Please wait



Press Release

Applied Micro Circuits Corporation Reports Second Quarter Fiscal 2017 Financial Results

Company Delivers Seventh Sequential Quarter of Revenue Growth
GAAP Loss Narrows to $0.05 per share; Non-GAAP Earnings Total $0.02 per share

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

Q2 Fiscal 2017 Financial Information

•
Consolidated net revenue of $41.8 million, represented the seventh sequential quarter of revenue growth
•
GAAP net loss narrowed significantly to $4.6 million or $0.05 per share, as compared with a GAAP net loss of $10.5 million or $0.12 per share in the previous quarter
•
Non-GAAP net income improved to $2.1 million, or $0.02 per share, as compared with non-GAAP net loss of $2.5 million, or $0.03 per share in the previous quarter.

Commenting on Applied Micro’s fiscal 2017 second quarter results, Dr. Paramesh Gopi, President and Chief Executive Officer, said, “In the second quarter of fiscal 2017 we achieved our seventh consecutive quarter of revenue growth. Our Connectivity business once again drove the improvement in top line results, and higher gross margins combined with greater operating efficiencies led to a return to profitability on a non-GAAP basis.”

"We continue to lead the optical market with our PAM4 single lambda 100/400G FinFET technology, which is now slated to become the industry standard for data center and enterprise connectivity. Additionally, we announced the deployment of our X-Gene products in industry-leading enterprise storage platforms, and successfully taped out X-Gene 3, our third generation server processor,” 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 second quarter fiscal 2017 results and business and financial outlook today, October 27, 2016, at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time.

DIAL-IN:     (855) 777-0852
PASSCODE:     83882028
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 83882028. 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

1



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 June 30, 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:
 
Media Relations Contact:
Suzanne Schmidt
 
Mike Major
Phone: (415) 217-4962
 
Phone (408) 542-8831


2




APPLIED MICRO CIRCUITS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 
 
September 30,
2016
 
March 31,
2016
 
 
(unaudited)
 
 
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash, cash equivalents and short-term investments
 
$
81,728

 
$
83,845

Accounts receivable, net
 
13,552

 
9,265

Inventories
 
13,181

 
16,148

Other current assets
 
9,929

 
10,775

Total current assets
 
118,390

 
120,033

Property and equipment, net
 
12,729

 
13,293

Goodwill
 
11,425

 
11,425

Other assets
 
1,201

 
1,541

Total assets
 
$
143,745

 
$
146,292

LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
8,843

 
$
8,599

Other current liabilities
 
20,877

 
20,862

Total current liabilities
 
29,720

 
29,461

Non-current liabilities
 
1,067

 
1,793

Total liabilities
 
30,787

 
31,254

Stockholders' equity
 
112,958

 
115,038

Total liabilities and stockholders' equity
 
$
143,745

 
$
146,292



3




APPLIED MICRO CIRCUITS CORPORATION
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
September 30,
2016
 
June 30,
2016
 
September 30,
2015
 
September 30,
2016
 
September 30,
2015
Net revenues
$
41,779

 
$
41,498

 
$
39,743

 
$
83,277

 
$
77,556

Cost of revenues
14,119

 
16,029

 
17,758

 
30,148

 
34,564

Gross profit
27,660

 
25,469

 
21,985

 
53,129

 
42,992

Operating expenses:
 
 
 
 
 
 
 
 
 
Research and development
24,037

 
27,485

 
22,411

 
51,522

 
44,028

Selling, general and administrative
8,342

 
8,699

 
8,373

 
17,041

 
17,137

Restructuring
—

 
—

 
15

 
—

 
111

Total operating expenses
32,379

 
36,184

 
30,799

 
68,563

 
61,276

Operating loss
(4,719
)
 
(10,715
)
 
(8,814
)
 
(15,434
)
 
(18,284
)
Interest and other income, net
257

 
247

 
265

 
504

 
1,909

Loss before income taxes
(4,462
)
 
(10,468
)
 
(8,549
)
 
(14,930
)
 
(16,375
)
Income tax provision (benefit)
178

 
71

 
(488
)
 
249

 
(910
)
Net loss
$
(4,640
)
 
$
(10,539
)
 
$
(8,061
)
 
$
(15,179
)
 
$
(15,465
)
Basic and diluted net loss per share:
$
(0.05
)
 
