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Press Release

Applied Micro Circuits Corporation Reports Third Quarter Fiscal 2016 Financial Results
Company Delivers Solid Sequential Revenue Growth and Improved Non-GAAP Earnings

SANTA CLARA, Calif., January 28, 2016 (GLOBE NEWSWIRE) - Applied Micro Circuits Corporation (Nasdaq: AMCC) (“AppliedMicro”) today reported its financial results for the fiscal 2016 third quarter ended December 31, 2015.

Fiscal Q3 2016 Financial Information

•
Consolidated net revenue of $40.6 million, representing the fourth sequential quarter of revenue growth
•
GAAP net loss of $8.2 million or $0.10 per share
•
Non-GAAP net loss narrows to $2.1 million or $0.03 per share
•
Total cash, cash equivalents and short-term investments of approximately $76.4 million as of December 31, 2015


Commenting on AppliedMicro’s fiscal 2016 third quarter operations, Dr. Paramesh Gopi, President and Chief Executive Officer, said, “On top of the solid execution of our base connectivity business, and with overall financial results once again demonstrating continued and consistent improvement, we are seeing clear evidence of the ongoing traction of both our X-Gene® and HeliX® families of computing products, and our X-Weave® family of connectivity products.”
 
AppliedMicro provides non-GAAP results as additional information relating to its financial condition and business trends. This information should be considered in conjunction with corresponding GAAP measures. A reconciliation between GAAP and non-GAAP financial results is provided in the financial tables section of this press release.


Conference Call and Webcast

Management will host a conference call and simultaneous webcast to discuss third quarter fiscal 2016 results and business and financial outlook today, January 28, 2016, at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time.
DIAL-IN:
(855) 777-0852
 
 
(631) 485-4854
 
PASSCODE:
20258064
 
WEBCAST:
Investor Relations section of the Company’s website at www.apm.com
 

A replay of the call will be available starting at 9:00 PM Eastern Time and can be accessed by dialing 855-859-2056 or 404-537-3406 and using the access code 20258064. The replay will be available through February 4, 2016.


About AppliedMicro

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 Santa Clara, California. www.apm.com.


(C) Copyright 2016, Applied Micro Circuits Corporation. AppliedMicro, X-Gene, X-Weave, HeliX, Server on a Chip, Cloud Processor and Cloud Server are trademarks or registered trademarks of Applied Micro Circuits Corporation. All other product or service names are the property of their respective owners.

Forward-Looking Statements

This press release contains forward-looking statements that reflect the Company's current views and expectations with respect to future events and financial performance, including statements regarding the Company's strategic focus; new product development,



commercialization and customer acceptance; the development of the X-Gene and ARM ecosystems; the anticipated performance of the Company’s base business; and future revenues, expenses and liquidity. 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, successful and timely development of products, an evolving competitive landscape, rapid technological change, increased supplier lead times and other supply chain constraints, the businesses and budgeting decisions of the Company's major customers, which may cause delays, reductions, rescheduling or cancellation of customer orders, successful management and retention of key personnel and service providers, market acceptance of new products and technologies, legal and regulatory developments, and general economic conditions, and do not take into account any restructuring or related activities that the Company may undertake. 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 Quarterly Report on Form 10-Q for the quarter ended September 30,2015, and its 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.



CONTACT:

Investor Relations Contact:
Suzanne Schmidt
Phone: (415) 217-4962
E-Mail: suzanne@blueshirtgroup.com

Media Contact:
Mike Major
Phone: (408) 542-8831
E-mail: mmajor@apm.com








APPLIED MICRO CIRCUITS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
 
 
 
 
 
 
 
December 31,
2015
 
March 31,
2015
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash, cash equivalents and short-term investments
 
