EXHIBIT 99.1
FOR ADDITIONAL INFORMATION:
| Investor Relations Contact: | Media/Editorial Contact: | |
Applied Micro Circuits Corporation Debra Hart | The Ardell Group Amy Peterson | |
Phone: (858) 535-4217 | Phone: (858) 792-4974 | |
E-Mail: dhart@amcc.com | E-Mail: amy@ardellgroup.com | |
Tuesday, January 20, 2004
Company Press Release
APPLIED MICRO CIRCUITS CORPORATION ANNOUNCES
THIRD QUARTER FISCAL 2004 FINANCIAL RESULTS
SAN DIEGO—January 20, 2004—Applied Micro Circuits Corporation [NASDAQ: AMCC] today reported its financial results for the third quarter of fiscal 2004.
Net revenues for the third quarter of fiscal 2004 were $38.2 million, up 52% sequentially from the $25.1 million reported in the second quarter of fiscal 2004. Year over year, net revenues for the third quarter of fiscal 2004 were up 81% from the $21.1 million reported in the third quarter of fiscal 2003.
The net loss for the third quarter of fiscal 2004 on a generally accepted accounting principles (GAAP) basis was $26.4 million or $0.09 per share, compared with a net loss of $22.9 million or $0.08 per share for the second quarter of fiscal 2004 and a net loss of $39.1 million or $0.13 per share for the third quarter of fiscal 2003.The pro forma net loss for the third quarter of fiscal 2004 was $7.1 million or $0.02 per share, compared to the pro forma net loss of $6.9 million or $0.02 per share in the second quarter of fiscal 2004 and the pro forma net loss $15.1 million or $0.05 per share in the third quarter of fiscal 2003.
Net revenues for the nine monthsended December 31, 2003 were $83.8 million compared to $81.5 million reported for the nine months ended December 31, 2002.
The GAAP net loss for the nine monthsended December 31, 2003 was $102.7 million or $0.34 per share, compared to the net loss of $516.4 million or $1.72 per share for the nine months ended December 31, 2002.The pro forma net loss for the nine months ended December 31, 2003 was $23.1 million or $0.08 per share, compared with the pro forma net loss of $41.7 million or $0.14 per share for the nine months ended December 31, 2002.
On September 30, 2003, AMCC acquired certain assets and licenses to property associated with IBM’s PowerPRS Switch Fabric product line. The consolidated operating results for the quarter ended December 31, 2003 reflect the operating results of the PRS business from the date of acquisition. On October 28, 2003, AMCC completed the acquisition of JNI Corporation for a purchase price of approximately $213.7 million, consisting of $196.4 million in cash and options to purchase approximately 4.3 million shares of AMCC’s common stock. The consolidated operating results for the quarter ended December 31, 2003 reflect the operating results of JNI Corporation subsequent to the date of the acquisition.
Revenue As Reported (in thousands):
| Quarter Ended | |||||||||
| Sept 30, 2003 | Dec 31, 2003 | Sequential % change | |||||||
AMCC: | |||||||||
Communications | $ | 21,828 | $ | 26,030 | 19 | % | |||
Non-Communications | 3,291 | 2,050 | -38 | % | |||||
Subtotal | 25,119 | 28,080 | 12 | % | |||||
PRS acquisition | — | 5,095 | N/A | ||||||
JNI(from the date of acquisition) | — | 5,014 | N/A | ||||||
Total revenue reported | $ | 25,119 | $ | 38,189 | 52 | % | |||
The following supplemental revenue table shows the revenue that would have been reported had AMCC and JNI been combined for each of the past two quarters (in thousands):
| Quarter Ended | |||||||||
| Sept 30, 2003 | Dec 31, 2003 | Sequential % changes | |||||||
AMCC: | |||||||||
Communications | $ | 21,828 | $ | 26,030 | 19 | % | |||
Non-Communications | 3,291 | 2,050 | -38 | % | |||||
Subtotal | 25,119 | 28,080 | 12 | % | |||||
PRS acquisition | — | 5,095 | N/A | ||||||
JNI(full quarters) | 6,012 | 7,034 | 17 | % | |||||
Total | $ | 31,131 | $ | 40,209 | — | ||||
Commenting on the results, Dave Rickey, Chairman of the Board, President and Chief Executive Officer said, “I am encouraged by the business momentum I see from our customers, as well as our product traction at the major accounts. We believe that our heavy investment in leadership products has positioned AMCC well as the industry rebounds.”
