9.0 million or $0.03 per share in the first quarter of fiscal 2004 and $11.8 million or $0.04 per share in the second quarter of fiscal 2003.
Net revenues for the six monthsended September 30, 2003 were $45.6 million compared to $60.4 million reported for the six months ended September 30, 2002.
The GAAP net loss for the six monthsended September 30, 2003 was $76.3 million or $0.25 per share, compared to the net loss of $477.3 million or $1.59 per share for the six months ended September 30, 2002.The pro forma net loss for the six months ended September 30, 2003 was
– more –
$15.9 million or $0.05 per share, compared with the pro forma net loss of $26.6 million or $0.09 per share for the six months ended September 30, 2002.
Commenting on the results, Dave Rickey, Chairman of the Board, President and Chief Executive Officer said, “I am encouraged by our financial results this quarter. I am also very excited about the acquisitions we have announced during the second quarter. The pending merger with JNI Corporation represents a tremendous opportunity to diversify our business into storage area networking. In addition, the acquisition of assets and licenses associated with IBM’s PowerPRS Switch Fabric product line complements and strengthens AMCC’s portfolio of switch fabric products with industry-leading technology, established customer relationships and near term revenue.”
Rickey continued, “We continue to expect to achieve synergies from the JNI Corporation and IBM PowerPRS acquisitions. As a result of anticipated savings and reasonable revenue growth assumptions, I expect to finish the March quarter at a run rate that will allow us to be profitable going forward, on a pro forma basis.”
AMCC reports its financial results in accordance with GAAP and additionally on a non-GAAP basis referred to as pro forma. These pro forma measures are not in accordance with, nor are they a substitute for, GAAP measures and may not be consistent with the presentation used by other companies. AMCC uses the pro forma financial measures to evaluate and manage the Company’s operations. AMCC is providing this information to investors to allow for the performance of additional financial analysis and because it is consistent with the financial models and estimates published by analysts who follow the Company.
The pro forma results exclude the following items which are required by GAAP: cumulative effect of accounting changes, goodwill and other purchased intangible asset impairment charges, restructuring costs, on-going amortization of purchased intangibles, acquired in-process research and development charges, stock-based compensation charges related to acquired companies, certain excess inventory charges and benefits, payroll tax effects of certain stock option exercises, and net gains and losses related to strategic equity investments. Income taxes are adjusted to an estimated pro forma effective tax rate. See the attached reconciliation of GAAP to pro forma net loss, which quantifies the amounts excluded from pro forma basis results.
Fiscal 2004 Second Quarter Highlights
| • | Signed a definitive agreement to acquire JNI Corporation marking AMCC’s entry into the storage area networking (SAN) market. JNI provides Fibre Channel hardware and software products that form critical elements of SANs. |
| • | Completed the purchase of assets and license of property associated with IBM’s PowerPRS Switch Fabric product line on September 30, 2003. Currently in its fifth generation of products, IBM’s PowerPRS product line is designed into numerous leading OEM platforms that are now in production and ramping to volume. |
| • | Introduced the S19235 and S19237 transceivers featuring electronic compensation built upon AMCC’s proven 10 Gbps and CMOS expertise. These devices enable OEMs to deliver more integrated capabilities for line card and XFP module applications, while simultaneously driving down overall system power, cost and size. |
| • | Teamed with IBM, Infineon Technologies, Texas Instruments and Xilinx to announce the creation and promotion of the Unified 10 Gbps Physical-Layer Initiative (UXPi), a program of the IEEE-ISTO. The goal of UXPi is to advocate a common 10 Gbps physical-layer standard across multiple markets, to simplify and accelerate the implementation of next generation 10 Gbps systems. |
For More Information
AMCC management will be holding a conference call today, October 23, 2003, at 2:00 pm PDT to discuss additional details regarding the Company’s performance for the second quarter of fiscal 2004 and to provide guidance for the third quarter of fiscal 2004. You may access the conference call via any of the following:
Teleconference: | (719) 457-2658 | |
Conference ID: | 779222 | |
Web Broadcast: | http://www.amcc.com | |
Replay: | (719) 457-0820 (available for 7 days following the call) |
AMCC Overview
AMCC designs, develops, manufactures, and markets high-performance, high-bandwidth silicon integrated circuits empowering wide area networks. AMCC utilizes a combination of digital, mixed-signal and high-frequency analog design expertise coupled with system-level knowledge and multiple silicon process technologies to offer integrated circuit products that enable the transport of voice and data over fiber optic networks. The Company’s system solution portfolio includes switch fabric, traffic management, network processor, framer/mapper, PHY and PMD devices that address the high-performance needs of the evolving intelligent optical network. AMCC’s corporate headquarters is located in San Diego, California. Sales and engineering offices are located throughout the world. For further information regarding AMCC, please visit our Web site athttp://www.amcc.com or call our shareholder information line at (888) 982-AMCC (2622).
