Applied Micro Circuits Corporation Reports Fourth Quarter Fiscal 2010 Financial Results


SUNNYVALE, Calif., April 29, 2010 (GLOBE NEWSWIRE) -- Applied Micro Circuits Corporation (Nasdaq:AMCC) today reported its financial results for the fourth quarter of fiscal 2010 ended March 31, 2010.

  • Recorded highest level of bookings since June 2007. A sequential increase of 38% over the prior quarter.
     
  • Q4 2010 net revenues from continuing operations were $57.6 million, up 7% sequentially and up 41% year over year.
     
  • Q4 2010 GAAP net loss from continuing operations was $(0.1) million or $(0.00) per share.
     
  • Q4 2010 non-GAAP EPS from continuing operations was $0.09 per share on net income of $6.1 million, compared to $0.04 per share on net income of $2.6 million for the third quarter of fiscal 2010.
     
  • Total cash was approximately $207 million as of March 31, 2010.
     
  • During the quarter, AppliedMicro announced the introduction of its PQX line of products that represent the industry's highest density, lowest power 10G/40G Optical Transport Network (OTN) framer/PHY System-On-a-Chip (SoC) for Carrier Ethernet router and WDM transport systems.

Net revenues from continuing operations for the fourth quarter of fiscal 2010 were $57.6 million compared to $53.7 million in the third quarter of fiscal 2010, representing a sequential increase of 7% and an increase of 41% over the $41.0 million in net revenues reported in the fourth quarter of fiscal 2009. Revenues for the full year were $205.6 million compared to $214.2 million for the comparable period last year, a 4% decrease. The net loss on a generally accepted accounting principles (GAAP) basis for the fourth quarter of fiscal 2010 was $(0.1) million or $(0.00) per share. The fourth quarter GAAP net loss compares with a net loss of $(3.6) million or $(0.05) per share for the third quarter of fiscal 2010 and a net loss of $(27.4) million or $(0.42) per share for the fourth quarter of fiscal 2009. For the full year, GAAP net loss was $(7.5) million or $(0.11) per share compared to $(309.3) million or $(4.74) per share for the full year ended March 31, 2009.

Non-GAAP income from continuing operations for the fourth quarter of fiscal 2010 was $6.1 million or $0.09 per share, compared to non-GAAP income from continuing operations of $2.6 million or $0.04 per share in the third quarter of fiscal 2010 and non-GAAP net loss from continuing operations of $(8.4) million or $(0.13) per share for the fourth quarter of fiscal 2009. For the full year, non-GAAP net income from continuing operations was $10.9 million or $0.16 per share compared to $11.6 million or $0.18 per share for the full year ended March 31, 2009.

"This quarter saw our highest booking levels in almost three years while we continued to make significant inroads in our targeted markets. Our PQX product released in March is already receiving great traction in the market and is following in the path of our successful Pemaquid and Yahara product releases. This is the fourth straight quarter we have met or exceeded the street expectations," said Paramesh Gopi, President and Chief Executive Officer.

Bob Gargus, Chief Financial Officer, commented, "We had a very strong quarter. Revenues, gross margins, bookings, asset management, and expense control all exceeded expectations. We continue to demonstrate growth and the ability to leverage this to the bottom line in the form of improved profitability."

AppliedMicro 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, other than temporary impairment on investments, impairment of strategic investment, payroll tax on certain stock option exercises, non-cash tax adjustments and expenses related to stock option investigation and other litigation. 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. 

AppliedMicro management will be holding a conference call today, April 29, 2010, 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 2010 and to provide guidance for the first quarter of fiscal 2011. You may access the conference call via any of the following:

   
Teleconference:      800-591-6923
   
Conference ID:      17606639
   
Web Broadcast:      http://www.appliedmicro.com
   
Replay:      888-286-8010 (access code: 55983327, available through May 6, 2010)

AppliedMicro Overview

AppliedMicro is a global leader in energy conscious high performance computing and connectivity solutions for telco, enterprise, data center, consumer and SMB applications. AppliedMicro's corporate headquarters are located in Sunnyvale, California. Sales and engineering offices are located throughout the world. For further information regarding AppliedMicro, visit the company's Web site at www.globenewswire.com/newsroom/ctr%3Fd=181671%26amp;l=6%26amp;u=http%253A%252F%252Fwww.appliedmicro.com" target="_top" rel="nofollow">http://www.appliedmicro.com.

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 the Company's focus, product cycles, design-win pipeline, strategic re-focus and future revenues. 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, 2009, 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.