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 and real estate transactions. 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.
For More Information
AMCC management will be holding a conference call today, January 20, 2004, 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 2004 and to provide guidance for the fourth quarter of fiscal 2004. You may access the conference call via any of the following:
| Teleconference: | 719-457-2618 | |
| Conference ID: | 616689 | |
| 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 silicon networking solutions for global wide area networks (WAN) and storage area networks (SAN). The Company’s proven design expertise, coupled with system-level knowledge and multiple silicon process technologies, provides integrated circuits that span the complete WAN PHY-to-fabric roadmap and a robust portfolio of networked storage products addressing Host Bus Adapters, storage array, switching, and SAN extension requirements. The Company’s system solution portfolio addresses the high-performance needs of both transport and switching and routing applications within the evolving intelligent optical network, as well as Fibre Channel hardware and software products for high-growth networked storage. AMCC’s corporate headquarters are located in San Diego, 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 or call our shareholder information line at (888) 982-AMCC (2622).
This news release contains forward-looking statements, including statements regarding customers’ business momentum and the Company’s product traction that 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, 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
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands)
| December 31, 2003 | March 31, 2003 | |||||
| (unaudited) | ||||||
ASSETS | ||||||
Current assets: | ||||||
Cash, cash equivalents and short-term investments | $ | 845,694 | $ | 1,036,140 | ||
Accounts receivable, net | 19,526 | 5,634 | ||||
Inventories | 7,890 | 7,178 | ||||
Other current assets | 18,452 | 23,623 | ||||
Total current assets | 891,562 | 1,072,575 | ||||
Property and equipment, net | 39,593 | 62,035 | ||||
Other assets | 2,206 | 759 | ||||
Purchased intangibles | 245,012 | 88,219 | ||||
Total assets | $ | 1,178,373 | $ | 1,223,588 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 26,575 | $ | 12,689 | ||
Other current liabilities | 51,194 | 37,446 | ||||
Current portion of long-term debt & capital leases | 265 | 1,265 | ||||
Total current liabilities | 78,034 | 51,400 | ||||
Long-term debt & capital leases | 103 | — | ||||
Stockholders’ equity | 1,100,236 | 1,172,188 | ||||
Total liabilities and stockholders’ equity | $ | 1,178,373 | $ | 1,223,588 | ||
Certain year-end amounts have been reclassified to conform with the current period presentation.
APPLIED MICRO CIRCUITS CORPORATION
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)
| Three months ended | Nine months ended | |||||||||||||||||||
| Dec 31, 2003 | Sept 30, 2003 | Dec 31, 2002 | Dec 31, 2003 | Dec 31, 2002 | ||||||||||||||||
Net revenues | $ | 38,189 | $ | 25,119 | $ | 21,114 | $ | 83,823 | $ | 81,488 | ||||||||||
Cost of revenues | 17,471 | 9,485 | 14,327 | 36,739 | 48,469 | |||||||||||||||
Gross profit | 20,718 | 15,634 | 6,787 | 47,084 | 33,019 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Research and development | 30,052 | 26,102 | 32,040 | 85,280 | 100,978 | |||||||||||||||
Selling, general and administrative | 13,493 | 11,037 | 14,467 | 34,892 | 45,782 | |||||||||||||||
