Exhibit 99.1
| FOR ADDITIONAL INFORMATION: | ||
| Investor Relations Contact: | Media/Editorial Contact: | |
Applied Micro Circuits Corporation | The Ardell Group | |
Debra Hart | Angela Edgerton | |
Phone: (858) 535-4217 | Phone: (858) 792-2941 | |
E-Mail: dhart@amcc.com | E-Mail: angela@ardellgroup.com | |
Wednesday, January 26, 2005
Company Press Release
APPLIED MICRO CIRCUITS CORPORATION ANNOUNCES
THIRD QUARTER FISCAL 2005 FINANCIAL RESULTS
SAN DIEGO—January 26, 2005—Applied Micro Circuits Corporation [NASDAQ: AMCC] today reported its financial results for the third quarter of fiscal 2005.
Net revenues for the third quarter of fiscal 2005 were $61.1 million compared to $61.1 million reported in the second quarter of fiscal 2005 and $38.2 million reported in the third quarter of fiscal 2004.
For the third quarter of fiscal 2005, on a generally accepted accounting principles (GAAP) basis, the net loss was $81.9 million or $(0.27) per share, compared with a net loss of $18.3 million or $(0.06) per share for the second quarter of fiscal 2005 and a net loss of $26.4 million or $(0.09) per share for the third quarter of fiscal 2004.
The pro forma net loss for the third quarter of fiscal 2005 was $4.1 million or $(0.01) per share, compared to the pro forma net loss of $4.1 million or $(0.01) per share in the second quarter of fiscal 2005 and the pro forma net loss of $7.1 million or $(0.02) per share in the third quarter of fiscal 2004.
Net revenues for the nine months ended December 31, 2004 were $189.6 million compared to $83.8 million reported for the nine months ended December 31, 2003.
The GAAP net loss for the nine months ended December 31, 2004 was $122.0 million or $(0.39) per share, compared to the net loss of $102.7 million or $(0.34) per share for the nine months ended December 31, 2003. The pro forma net loss for the nine months ended December 31, 2004 was $6.0 million or $(0.02) per share, compared with the pro forma net loss of $23.1 million or $(0.08) per share for the nine months ended December 31, 2003.
Commenting on the results, Tom Tullie, Chief Operating Officer, said, “The operating results we announced today are in-line with our expectations for the quarter. I am encouraged that our Communications, Storage and Embedded Products groups all saw sequential revenue growth. In addition, our recent actions to reduce operating expenses position us to achieve pro forma EPS profitability in the near future.”
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.
During the third quarter ended December 31, 2004, AMCC recorded a $27.3 million charge for the impairment of purchased intangibles, a $28.9 million net charge for settlement of pending securities class-action litigation, and an $8.1 million charge for restructuring costs associated with the November workforce reduction.
The pro forma results exclude the following items which are required by GAAP: restructuring costs, amortization and impairments of purchased intangibles, excess inventory benefit, acquired in-process research and development charges, stock-based compensation charges related to acquired companies, litigation settlement costs, real estate gains, realized gains and losses on strategic equity investments, and payroll tax effects of stock option exercises. Income taxes are adjusted to an estimated pro forma effective tax rate. See the attached reconciliation of the GAAP net loss to the pro forma net income or loss, which quantifies the amounts excluded from pro forma basis results.
For More Information
AMCC management will be holding a conference call today, January 26, 2005, 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 2005 and to provide guidance for the fourth quarter of fiscal 2005. You may access the conference call via any of the following:
Teleconference: | 913-981-4910 | |
Conference ID: | 624714 | |
Web Broadcast: | http://www.amcc.com | |
Replay: | 719-457-0820 | |
(available for 7 days following the call) |
AMCC Overview
AMCC provides the essential building blocks for the processing, moving and storing of information worldwide. The company blends systems and software expertise with high-performance, high-bandwidth silicon integration to deliver silicon, hardware and software
solutions for global wide area networks (WAN), embedded applications such as PowerPC and programmable SOC architectures, storage area networks (SAN), and high-growth storage markets such as Serial ATA (SATA), and RAID. 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 athttp://www.amcc.com.