This news release contains forward-looking statements, including statements regarding acquisitions and expected synergies therefrom, revenue growth and the Company’s anticipated financial performance, that are subject to certain risks and uncertainties, including, but not limited to, the Company’s ability to realize expected synergies associated with the pending merger with JNI Corporation and the acquisition of the PRS product line assets, 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, manufacturing capacity and execution, 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, 2003, 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.
-Financial Tables Follow-
APPLIED MICRO CIRCUITS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
($ in thousands)
September 30, 2003 | March 31, 2003 | |||||
| (unaudited) | ||||||
ASSETS | ||||||
Current assets: | ||||||
Cash, cash equivalents and short-term investments | $ | 955,889 | $ | 1,036,140 | ||
Accounts receivable, net | 11,286 | 5,634 | ||||
Inventories | 5,475 | 7,178 | ||||
Other current assets | 15,442 | 23,623 | ||||
Total current assets | 988,092 | 1,072,575 | ||||
Property and equipment, net | 52,927 | 62,035 | ||||
Other assets | 1,153 | 759 | ||||
Purchased intangibles | 126,731 | 88,219 | ||||
Total assets | $ | 1,168,903 | $ | 1,223,588 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 12,007 | $ | 12,689 | ||
Other current liabilities | 44,599 | 37,446 | ||||
Current portion of long-term debt & capital leases | 159 | 1,265 | ||||
Total current liabilities | 56,765 | 51,400 | ||||
Stockholders’ equity | 1,112,138 | 1,172,188 | ||||
Total liabilities and stockholders’ equity | $ | 1,168,903 | $ | 1,223,588 | ||
Certain year-end amounts have been reclassified to conform with the current period presentation.
APPLIED MICRO CIRCUITS CORPORATION
GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)
| Three Months Ended | Six months Ended | |||||||||||||||||||
| Sept 30, 2003 | June 30, 2003 | Sept 30, 2002 | Sept 30, 2003 | Sept 30, 2002 | ||||||||||||||||
Net revenues | $ | 25,119 | $ | 20,515 | $ | 30,219 | $ | 45,634 | $ | 60,374 | ||||||||||
Cost of revenues | 9,485 | 9,783 | 16,503 | 19,268 | 34,142 | |||||||||||||||
Gross profit | 15,634 | 10,732 | 13,716 | 26,366 | 26,232 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Research and development | 26,102 | 29,126 | 33,441 | 55,228 | 68,938 | |||||||||||||||
Selling, general and administrative | 11,037 | 10,362 | 14,989 | 21,399 | 31,315 | |||||||||||||||
Stock-based compensation: | ||||||||||||||||||||
Research and development | 3,579 | 9,125 | 11,413 | 12,704 | 52,090 | |||||||||||||||
Selling, general and administrative | 1,043 | 3,408 | 24,104 | 4,451 | 50,734 | |||||||||||||||
Acquired in-process research and development | 5,700 | — | — | 5,700 | — | |||||||||||||||
Impairment of goodwill and other intangible assets | — | — | — | — | 204,284 | |||||||||||||||
Restructuring costs | — | 23,498 | 3,000 | 23,498 | 5,500 | |||||||||||||||
Total operating expenses | 47,461 | 75,519 | 86,947 | 122,980 | 412,861 | |||||||||||||||