$
76,443

 
$
75,358

Accounts receivable, net
 
12,452

 
12,407

Inventories
 
19,692

 
23,514

Other current assets
 
14,578

 
16,840

Total current assets
 
123,165

 
128,119

Property and equipment, net
 
13,348

 
16,749

Goodwill
 
11,425

 
11,425

Other assets
 
1,626

 
2,570

Total assets
 
$
149,564

 
$
158,863

LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
12,876

 
$
13,896

Other current liabilities
 
20,114

 
17,571

Total current liabilities
 
32,990

 
31,467

Non-current liabilities
 
781

 
4,291

Stockholders' equity
 
115,793

 
123,105

Total liabilities and stockholders' equity
 
$
149,564

 
$
158,863









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,
2015
 
September 30,
2015
 
December 31,
2014
 
December 31,
2015
 
December 31,
2014
Net revenues
$
40,623

 
$
39,743

 
$
36,747

 
$
118,179

 
$
127,964

Cost of revenues
18,241

 
17,758

 
14,842

 
52,805

 
52,815

Gross profit
22,382

 
21,985

 
21,905

 
65,374

 
75,149

Operating expenses:
 
 
 
 
 
 
 
 
 
Research and development
22,377

 
22,411

 
24,721

 
66,405

 
82,636

Selling, general and administrative
8,232

 
8,373

 
8,707

 
25,369

 
25,684

Amortization of purchased intangible assets
—

 
—

 
—

 
—

 
105

Restructuring
(29
)
 
15

 
221

 
82

 
1,322

Total operating expenses
30,580

 
30,799

 
33,649

 
91,856

 
109,747

Operating loss
(8,198
)
 
(8,814
)
 
(11,744
)
 
(26,482
)
 
(34,598
)
Interest and other income (expense), net
169

 
265

 
475

 
2,078

 
(1,322
)
Loss before income taxes
(8,029
)
 
(8,549
)
 
(11,269
)
 
(24,404
)
 
(35,920
)
Income tax provision (benefit)
170

 
(488
)
 
862

 
(740
)
 
993

Net loss
$
(8,199
)
 
$
(8,061
)
 
$
(12,131
)
 
$
(23,664
)
 
$
(36,913
)
Basic and diluted net loss per share:
$
(0.10
)
 
$
(0.10
)
 
$
(0.15
)
 
$
(0.29
)
 
$
(0.47
)
Shares used in calculating basic and diluted net loss per share
83,191

 
82,176

 
78,920

 
82,186

 
78,442





APPLIED MICRO CIRCUITS CORPORATION
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET LOSS
(in thousands, except per share data)
(unaudited)
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
December 31,
2015
 
September 30,
2015
 
December 31,
2014
 
December 31,
2015
 
December 31,
2014
GAAP net loss
$
(8,199
)
 
$
(8,061
)
 
$
(12,131
)
 
$
(23,664
)
 
$
(36,913
)
Adjustments:
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
6,141

 
5,934

 
4,857

 
18,167

 
14,303

Amortization of purchased intangible assets
—

 
—

 
—

 
—

 
105

Veloce acquisition consideration
—

 
—

 
—

 
—

 
7,140

Restructuring
(29
)
 
15

 
221

 
82

 
1,322

Impairment of a strategic investment
—

 
—

 
—

 
—

 
2,500

Reversals of impairment charges upon sales of marketable securities
—

 
(267
)
 
(129
)
 
(1,694
)
 
(158
)
Income tax effect on non-GAAP adjustments
(30
)
 
(25
)
 
62

 
(677
)
 
(307
)
Total GAAP to Non-GAAP adjustments
6,082

 
5,657

 
5,011

 
15,878

 
24,905

Non-GAAP net loss
$
(2,117
)
 
$
(2,404
)
 
$
(7,120
)
 
$
(7,786
)
 
$
(12,008
)
Diluted non-GAAP net loss per share
$
(0.03
)
 
$
(0.03
)
 
$
(0.09
)
 
$
(0.09
)
 
$
(0.15
)
Shares used in calculating diluted non-GAAP net loss per share
83,191

 
82,176

 
78,920

 
82,186

 
78,442

Diluted net loss per share:
 
 
 
 
 
 
 
 
 
GAAP diluted net loss per share
$
(0.10
)
 
$
(0.10
)
 
$
(0.15
)
 
$
(0.29
)
 
