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Press Release

Applied Micro Circuits Corporation Reports Fourth Quarter & Full Year Fiscal 2016 Financial Results

Company Delivers Fifth Sequential Quarter of Revenue Growth and Improved Non-GAAP Earnings

SANTA CLARA, Calif., April 28, 2016 (GLOBE NEWSWIRE) - Applied Micro Circuits Corporation (Nasdaq: AMCC) (“AppliedMicro”) today reported its financial results for the fiscal fourth quarter and full year ended March 31, 2016.

Q4 Fiscal 2016 Financial Information

•
Consolidated net revenue of $41.1 million, representing the fifth sequential quarter of revenue growth
•
GAAP net loss of $8.9 million or $0.11 per share
•
Non-GAAP net loss narrows to $1.4 million, or $0.02 per share

Full Year Fiscal 2016 Financial Information

•
Consolidated net revenue of $159.3 million
•
GAAP net loss of $32.6 million, or $0.39 per share
•
Non-GAAP net loss improves to $9.2 million, or $0.11 per share
•
Total cash, cash equivalents and short-term investments of approximately $83.8 million as of March 31, 2016

Commenting on Applied Micro’s fiscal 2016 fourth quarter and full year operations, Dr. Paramesh Gopi, President and Chief Executive Officer, said, “We are pleased to announce another strong quarter of solid financial results. Fourth quarter fiscal 2016 revenue of $41.1 million represents our fifth consecutive quarter of improving sales, and was driven by strength in our Connectivity business and driven by our ability to deliver 16nm PAM4 solutions to our customers. Overall, fiscal 2016 was a very important year for Applied Micro, highlighted by multiple Tier One X-Gene deployments, our launch of X-Gene 3, and our leadership in 100Gbps PAM4 for data center interconnectivity.”

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 fourth quarter and full year fiscal 2016 results and business and financial outlook today, April 28, 2016, at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time.

DIAL-IN:
(855) 777-0852
 
PASSCODE:
81179007
 
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 81179007. The replay will be available for seven days.


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.



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(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 December 31, 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





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APPLIED MICRO CIRCUITS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 
 
 
 
 
 
 
March 31,
2016
 
March 31,
2015
 
 
(unaudited)
 
 
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash, cash equivalents and short-term investments
 
$
83,845

 
$
75,358

Accounts receivable, net
 
9,265

 
12,407

Inventories
 
16,148

 
23,514

Other current assets
 
10,775

 
16,840

Total current assets
 
120,033

 
128,119

Property and equipment, net
 
13,293

 
16,749

Goodwill
 
11,425

 
11,425

Other assets
 
1,541

 
2,570

Total assets
 
$
146,292

 
$
158,863

LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
8,599

 
$
13,896

Other current liabilities
 
20,862

 
17,571

Total current liabilities
 
29,461

 
31,467

Non-current liabilities
 
1,793

 
4,291

Stockholders' equity
 
115,038

 
123,105

Total liabilities and stockholders' equity
 
$
146,292

 
$
158,863






3




APPLIED MICRO CIRCUITS CORPORATION
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
 
 
 
 
Three Months Ended
 
Fiscal Years Ended
 
March 31,
2016
 
December 31,
2015
 
March 31,
2015
 
March 31,
2016
 
March 31,
2015
Net revenues
$
41,108

 
$
40,623

 
$
37,048

 
$
159,287

 
$
165,011

Cost of revenues
16,934

 
18,241

 
16,482

 
69,739

 
69,297

Gross profit
24,174

 
22,382

 
20,566

 
89,548

 
95,714

Operating expenses:
 
 
 
 
 
 
 
 
 
Research and development
25,113

 
22,377

 
24,583

 
91,518

 
107,220

Selling, general and administrative
8,138

 
8,232

 
7,959

 
33,507

 
33,643

Amortization of purchased intangible assets
—

 
—

 
—

 
—

 
104

Restructuring
(57
)
 
(29
)
 
4,098

 
25

 
5,421

Total operating expenses
33,194

 
30,580

 
36,640

 
125,050

 
146,388

Operating loss
(9,020
)
 
(8,198
)
 
(16,074
)
 
(35,502
)
 
(50,674
)
Interest and other income (expense), net
229

 
169

 
1,029

 
2,307

 
(292
)
Loss before income taxes
(8,791
)
 
(8,029
)
 
(15,045
)
 
(33,195
)
 
(50,966
)
Income tax provision (benefit)
116

 
170

 
99

 
(624
)
 
1,092

Net loss
$
(8,907
)
 
$
(8,199
)
 
$
(15,144
)
 
$
(32,571
)
 
$
(52,058
)
Basic and diluted net loss per share:
$
(0.11
)
 
$
(0.10
)
 
$
(0.19
)
 
$
(0.39
)
 