 
APPLIED MICRO CIRCUITS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
       
       
ASSETS March 31,
2010
March 31,
2009
       
Current assets:      
Cash, cash equivalents and short-term investments $206,643 $184,009
Accounts receivable, net    22,892  17,537
Inventories    15,387  26,598
Other current assets    18,098  11,334
Assets of discontinued operations  --  8,558
Total current assets    263,020  248,036
Property and equipment, net    25,879  25,749
Purchased intangibles, net    16,850  32,965
Other assets    10,295  17,860
Total assets   $316,044 $324,610
       
LIABILITIES AND STOCKHOLDERS' EQUITY    
       
Current liabilities:      
Accounts payable   $20,074 $16,715
Other current liabilities    15,096  23,925
Total current liabilities    35,170  40,640
Stockholders' equity    280,874  283,970
Total liabilities and stockholders' equity $316,044 $324,610
 
 
APPLIED MICRO CIRCUITS CORPORATION
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
           
  Three Months Ended Year Ended
  March 31,
2010
December 31,
2009
March 31,
2009
March 31,
2010
March 31,
2009
           
Net revenues $57,610 $53,704 $41,001 $205,598 $214,216
Cost of revenues  22,787  24,173  21,842  92,931  101,070
Gross profit  34,823  29,531  19,159  112,667  113,146
Operating expenses:          
Research and development  24,255  23,599  24,202  88,096  84,687
Selling, general and administrative  11,937  11,454  11,151  45,901  50,097
Amortization of purchased intangibles  1,005  1,005  1,005  4,020  4,020
Goodwill impairment charges  --  --  --  --  222,972
Restructuring charges (reversals), net  1,025  --  7,717  746  8,623
Litigation settlement  --  --  --  --  130
Option investigation related expenses, net  --  --  (4)  --  80
Total operating expenses  38,222  36,058  44,071  138,763  370,609
Operating loss  (3,399)  (6,527)  (24,912)  (26,096)  (257,463)
Interest and other (expense) income and other-than-temporary
impairment, net
 2,106  1,619  1,693  1,889  (7,581)
Loss from continuing operations before income taxes  (1,293)  (4,908)  (23,219)  (24,207)  (265,044)
Income tax benefit  (1,226)  (2,248)  (455)  (10,610)  (3,946)
Loss from continuing operations  (67)  (2,660)  (22,764)  (13,597)  (261,098)
Income (loss) from discontinued operations, net of income taxes (1)  2  (934)  (4,622)  6,112  (48,235)
Net loss $(65) $(3,594) $(27,386) $(7,485) $(309,333)
           
Basic income (loss) per share:          
Loss per share from continuing operations $(0.00) $(0.04) $(0.35) $(0.21) $(4.00)
Income (loss) per share from discontinued operations 0.00 (0.01) (0.07) 0.10 (0.74)
Net loss per share $(0.00) $(0.05) $(0.42) $(0.11) $(4.74)
Shares used in calculating basic income (loss) per share  65,345  66,139  65,703  66,006  65,271
           
Diluted income (loss) per share:          
Loss per share from continuing operations $(0.00) $(0.04) $(0.35) $(0.21) $(4.00)
Income (loss) per share from discontinued operations 0.00 (0.01) (0.07) 0.10 (0.74)
Net loss per share $(0.00) $(0.05) $(0.42) $(0.11) $(4.74)
Shares used in calculating diluted income (loss) per share  65,345  66,139  65,703  66,006  65,271
           
______
(1) The following table provides information on the components of the loss from discontinued operations for the periods presented:
           
Components of discontinued operations          
     
  Three Months Ended Year Ended
  March 31,
2010
December 31,
2009
March 31,
2009
March 31,
2010
March 31,
2009
           
Net revenues  $1,462  $1,009 $4,508  $3,690  $39,849
Cost of revenues  1,481  1,003  4,071  3,268  24,437
Gross profit (loss)  (19)  6  437  422  15,412
Operating expenses:          
Research and development  --  10  2,758  687  11,470
Selling, general and administrative  --  24  2,142  807  9,561
Amortization of purchased intangibles  --  --  315  --  1,260
Goodwill impairment charges  --  --  --  --  41,158
Restructuring charges, net  --  --  --  --  126
Total operating expenses  --  34  5,215  1,494  63,575
Operating loss  (19)  (28)  (4,778)  (1,072)  (48,163)
Gain on sale of Storage Business  --  --  --  11,366  --
Income (loss) from discontinued operations before income taxes  (19)  (28)  (4,778)  10,294  (48,163)
Income tax expense (benefit)  (21)  906  (156)  4,182  72
Net income (loss) from discontinued operations, net of income taxes $2 $(934) $(4,622)  $6,112  $(48,235)
 
