Applied Micro Circuits (AMCC) 8-K Results of Operations and Financial Condition

EXHIBIT 99.1

FOR ADDITIONAL INFORMATION:
Investor Relations Contact:	Media/Editorial Contact:
Applied Micro Circuits Corporation Scott Dawson	The Bernard Group Diane Bernard
Phone: (858) 535-4217	Phone: (512) 617-6319
E-Mail:sdawson@amcc.com	E-Mail: diane@bernardgroup.com

Tuesday, May 1, 2007

Company Press Release

APPLIED MICRO CIRCUITS CORPORATION ANNOUNCES

FOURTH QUARTER FISCAL 2007 FINANCIAL RESULTS

Selected Q4 Highlights

• Q4 net revenues of $70.2 million; fiscal 2007 net revenues of $292.9 million

• Fiscal 2007 total revenues and Focus* revenues grew 11.8% and 22.5% respectively

• Q4 GAAP net loss of $5.3 million or $(0.02) per share

• Q4 non-GAAP net income of $2.8 million or $0.01 per share

• Shipped the industry’s first fully integrated dual port SFP+ transceiver

• Introduced a new suite of SONET/SDH/10GE PHY products

• Announced the availability of the powerful new 24-port RAID 6 controllers

• Shipped the two millionth SATA RAID controller port

SUNNYVALE, Calif., —May 1, 2007—Applied Micro Circuits Corporation [NASDAQ: AMCC] today reported its financial results for the fourth quarter of fiscal 2007.

Net revenues for the fourth quarter of fiscal 2007 were $70.2 million compared to $76.6 million reported in the third quarter of fiscal 2007 and $67.0 million reported in the fourth quarter of fiscal 2006.

Net revenues for the year ended March 31, 2007 were $292.9 million compared to $261.8 million reported for the year ended March 31, 2006.

The net loss on a generally accepted accounting principles (GAAP) basis for the fourth quarter of fiscal 2007 was $5.3 million or $(0.02) per share. The fourth quarter GAAP net loss compares with a net loss of $4.2 million or $(0.01) per share for the third quarter of fiscal 2007 and a net loss of $138.3 million or $(0.47) per share for the fourth quarter of fiscal 2006. The GAAP net loss for the year ended March 31, 2007 was $24.2 million or $(0.09) per share, compared to the net loss of $148.4 million or $(0.49) per share for the year ended March 31, 2006.

The non-GAAP net income for the fourth quarter of fiscal 2007 was $2.8 million or $0.01 per share, compared to the non-GAAP net income of $9.0 million or $0.03 per share in the third quarter of fiscal 2007 and the non-GAAP net income of $6.0 million or $0.02 per share in the fourth quarter of fiscal 2006. The non-GAAP net income for the year ended March 31, 2007 was $30.3 million or $0.11 per share, compared with the non-GAAP net income of $17.9 million or $0.06 per share for the year ended March 31, 2006.

“Fourth quarter revenues were disappointing. This was largely due to a significant downturn in our distribution business primarily caused by a combination of inventory corrections and delays in production ramps from end customers. On a positive note, I am pleased that we were able to grow our fiscal 2007 revenues nearly 12% year over year and that within this, Focus* revenues grew 22.5%,” said Kambiz Hooshmand, president and chief executive officer. “We also had a number of well-received product introductions in the fourth quarter that bode well for our future.”

Bob Gargus, chief financial officer commented, “During fiscal 2007 we demonstrated the ability to manage our expenses, and to leverage our top line by putting a large percentage of every dollar of revenue growth to the bottom line. Despite our revenue decline, we remain optimistic that as the revenues expand we will once again show this leverage in our bottom line results. We did increase our non-GAAP net income by 70% in fiscal 2007 compared to fiscal 2006. Expanding profitability and generating growth remain our top two priorities in fiscal 2008.”

AMCC reports its financial results in accordance 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 and impairments of purchased intangibles and goodwill, acquired in-process research and development charges, stock-based compensation charges, realized gains on strategic equity investments, payroll tax on certain stock option exercises and expenses related to stock option investigation. 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. 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.

