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Applied Micro Circuits Corporation Reports Third Quarter Fiscal 2013 Financial Results



Applied Micro Circuits Corporation Reports Third Quarter Fiscal 2013 Financial
Results

SUNNYVALE, Calif., Jan. 30, 2013 (GLOBE NEWSWIRE) -- Applied Micro Circuits
Corporation (Nasdaq:AMCC) ("AppliedMicro" or the "Company") today reported its
financial results for the third quarter of fiscal 2013, ended December 31,
2012.

  * Q3 FY2013 net revenues were $51.7 million, up approximately 12%
    sequentially and down approximately 8% year over year.
     
  * Q3 FY2013 non-GAAP EPS was $(0.10) per share on net loss of $6.9 million,
    compared to $(0.16) per share on a net loss of $10.5 million, for the
    second quarter of fiscal 2013.
     
  * Q3 FY2013 GAAP net loss was $71.6 million or $(1.08) per share compared to
    net loss of $21.6 million or $(0.33) per share for the second quarter of
    fiscal 2013.
     
  * Total cash, cash equivalents and short-term investments was approximately
    $84 million as of December 31, 2012 compared to $90 million as of
    September 30, 2012.
     
  * During the quarter, the Company taped out its ARM 64-bit X-Gene processor
    chip in 40nm. In mid-January 2013, the Company also taped-out a 28nm test
    chip version of the X-Gene chip which incorporated several other features
    in addition to the geometry shrink.
     
  * The performance simulations of AppliedMicro's ARM 64-Bit X-Gene processor
    have significantly exceeded the Company's expectations and resulted in an
    increase in the range of its estimated milestone-based payments under the
    Veloce merger agreement. The purchase price is now estimated to be in the
    range of $117 to $178.5 million, depending upon the achievement of
    multiple product development cycles and technical performance results.

Net revenues for the third quarter of fiscal 2013 were $51.7 million compared
to $46.3 million in the second quarter of fiscal 2013, representing a
sequential quarterly increase of 11.6% and a decrease of 8.3% over the $56.3
million in net revenues reported in the third quarter of fiscal 2012. Net
revenues for the first nine months of fiscal 2013 were $139.3 million,
compared to $182.1 million for the same period last year, representing a
decrease of 23.5%.

The net loss on a generally accepted accounting principles (GAAP) basis for
the third quarter and for the first nine months of fiscal 2013 were $71.6
million and $116.5 million, or $(1.08) and $(1.81) per share,
respectively. This included an accrual of $51.9 million for the Veloce
acquisition in the quarter. This compares with a GAAP net loss of $7.1
million, or $(0.12) per share, and net loss of $15.1 million, or $(0.24) per
share, for the third quarter and first nine months of fiscal 2012,
respectively.

Non-GAAP loss for the third quarter and the first nine months of fiscal 2013
was $6.9 million or $(0.10) per share and $28.9 million or $(0.45) per share,
respectively, compared to non-GAAP loss of $1.1 million or $(0.02) per share
and non-GAAP net income of $0.6 million or $0.01 per diluted share for the
third quarter and first nine months of fiscal 2012, respectively.

"In the third quarter we believe we made giant strides in our product
development efforts by taping out our 40nm ARM 64-Bit X-Gene server on a chip.
We also taped out a test chip for our upcoming 28nm product in January. While
we await final benchmarks from the actual silicon, the results from highly
correlated simulations indicate that the 40nm chip performance may far exceed
our original expectations. In fact, we believe the networking performance of
the chip suggests that we may be able to further penetrate into Enterprise
class solutions. I am also very pleased with the improvements in our base
business, reflected in continued quarter over quarter revenue growth," said
Dr. Paramesh Gopi, President and Chief Executive Officer.

Bob Gargus, Chief Financial Officer commented, "While we are very excited with
the milestones in our ARM 64-bit product strategy, we also had a very solid
quarter Company-wide and beat expectations. We feel we are making great
progress towards our goal of attaining break even on a non-GAAP basis for the
March quarter."

