updated 4/28/2011 4:17:44 PM ET 2011-04-28T20:17:44

SUNNYVALE, Calif., April 28, 2011 (GLOBE NEWSWIRE) -- Applied Micro Circuits Corporation (Nasdaq:AMCC) ("AppliedMicro") today reported its financial results for the fourth quarter of fiscal 2011, ended March 31 2011.

  • Q4 2011 net revenues were $58.6 million, down 6.1% sequentially and up 1.7% year over year.
     
  • Q4 2011 GAAP net loss was $4.0 million or $0.06 per share compared to net loss of $2.0 million or $0.03 per share for the third quarter of fiscal 2011.
     
  • Q4 2011 non-GAAP EPS was $0.04 per share on net income of $2.7 million, compared to $0.10 per share on net income of $6.8 million, from continuing operations, for the third quarter of fiscal 2011.
     
  • Total cash, cash equivalents and short-term investments was approximately $168.1 million as of March 31, 2011 compared to $190.2 million at the end of December 31, 2010. The decrease in cash is mainly due to stock buybacks and investment in working capital.
     
  • The Company announced attainment of milestone of shipping 1 million Optical Transport Network (OTN) ports.
     
  • During the quarter, the Company announced the introduction of APM86392 and APM86391, of its PacketPro™ family of multi-core embedded processing devices. The industry's first embedded multi-core processors that enable two or more independent subsystems to operate concurrently with effective isolation on a single chip.

Net revenues for the fourth quarter of fiscal 2011 were $58.6 million compared to $62.4 million in the third quarter of fiscal 2011, representing a sequential decrease of 6.1% and an increase of 1.7% over the $57.6 million in net revenues reported in the fourth quarter of fiscal 2010. Revenues for the full year were $247.7 million compared to $205.6 million for the full year fiscal 2010, a 20.5% increase.

The net loss on a generally accepted accounting principles (GAAP) basis for the fourth quarter of fiscal 2011 was $4.0 million or $0.06 per share. The fourth quarter GAAP net loss compares with a net loss of $2.0 million or $0.03 per share for the third quarter of fiscal 2011 and a net loss of $0.1 million or $0.00 per share for the fourth quarter of fiscal 2010. For the full year ended March 31, 2011, GAAP net loss was $1.0 million or $0.02 per share compared to a net loss of $7.5 million or $0.11 per share for the full fiscal year 2010.

Non-GAAP income from continuing operations for the fourth quarter of fiscal 2011 was $2.7 million or $0.04 per diluted share, compared to non-GAAP income from continuing operations of $6.8 million or $0.10 per diluted share in the third quarter of fiscal 2011 and non-GAAP net income from continuing operations of $6.1 million or $0.09 per diluted share for the fourth quarter of fiscal 2010. For the full fiscal year 2011, non-GAAP net income from continuing operations was $28.5 million or $0.42 per diluted share compared to $10.9 million or $0.16 per diluted share for the full fiscal year 2010.

"We executed to plan and continue to build upon our leadership position in the OTN market. With our increased pace of product introductions, we are confident of expanding our market share in all our key focus markets," said Dr.Paramesh Gopi, President and Chief Executive Officer.

Bob Gargus, Chief Financial Officer commented, "Lead times continue to be challenging and going forward are further challenged by the supply chain issues from the Japan earthquake. Overall we did a good job of meeting our revenue estimates and managing inventories to better serve our customers. Looking forward it appears that overall market demand, for the next 2 or so quarters, is consistent with our expectations."

AppliedMicro reports its financial results in accordance with GAAP and also provides additional financial data that have not been prepared in accordance with GAAP. The non-GAAP results and other financial measures reported by the Company exclude certain items that are required by GAAP, such as restructuring charges, amortization of purchased intangibles, stock-based compensation charges, other-than-temporary impairment on investments, impairment of strategic investment, one-time acquisition related charges, payroll taxes on certain stock option exercises and non-cash tax adjustments. Income taxes are adjusted to an estimated non-GAAP effective tax rate. These non-GAAP measures are not a substitute for GAAP measures and may not be consistent with the presentation used by other companies. The Company uses the non-GAAP financial measures to evaluate and manage its operations. The Company is providing this information to allow investors to perform additional financial analysis and because it is consistent with the financial models and estimates published by analysts who follow the Company. The attached schedule reconciles non-GAAP results and other financial measures reported by the Company with the most directly comparable GAAP financial measures. 