This news release contains forward-looking statements, including, but not limited to, statements regarding the company’s expectations of future profitability and the magnitude of charges resulting from the settlement of pending litigation. 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, integration of acquired businesses, manufacturing capacity and execution, the risk that the settlement will not be approved by the court or that the charges resulting from the settlement will be higher than expected due to inability to obtain the company’s insurers’ agreed upon contribution to the settlement 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, 2004, 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)
Dec 31, 2004 | March 31, 2004 | |||||
| (unaudited) | ||||||
ASSETS | ||||||
Current assets: | ||||||
Cash, cash equivalents and short-term investments | $ | 405,970 | $ | 861,041 | ||
Accounts receivable, net | 22,304 | 23,284 | ||||
Inventories | 19,847 | 8,490 | ||||
Other current assets | 46,623 | 16,208 | ||||
Total current assets | 494,744 | 909,023 | ||||
Property and equipment, net | 47,102 | 37,271 | ||||
Other assets | 1,999 | 1,616 | ||||
Purchased intangibles | 544,892 | 240,193 | ||||
Total assets | $ | 1,088,737 | $ | 1,188,103 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 14,164 | $ | 18,164 | ||
Other current liabilities | 109,657 | 49,089 | ||||
Current portion of long-term debt & capital leases | 103 | 303 | ||||
Total current liabilities | 123,924 | 67,556 | ||||
Stockholders’ equity | 964,813 | 1,120,547 | ||||
Total liabilities and stockholders’ equity | $ | 1,088,737 | $ | 1,188,103 | ||
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, 2004 | Sept 30, 2004 | Dec 31, 2003 | Dec 31, 2004 | Dec 31, 2003 | ||||||||||||||||
Net revenues | $ | 61,081 | $ | 61,069 | $ | 38,189 | $ | 189,552 | $ | 83,823 | ||||||||||
Cost of revenues | 30,159 | 31,529 | 17,471 | 93,180 | 36,739 | |||||||||||||||
Gross profit | 30,922 | 29,540 | 20,718 | 96,372 | 47,084 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Research and development | 31,411 | 31,702 | 30,052 | 94,103 | 85,280 | |||||||||||||||
Selling, general and administrative | 15,887 | 15,298 | 13,493 | 45,563 | 34,892 | |||||||||||||||
Stock-based compensation: | ||||||||||||||||||||
Research and development | 752 | 915 | 2,142 | 2,699 | 14,846 | |||||||||||||||
Selling, general and administrative | 876 | 2,202 | 375 | 4,401 | 4,826 | |||||||||||||||
Amortization of purchased intangibles | 1,833 | 1,962 | 689 | 5,352 | 689 | |||||||||||||||
Impairment of purchased intangibles | 27,330 | — | — | 27,330 | — | |||||||||||||||
Acquired in-process research and development | — | — | 16,100 | 13,400 | 21,800 | |||||||||||||||
Restructuring charges(benefits) | 8,079 | 310 | (200 | ) | 8,389 | 23,298 | ||||||||||||||
Litigation settlement, net | 28,900 | — | — | 28,900 | — | |||||||||||||||
Total operating expenses | 115,068 | 52,389 | 62,651 | 230,137 | 185,631 | |||||||||||||||
Operating loss | (84,146 | ) | (22,849 | ) | (41,933 | ) | (133,765 | ) | (138,547 | ) | ||||||||||
Interest and other income, net | 4,780 | 4,530 | 15,493 | 14,591 | 35,807 | |||||||||||||||
Loss before income taxes | (79,366 | ) | (18,319 | ) | (26,440 | ) | (119,174 | ) | (102,740 | ) | ||||||||||