Stock-based compensation: | ||||||||||||||||||||
Research and development | 2,142 | 3,579 | 10,467 | 14,846 | 62,557 | |||||||||||||||
Selling, general and administrative | 375 | 1,043 | 4,286 | 4,826 | 55,020 | |||||||||||||||
Amortization of purchased intangibles | 689 | — | — | 689 | — | |||||||||||||||
Acquired in-process research and development | 16,100 | 5,700 | — | 21,800 | — | |||||||||||||||
Impairment of goodwill and other intangible assets | — | — | — | — | 204,284 | |||||||||||||||
Restructuring charges (benefits) | (200 | ) | — | — | 23,298 | 5,500 | ||||||||||||||
Total operating expenses | 62,651 | 47,461 | 61,260 | 185,631 | 474,121 | |||||||||||||||
Operating loss | (41,933 | ) | (31,827 | ) | (54,473 | ) | (138,547 | ) | (441,102 | ) | ||||||||||
Interest and other income, net | 15,493 | 8,919 | 15,414 | 35,807 | 26,932 | |||||||||||||||
Loss before income taxes | (26,440 | ) | (22,908 | ) | (39,059 | ) | (102,740 | ) | (414,170 | ) | ||||||||||
Income taxes | — | — | — | — | — | |||||||||||||||
Loss before cumulative effect of accounting change | (26,440 | ) | (22,908 | ) | (39,059 | ) | (102,740 | ) | (414,170 | ) | ||||||||||
Cumulative effect of accounting change | — | — | — | — | (102,229 | ) | ||||||||||||||
Net loss | $ | (26,440 | ) | $ | (22,908 | ) | $ | (39,059 | ) | (102,740 | ) | $ | (516,399 | ) | ||||||
Basic and diluted loss per share: | ||||||||||||||||||||
Loss per share before cumulative effect of accounting change | $ | (0.09 | ) | $ | (0.08 | ) | $ | (0.13 | ) | $ | (0.34 | ) | $ | (1.38 | ) | |||||
Loss per share | $ | (0.09 | ) | $ | (0.08 | ) | $ | (0.13 | ) | $ | (0.34 | ) | $ | (1.72 | ) | |||||
Weighted average shares | 306,823 | 305,195 | 301,622 | 305,273 | 300,711 | |||||||||||||||
APPLIED MICRO CIRCUITS CORPORATION
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)
| Three months ended | Nine months ended | |||||||||||||||||||
Dec 31, 2003 | Sept 30, 2003 | Dec 31, 2002 | Dec 31, 2003 | Dec 31, 2002 | ||||||||||||||||
Net revenues | $ | 38,189 | $ | 25,119 | $ | 21,114 | $ | 83,823 | $ | 81,488 | ||||||||||
Cost of revenues | 14,132 | 8,795 | 12,355 | 30,920 | 41,498 | |||||||||||||||
Gross profit | 24,057 | 16,324 | 8,759 | 52,903 | 39,990 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Research and development | 30,038 | 26,099 | 32,040 | 85,261 | 100,974 | |||||||||||||||
Selling, general and administrative | 13,414 | 11,036 | 14,467 | 34,810 | 45,782 | |||||||||||||||
Total operating expenses | 43,452 | 37,135 | 46,507 | 120,071 | 146,756 | |||||||||||||||
Operating loss | (19,395 | ) | (20,811 | ) | (37,748 | ) | (67,168 | ) | (106,766 | ) | ||||||||||
Interest and other income, net | 7,080 | 8,919 | 11,751 | 27,394 | 34,919 | |||||||||||||||
Loss before income taxes | (12,315 | ) | (11,892 | ) | (25,997 | ) | (39,774 | ) | (71,847 | ) | ||||||||||
Income tax benefit | (5,171 | ) | (4,994 | ) | (10,918 | ) | (16,703 | ) | (30,175 | ) | ||||||||||
Net loss | $ | (7,144 | ) | $ | (6,898 | ) | $ | (15,079 | ) | $ | (23,071 | ) | $ | (41,672 | ) | |||||
Diluted loss per share: | ||||||||||||||||||||
Loss per share | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.05 | ) | $ | (0.08 | ) | $ | (0.14 | ) | |||||
Weighted average shares | 306,823 | 305,195 | 301,622 | 305,273 | 300,711 | |||||||||||||||
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 generally accepted accounting principles 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. See the schedule of pro forma adjustments for a reconciliation of the pro forma results to the GAAP basis results.
