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Press Release

Applied Micro Circuits Corporation Reports First Quarter Fiscal 2017 Financial Results

Company Delivers Sixth Sequential Quarter of Revenue Growth

SANTA CLARA, Calif., July 27, 2016 (GLOBE NEWSWIRE) - Applied Micro Circuits Corporation (Nasdaq: AMCC) (“AppliedMicro”) today reported its financial results for its first quarter of fiscal 2017, ended June 30, 2016.

Q1 Fiscal 2017 Financial Information

•
Consolidated net revenue of $41.5 million, representing the sixth sequential quarter of revenue growth
•
GAAP net loss of $10.5 million or $0.12 per share
•
Non-GAAP net loss of $2.5 million, or $0.03 per share

Commenting on Applied Micro’s fiscal 2017 first quarter results, Dr. Paramesh Gopi, President and Chief Executive Officer, said, “We are beginning fiscal 2017 with our sixth consecutive quarter of revenue growth. Our Connectivity business drove the improvement in top line results and our on-going cost reduction efforts resulted in improved gross margins.”

"We are pleased with the progress we've made in both our base Connectivity business as well as our Computing business. Our PAM4 single lambda 100/400G FinFET technology continues to lead the market, while our X-Gene® product line gained meaningful traction and was deployed at top hyperscale data center customers.” concluded Dr. Gopi.

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 first quarter fiscal 2017 results and business and financial outlook today, July 27, 2016, at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time.
DIAL-IN:
(855) 777-0852
 
PASSCODE:
46834760
 
WEBCAST:
Investor Relations section of the Company’s website at www.apm.com
 

A replay of the call will be available starting at 8:00 PM Eastern Time and can be accessed by dialing 855-859-2056 or 404-537-3406 and using the access code 46834760. 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.
(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

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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 Annual Report on Form 10-K for the year ended March 31, 2016, 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)
 
 
 
 
 
 
 
 
June 30,
2016
 
March 31,
2016
 
 
(unaudited)
 
 
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash, cash equivalents and short-term investments
 
$
82,311

 
$
83,845

Accounts receivable, net
 
9,163

 
9,265

Inventories
 
12,604

 
16,148

Other current assets
 
10,906

 
10,775

Total current assets
 
114,984

 
120,033

Property and equipment, net
 
13,905

 
13,293

Goodwill
 
11,425

 
11,425

Other assets
 
1,323

 
1,541

Total assets
 
$
141,637

 
$
146,292

LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
6,184

 
$
8,599

Other current liabilities
 
22,974

 
20,862

Total current liabilities
 
29,158

 
29,461

Non-current liabilities
 
1,548

 
1,793

Total liabilities
 
30,706

 
31,254

Stockholders' equity
 
110,931

 
115,038

Total liabilities and stockholders' equity
 
$
141,637

 
$
146,292






3




APPLIED MICRO CIRCUITS CORPORATION
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
 
 
Three Months Ended
 
June 30,
2016
 
March 31,
2016
 
June 30,
2015
Net revenues
$
41,498

 
$
41,108

 
$
37,813

Cost of revenues
16,029

 
16,934

 
16,806

Gross profit
25,469

 
24,174

 
21,007

Operating expenses:
 
 
 
 
 
Research and development
27,485

 
25,113

 
21,617

Selling, general and administrative
8,699

 
8,138

 
8,764

Restructuring
—

 
(57
)
 
96

Total operating expenses
36,184

 
33,194

 
30,477

Operating loss
(10,715
)
 
(9,020
)
 
(9,470
)
Interest and other income, net
247

 
229

 
1,644

Loss before income taxes
(10,468
)
 
(8,791
)
 
(7,826
)
Income tax provision (benefit)
71

 
116

 
(422
)
Net loss
$
(10,539
)
 
$
(8,907
)
 
$
(7,404
)
Basic and diluted net loss per share:
$
(0.12
)
 
$
(0.11
)
 
$
(0.09
)
Shares used in calculating basic and diluted net loss per share
84,980

 
84,127

 
81,179


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
 
June 30,
2016
 
March 31,
2016
 
June 30,
2015
GAAP net loss
$
(10,539
)
 
$
(8,907
)
 
$
(7,404
)
Adjustments:
 
 
 
 
 
Stock-based compensation expense
8,165

 
7,637

 
6,092

Restructuring
—

 
(57
)
 
96

Reversals of impairment charges upon sales of marketable securities
—

 
—

 
(1,427
)
Income tax effect on non-GAAP adjustments
(129
)
 
(84
)
 
(622
)
Total GAAP to Non-GAAP adjustments
8,036

 
7,496

 
4,139

Non-GAAP net loss
$
(2,503
)
 
$
(1,411
)
 
$
(3,265
)
Diluted non-GAAP net loss per share
$
(0.03
)
 
$
(0.02
)
 
