Exhibit 99.1
FOR ADDITIONAL INFORMATION:
| Investor Relations Contact: | Media/Editorial Contact: | |
Applied Micro Circuits Corporation | The Bernard Group | |
Scott Dawson | Diane Bernard | |
Phone: (858) 535-4217 | Phone: (512) 617-6319 | |
E-Mail:sdawson@amcc.com | E-Mail: diane@bernardgroup.com | |
Wednesday, July 25, 2007
Company Press Release
APPLIED MICRO CIRCUITS CORPORATION ANNOUNCES
FIRST QUARTER FISCAL 2008 FINANCIAL RESULTS
Selected Q1 Highlights
| • | Q1 net revenues of $50.1 million |
| • | Q1 GAAP net loss of $16.4 million or $(0.06) per share |
| • | Q1 non-GAAP net loss of $7.3 million or $(0.03) per share |
| • | Storage revenues grew 5.0% sequentially |
| • | Announced Titan, the Company’s next generation dual-core processor for embedded applications |
| • | Introduced new members of the Rubicon family: 10G ENET/OTN/SONET/SDH Mapper and FEC devices |
| • | Announced that Donald Colvin, CFO of ON Semiconductor, was elected to the board of directors |
SUNNYVALE, Calif., —July 25, 2007—Applied Micro Circuits Corporation [NASDAQ: AMCC] today reported its financial results for the first quarter of fiscal 2008.
Net revenues for the first quarter of fiscal 2008 were $50.1 million compared to $70.2 million reported in the fourth quarter of fiscal 2007 and $69.7 million reported in the first quarter of fiscal 2007.
The net loss on a generally accepted accounting principles (GAAP) basis for the first quarter of fiscal 2008 was $16.4 million or $(0.06) per share. The first quarter GAAP net loss compares with a net loss of $5.3 million or $(0.02) per share for the fourth quarter of fiscal 2007 and a net loss of $0.8 million or $(0.00) per share for the first quarter of fiscal 2007.
The non-GAAP net loss for the first quarter of fiscal 2008 was $7.3 million or $(0.03) per share, compared to the non-GAAP net income of $2.8 million or $0.01 per share in the fourth quarter of fiscal 2007 and the non-GAAP net income of $8.1 million or $0.03 per share in the first quarter of fiscal 2007.
“The first quarter revenues represent what we believe is the bottom of this correction cycle. With a book-to-bill ratio of 1.15x and firm order patterns continuing into the current quarter, I am confident that we will return to solid revenue growth for the September quarter and optimistic that this will continue for the remainder of this fiscal year,” said Kambiz Hooshmand, president and chief executive officer.
Bob Gargus, chief financial officer commented, “We have already taken the first steps in our initiative to reduce operating expenses. I expect that reductions implemented earlier this month will yield a little less than half the needed reductions and represents a good first step. I anticipate that revenue growth in the second half combined with planned expense reductions will return us to profitability later in the year.”
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, 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, July 25, 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 first quarter of fiscal 2008 and to provide guidance for the second quarter of fiscal 2008. You may access the conference call via any of the following:
| Teleconference: | 913-312-1302 | |
| Conference ID: | 3482534 | |
| Web Broadcast: | http://investor.amcc.com/events.cfm | |
| Replay: | 719-457-0820 (available through August 1, 2007) |
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 athttp://www.amcc.com.