$
(0.47
)
GAAP to non-GAAP adjustments
0.07

 
0.07

 
0.06

 
0.20

 
0.32

Non-GAAP diluted net loss per share
$
(0.03
)
 
$
(0.03
)
 
$
(0.09
)
 
$
(0.09
)
 
$
(0.15
)
Reconciliation of shares used in calculating non-GAAP net loss per share:
 
 
 
 
 
 
 
 
 
Shares used in calculating the basic net loss per share
83,191

 
82,176

 
78,920

 
82,186

 
78,442

Adjustment for dilutive securities
—

 
—

 
—

 
—

 
—

Shares used in calculating diluted non-GAAP net loss per share
83,191

 
82,176

 
78,920

 
82,186

 
78,442
















APPLIED MICRO CIRCUITS CORPORATION
SCHEDULE OF SELECTED GAAP TO NON-GAAP ADJUSTMENTS
(in thousands)
(unaudited)
 
The following schedule reconciles selected line items on the condensed consolidated statements of operations from the GAAP basis to the non-GAAP basis:
 
Three Months Ended
 
Nine Months Ended
 
December 31,
2015
 
September 30,
2015
 
December 31,
2014
 
December 31,
2015
 
December 31,
2014
GROSS PROFIT:
 
 
 
 
 
 
 
 
 
GAAP gross profit
$
22,382

 
$
21,985

 
$
21,905

 
$
65,374

 
$
75,149

Stock-based compensation expense
140

 
116

 
72

 
349

 
221

Non-GAAP gross profit
$
22,522

 
$
22,101

 
$
21,977

 
$
65,723

 
$
75,370

OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
GAAP operating expenses
$
30,580

 
$
30,799

 
$
33,649

 
$
91,856

 
$
109,747

Stock-based compensation expense
(6,001
)
 
(5,818
)
 
(4,785
)
 
(17,818
)
 
(14,082
)
Amortization of purchased intangible assets
—

 
—

 
—

 
—

 
(105
)
Veloce acquisition consideration
—

 
—

 
—

 
—

 
(7,140
)
Restructuring
29

 
(15
)
 
(221
)
 
(82
)
 
(1,322
)
Non-GAAP operating expenses
$
24,608

 
$
24,966

 
$
28,643

 
$
73,956

 
$
87,098

INTEREST AND OTHER (EXPENSE) INCOME, NET
 
 
 
 
 
 
 
 
 
GAAP interest and other income (expense), net
$
169

 
$
265

 
$
475

 
$
2,078

 
$
(1,322
)
Impairment of a strategic investment
—

 
—

 
—

 
—

 
2,500

Reversals of impairment charges upon sales of marketable securities
—

 
(267
)
 
(129
)
 
(1,694
)
 
(158
)
Non-GAAP interest and other income (expense), net
$
169

 
$
(2
)
 
$
346

 
$
384

 
$
1,020

INCOME TAX (BENEFIT) EXPENSE:
 
 
 
 
 
 
 
 
 
GAAP income tax expense (benefit)
$
170

 
$
(488
)
 
$
862

 
$
(740
)
 
$
993

Income tax adjustment
30

 
25

 
(62
)
 
677

 
307

Non-GAAP income tax expense (benefit)
$
200

 
$
(463
)
 
$
800

 
$
(63
)
 
$
1,300

RESEARCH AND DEVELOPMENT :
 
 
 
 
 
 
 
 
 
GAAP research and development
$
22,377

 
$
22,411

 
$
24,721

 
$
66,405

 
$
82,636

Stock-based compensation expense
(4,500
)
 
(3,955
)
 
(2,992
)
 
(12,515
)
 
(9,039
)
Veloce acquisition consideration
—

 
—

 
—

 
—

 
(7,140
)
Non-GAAP research and development
$
17,877

 
$
18,456

 
$
21,729

 
$
53,890

 
$
66,457

SELLING, GENERAL AND ADMINISTRATIVE :
 
 
 
 
 
 
 
 
 