Income tax expense | 2,526 | — | — | 2,861 | — | |||||||||||||||
Net loss | $ | (81,892 | ) | $ | (18,319 | ) | $ | (26,440 | ) | $ | (122,035 | ) | $ | (102,740 | ) | |||||
Basic and diluted loss per share: | ||||||||||||||||||||
Loss per share | $ | (0.27 | ) | $ | (0.06 | ) | $ | (0.09 | ) | $ | (0.39 | ) | $ | (0.34 | ) | |||||
Shares used in calculating basic and diluted loss per share | 307,729 | 310,128 | 306,823 | 309,792 | 305,273 | |||||||||||||||
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, 2004 | Sept 30, 2004 | Dec 31, 2003 | Dec 31, 2004 | Dec 31, 2003 | ||||||||||||||||
Net revenues | $ | 61,081 | $ | 61,069 | $ | 38,189 | $ | 189,552 | $ | 83,823 | ||||||||||
Cost of revenues | 23,761 | 23,823 | 14,132 | 72,219 | 30,920 | |||||||||||||||
Gross profit | 37,320 | 37,246 | 24,057 | 117,333 | 52,903 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Research and development | 31,411 | 31,702 | 30,038 | 94,103 | 85,261 | |||||||||||||||
Selling, general and administrative | 15,887 | 15,298 | 13,414 | 45,561 | 34,810 | |||||||||||||||
Total operating expenses | 47,298 | 47,000 | 43,452 | 139,664 | 120,071 | |||||||||||||||
Operating loss | (9,978 | ) | (9,754 | ) | (19,395 | ) | (22,331 | ) | (67,168 | ) | ||||||||||
Interest and other income, net | 4,780 | 4,530 | 7,080 | 14,591 | 27,394 | |||||||||||||||
Loss before income taxes | (5,198 | ) | (5,224 | ) | (12,315 | ) | (7,740 | ) | (39,774 | ) | ||||||||||
Income tax benefit | (1,144 | ) | (1,149 | ) | (5,171 | ) | (1,703 | ) | (16,703 | ) | ||||||||||
Net loss | $ | (4,054 | ) | $ | (4,075 | ) | $ | (7,144 | ) | $ | (6,037 | ) | $ | (23,071 | ) | |||||
Diluted loss per share: | ||||||||||||||||||||
Loss per share | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.08 | ) | |||||
Shares used in calculating diluted loss per share | 307,729 | 310,128 | 306,823 | 309,792 | 305,273 | |||||||||||||||
The above pro forma statements are based on the Company’s consolidated statements of operations forthe periods presented. This pro forma information is not prepared in accordance with generally acceptedaccounting principles and may not be consistent with the presentation used by other companies. The proforma 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 INCOME/LOSS
(unaudited)
(in thousands)
| Three months ended | Nine months ended | |||||||||||||||||||
| Dec 31, 2004 | Sept 30, 2004 | Dec 31, 2003 | Dec 31, 2004 | Dec 31, 2003 | ||||||||||||||||
GAAP net loss | $ | (81,892 | ) | $ | (18,319 | ) | $ | (26,440 | ) | $ | (122,035 | ) | $ | (102,740 | ) | |||||
Adjustments: | ||||||||||||||||||||
Stock-based compensation related to acquired companies | 1,975 | 3,246 | 2,670 | 7,731 | 20,214 | |||||||||||||||
Amortization of purchased intangibles | 7,884 | 9,539 | 3,865 | 25,682 | 7,008 | |||||||||||||||
Impairments of purchased intangibles | 27,330 | — | — | 27,330 | — | |||||||||||||||
Restructuring costs(benefits) | 8,079 | 310 | (200 | ) | 8,389 | 23,298 | ||||||||||||||
Litigation settlement, net | 28,900 | — | — | 28,900 | — | |||||||||||||||
Gain on the sale of real estate | — | — | (7,551 | ) | — | (7,551 | ) | |||||||||||||
Realized gains on strategic equity investments | — | — | (862 | ) | — | (862 | ) | |||||||||||||
Excess inventory benefit | — | — | — | — | (1,053 | ) | ||||||||||||||