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 therefrom. 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 future revenues, orders, operating expenses 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, 2007, 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)
June 30, 2007 | March 31, 2007 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash, cash equivalents and short-term investments | $ | 255,873 | $ | 284,470 | ||
Accounts receivable, net | 21,710 | 32,558 | ||||
Inventories | 34,834 | 31,286 | ||||
Other current assets | 12,950 | 14,438 | ||||
Total current assets | 325,367 | 362,752 | ||||
Property and equipment, net | 26,613 | 27,150 | ||||
Goodwill and purchased intangibles | 409,376 | 415,644 | ||||
Other assets | 12,113 | 10,966 | ||||
Total assets | $ | 773,469 | $ | 816,512 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 18,110 | $ | 26,893 | ||
Other current liabilities | 27,048 | 28,797 | ||||
Total current liabilities | 45,158 | 55,690 | ||||
Stockholders’ equity | 728,311 | 760,822 | ||||
Total liabilities and stockholders’ equity | $ | 773,469 | $ | 816,512 | ||
APPLIED MICRO CIRCUITS CORPORATION
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
| Three months ended | ||||||||||||
June 30, 2007 | March 31, 2007 | June 30, 2006 | ||||||||||
Net revenues | $ | 50,135 | $ | 70,167 | $ | 69,679 | ||||||
Cost of revenues | 26,498 | 35,851 | 31,528 | |||||||||
Gross profit | 23,637 | 34,316 | 38,151 | |||||||||
Operating expenses: | ||||||||||||
Research and development | 25,482 | 24,176 | 22,839 | |||||||||
Selling, general and administrative | 16,063 | 18,008 | 16,450 | |||||||||
Amortization of purchased intangibles | 1,345 | 1,350 | 1,107 | |||||||||
Restructuring charges | (32 | ) | (1,442 | ) | 1,247 | |||||||
Option investigation | 292 | 939 | 550 | |||||||||
Total operating expenses | 43,150 | 43,031 | 42,193 | |||||||||
Operating loss | (19,513 | ) | (8,715 | ) | (4,042 | ) | ||||||
Interest and other income, net | 3,076 | 3,460 | 3,365 | |||||||||
Loss before income taxes | (16,437 | ) | (5,255 | ) | (677 | ) | ||||||
Income tax expense (benefit) | (17 | ) | 75 | 140 | ||||||||
Net loss | $ | (16,420 | ) | $ | (5,330 | ) | $ | (817 | ) | |||
Basic and diluted loss per share: | ||||||||||||
Loss per share | $ | (0.06 | ) | $ | (0.02 | ) | $ | (0.00 | ) | |||
Shares used in calculating basic and diluted loss per share | 281,656 | 282,472 | 291,178 | |||||||||
APPLIED MICRO CIRCUITS CORPORATION
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME (LOSS)
(unaudited)
(in thousands)
| Three months ended | ||||||||||||
June 30, 2007 | March 31, 2007 | June 30, 2006 | ||||||||||
GAAP net loss | $ | (16,420 | ) | $ | (5,330 | ) | $ | (817 | ) | |||
Adjustments: | ||||||||||||
Stock-based compensation charges | 2,620 | 2,440 | 2,511 | |||||||||
Amortization of purchased intangibles | 6,036 | 6,200 | 4,733 | |||||||||
Restructuring charges | (32 | ) | (1,442 | ) | 1,247 | |||||||
Payroll taxes on certain stock option exercises | 2 | 6 | 1 | |||||||||
Expenses related to stock option investigation | 292 | 939 | 550 | |||||||||
Income tax adjustments | 209 | (12 | ) | (94 | ) | |||||||
Total GAAP to Non-GAAP adjustments | 9,127 | 8,131 | 8,948 | |||||||||
Non-GAAP net income (loss) | $ | (7,293 | ) | $ | 2,801 | $ | 8,131 | |||||
Diluted income (loss) per share | $ | (0.03 | ) | $ | 0.01 | $ | 0.03 | |||||
Shares used in calculating diluted income (loss) per share | 281,656 | 283,871 | 292,126 | |||||||||
Income (loss) per share: | ||||||||||||
GAAP income (loss) per share | $ | (0.06 | ) | $ | (0.02 | ) | $ | (0.00 | ) | |||
GAAP to non-GAAP adjustments | 0.03 | 0.03 | 0.03 | |||||||||
Non-GAAP income (loss) per share | $ | (0.03 | ) | $ | 0.01 | $ | 0.03 | |||||
Reconciliation of shares used in calculating the non-GAAP income per share: | ||||||||||||
Shares used in calculating the basic and diluted income (loss) per share | 281,656 | 282,472 | 291,178 | |||||||||
Adjustment for dilutive securities | — | 1,399 | 948 | |||||||||
Non-GAAP shares used in the EPS calculation | 281,656 | 283,871 | 292,126 | |||||||||
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 | ||||||||||||
| June 30, 2007 | March 31, 2007 | June 30, 2006 | ||||||||||
GROSS PROFIT: | ||||||||||||
GAAP gross profit | $ | 23,637 | $ | 34,316 | $ | 38,151 | ||||||
Amortization of purchased intangibles | 4,691 | 4,850 | 3,626 | |||||||||