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, Veloce Acquisition
consideration, stock-based compensation charges, other-than-temporary
impairment on investments, one-time acquisition related recoveries, sale of
equipment and other assets, warrant expense, payroll taxes on certain stock
option exercises and non-cash tax adjustments. 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, January 30,
2013 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
2013 and to provide guidance for the fourth quarter of fiscal 2013. You may
access the conference call via any of the following:

Teleconference: 800-798-2884
Conference ID:  80437361
Web Broadcast:  http://www.apm.com
Replay:         888-286-8010 (access code: 98851945, available through
                February 6, 2013)

AppliedMicro Overview

Applied Micro Circuits Corporation is a global leader in computing and
connectivity solutions for next-generation cloud infrastructure and data
centers. AppliedMicro delivers silicon solutions that dramatically lower total
cost of ownership. Corporate headquarters are located in Sunnyvale,
California. www.apm.com.

Applied Micro Circuits Corporation, AppliedMicro, the AppliedMicro logo,
X-Gene and Server on a Chip are trademarks or registered trademarks of Applied
Micro Circuits Corporation. All other product or service names 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 the chip performance of the 40nm
and 28nm ARM 64-Bit X Gene server on a chip, the TAM for such product, the
estimated range of payments for the Veloce acquisition, 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, increased supplier lead times and other supply chain
constraints, 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, successful integration and management of
recently acquired businesses, 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, 2012, 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)
                                                                
                                                  December 31, March 31,
ASSETS                                            2012         2012
                                                                
Current assets:                                                 
Cash, cash equivalents and short-term investments  $ 84,244     $ 113,846
Accounts receivable, net                           17,362       22,666
Inventories                                        13,857       23,244
Other current assets                               19,297       31,105
Total current assets                               134,760      190,861
Property and equipment, net                        36,171       38,100
Goodwill                                           13,183       13,183
Purchased intangibles, net                         13,008       16,634
Other assets                                       14,004       10,274
Total assets                                       $ 211,126    $ 269,052
                                                                
LIABILITIES AND STOCKHOLDERS' EQUITY                            
                                                                
Current liabilities:                                            
Accounts payable                                   $ 14,427     $ 21,383
Other current liabilities                          89,906       50,903
Total current liabilities                          104,333      72,286
Non-current liability:                                          
Other long-term liabilities                        14,767       27,530
Stockholders' equity                               92,026       169,236
Total liabilities and stockholders' equity         $ 211,126    $ 269,052
                                                                

APPLIED MICRO CIRCUITS CORPORATION
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
                  Three Months Ended                  Nine Months Ended
                  December 31, September   December   December 31, December
                               30,         31,                     31,
                  2012         2012        2011       2012         2011
                                                                    
Net revenues       $ 51,698     $ 46,324    $ 56,347   $ 139,316    $ 182,120
Cost of revenues   22,958       20,561      23,795     61,874       77,830
Gross profit       28,740       25,763      32,552     77,442       104,290
Operating                                                           
expenses:
Research and       82,711       34,383      28,279     151,865      86,256
development
Selling, general
and                12,675       13,531      11,406     38,676       32,903
administrative
Amortization of
purchased          338          601         650        1,589        2,552
intangible assets
Restructuring      6,218        --          2          6,218        875
charges, net
Total operating    101,942      48,515      40,337     198,348      122,586
expenses
Operating loss     (73,202)     (22,752)    (7,785)    (120,906)    (18,296)
Interest and
other income       2,258        835         914        4,855        3,787
(expense), net
Loss before        (70,944)     (21,917)    (6,871)    (116,051)    (14,509)
income taxes
Income tax         618          (360)       206        458          597
expense (benefit)
Net loss           $ (71,562)   $ (21,557)  $ (7,077)  $ (116,509)  $ (15,106)
                                                                    
Basic and diluted
net loss per                                                        
share:
Net loss per       $ (1.08)     $ (0.33)    $ (0.12)   $ (1.81)     $ (0.24)
share
Shares used in
calculating basic  66,113       64,947      60,990     64,489       62,465
and diluted net
loss per share
                                                                    

APPLIED MICRO CIRCUITS CORPORATION
RECONCILIATION OF GAAP NET (LOSS) INCOME TO NON-GAAP NET (LOSS) INCOME
(in thousands, except per share data)
(unaudited)
 