For More Information

AMCC management will be holding a conference call today, May 1, 2007, at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time to discuss additional details regarding the Company’s performance for the fourth quarter of fiscal 2007 and to provide guidance for the first quarter of fiscal 2008. You may access the conference call via any of the following:

Teleconference:	913-981-5581
Conference ID:	7141735
Web Broadcast:	http://investor.amcc.com/events.cfm
Replay:	719-457-0820

AMCC Overview

AMCC is a global leader in network and embedded PowerPC^® processing, optical transport and storage solutions. Our products enable the development of converged IP-based networks offering high-speed secure data, high-definition video and high-quality voice for carrier, metropolitan, access and enterprise applications. AMCC provides networking equipment vendors with industry-leading network and communications processing, Ethernet, SONET and switch fabric solutions. AMCC is also the leading vendor of high-port count SATA RAID controllers enabling low-cost, high-performance, high-capacity storage. 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.

* As we first noted in our January 2006 conference call, Non-focus revenues are derived from Non-focus products that we still support from a customer perspective, but for which we are no longer planning major enhancements. The Non-focus areas are: legacy switching products, ASIC’s, Fibre Channel HBA’s, SAN IC’s, Pointer Processors, and legacy framers. Focus revenues are all revenues not deemed to be Non-focus revenues.

AMCC is a registered trademark of Applied Micro Circuits Corporation. The PowerPC name and logo are registered trademarks of IBM Corporation and used under license there from. All other trademarks are the property of their respective owners.

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 product introductions, revenue expansion and priorities for fiscal 2008. 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, 2006, 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)

	March 31, 2007		March 31, 2006
			(audited)
ASSETS
Current assets:
Cash, cash equivalents and short-term investments	$	284,470	$	335,665
Accounts receivable, net		32,558		26,324
Inventories		31,286		24,941
Other current assets		14,438		12,618
Total current assets		362,752		399,548
Property and equipment, net		27,150		36,127
Goodwill and purchased intangibles		415,644		381,066
Other assets		10,966		8,685
Total assets	$	816,512	$	825,426
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	26,893	$	24,656
Other current liabilities		28,797		37,962
Total current liabilities		55,690		62,618
Stockholders’ equity		760,822		762,808
Total liabilities and stockholders’ equity	$	816,512	$	825,426

APPLIED MICRO CIRCUITS CORPORATION

GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

	Three months ended									Fiscal years ended
	Mar 31, 2007			Dec 31, 2006			Mar 31, 2006			Mar 31, 2007			Mar 31, 2006
													(audited)
Net revenues	$	70,167		$	76,642		$	66,993		$	292,852		$	261,844
Cost of revenues		35,851			37,799			30,449			140,714			122,392
Gross profit		34,316			38,843			36,544			152,138			139,452
Operating expenses:
Research and development		24,176			24,550			22,836			96,418			93,770
Selling, general and administrative		18,008			17,351			15,673			67,971			62,157
Amortization of purchased intangibles		1,350			1,350			1,107			4,995			4,588
Acquired in-process research and development		—			—			—			13,300			—
Impairment of goodwill		—			—			131,216			—			131,216
Restructuring charges		(1,442	)		67			7,704			1,291			12,602
Option investigation		939			2,705			—			5,344			—
Total operating expenses		43,031			46,023			178,536			189,319			304,333
Operating loss		(8,715	)		(7,180	)		(141,992	)		(37,181	)		(164,881	)
Interest and other income, net		3,460			3,121			3,992			13,375			15,873
Loss before income taxes		(5,255	)		(4,059	)		(138,000	)		(23,806	)		(149,008	)
Income tax expense (benefit)		75			113			328			402			(636	)
Net loss	$	(5,330	)	$	(4,172	)	$	(138,328	)	$	(24,208	)	$	(148,372	)
Basic and diluted loss per share:
Loss per share	$	(0.02	)	$	(0.01	)	$	(0.47	)	$	(0.09	)	$	(0.49	)
Shares used in calculating basic and diluted loss per share		282,472			281,799			294,442			284,303			300,841