Operating loss | (31,827 | ) | (64,787 | ) | (73,231 | ) | (96,614 | ) | (386,629 | ) | ||||||||||
Interest and other income, net | 8,919 | 11,395 | 795 | 20,314 | 11,518 | |||||||||||||||
Loss before income taxes | (22,908 | ) | (53,392 | ) | (72,436 | ) | (76,300 | ) | (375,111 | ) | ||||||||||
Income tax benefit | — | — | — | — | — | |||||||||||||||
Loss before cumulative effect of accounting change | (22,908 | ) | (53,392 | ) | (72,436 | ) | (76,300 | ) | (375,111 | ) | ||||||||||
Cumulative effect of accounting change | — | — | — | — | (102,229 | ) | ||||||||||||||
Net loss | $ | (22,908 | ) | $ | (53,392 | ) | $ | (72,436 | ) | $ | (76,300 | ) | $ | (477,340 | ) | |||||
Basic and diluted loss per share: | ||||||||||||||||||||
Loss per share before cumulative effect of accounting change | $ | (0.08 | ) | $ | (0.18 | ) | $ | (0.24 | ) | $ | (0.25 | ) | $ | (1.25 | ) | |||||
Loss per share | $ | (0.08 | ) | $ | (0.18 | ) | $ | (0.24 | ) | $ | (0.25 | ) | $ | (1.59 | ) | |||||
Weighted average shares | 305,195 | 303,801 | 300,701 | 304,498 | 300,256 | |||||||||||||||
APPLIED MICRO CIRCUITS CORPORATION
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| Sept 30, 2003 | June 30, 2003 | Sept 30, 2002 | Sept 30, 2003 | Sept 30, 2002 | ||||||||||||||||
Net revenues | $ | 25,119 | $ | 20,515 | $ | 30,219 | $ | 45,634 | $ | 60,374 | ||||||||||
Cost of revenues | 8,795 | 7,993 | 14,513 | 16,788 | 29,143 | |||||||||||||||
Gross profit | 16,324 | 12,522 | 15,706 | 28,846 | 31,231 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Research and development | 26,099 | 29,124 | 33,441 | 55,223 | 68,934 | |||||||||||||||
Selling, general and administrative | 11,036 | 10,360 | 14,989 | 21,396 | 31,315 | |||||||||||||||
Total operating expenses | 37,135 | 39,484 | 48,430 | 76,619 | 100,249 | |||||||||||||||
Operating loss | (20,811 | ) | (26,962 | ) | (32,724 | ) | (47,773 | ) | (69,018 | ) | ||||||||||
Interest and other income, net | 8,919 | 11,395 | 12,445 | 20,314 | 23,168 | |||||||||||||||
Loss before income taxes | (11,892 | ) | (15,567 | ) | (20,279 | ) | (27,459 | ) | (45,850 | ) | ||||||||||
Income tax benefit | (4,994 | ) | (6,538 | ) | (8,517 | ) | (11,532 | ) | (19,257 | ) | ||||||||||
Net loss | $ | (6,898 | ) | $ | (9,029 | ) | $ | (11,762 | ) | $ | (15,927 | ) | $ | (26,593 | ) | |||||
Diluted loss per share: | ||||||||||||||||||||
Loss per share | $ | (0.02 | ) | $ | (0.03 | ) | $ | (0.04 | ) | $ | (0.05 | ) | $ | (0.09 | ) | |||||
Weighted average shares | 305,195 | 303,801 | 300,701 | 304,498 | 300,256 | |||||||||||||||
The above pro forma statements are based on the Company’s consolidated statements of operations for the periods presented. This pro forma information is not prepared in accordance with GAAP and may not be consistent with the presentation used by other companies. The pro forma operating results are used by the Company’s management to evaluate the operating performance of the Company and are also consistent with the financial models and estimates published by analysts who follow the Company.