$
(0.66
)
Shares used in calculating basic and diluted net loss per share
84,127

 
83,191

 
80,667

 
82,668

 
78,814


4




APPLIED MICRO CIRCUITS CORPORATION
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET LOSS
(in thousands, except per share data)
(unaudited)
 
 
 
 
 
Three Months Ended
 
Fiscal Years Ended
 
March 31,
2016
 
December 31,
2015
 
March 31,
2015
 
March 31,
2016
 
March 31,
2015
GAAP net loss
$
(8,907
)
 
$
(8,199
)
 
$
(15,144
)
 
$
(32,571
)
 
$
(52,058
)
Adjustments:
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
7,637

 
6,141

 
4,002

 
25,804

 
18,305

Amortization of purchased intangible assets
—

 
—

 
—

 
—

 
104

Veloce acquisition consideration
—

 
—

 
2,090

 
—

 
9,230

Restructuring
(57
)
 
(29
)
 
4,098

 
25

 
5,421

Impairment of strategic investments
—

 
—

 
500

 
—

 
3,000

Reversals of impairment charges upon sales of marketable securities
—

 
—

 
(1,176
)
 
(1,694
)
 
(1,334
)
Income tax effect on non-GAAP adjustments
(84
)
 
(30
)
 
(151
)
 
(761
)
 
(458
)
Total GAAP to Non-GAAP adjustments
7,496

 
6,082

 
9,363

 
23,374

 
34,268

Non-GAAP net loss
$
(1,411
)
 
$
(2,117
)
 
$
(5,781
)
 
$
(9,197
)
 
$
(17,790
)
Diluted non-GAAP net loss per share
$
(0.02
)
 
$
(0.03
)
 
$
(0.07
)
 
$
(0.11
)
 
$
(0.23
)
Shares used in calculating diluted non-GAAP net loss per share
84,127

 
83,191

 
80,667

 
82,668

 
78,814

Diluted net loss per share:
 
 
 
 
 
 
 
 
 
GAAP diluted net loss per share
$
(0.11
)
 
$
(0.10
)
 
$
(0.19
)
 
$
(0.39
)
 
$
(0.66
)
GAAP to non-GAAP adjustments
0.09

 
0.07

 
0.12

 
0.28

 
0.43

Non-GAAP diluted net loss per share
$
(0.02
)
 
$
(0.03
)
 
$
(0.07
)
 
$
(0.11
)
 
$
(0.23
)












5




APPLIED MICRO CIRCUITS CORPORATION
SCHEDULE OF SELECTED GAAP TO NON-GAAP ADJUSTMENTS
(in thousands)
(unaudited)
 
 
Three Months Ended
 
Fiscal Years Ended
 
March 31,
2016
 
December 31,
2015
 
March 31,
2015
 
March 31,
2016
 
March 31,
2015
GROSS PROFIT:
 
 
 
 
 
 
 
 
 
GAAP gross profit
$
24,174

 
$
22,382

 
$
20,566

 
$
89,548

 
$
95,714

Stock-based compensation expense
172

 
140

 
69

 
521

 
289

Non-GAAP gross profit
$
24,346

 
$
22,522

 
$
20,635

 
$
90,069

 
$
96,003

OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
GAAP operating expenses
$
33,194

 
$
30,580

 
$
36,640

 
$
125,050

 
$
146,388

Stock-based compensation expense
(7,465
)
 
(6,001
)
 
(3,933
)
 
(25,283
)
 
(18,016
)
Amortization of purchased intangible assets
—

 
—

 
—

 
—

 
(104
)
Veloce acquisition consideration
—

 
—

 
(2,090
)
 
—

 
(9,230
)
Restructuring
57

 
29

 
(4,098
)
 
(25
)
 
(5,421
)
Non-GAAP operating expenses
$
25,786

 
$
24,608

 
$
26,519

 
$
99,742

 
$
113,617

INTEREST AND OTHER INCOME (EXPENSE), NET
 
 
 
 
 
 
 
 
 
GAAP interest and other income (expense), net
$
229

 
$
169

 
$
1,029

 
$
2,307

 
$
(292
)
Impairment of strategic investments
—

 
—

 
500

 
—

 
3,000

Reversals of impairment charges upon sales of marketable securities
—

 
—

 
(1,176
)
 
(1,694
)
 
(1,334
)
Non-GAAP interest and other income, net
$
229

 
$
169

 
$
353

 
$
613

 
$
1,374

INCOME TAX EXPENSE (BENEFIT):
 
 
 
 
 
 
 
 
 
GAAP income tax expense (benefit)
$
116

 
$
170

 
$
99

 
$
(624
)
 
$
1,092

Income tax adjustment
84

 
30

 
151

 
761

 
458

Non-GAAP income tax expense
$
200

 
$
200

 
$
250

 
$
137

 
$
1,550

RESEARCH AND DEVELOPMENT :
 
 
 