APPLIED MICRO CIRCUITS CORPORATION

RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME (LOSS)

(unaudited)

(in thousands)

	Three months ended									Fiscal years ended
	Mar 31, 2007			Dec 31, 2006			Mar 31, 2006			Mar 31, 2007			Mar 31, 2006
GAAP net loss	$	(5,330	)	$	(4,172	)	$	(138,328	)	$	(24,208	)	$	(148,372	)
Adjustments:
Stock-based compensation charges		2,440			2,723			2,097			10,351			6,540
Amortization of purchased intangibles		6,200			7,877			4,732			24,751			22,232
Impairment of goodwill		—			—			131,216			—			131,216
Restructuring charges		(1,442	)		67			7,704			1,291			12,602
Realized gain on sale of strategic equity investment		—			—			—			—			(672	)
Acquired in-process research and development		—			—			—			13,300			—
Payroll taxes on certain stock option exercises		6			—			2			7			3
Expenses related to stock option investigation		939			2,705			—			5,344			—
Income tax adjustments		(12	)		(217	)		(1,377	)		(535	)		(5,676	)
Total GAAP to Non-GAAP adjustments		8,131			13,155			144,374			54,509			166,245
Non-GAAP net income	$	2,801		$	8,983		$	6,046		$	30,301		$	17,873
Diluted income per share	$	0.01		$	0.03		$	0.02		$	0.11		$	0.06
Shares used in calculating diluted income per share		283,871			283,060			296,561			285,411			302,531
Income (loss) per share:
GAAP income (loss) per share	$	(0.02	)	$	(0.01	)	$	(0.47	)	$	(0.09	)	$	(0.49	)
GAAP to non-GAAP adjustments		0.03			0.04			0.49			0.20			0.55
Non-GAAP income (loss) per share	$	0.01		$	0.03		$	0.02		$	0.11		$	0.06
Reconciliation of shares used in calculating the non-GAAP income per share:
Shares used in calculating the basic and diluted income (loss) per share		282,472			281,799			294,442			284,303			300,841
Adjustment for dilutive securities		1,399			1,261			2,119			1,108			1,690
Non-GAAP shares used in the EPS calculation		283,871			283,060			296,561			285,411			302,531

APPLIED MICRO CIRCUITS CORPORATION

SCHEDULE OF SELECTED GAAP TO NON-GAAP ADJUSTMENTS

(unaudited)

(in thousands)

The following schedule reconciles selected line items from the GAAP basis statements of operations to the non-GAAP statements of operations:

	Three months ended							Fiscal year ended
	Mar 31, 2007			Dec 31, 2006		Mar 31, 2006		Mar 31, 2007		Mar 31, 2006
GROSS PROFIT:
GAAP gross profit	$	34,316		$	38,843	$	36,544	$	152,138	$	139,452
Amortization of purchased intangibles		4,850			6,527		3,625		19,756		17,644
Stock-based compensation expense		153			148		21		592		89
Non-GAAP gross profit	$	39,319		$	45,518	$	40,190	$	172,486	$	157,185
OPERATING EXPENSES:
GAAP operating expenses	$	43,031		$	46,023	$	178,536	$	189,319	$	304,333
Amortization of purchased intangibles		1,350			1,350		1,107		4,995		4,588
Impairment of goodwill		—			—		131,216		—		131,216
Acquired in-process research and development		—			—		—		13,300		—
Stock-based compensation expense		2,287			2,575		2,076		9,759		6,451
Restructuring charges		(1,442	)		67		7,704		1,291		12,602
Payroll taxes on certain stock option exercises		6			—		2		7		3
Expenses related to stock option investigation		939			2,705		—		5,344		—
Non-GAAP operating expenses	$	39,891		$	39,326	$	36,431	$	154,623	$	149,473
INTEREST AND OTHER INCOME, NET
GAAP interest and other income, net	$	3,460		$	3,121	$	3,992	$	13,375	$	15,873
Realized gain on sale of strategic equity investments		—			—		—		—		(672	)
Non-GAAP interest and other income, net	$	3,460		$	3,121	$	3,992	$	13,375	$	15,201
INCOME TAX EXPENSE (BENEFIT):
GAAP income tax expense (benefit)	$	75		$	113	$	328	$	402	$	(636	)
Income tax adjustments		12			217		1,377		535		5,676
Non-GAAP income tax expense (benefit)	$	87		$	330	$	1,705	$	937	$	5,040
RESEARCH AND DEVELOPMENT
GAAP research and development	$	24,176		$	24,550	$	22,836	$	96,418	$	93,770
Stock-based compensation expense		786			882		666		3,765		2,690
Payroll taxes on certain stock option exercises		3			—		1		3		2
Non-GAAP research and development	$	23,387		$	23,668	$	22,169	$	92,650	$	91,078
SELLING, GENERAL AND ADMINISTRATIVE
GAAP selling, general and administrative	$	18,008		$	17,351	$	15,673	$	67,971	$	62,157
Stock-based compensation expense		1,501			1,693		1,410		5,994		3,761
Payroll taxes on certain stock option exercises		3			—		1		4		1
Non-GAAP selling, general and administrative	$	16,504		$	15,658	$	14,262	$	61,973	$	58,395

APPLIED MICRO CIRCUITS CORPORATION

CONSOLIDATED STATEMENT OF CASHFLOWS

($ in thousands)

	Fiscal years ended March 31,
	2007			2006
				(audited)
Operating activities:
Net loss	$	(24,208	)	$	(148,372	)
Adjustments to reconcile net loss to net cash used for operating activities
Depreciation and amortization		8,410			12,902
Amortization of purchased intangibles		24,751			22,232
Acquired in-process research and development		13,300			—
Goodwill and purchased intangible asset impairment charges		—			131,216
Stock-based compensation expense :
Stock options		10,211			6,540
Restricted stock units		142			—
Non-cash restructuring charges		2,798			4,395
Net gain on strategic equity investments		—			(672	)
Net gain on disposals of property		120			(4	)
Changes in operating assets and liabilities:
Accounts receivables		(4,790	)		2,277
Inventories		(5,307	)		(6,927	)
Other assets		(1,336	)		34,388
Accounts payable		1,214			640
Accrued payroll and other accrued liabilities		(11,566	)		(62,782	)
Deferred revenue		(1,230	)		(403	)
Net cash provided by (used for) operating activities		12,509			(4,570	)
Investing activities:
Proceeds from sales and maturities of short-term investments		468,570			1,082,451
Purchases of short-term investments		(403,080	)		(1,025,274	)
Purchase of property, equipment and other assets		(6,732	)		(7,933	)
Proceeds from the sale of strategic equity investments		—			672
Purchase of strategic investment		(1,500	)		(3,500	)
Proceeds from sale of real estate		4,788			—
Proceeds from sale of property, equipment and other assets		—			101
Net cash paid for acquisitions		(71,971	)		—
Net cash provided by (used for) investing activities		(9,925	)		46,517
Financing activities:
Proceeds from issuance of common stock		2,850			6,745
Repurchase of Company stock		(20,137	)		(9,947	)
Funding of structured stock repurchase agreements		(9,398	)		(105,000	)
Funds received from structured stock repurchase agreements including gains		26,973			40,144
Payments on long-term debt		(289	)		(34	)
Other		(113	)		(126	)
Net cash used for financing activities		(114	)		(68,218	)
Net increase (decrease) in cash and cash equivalents		2,470			(26,271	)
Cash and cash equivalents at beginning of year		49,125			75,396
Cash and cash equivalents at end of year	$	51,595		$	49,125
Supplementary cash flow disclosure:
Cash paid for:
Interest	$	4		$	86
Income taxes	$	369		$	884