                     Three Months Ended                 Nine Months Ended
                     December    September   December   December 31, December
                     31,         30,         31,                     31,
                     2012        2012        2011       2012         2011
                                                                      
GAAP net loss         $ (71,562)  $ (21,557)  $ (7,077)  $ (116,509)  $ (15,106)
Adjustments:                                                          
Stock-based           6,222       7,634       4,433      21,545       11,735
compensation charges
Warrant expense       --          --          --         1,289        --
Amortization of
purchased             1,017       1,280       1,329      3,626        5,425
intangibles
Veloce acquisition    51,930      2,325       --         56,580       --
consideration
Acquisition related   --          --          --         (133)        (2,267)
recoveries
Restructuring         6,218       --          2          6,218        875
charges, net
Sale of equipment     (1,299)     --          --         (1,299)      --
and other assets
Other-than-temporary
investment            (270)       (174)       (61)       (1,533)      (666)
impairment 
Income tax            832         (34)        242        1,351        580
adjustments
Total GAAP to         64,650      11,031      5,945      87,644       15,682
Non-GAAP adjustments
                                                                      
Non-GAAP net loss     $ (6,912)   $ (10,526)  $ (1,132)  $ (28,865)   $ 576
(income)
                                                                      
Diluted (loss)        $ (0.10)    $ (0.16)    $ (0.02)   $ (0.45)     $ 0.01
income per share
                                                                      
Shares used in
calculating diluted   66,113      64,947      60,990     64,489       62,968
(loss) income per
share 
                                                                      
Net (loss) income                                                     
per share:
GAAP loss per share   $ (1.08)    $ (0.33)    $ (0.12)   $ (1.81)     $ (0.24)
GAAP to non-GAAP     0.98        0.17        0.10       1.36         0.25
adjustments 
Non-GAAP net (loss)   $ (0.10)    $ (0.16)    $ (0.02)   $ (0.45)     $ 0.01
income per share
                                                                      
Reconciliation of
shares used in
calculating non-GAAP                                                  
(loss) income per
share:
Shares used in
calculating the       66,113      64,947      60,990     64,489       62,465
basic loss per
share 
Adjustment for        --          --          --         --           503
dilutive securities 
Shares used in
calculating non-GAAP  66,113      64,947      60,990     64,489       62,968
diluted (loss)
income per share
                                                                      

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             Nine Months Ended
                          December   September December  December   December
                          31,        30,       31,       31,        31,
                          2012       2012      2011      2012       2011
GROSS PROFIT:                                                        
GAAP gross profit          $ 28,740   $ 25,763  $ 32,552  $ 77,442   $ 104,290
Amortization of purchased  679        679       679       2,037      2,873
intangibles
Stock-based compensation   158        177       83        597        292
expense
Non-GAAP gross profit      $ 29,577   $ 26,619  $ 33,314  $ 80,076   $ 107,455
                                                                     
OPERATING EXPENSES:                                                  
GAAP operating expenses    $ 101,942  $ 48,515  $ 40,337  $ 198,348  $ 122,586
Stock-based compensation   (6,064)    (7,457)   (4,350)   (20,948)   (11,443)
expense
Warrant expense            --         --        --        (1,289)    --
Amortization of purchased  (338)      (601)     (650)     (1,589)    (2,552)
intangibles
Acquisition related        --         --        --        133        2,267
expenses
Veloce acquisition         (51,930)   (2,325)   --        (56,580)   --
consideration
Restructuring charges,     (6,218)    --        (2)       (6,218)    (875)
net
Non-GAAP operating         $ 37,392   $ 38,132  $ 35,335  $ 111,857  $ 109,983
expenses
                                                                     
INTEREST AND OTHER
INCOME, NET AND                                                      
OTHER-THAN-TEMPORARY
IMPAIRMENT:
GAAP interest and other    $ 2,258    $ 835     $ 914     $ 4,855    $ 3,787
income
Sale of equipment and      (1,299)    --        --        (1,299)    --
other assets
Other-than-temporary       (270)      (174)     (61)      (1,533)    (666)
investment impairment 
Non-GAAP interest and      $ 689      $ 661     $ 853     $ 2,023    $ 3,121
other income, net
                                                                     