$
(0.12
)
 
$
(0.10
)
 
$
(0.18
)
 
$
(0.19
)
Shares used in calculating basic and diluted net loss per share
85,984

 
84,980

 
82,176

 
85,486

 
81,680


4




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
 
Six Months Ended
 
September 30,
2016
 
June 30,
2016
 
September 30,
2015
 
September 30,
2016
 
September 30,
2015
GAAP net loss
$
(4,640
)
 
$
(10,539
)
 
$
(8,061
)
 
$
(15,179
)
 
$
(15,465
)
Adjustments:
 
 
 
 
 
 
 
 
 
Stock-based compensation expense and other
6,790

 
8,165

 
5,934

 
14,955

 
12,026

Restructuring
—

 
—

 
15

 
—

 
111

Reversals of impairment charges upon sales of marketable securities
—

 
—

 
(267
)
 
—

 
(1,694
)
Income tax effect on non-GAAP adjustments
(22
)
 
(129
)
 
(25
)
 
(151
)
 
(647
)
Total GAAP to Non-GAAP adjustments
6,768

 
8,036

 
5,657

 
14,804

 
9,796

Non-GAAP net income (loss)
$
2,128

 
$
(2,503
)
 
$
(2,404
)
 
$
(375
)
 
$
(5,669
)
Diluted non-GAAP net income (loss) per share
$
0.02

 
$
(0.03
)
 
$
(0.03
)
 
$
(0.01
)
 
$
(0.07
)
Shares used in calculating diluted non-GAAP net income (loss) per share (*)
87,014

 
84,980

 
82,176

 
85,486

 
81,680

Diluted net income (loss) per share:
 
 
 
 
 
 
 
 
 
GAAP diluted net loss per share
$
(0.05
)
 
$
(0.12
)
 
$
(0.10
)
 
$
(0.18
)
 
$
(0.19
)
GAAP to non-GAAP adjustments
0.07

 
0.09

 
0.07

 
0.17

 
0.12

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

 
$
(0.03
)
 
$
(0.03
)
 
$
(0.01
)
 
$
(0.07
)
 
 
 
 
 
 
 
 
 
 
(*) For the three months ended September 30, 2016, non-GAAP adjustments convert GAAP net loss to non-GAAP net income; therefore, fully dilutive shares are used in the calculation of non-GAAP diluted net income per share.

5




APPLIED MICRO CIRCUITS CORPORATION
SCHEDULE OF SELECTED GAAP TO NON-GAAP ADJUSTMENTS
(in thousands)
(unaudited)
 
 
Three Months Ended
 
Six Months Ended
 
September 30,
2016
 
June 30,
2016
 
September 30,
2015
 
September 30,
2016
 
September 30,
2015
GROSS PROFIT:
 
 
 
 
 
 
 
 
 
GAAP gross profit
$
27,660

 
$
25,469

 
$
21,985

 
$
53,129

 
$
42,992

Stock-based compensation expense and other
172

 
158

 
116

 
330

 
209

Non-GAAP gross profit
$
27,832

 
$
25,627

 
$
22,101

 
$
53,459

 
$
43,201

OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
GAAP operating expenses
$
32,379

 
$
36,184

 
$
30,799

 
$
68,563

 
$
61,276

Stock-based compensation expense and other
(6,618
)
 
(8,007
)
 
(5,818
)
 
(14,625
)
 
(11,817
)
Restructuring
—

 
—

 
(15
)
 
—

 
(111
)
Non-GAAP operating expenses
$
25,761

 
$
28,177

 
$
24,966

 
$
53,938

 
$
49,348

INTEREST AND OTHER INCOME, NET
 
 
 
 
 
 
 
 
 
GAAP interest and other income, net
$
257

 
$
247

 
$
265

 
$
504

 
$
1,909

Reversals of impairment charges upon sales of marketable securities
—

 
—

 
(267
)
 
—

 
(1,694
)
Non-GAAP interest and other income, net
$
257

 
$
247

 
$
(2
)
 
$
504

 
$
215

INCOME TAX EXPENSE (BENEFIT):
 
 
 
 
 
 
 
 
 
GAAP income tax expense (benefit)
$
178

 
$
71

 
$
(488
)
 