Acquired in-process research and development | — | — | 16,100 | 13,400 | 21,800 | |||||||||||||||
Payroll taxes on certain stock option exercises | — | — | 103 | 2 | 112 | |||||||||||||||
Income tax adjustments | 3,670 | 1,149 | 5,171 | 4,564 | 16,703 | |||||||||||||||
Total GAAP to pro forma adjustments | 77,838 | 14,244 | 19,296 | 115,998 | 79,669 | |||||||||||||||
Pro forma net loss | $ | (4,054 | ) | $ | (4,075 | ) | $ | (7,144 | ) | $ | (6,037 | ) | $ | (23,071 | ) | |||||
Per share reconciliation: | ||||||||||||||||||||
GAAP loss per share | $ | (0.27 | ) | $ | (0.06 | ) | $ | (0.09 | ) | $ | (0.39 | ) | $ | (0.34 | ) | |||||
GAAP to pro forma adjustments | 0.26 | 0.05 | 0.07 | 0.37 | 0.26 | |||||||||||||||
Pro forma loss per share | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.08 | ) | |||||
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 formastatements of operations:
| Three months ended | Nine months ended | |||||||||||||||||||
| Dec 31, 2004 | Sept 30, 2004 | Dec 31, 2003 | Dec 31, 2004 | Dec 31, 2003 | ||||||||||||||||
| GROSS PROFIT: | ||||||||||||||||||||
GAAP gross profit | $ | 30,922 | $ | 29,540 | $ | 20,718 | $ | 96,372 | $ | 47,084 | ||||||||||
Amortization of purchased intangibles | 6,051 | 7,577 | 3,176 | 20,330 | 6,319 | |||||||||||||||
Excess inventory charge (benefit) | — | — | — | — | (1,053 | ) | ||||||||||||||
Stock-based compensation related to acquired companies | 347 | 129 | 153 | 631 | 542 | |||||||||||||||
Payroll taxes on certain stock option exercises | — | — | 10 | — | 11 | |||||||||||||||
Pro forma gross profit | $ | 37,320 | $ | 37,246 | $ | 24,057 | $ | 117,333 | $ | 52,903 | ||||||||||
| OPERATING EXPENSES: | ||||||||||||||||||||
GAAP operating expenses | $ | 115,068 | $ | 52,389 | $ | 62,651 | $ | 230,137 | $ | 185,631 | ||||||||||
Amortization of purchased intangibles | 1,833 | 1,962 | 689 | 5,352 | 689 | |||||||||||||||
Impairment of purchased intangibles | 27,330 | — | — | 27,330 | — | |||||||||||||||
Acquired in-process research and development | — | — | 16,100 | 13,400 | 21,800 | |||||||||||||||
Stock-based compensation related to acquired companies | 1,628 | 3,117 | 2,517 | 7,100 | 19,672 | |||||||||||||||
Restructuring costs (benefits) | 8,079 | 310 | (200 | ) | 8,389 | 23,298 | ||||||||||||||
Litigation settlement, net | 28,900 | — | — | 28,900 | — | |||||||||||||||
Payroll taxes on certain stock option exercises | — | — | 93 | 2 | 101 | |||||||||||||||
Pro forma operating expenses | $ | 47,298 | $ | 47,000 | $ | 43,452 | $ | 139,664 | $ | 120,071 | ||||||||||
| INTEREST AND OTHER INCOME, NET | ||||||||||||||||||||
GAAP interest and other income, net | $ | 4,780 | $ | 4,530 | $ | 15,493 | $ | 14,591 | $ | 35,807 | ||||||||||
Gain on the sale of real estate | — | — | (7,551 | ) | — | (7,551 | ) | |||||||||||||
Realized gains on strategic equity investments | — | — | (862 | ) | — | (862 | ) | |||||||||||||
Pro forma interest and other income, net | $ | 4,780 | $ | 4,530 | $ | 7,080 | $ | 14,591 | $ | 27,394 | ||||||||||
| INCOME TAX BENEFIT: | ||||||||||||||||||||
GAAP income tax expense | $ | 2,526 | $ | — | $ | — | $ | 2,861 | $ | — | ||||||||||
Income tax adjustments | (3,670 | ) | (1,149 | ) | (5,171 | ) | (4,564 | ) | (16,703 | ) | ||||||||||
Pro forma income tax benefit | $ | (1,144 | ) | $ | (1,149 | ) | $ | (5,171 | ) | $ | (1,703 | ) | $ | (16,703 | ) | |||||