INCOME TAX (BENEFIT)                                                 
EXPENSE:
GAAP income tax expense    $ 618      $ (360)   $ 206     $ 458      $ 597
(benefit) 
Income tax adjustments     (832)      34        (242)     (1,351)    (580)
Non-GAAP income tax        $ (214)    $ (326)   $ (36)    $ (893)    $ 17
(benefit) expense
                                                                     
RESEARCH AND DEVELOPMENT                                             
:
GAAP research and          $ 82,711   $ 34,383  $ 28,279  $ 151,865  $ 86,256
development 
Stock-based compensation   (2,814)    (3,715)   (2,647)   (10,734)   (6,761)
expense
Warrant expense            --         --        --        (1,289)    --
Veloce acquisition         (51,930)   (2,325)   --        (56,580)   --
consideration
Non-GAAP research and      $ 27,967   $ 28,343  $ 25,632  $ 83,262   $ 79,495
development 
                                                                     
SELLING, GENERAL AND                                                 
ADMINISTRATIVE :
GAAP selling, general and  $ 12,675   $ 13,531  $ 11,406  $ 38,676   $ 32,903
administrative 
Stock-based compensation   (3,250)    (3,742)   (1,703)   (10,214)   (4,682)
expense
Acquisition related        --         --       --         133        2,267
expenses
Non-GAAP selling, general  $ 9,425    $ 9,789   $ 9,703   $ 28,595   $ 30,488
and administrative 
                                                                     

APPLIED MICRO CIRCUITS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
                                                Nine Months Ended December 31,
                                                2012            2011
Operating activities:                                            
Net loss                                         $ (116,509)     $ (15,106)
Adjustments to reconcile net loss to net cash                    
used for operating activities:
Depreciation                                     7,247           6,000
Amortization of purchased intangibles            3,626           5,425
Stock-based compensation expense:                                
Stock options                                    3,104           4,207
Restricted stock units                           18,441          7,528
Warrants                                         1,289           — 
Veloce accrued liability                         40,652          — 
Acquisition related adjustment                   (133)           (2,267)
Net (gain) loss on disposals of property,        (1,296)         10
equipment and other assets
Tax effect on other comprehensive income         (130)           — 
Restructuring charges                            4,689           — 
Changes in operating assets and liabilities:                     
Accounts receivable                              5,304           (10,831)
Inventories                                      9,387           8,992
Other assets                                     (2,758)         (3,825)
Accounts payable                                 (3,907)         (5,124)
Accrued payroll and other liabilities            887             2,506
Deferred revenue                                 (841)           (465)
Net cash used for operating activities           (30,948)        (2,950)
Investing activities:                                            
Proceeds from sales and maturities of            35,367          95,308
short-term investments
Purchases of short-term investments              (17,834)        (79,891)
Proceeds from sale of property, equipment and    1,800           — 
other assets
Purchase of property, equipment and other        (8,454)         (11,899)
assets
Proceeds from sale of strategic equity           7,146           — 
investment
Purchase of strategic equity investment          (500)           (4,750)
Funding of a note receivable                     (500)           — 
Net cash provided by (used for) investing        17,025          (1,232)
activities 
Financing activities:                                            
Proceeds from issuances of common stock          5,863           3,874
Funding of restricted stock units withheld for   (2,772)         (2,739)
taxes
Repurchases of common stock                      (654)           (20,852)
Funding of structured stock repurchase           —               (10,000)
agreements 
Payment of contingent consideration              (485)           — 
Other                                            (411)           (272)
Net cash provided by (used for) financing        1,541           (29,989)
activities 
Net decrease in cash and cash equivalents        (12,382)        (34,171)
Cash and cash equivalents at the beginning of    28,065          84,402
the period
Cash and cash equivalents at the end of the      $ 15,683        $ 50,231
period

CONTACT: Investor Relations Contact:
        
         Applied Micro Circuits Corporation
         Bob Gargus
         Phone: (408) 542-8752
         E-Mail: rgargus@apm.com
        
         Media Contact:
        
         Applied Micro Circuits Corporation
         Diane Orr
         Phone: (408) 358-1617
         E-mail: dianer@orr-co.com

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