 
 
 
 
 
 
GAAP research and development
$
25,113

 
$
22,377

 
$
24,584

 
$
91,518

 
$
107,220

Stock-based compensation expense
(5,503
)
 
(4,500
)
 
(2,619
)
 
(18,018
)
 
(11,658
)
Veloce acquisition consideration
—

 
—

 
(2,090
)
 
—

 
(9,230
)
Non-GAAP research and development
$
19,610

 
$
17,877

 
$
19,875

 
$
73,500

 
$
86,332

SELLING, GENERAL AND ADMINISTRATIVE :
 
 
 
 
 
 
 
 
 
GAAP selling, general and administrative
$
8,138

 
$
8,232

 
$
7,959

 
$
33,507

 
$
33,643

Stock-based compensation expense
(1,962
)
 
(1,501
)
 
(1,314
)
 
(7,265
)
 
(6,358
)
Non-GAAP selling, general and administrative
$
6,176

 
$
6,731

 
$
6,645

 
$
26,242

 
$
27,285



6




APPLIED MICRO CIRCUITS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
 
 
 
 
Three Months Ended
 
Fiscal Years Ended
 
March 31,
2016
 
December 31,
2015
 
March 31,
2015
 
March 31,
2016
 
March 31,
2015
Operating activities:
 
 
 
 
 
 
 
 
 
Net loss
$
(8,907
)
 
$
(8,199
)
 
$
(15,144
)
 
$
(32,571
)
 
$
(52,058
)
Adjustments to reconcile net loss to net cash provided by (used for) operating activities:
 
 
 
 
 
 
 
 
 
Depreciation
1,891

 
2,028

 
1,957

 
7,590

 
8,555

Amortization of purchased intangible assets
—

 
—

 
—

 
—

 
104

Amortization of bond premium
258

 
429

 
—

 
687

 
—

Stock-based compensation expense
7,637

 
6,141

 
4,002

 
25,804

 
18,305

Veloce acquisition consideration
—

 
—

 
2,090

 
—

 
9,230

Tax effect on other comprehensive loss
49

 
—

 
160

 
49

 
126

Non-cash restructuring charges
—

 
—

 
2,601

 
—

 
2,615

Impairment of a strategic investment
—

 
—

 
500

 
—

 
3,000

Loss (gain) on short-term investments and other, net
7

 
(1
)
 
(1,216
)
 
(1,581
)
 
(1,317
)
Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 
 
Accounts receivable
3,187

 
172

 
6,840

 
3,142

 
12,771

Inventories
3,533

 
700

 
698

 
7,382

 
(4,573
)
Other assets
3,891

 
754

 
(705
)
 
6,754

 
(1,440
)
Accounts payable
(4,248
)
 
992

 
(6,193
)
 
(5,614
)
 
(9,911
)
Accrued payroll and other accrued liabilities
(1,018
)
 
168

 
(2,200
)
 
(680
)
 
(3,127
)
Veloce accrued liability
(9
)
 
(9
)
 
(169
)
 
(108
)
 
(9,150
)
Deferred revenue
(7
)
 
(39
)
 
36

 
(69
)
 
(152
)
Net cash provided by (used for) operating activities
6,264

 
3,136

 
(6,743
)
 
10,785

 
(27,022
)
Investing activities:
 
 
 
 
 
 
 
 
 
Proceeds from sales and maturities of short-term investments
5,487

 
10,380

 
11,142

 
63,714

 
16,340

Purchases of short-term investments
(6,443
)
 
(14,319
)
 
(17,165
)
 
(84,464
)
 
(19,887
)
Proceeds from sale of property and equipment
—

 
—

 
—

 
31

 
1

Purchases of property and equipment and other assets
(562
)
 
(1,232
)
 
(2,481
)
 
(2,601
)
 
(9,772
)
Proceeds from sale of TPack
—

 
—

 
—

 
—

 
3,353

Net cash used for investing activities
(1,518
)
 
(5,171
)
 
(8,504
)
 
(23,320
)
 
(9,965
)
Financing activities:
 
 
 
 
 
 
 
 
 
Proceeds from issuances of common stock
1,736

 
(2
)
 
1,964

 
2,979

 
3,854

Funding of restricted stock units withheld for taxes
(187
)
 
(268
)
 
(302
)
 
(1,874
)
 
(1,911
)
Net cash provided by (used for) financing activities
1,549

 
(270
)
 
1,662

 
1,105

 
1,943

Net increase (decrease) in cash and cash equivalents
6,295

 
(2,305
)
 
(13,585
)
 
(11,430
)
 
(35,044
)
Cash and cash equivalents at the beginning of the period
18,770

 
21,075

 
50,080

 
36,495

 
71,539

Cash and cash equivalents at the end of the period
$
25,065

 
$
18,770

 
$
36,495

 
$
25,065

 
$
36,495


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