AppliedMicro management will be holding a conference call today, April 28, 2011 at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time to discuss additional details regarding the Company's performance for the fourth quarter of fiscal 2011 and to provide guidance for the first quarter of fiscal 2012. You may access the conference call via any of the following:

Teleconference:  866-700-7441
Conference ID: 87823970
Web Broadcast:  http://www.apm.com
Replay:  888-286-8010 (access code: 19764072, available through May 5, 2011)

AppliedMicro Overview

AppliedMicro is a global leader in energy conscious high performance computing and connectivity solutions for telco, enterprise, data center, consumer and SMB applications. AppliedMicro's corporate headquarters are located in Sunnyvale, California. Sales and engineering offices are located throughout the world. For further information regarding AppliedMicro, visit the company's Web site at http://www.apm.com .

This news release contains forward-looking statements that reflect the Company's current view with respect to future events and financial performance, including statements regarding the Company's focus, product cycles, design-win pipeline, strategic re-focus and future revenues. 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, increased supplier lead times and other supply chain constraints, the businesses of the Company's major customers, reductions, rescheduling or cancellation of orders by the Company's customers, successful and timely development of products, successful integration and management of recently acquired businesses, market acceptance of new products, and general economic conditions. 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, 2010, and the Company's 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)
(unaudited)
     
  March 31, March 31,
ASSETS 2011 2010
     
Current assets:    
Cash, cash equivalents and short-term investments  $168,051 $206,643
Accounts receivable, net  19,997  22,892
Inventories  26,561  15,387
Other current assets  16,784  18,098
Total current assets  231,393  263,020
Property and equipment, net  32,023  25,879
Goodwill  13,183  --
Purchased intangibles, net  23,388  16,850
Other assets  8,670  10,295
Total assets  $308,657  $316,044
 
LIABILITIES AND STOCKHOLDERS' EQUITY
     
Current liabilities:    
Accounts payable  $24,431  $20,074
Other current liabilities  22,416  15,096
Total current liabilities  46,847  35,170
Stockholders' equity  261,810  280,874
Total liabilities and stockholders' equity  $308,657  $316,044
           
           
APPLIED MICRO CIRCUITS CORPORATION          
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS          
(in thousands, except per share data)          
(unaudited)        
     
  Three Months Ended Year Ended
  March 31, December 31, March 31, March 31, March 31,
  2011 2010 2010 2011 2010
           
Net revenues  $58,583  $62,364  $57,610  $247,710  $205,598
Cost of revenues  25,476  23,886  22,787  95,282  92,931
Gross profit  33,107  38,478  34,823  152,428  112,667
Operating expenses:          
Research and development  26,932  28,684  24,255  108,732  88,096
Selling, general and administrative  11,733  12,729  11,937  49,173  45,901
Amortization of purchased intangibles  1,713  1,488  1,005  5,285  4,020
Restructuring charges (recoveries), net  (34)  33  1,025  532  746
Total operating expenses  40,344  42,934  38,222  163,722  138,763
Operating loss  (7,237)  (4,456)  (3,399)  (11,294)  (26,096)
Interest and other income (expense), net and other-than-temporary impairment  3,179  2,325  2,106  10,687  1,889
Loss from continuing operations before income taxes  (4,058)  (2,131)  (1,293)  (607)  (24,207)
Income tax (benefit) expense  (47)  (170)  (1,226)  399  (10,610)
Loss from continuing operations  (4,011)  (1,961)  (67)  (1,006)  (13,597)
Income from discontinued operations, net of income taxes  --  --  2  --  6,112
Net loss  $(4,011)  $(1,961)  $(65)  $(1,006)  $(7,485)
           