APPLIED MICRO CIRCUITS CORPORATION
RECONCILIATION OF GAAP TO PRO FORMA NET LOSS
(unaudited)
(in thousands)
| Three months ended | Nine months ended | |||||||||||||||||||
Dec 31, 2003 | Sept 30, 2003 | Dec 31, 2002 | Dec 31, 2003 | Dec 31, 2002 | ||||||||||||||||
GAAP net loss | $ | (26,440 | ) | $ | (22,908 | ) | $ | (39,059 | ) | $ | (102,740 | ) | $ | (516,399 | ) | |||||
Adjustments: | ||||||||||||||||||||
Stock-based compensation related to acquired companies | 2,670 | 4,793 | 15,153 | 20,214 | 119,833 | |||||||||||||||
Amortization of purchased intangibles | 3,865 | 1,572 | 1,572 | 7,008 | 4,715 | |||||||||||||||
Impairments of goodwill and other intangibles | — | — | — | — | 204,284 | |||||||||||||||
Cumulative effect of accounting change | — | — | — | — | 102,229 | |||||||||||||||
Restructuring costs / (benefits) | (200 | ) | — | — | 23,298 | 5,500 | ||||||||||||||
Valuation allowance for strategic equity investments | — | — | — | — | 11,650 | |||||||||||||||
Gain on the sale of real estate | (7,551 | ) | — | (3,663 | ) | (7,551 | ) | (3,663 | ) | |||||||||||
Realized gains on strategic equity investments | (862 | ) | — | — | (862 | ) | — | |||||||||||||
Sale of excess inventory benefit | — | (1,053 | ) | — | (1,053 | ) | — | |||||||||||||
Acquired in-process research and development | 16,100 | 5,700 | — | 21,800 | — | |||||||||||||||
Payroll taxes on certain stock option exercises | 103 | 4 | — | 112 | 4 | |||||||||||||||
Income tax adjustments | 5,171 | 4,994 | 10,918 | 16,703 | 30,175 | |||||||||||||||
Total GAAP to pro forma adjustments | 19,296 | 16,010 | 23,980 | 79,669 | 474,727 | |||||||||||||||
Pro forma net loss | $ | (7,144 | ) | $ | (6,898 | ) | $ | (15,079 | ) | $ | (23,071 | ) | $ | (41,672 | ) | |||||
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 | Nine months ended | |||||||||||||||||||
Dec 31, 2003 | Sept 30, 2003 | Dec 31, 2002 | Dec 31, 2003 | Dec 31, 2002 | ||||||||||||||||
GROSS PROFIT: | ||||||||||||||||||||
GAAP gross profit | $ | 20,718 | $ | 15,634 | $ | 6,787 | $ | 47,084 | $ | 33,019 | ||||||||||
Amortization of purchased intangibles | 3,176 | 1,572 | 1,572 | 6,319 | 4,715 | |||||||||||||||
Sale of excess inventory benefit | — | (1,053 | ) | — | (1,053 | ) | — | |||||||||||||
Stock-based compensation related to acquired companies | 153 | 171 | 400 | 542 | 2,256 | |||||||||||||||
Payroll taxes on certain stock option exercises | 10 | — | — | 11 | — | |||||||||||||||
Pro forma gross profit | $ | 24,057 | $ | 16,324 | $ | 8,759 | $ | 52,903 | $ | 39,990 | ||||||||||
OPERATING EXPENSES: | ||||||||||||||||||||
GAAP operating expenses | $ | 62,621 | $ | 47,461 | $ | 61,260 | $ | 185,631 | $ | 474,121 | ||||||||||
Amortization of purchased intangibles | 689 | — | — | 689 | — | |||||||||||||||
Acquired in-process research and development | 16,100 | 5,700 | — | 21,800 | — | |||||||||||||||
Impairments of goodwill and other intangible assets | — | — | — | — | 204,284 | |||||||||||||||
Stock-based compensation related to acquired companies | 2,517 | 4,622 | 14,753 | 19,672 | 117,577 | |||||||||||||||
Restructuring costs (benefits) | (200 | ) | — | — | 23,298 | 5,500 | ||||||||||||||
Payroll taxes on certain stock option exercises | 93 | 4 | — | 101 | 4 | |||||||||||||||
Pro forma operating expenses | 43,452 | 37,135 | 46,507 | $ | 120,071 | $ | 146,756 | |||||||||||||
OTHER INCOME (EXPENSE), NET: | ||||||||||||||||||||
GAAP other income (expense), net | $ | 15,493 | $ | 8,919 | $ | 15,414 | $ | 35,807 | $ | 26,932 | ||||||||||
Gain on the sale of real estate | (7,551 | ) | — | (3,663 | ) | (7,551 | ) | (3,663 | ) | |||||||||||
Realized gains on strategic equity investments | (862 | ) | — | — | (862 | ) | — | |||||||||||||
Valuation allowance for strategic equity investments | — | — | — | — | 11,650 | |||||||||||||||
Pro forma other income (expense), net | $ | 7,080 | $ | 8,919 | $ | 11,751 | $ | 27,394 | $ | 34,919 | ||||||||||