$
(0.04
)
Shares used in calculating diluted non-GAAP net loss per share
84,980

 
84,127

 
81,179

Diluted net loss per share:
 
 
 
 
 
GAAP diluted net loss per share
$
(0.12
)
 
$
(0.11
)
 
$
(0.09
)
GAAP to non-GAAP adjustments
0.09

 
0.09

 
0.05

Non-GAAP diluted net loss per share
$
(0.03
)
 
$
(0.02
)
 
$
(0.04
)












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APPLIED MICRO CIRCUITS CORPORATION
SCHEDULE OF SELECTED GAAP TO NON-GAAP ADJUSTMENTS
(in thousands)
(unaudited)
 
 
Three Months Ended
 
June 30,
2016
 
March 31,
2016
 
June 30,
2015
GROSS PROFIT:
 
 
 
 
 
GAAP gross profit
$
25,469

 
$
24,174

 
$
21,007

Stock-based compensation expense
158

 
172

 
93

Non-GAAP gross profit
$
25,627

 
$
24,346

 
$
21,100

OPERATING EXPENSES:
 
 
 
 
 
GAAP operating expenses
$
36,184

 
$
33,194

 
$
30,477

Stock-based compensation expense
(8,007
)
 
(7,465
)
 
(5,999
)
Restructuring
—

 
57

 
(96
)
Non-GAAP operating expenses
$
28,177

 
$
25,786

 
$
24,382

INTEREST AND OTHER INCOME, NET
 
 
 
 
 
GAAP interest and other income, net
$
247

 
$
229

 
$
1,644

Reversals of impairment charges upon sales of marketable securities
—

 
—

 
(1,427
)
Non-GAAP interest and other income, net
$
247

 
$
229

 
$
217

INCOME TAX EXPENSE (BENEFIT):
 
 
 
 
 
GAAP income tax expense (benefit)
$
71

 
$
116

 
$
(422
)
Income tax adjustment
129

 
84

 
622

Non-GAAP income tax expense
$
200

 
$
200

 
$
200

RESEARCH AND DEVELOPMENT :
 
 
 
 
 
GAAP research and development
$
27,485

 
$
25,113

 
$
21,617

Stock-based compensation expense
(5,993
)
 
(5,503
)
 
(4,060
)
Non-GAAP research and development
$
21,492

 
$
19,610

 
$
17,557

SELLING, GENERAL AND ADMINISTRATIVE :
 
 
 
 
 
GAAP selling, general and administrative
$
8,699

 
$
8,138

 
$
8,764

Stock-based compensation expense
(2,014
)
 
(1,962
)
 
(1,939
)
Non-GAAP selling, general and administrative
$
6,685

 
$
6,176

 
$
6,825



6




APPLIED MICRO CIRCUITS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
 
 
Three Months Ended
 
June 30,
2016
 
March 31,
2016
 
June 30,
2015
Operating activities:
 
 
 
 
 
Net loss
$
(10,539
)
 
$
(8,907
)
 
$
(7,404
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
 
 
Depreciation
1,570

 
1,891

 
1,838

Amortization of bond premium
226

 
258

 
—

Stock-based compensation expense
8,165

 
7,637

 
6,092

Tax effect on other comprehensive loss
(94
)
 
49

 
—

Loss (gain) on short-term investments and other, net
(26
)
 
7

 
(1,455
)
Changes in operating assets and liabilities:
 
 
 
 
 
Accounts receivable
102

 
3,187

 
882

Inventories
3,552

 
3,533

 
3,723

Other assets
(70
)
 
3,891

 
2,464

Accounts payable
(2,382
)
 
(4,248
)
 
(3,453
)
Accrued payroll and other accrued liabilities
1,077

 
(1,018
)
 
220

Veloce accrued liability
(8
)
 
(9
)
 
(65
)
Deferred revenue
1

 
(7
)
 
7

Net cash provided by operating activities
1,574

 
6,264

 
2,849

Investing activities:
 
 
 
 
 
Proceeds from sales and maturities of short-term investments
18,461

 
5,487

 
7,444

Purchases of short-term investments
(17,739
)
 
(6,443
)
 
(1,129
)
Proceeds from sale of property and equipment
2

 
—

 
25

Purchases of property and equipment
(2,547
)
 
(562
)
 
(315
)
Net cash provided by (used for) investing activities
(1,823
)
 
(1,518
)
 
6,025

Financing activities:
 
 
 
 
 
Proceeds from issuances of common stock
32

 
1,736

 
133

Funding of restricted stock units withheld for taxes and other
(623
)
 
(187
)
 
(1,212
)
Net cash provided by (used for) financing activities
(591
)
 
1,549

 
(1,079
)
Net increase (decrease) in cash and cash equivalents
(840
)
 
6,295

 
7,795

Cash and cash equivalents at beginning of the period
25,065

 
18,770

 
36,495

Cash and cash equivalents at end of the period
$
24,225

 
$
25,065

 
$
44,290


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