Basic and diluted income (loss) per share:          
Loss per share from continuing operations $(0.06) $(0.03) $0.00 $(0.02) $(0.21)
Income per share from discontinued operations 0.00 0.00 0.00 0.00 0.10
Net loss per share $(0.06) $(0.03) $0.00 $(0.02) $(0.11)
Shares used in calculating basic and diluted income (loss) per share  64,236  64,647  65,345  65,160  66,006
         
         
           
           
           
APPLIED MICRO CIRCUITS CORPORATION
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS)
(in thousands, except per share data)
(unaudited)
 
  Three Months Ended Year Ended
  March 31, December 31, March 31, March 31, March 31,
  2011 2010 2010 2011 2010
           
GAAP net loss from continuing operations  $(4,011)  $(1,961)  $(67)  $(1,006)  $(13,597)
Adjustments:          
Stock-based compensation charges  3,774  5,089  3,563  16,684  13,682
Amortization of purchased intangibles  4,978  4,757  3,630  17,167  16,116
Acquisition transaction expenses  --  --  --  859  --
Restructuring charges (recoveries), net  (34)  33  1,025  532  746
Impairment of strategic investment  --  --  --  --  2,000
Other-than-temporary investment impairment   (1,914)  (774)  (642)  (5,284)  2,927
Payroll taxes on certain stock option exercises  --  --  --  4  --
Income tax adjustments  (129)  (379)  (1,414)  (481)  (10,948)
Total GAAP to Non-GAAP adjustments  6,675  8,726  6,162  29,481  24,523
           
Non-GAAP net income from continuing operations  $2,664  $6,765  $6,095  $28,475  $10,926
           
Diluted income per share from continuing operations $0.04 $0.10 $0.09 $0.42 $0.16
           
Shares used in calculating diluted income per share   65,741  65,890  67,573  67,097  67,703
       
Net income (loss) per share from continuing operations:      
GAAP income (loss) per share  $(0.06) $(0.03) $0.00 $(0.02) $(0.21)
GAAP to non-GAAP adjustments  0.10 0.13 0.09 0.44 0.37
Non-GAAP net income per share from continuing operations $0.04 $0.10 $0.09 $0.42 $0.16
 

Reconciliation of shares used in calculating non-GAAP income

per share:
   
Shares used in calculating the basic income (loss) per share   64,236  64,647  65,345  65,160  66,006
Adjustment for dilutive securities   1,505  1,243  2,228  1,937  1,697
Non-GAAP shares used in the EPS calculation   65,741  65,890  67,573  67,097  67,703
 
 
APPLIED MICRO CIRCUITS CORPORATION
SCHEDULE OF SELECTED GAAP TO NON-GAAP ADJUSTMENTS
(in thousands)
(unaudited)
 
The following schedule reconciles selected line items from the GAAP basis statements of operations to the non-GAAP statements of operations:
 
    Three Months Ended Year Ended
    March 31, December 31, March 31, March 31, March 31,
    2011 2010 2010 2011 2010
GROSS PROFIT:          
GAAP gross profit  $33,107  $38,478  $34,823  $152,428  $112,667
Gross income (loss) from discontinued operations  --  --  (19)  --  422
Amortization of purchased intangibles  3,265  3,269  2,625  11,882  12,096
Stock-based compensation expense  154  164  169  651  587
Non-GAAP gross profit  $36,526  $41,911  $37,598  $164,961  $125,772
           
OPERATING EXPENSES:          
GAAP operating expenses  $40,344  $42,934  $38,222  $163,722  $138,763
Operating expenses from discontinued operations  --  --  --  --  1,494
Stock-based compensation expense  (3,620)  (4,925)  (3,394)  (16,033)  (13,095)
Amortization of purchased intangibles  (1,713)  (1,488)  (1,005)  (5,285)  (4,020)
Acquisition transaction expenses  --  --  --  (859)  --
Restructuring (charges) recoveries, net  34  (33)  (1,025)  (532)  (746)
Payroll taxes on certain stock option exercises  --  --  --  (4)  --
Non-GAAP operating expenses $35,045 $36,488  $32,798  $141,009  $122,396
           