GAAP selling, general and administrative
$
8,232

 
$
8,373

 
$
8,707

 
$
25,369

 
$
25,684

Stock-based compensation expense
(1,501
)
 
(1,863
)
 
(1,793
)
 
(5,303
)
 
(5,043
)
Non-GAAP selling, general and administrative
$
6,731

 
$
6,510

 
$
6,914

 
$
20,066

 
$
20,641






APPLIED MICRO CIRCUITS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
December 31,
2015
 
September 30,
2015
 
December 31,
2014
 
December 31,
2015
 
December 31,
2014
Operating activities:
 
 
 
 
 
 
 
 
 
Net loss
$
(8,199
)
 
$
(8,061
)
 
$
(12,131
)
 
$
(23,664
)
 
$
(36,913
)
Adjustments to reconcile net loss to net cash provided by (used for) operating activities:
 
 
 
 
 
 
 
 
 
Depreciation
2,028

 
1,833

 
2,223

 
5,699

 
6,598

Amortization of purchased intangible assets
—

 
—

 
—

 
—

 
105

Amortization of bond premium
429

 
—

 
—

 
429

 
—

Stock-based compensation expense
6,141

 
5,934

 
4,857

 
18,167

 
14,303

Veloce acquisition consideration
—

 
—

 
—

 
—

 
7,140

Tax effect on other comprehensive loss
—

 
—

 
50

 
—

 
(34
)
Non-cash restructuring charges
—

 
—

 
14

 
—

 
14

Impairment of a strategic investment
—

 
—

 
—

 
—

 
2,500

Gain on short-term investments and other, net
(1
)
 
(132
)
 
(123
)
 
(1,588
)
 
(101
)
Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 
 
Accounts receivable
172

 
(1,099
)
 
(1,366
)
 
(45
)
 
5,931

Inventories
700

 
(574
)
 
(6,605
)
 
3,849

 
(5,271
)
Other assets
754

 
(355
)
 
(1,336
)
 
2,863

 
(736
)
Accounts payable
992

 
1,095

 
8,375

 
(1,366
)
 
(3,719
)
Accrued payroll and other accrued liabilities
168

 
(50
)
 
1,662

 
338

 
(927
)
Veloce accrued liability
(9
)
 
(25
)
 
(1,482
)
 
(99
)
 
(8,981
)
Deferred revenue
(39
)
 
(30
)
 
(22
)
 
(62
)
 
(188
)
Net cash provided by (used for) operating activities
3,136

 
(1,464
)
 
(5,884
)
 
4,521

 
(20,279
)
Investing activities:
 
 
 
 
 
 
 
 
 
Proceeds from sales and maturities of short-term investments
10,380

 
40,403

 
3,278

 
58,227

 
5,198

Purchases of short-term investments
(14,319
)
 
(62,573
)
 
(653
)
 
(78,021
)
 
(2,722
)
Proceeds from sale of property and equipment
—

 
6

 
—

 
31

 
1

Purchases of property and equipment and other assets
(1,232
)
 
(492
)
 
(271
)
 
(2,039
)
 
(7,291
)
Proceeds from sale of TPack
—

 
—

 
—

 
—

 
3,353

Net cash provided by (used for) investing activities
(5,171
)
 
(22,656
)
 
2,354

 
(21,802
)
 
(1,461
)
Financing activities:
 
 
 
 
 
 
 
 
 
Proceeds from issuances of common stock
(2
)
 
1,112

 
27

 
1,243

 
1,890

Funding of restricted stock units withheld for taxes
(268
)
 
(207
)
 
(363
)
 
(1,687
)
 
(1,609
)
Net cash provided by (used for) financing activities
(270
)
 
905

 
(336
)
 
(444
)
 
281

Net decrease in cash and cash equivalents
(2,305
)
 
(23,215
)
 
(3,866
)
 
(17,725
)
 
(21,459
)
Cash and cash equivalents at the beginning of the period
21,075

 
44,290

 
53,946

 
36,495

 
71,539

Cash and cash equivalents at the end of the period
$
18,770

 
$
21,075

 
$
50,080

 
$
18,770

 
$
50,080