$
249

 
$
(910
)
Income tax adjustment
22

 
129

 
25

 
151

 
647

Non-GAAP income tax expense
$
200

 
$
200

 
$
(463
)
 
$
400

 
$
(263
)
RESEARCH AND DEVELOPMENT :
 
 
 
 
 
 
 
 
 
GAAP research and development
$
24,037

 
$
27,485

 
$
22,411

 
$
51,522

 
$
44,028

Stock-based compensation expense and other
(4,624
)
 
(5,993
)
 
(3,955
)
 
(10,617
)
 
(8,015
)
Non-GAAP research and development
$
19,413

 
$
21,492

 
$
18,456

 
$
40,905

 
$
36,013

SELLING, GENERAL AND ADMINISTRATIVE :
 
 
 
 
 
 
 
 
 
GAAP selling, general and administrative
$
8,342

 
$
8,699

 
$
8,373

 
$
17,041

 
$
17,137

Stock-based compensation expense and other
(1,994
)
 
(2,014
)
 
(1,863
)
 
(4,008
)
 
(3,802
)
Non-GAAP selling, general and administrative
$
6,348

 
$
6,685

 
$
6,510

 
$
13,033

 
$
13,335


6




APPLIED MICRO CIRCUITS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
September 30,
2016
 
June 30,
2016
 
September 30,
2015
 
September 30,
2016
 
September 30,
2015
Operating activities:
 
 
 
 
 
 
 
 
 
Net loss
$
(4,640
)
 
$
(10,539
)
 
$
(8,061
)
 
$
(15,179
)
 
$
(15,465
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
 
 
 
 
 
 
Depreciation
1,570

 
1,570

 
1,833

 
3,140

 
3,671

Amortization of bond premium
174

 
226

 
—

 
400

 
—

Stock-based compensation expense
6,696

 
8,165

 
5,934

 
14,861

 
12,026

Tax effect on other comprehensive loss
19

 
(94
)
 
—

 
(75
)
 
—

Loss (gain) on short-term investments and other, net
137

 
(26
)
 
(132
)
 
111

 
(1,587
)
Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 
 
Accounts receivable
(4,389
)
 
102

 
(1,099
)
 
(4,287
)
 
(217
)
Inventories
(584
)
 
3,552

 
(574
)
 
2,968

 
3,149

Other assets
1,113

 
(70
)
 
(355
)
 
1,042

 
2,109

Accounts payable
2,767

 
(2,382
)
 
1,095

 
384

 
(2,358
)
Accrued payroll and other accrued liabilities
(101
)
 
1,077

 
(50
)
 
977

 
170

Veloce accrued liability
(3,660
)
 
(8
)
 
(25
)
 
(3,668
)
 
(90
)
Deferred revenue
(12
)
 
1

 
(30
)
 
(10
)
 
(23
)
Net cash provided by (used for) operating activities
(910
)
 
1,574

 
(1,464
)
 
664

 
1,385

Investing activities:
 
 
 
 
 
 
 
 
 
Proceeds from sales and maturities of short-term investments
9,684

 
18,461

 
40,403

 
28,145

 
47,847

Purchases of short-term investments
(11,062
)
 
(17,739
)
 
(62,573
)
 
(28,801
)
 
(63,702
)
Proceeds from sale of property and equipment
—

 
2

 
6

 
2

 
31

Purchases of property and equipment
(761
)
 
(2,547
)
 
(492
)
 
(3,308
)
 
(807
)
Net cash used for investing activities
(2,139
)
 
(1,823
)
 
(22,656
)
 
(3,962
)
 
(16,631
)
Financing activities:
 
 
 
 
 
 
 
 
 
Proceeds from issuances of common stock
1,744

 
32

 
1,112

 
1,776

 
1,245

Funding of restricted stock units withheld for taxes and other
(431
)
 
(623
)
 
(207
)
 
(1,054
)
 
(1,419
)
Net cash provided by (used for) financing activities
1,313

 
(591
)
 
905

 
722

 
(174
)
Net decrease in cash and cash equivalents
(1,736
)
 
(840
)
 
(23,215
)
 
(2,576
)
 
(15,420
)
Cash and cash equivalents at beginning of the period
24,225

 
25,065

 
44,290

 
25,065

 
36,495

Cash and cash equivalents at end of the period
$
22,489

 
$
24,225

 
$
21,075

 
$
22,489

 
$
21,075


7