 
APPLIED MICRO CIRCUITS CORPORATION
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME (LOSS)
(in thousands, except per share data)
(unaudited)
           
  Three Months Ended Year Ended
  March 31,
2010
December 31,
2009
March 31,
2009
March 31,
2010
March 31,
2009
           
GAAP net loss from continuing operations  $(67) $(2,660)  $(22,764)  $(13,597)  $(261,098)
Adjustments:          
Stock-based compensation charges  3,563  3,737  2,077  13,682  9,186
Amortization of purchased intangibles  3,630  3,630  4,588  16,117  18,900
Goodwill impairment charges  --  --  --  --  222,972
Restructuring charges (reversals), net  1,025  --  7,717  746  8,623
Impairment of strategic investment  --  --  --  2,000  --
Other-than-temporary investment impairment   (642)  261  203  2,927  17,144
Litigation settlement  --  --  --  --  130
Option investigation related expenses, net  --  --  (4)  --  80
Income tax adjustments  (1,414)  (2,330)  (196)  (10,948)  (4,306)
Total GAAP to Non-GAAP adjustments  6,162  5,298  14,385  24,524  272,729
           
Non-GAAP income (loss) from continuing operations  $6,095  $2,638  $(8,379)  $10,927  $11,631
           
Diluted income (loss) per share from continuing operations $0.09 $0.04 $(0.13) $0.16 $0.18
           
Shares used in calculating diluted income (loss) per share   67,573  68,095  65,703  67,703  65,479
           
Income (loss) per share from continuing operations:          
GAAP loss per share  $(0.00) $(0.04) $(0.35) $(0.21) $(4.00)
GAAP to non-GAAP adjustments  0.09 0.08 0.22 0.37 4.18
Non-GAAP income (loss) per share from continuing
operations
$0.09 $0.04 $(0.13) $0.16 $0.18
           
Reconciliation of shares used in calculating non-GAAP
income per share:
         
Shares used in calculating the basic income (loss) per share   65,345  66,139  65,703  66,006  65,271
Adjustment for dilutive securities   2,228  1,956  --  1,697  208
Non-GAAP shares used in the EPS calculation   67,573  68,095  65,703  67,703  65,479
           
Discontinued operations          
           
  Three Months Ended Year Ended
  March 31,
2010
December 31,
2009
March 31,
2009
March 31,
2010
March 31,
2009
           
           
GAAP income (loss) from discontinued operations  $2  $(934)  $(4,622)  $6,112  $(48,235)
Adjustments:          
Stock-based compensation charges  --  --  197  --  1,198
Amortization of purchased intangibles  --  --  1,040  --  4,160
Goodwill impairment charges  --  --  --  --  41,158
Restructuring charges, net  --  --  --  --  126
Gain on sale of Storage Business  --  --  --  (11,366)  --
Income tax adjustments  (21)  907  (50)  4,214  118
Total GAAP to non-GAAP adjustments  (21)  907  1,187  (7,152)  46,760
           
Non-GAAP income (loss) from discontinued operations   $(19)  $(27)  $(3,435)  $(1,040)  $(1,475)
           
Income (loss) per share from discontinued operations:          
GAAP income (loss) per share  $0.00 $(0.01) $(0.07) $0.10 $(0.74)
GAAP to non-GAAP adjustments  (0.00) 0.01 0.02 (0.12) 0.72
Non-GAAP income (loss) per share from discontinued operations $(0.00) $(0.00) $(0.05) $(0.02) $(0.02)
 
 
APPLIED MICRO CIRCUITS CORPORATION
SCHEDULE OF SELECTED GAAP TO NON-GAAP ADJUSTMENTS
(in thousands)
(unaudited)
           
The following schedule reconciles selected line items from the GAAP basis statements of operations to the non-GAAP statements of operations: 
           
  Three Months Ended Year Ended
  March 31,
2010
December 31,
2009
March 31,
2009
March 31,
2010
March 31,
2009
GROSS PROFIT:          
GAAP gross profit  $34,823  $29,531  $19,159  $112,667  $113,146
Gross profit (loss) from discontinued operations  (19)  6  437  422  15,412
Amortization of purchased intangibles  2,625  2,625  4,308  12,097  17,780
Stock-based compensation expense  169  164  61  587  548
Non-GAAP gross profit  $37,598  $32,326 $23,965  $125,773  $146,886
           