APPLIED MICRO CIRCUITS CORPORATION
RECONCILIATION OF GAAP TO PRO FORMA NET LOSS
(unaudited)
(in thousands)
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| Sept 30, 2003 | June 30, 2003 | Sept 30, 2002 | Sept 30, 2003 | Sept 30, 2002 | ||||||||||||||||
GAAP net loss | $ | (22,908 | ) | $ | (53,392 | ) | $ | (72,436 | ) | $ | (76,300 | ) | $ | (477,340 | ) | |||||
Adjustments: | ||||||||||||||||||||
Stock-based compensation related to acquired companies | 4,793 | 12,751 | 35,936 | 17,544 | 104,680 | |||||||||||||||
Amortization of purchased intangibles | 1,572 | 1,571 | 1,571 | 3,143 | 3,143 | |||||||||||||||
Impairments of goodwill and other intangibles | — | — | — | — | 204,284 | |||||||||||||||
Cumulative effect of accounting change | — | — | — | — | 102,229 | |||||||||||||||
Restructuring costs | — | 23,498 | 3,000 | 23,498 | 5,500 | |||||||||||||||
Valuation allowance for strategic equity investments | — | — | 11,650 | — | 11,650 | |||||||||||||||
Excess inventory benefit | (1,053 | ) | — | — | (1,053 | ) | — | |||||||||||||
Acquired in-process research and development | 5,700 | — | — | 5,700 | — | |||||||||||||||
Payroll taxes on certain stock option exercises | 4 | 5 | — | 9 | 4 | |||||||||||||||
Income tax adjustments | 4,994 | 6,538 | 8,517 | 11,532 | 19,257 | |||||||||||||||
Total GAAP to pro forma adjustments | 16,010 | 44,363 | 60,674 | 60,373 | 450,747 | |||||||||||||||
Pro forma net loss | $ | (6,898 | ) | $ | (9,029 | ) | $ | (11,762 | ) | $ | (15,927 | ) | $ | (26,593 | ) | |||||
APPLIED MICRO CIRCUITS CORPORATION
SCHEDULE OF SELECTED PRO FORMA ADJUSTMENTS
(unaudited)
(in thousands)
The following schedule reconciles selected line items from the GAAP basis statements of operations to the pro forma statements of operations.
| Three Months Ended | Six Months Ended | ||||||||||||||||
| Sept 30, 2003 | June 30, 2003 | Sept 30, 2002 | Sept 30, 2003 | Sept 30, 2002 | |||||||||||||
GROSS PROFIT: | |||||||||||||||||
GAAP gross profit | $ | 15,634 | $ | 10,732 | $ | 13,716 | $ | 26,366 | $ | 26,232 | |||||||
Amortization of purchased intangibles | 1,572 | 1,571 | 1,571 | 3,143 | 3,143 | ||||||||||||
Excess inventory charge(benefit) | (1,053 | ) | — | — | (1,053 | ) | — | ||||||||||
Stock-based compensation related to acquired companies | 171 | 218 | 419 | 389 | 1,856 | ||||||||||||
Payroll taxes on certain stock option exercises | — | 1 | — | 1 | — | ||||||||||||
Pro forma gross profit | $ | 16,324 | $ | 12,522 | $ | 15,706 | $ | 28,846 | $ | 31,231 | |||||||
OPERATING EXPENSES: | |||||||||||||||||
GAAP operating expenses | $ | 47,461 | $ | 75,519 | $ | 86,947 | $ | 122,980 | $ | 412,861 | |||||||
Acquired in-process research and development | 5,700 | — | — | 5,700 | — | ||||||||||||
Impairment of goodwill and other intangible assets | — | — | — | — | 204,284 | ||||||||||||
Stock-based compensation related to acquired companies | 4,622 | 12,533 | 35,517 | 17,155 | 102,824 | ||||||||||||
Restructuring costs | — | 23,498 | 3,000 | 23,498 | 5,500 | ||||||||||||
Payroll taxes on certain stock option exercises | 4 | 4 | — | 8 | 4 | ||||||||||||
Pro forma operating expenses | $ | 37,135 | $ | 39,484 | $ | 48,430 | $ | 76,619 | $ | 100,249 | |||||||
OTHER INCOME (EXPENSE), NET: | |||||||||||||||||
GAAP other income (expense), net | $ | 8,919 | $ | 11,395 | $ | 795 | $ | 20,314 | $ | 11,518 | |||||||
Valuation allowance for strategic equity investments | — | — | 11,650 | — | 11,650 | ||||||||||||
Pro forma other income (expense), net | $ | 8,919 | $ | 11,395 | $ | 12,445 | $ | 20,314 | $ | 23,168 | |||||||