Stock-based compensation expense | 72 | 153 | 134 | |||||||||
Non-GAAP gross profit | $ | 28,400 | $ | 39,319 | $ | 41,911 | ||||||
OPERATING EXPENSES: | ||||||||||||
GAAP operating expenses | $ | 43,150 | $ | 43,031 | $ | 42,193 | ||||||
Amortization of purchased intangibles | (1,345 | ) | (1,350 | ) | (1,107 | ) | ||||||
Stock-based compensation expense | (2,548 | ) | (2,287 | ) | (2,377 | ) | ||||||
Restructuring charges | 32 | 1,442 | (1,247 | ) | ||||||||
Payroll taxes on certain stock option exercises | (2 | ) | (6 | ) | (1 | ) | ||||||
Expenses related to stock option investigation | (292 | ) | (939 | ) | (550 | ) | ||||||
Non-GAAP operating expenses | $ | 38,995 | $ | 39,891 | $ | 36,911 | ||||||
INTEREST AND OTHER INCOME, NET | ||||||||||||
GAAP interest and other income, net | $ | 3,076 | $ | 3,460 | $ | 3,365 | ||||||
Realized gain on sale of strategic equity investments | — | — | — | |||||||||
Non-GAAP interest and other income, net | $ | 3,076 | $ | 3,460 | $ | 3,365 | ||||||
INCOME TAX EXPENSE (BENEFIT): | ||||||||||||
GAAP income tax expense (benefit) | $ | (17 | ) | $ | 75 | $ | 140 | |||||
Income tax adjustments | (209 | ) | 12 | 94 | ||||||||
Non-GAAP income tax expense (benefit) | $ | (226 | ) | $ | 87 | $ | 234 | |||||
RESEARCH AND DEVELOPMENT | ||||||||||||
GAAP research and development | $ | 25,482 | $ | 24,176 | $ | 22,839 | ||||||
Stock-based compensation expense | (1,055 | ) | (786 | ) | (1,069 | ) | ||||||
Payroll taxes on certain stock option exercises | (2 | ) | (3 | ) | — | |||||||
Non-GAAP research and development | $ | 24,425 | $ | 23,387 | $ | 21,770 | ||||||
SELLING, GENERAL AND ADMINISTRATIVE | ||||||||||||
GAAP selling, general and administrative | $ | 16,063 | $ | 18,008 | $ | 16,450 | ||||||
Stock-based compensation expense | (1,493 | ) | (1,501 | ) | (1,308 | ) | ||||||
Payroll taxes on certain stock option exercises | — | (3 | ) | (1 | ) | |||||||
Non-GAAP selling, general and administrative | $ | 14,570 | $ | 16,504 | $ | 15,141 | ||||||
APPLIED MICRO CIRCUITS CORPORATION
CONSOLIDATED STATEMENT OF CASHFLOWS
($ in thousands)
(unaudited)
| Three Months ended June 30, | ||||||||
| 2007 | 2006 | |||||||
Operating activities: | ||||||||
Net loss | $ | (16,420 | ) | $ | (817 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used for) operating activities | ||||||||
Depreciation and amortization | 1,633 | 2,473 | ||||||
Amortization of purchased intangibles | 6,036 | 4,733 | ||||||
Stock-based compensation expense : | ||||||||
Stock options | 2,339 | 2,499 | ||||||
Restricted stock units | 281 | 12 | ||||||
Non-cash restructuring charges (benefit) | (32 | ) | 558 | |||||
Net gain on disposal of property | (6 | ) | — | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 10,848 | (4,779 | ) | |||||
Inventories | (3,548 | ) | (1,392 | ) | ||||
Other assets | 341 | (1,379 | ) | |||||
Accounts payable | (8,783 | ) | 4,073 | |||||
Accrued payroll and other accrued liabilities | (1,770 | ) | 276 | |||||
Deferred revenue | 53 | 63 | ||||||
Net cash provided by (used for) operating activities | (9,028 | ) | 6,320 | |||||
Investing activities: | ||||||||
Proceeds from sales and maturities of short-term investments | 118,105 | 137,354 | ||||||
Purchases of short-term investments | (112,237 | ) | (99,747 | ) | ||||
Purchase of property, equipment and other assets | (1,097 | ) | (1,736 | ) | ||||
Proceeds from sale of property, equipment and other assets | 7 | — | ||||||
Reduction of purchase price from prior acquisition | 232 | — | ||||||
Net cash provided by investing activities | 5,010 | 35,871 | ||||||
Financing activities: | ||||||||
Proceeds from issuance of common stock | 599 | 239 | ||||||
Open market repurchases of Company stock | (9,138 | ) | (20,137 | ) | ||||
Funding of structured stock repurchase agreements | (10,000 | ) | — | |||||
Funds received from structured stock repurchase agreements including gains | — | 17,379 | ||||||
Other | (172 | ) | (89 | ) | ||||
Net cash used for financing activities | (18,711 | ) | (2,608 | ) | ||||
Net increase (decrease) in cash and cash equivalents | (22,729 | ) | 39,583 | |||||
Cash and cash equivalents at beginning of year | 51,595 | 49,125 | ||||||
Cash and cash equivalents at end of year | $ | 28,866 | $ | 88,708 | ||||
Supplementary cash flow disclosure: | ||||||||
Cash paid for: | ||||||||
Interest | $ | 3 | $ | — | ||||
Income taxes | $ | 171 | $ | 210 | ||||