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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., , Oct. 27, 2016 (GLOBE NEWSWIRE) -- Applied Micro Circuits Corporation (Nasdaq:AMCC) (“AppliedMicro”) today reported 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 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.

   
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      
             

 

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    
                     

 

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.  
   

 

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      
                     

 

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    
                     


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

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

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