OPERATING EXPENSES:          
GAAP operating expenses  $38,222  $36,058  $44,071  $138,763  $370,609
Operating expenses from discontinued operations  --  34  5,215  1,494  63,575
Stock-based compensation expense  (3,394)  (3,573)  (2,213)  (13,095)  (9,836)
Amortization of purchased intangibles  (1,005)  (1,005)  (1,320)  (4,020)  (5,280)
Goodwill impairment charges  --  --  --  --  (264,130)
Restructuring charges (reversals), net  (1,025)  --  (7,717)  (746)  (8,749)
Litigation settlement  --  --  --  --  (130)
Option investigation related expenses, net  --  --  4  --  (80)
Non-GAAP operating expenses  $32,798  $31,514  $38,040  $122,396  $145,979
           
INTEREST AND OTHER INCOME, NET          
GAAP interest and other (expense) income, net  $2,106  $1,619  $1,693  $1,889  $(7,581)
Impairment of strategic investment  --  --  --  2,000  --
Other-than-temporary investment impairment   (642)  261  203  2,927  17,144
Non-GAAP interest and other income, net  $1,464  $1,880  $1,896  $6,816  $9,563
           
INCOME TAX EXPENSE          
(BENEFIT):          
GAAP income tax expense (benefit)  $(1,226)  $(2,248)  $(455)  $(10,610)  $(3,946)
Income tax expense (benefit) from discontinued operations  (21)  906  (156)  4,182  72
Income tax adjustments  1,435  1,423  246  6,734  4,188
Non-GAAP income tax expense (benefit)  $188 $81  $(365)  $306  $314
           
RESEARCH AND DEVELOPMENT           
GAAP research and development   $24,255  $23,599  $24,202  $88,096  $84,687
Research and development from discontinued operations  --  10  2,758  687  11,470
Stock-based compensation expense  (1,710)  (1,692)  (853)  (6,268)  (4,532)
Non-GAAP research and development   $22,545  $21,917  $26,107  $82,515  $91,625
           
SELLING, GENERAL AND ADMINISTRATIVE           
GAAP selling, general and administrative   $11,937  $11,454  $11,151  $45,901  $50,097
Selling, general and administrative from discontinued operations  --  24  2,142  807  9,561
Stock-based compensation expense  (1,684)  (1,881)  (1,360)  (6,827)  (5,304)
Non-GAAP selling, general and administrative   $10,253  $9,597  $11,933  $39,881  $54,354
 
 
APPLIED MICRO CIRCUITS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
     
  Year Ended March 31,
  2010 2009
Operating activities:    
Net loss  $ (7,485)  $ (309,333)
Adjustments to reconcile net loss to net cash provided by
(used for) operating activities:
Depreciation  6,778   6,862
Amortization of purchased intangibles   16,117  23,060
Stock-based compensation expense:    
Stock options   4,125  5,139
Restricted stock units   9,557  5,245
Other-than-temporary impairment of marketable securities   4,287  17,144
Impairment of strategic investment  2,000  — 
Goodwill impairment charges  —   264,130
Non-cash restructuring charges  359  1,989
Litigation settlement  —   130
Tax benefit from other comprehensive income  (6,204)  — 
Net loss on disposals of property   145  48
Net gain on sale of storage business unit   (11,366)  — 
Changes in operating assets and liabilities:    
Accounts receivable   (5,355)  11,263
Inventories   10,754  3,414
Other assets   (237)  (4,939)
Accounts payable   2,245  (8,803)
Accrued payroll and other accrued liabilities   (7,077)  467
Deferred tax liability   —   (3,957)
Deferred revenue   (1,776)  668
Net cash provided by operating activities   16,867  12,527
Investing activities:    
Proceeds from sales and maturities of short-term investments  185,724  199,577
Purchases of short-term investments   (173,265)  (150,358)
Purchase of property, equipment and other assets   (7,532)  (7,259)
Purchases of strategic investment  (1,000)  — 
Proceeds from sale of storage business unit   21,527  — 
Net cash provided by investing activities   25,454  41,960
Financing activities:    
Proceeds from issuance of common stock   2,955  2,448
Repurchase on Company stock  (8,076)  — 
Funding of structured stock repurchase agreements   (41,797)  — 
Funds received from structured stock repurchase agreements  27,751  — 
Other   35  (287)
Net cash provided by (used for) financing activities   (19,132)  2,161
Net increase in cash and cash equivalents   23,189  56,648
Cash and cash equivalents at the beginning of the period  99,337  42,689
Cash and cash equivalents at the end of the period  122,526  99,337


            

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