INTEREST AND OTHER INCOME (EXPENSE), NET          
AND OTHER-THAN-TEMPORARY IMPAIRMENT:          
GAAP interest and other income and other-than-temporary impairment, net  $3,179  $2,325  $2,106  $10,687  $1,889
Impairment of strategic investment  --  --  --  --  2,000
Other-than-temporary investment impairment   (1,914)  (774)  (642)  (5,284)  2,927
Non-GAAP interest and other income, net  $1,265  $1,551  $1,464  $5,403  $6,816
           
INCOME TAX EXPENSE (BENEFIT):          
GAAP income tax expense (benefit)  $(47)  $(170)  $(1,226)  $399  $(10,610)
Income tax expense (benefit) from discontinued operations  --  --  (21)  --  4,182
Income tax adjustments  129  379  1,435  482  6,734
Non-GAAP income tax expense  $82  $209  $188  $881  $306
           
RESEARCH AND DEVELOPMENT :          
GAAP research and development   $26,932  $28,684  $24,255  $108,732  $88,096
Research and development from discontinued operations  --  --  --  --  687
Stock-based compensation expense  (2,288)  (2,809)  (1,710)  (8,999)  (6,268)
Payroll taxes on certain stock option exercises   --  --  --  (2)  --
Non-GAAP research and development   $24,644  $25,875  $22,545  $99,731  $82,515
           
SELLING, GENERAL AND ADMINISTRATIVE :          
GAAP selling, general and administrative   $11,733  $12,729  $11,937  $49,173  $45,901
Selling, general and administrative from discontinued operations  --  --  --  --  807
Stock-based compensation expense  (1,332)  (2,116)  (1,684)  (7,034)  (6,827)
Acquisition transaction expenses  --  --  --  (859)  --
Payroll taxes on certain stock option exercises   --  --  --  (2)  --
Non-GAAP selling, general and administrative   $10,401  $10,613  $10,253  $41,278  $39,881
 
 
APPLIED MICRO CIRCUITS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
  Year Ended March 31,
  2011 2010
Operating activities:    
Net loss  $ (1,006)  $ (7,485)
Adjustments to reconcile net loss to net cash provided by operating activities:    
Depreciation   7,243  6,778
Amortization of purchased intangibles   17,162  16,117
Stock-based compensation expense:    
Stock options   5,592  4,125
Restricted stock units   11,092  9,557
Other-than-temporary impairment of marketable securities   --   4,287
Impairment of strategic investment  --   2,000
Non-cash restructuring charges  --   359
Tax benefit from other comprehensive income  --   (6,204)
Capitalization of prior years mask set costs  (1,177)  -- 
Net (gain) loss on disposals of property   (322)  145
Net gain on sale of storage business unit   --   (11,366)
Changes in operating assets and liabilities, net of amounts acquired:  
Accounts receivable   3,465  (5,355)
Inventories   (11,174)  10,754
Other assets   (1,561)  (237)
Accounts payable   1,842  2,245
Accrued payroll and other accrued liabilities   (1,162)  (7,077)
Deferred revenue   956  (1,776)
Net cash provided by operating activities   30,950  16,867
Investing activities:    
Proceeds from sales and maturities of short-term investments  121,876  185,724
Purchases of short-term investments   (124,950)  (173,265)
Proceeds from sale of property and equipment  365  -- 
Purchase of property, equipment and other assets  (9,740)  (7,532)
Proceeds from sale of strategic investment  4,991  -- 
Purchase of strategic investment  (330)  (1,000)
Proceeds from sale of storage business unit   --   21,527
Purchase of a business, net of cash acquired  (31,484)  -- 
Net cash (used for) provided by investing activities   (39,272)  25,454
Financing activities:    
Proceeds from issuances of common stock   8,045  3,825
Funding of restricted stock units withheld for taxes  (2,746)  (870)
Repurchases of common stock  (40,063)  (8,076)
Funding of structured stock repurchase agreements   (10,000)  (41,797)
Funds received from structured stock repurchase agreements  15,512  27,751
Other   (550)  35
Net cash used for financing activities   (29,802)  (19,132)
Net (decrease) increase in cash and cash equivalents   (38,124)  23,189
Cash and cash equivalents at the beginning of the period  122,526  99,337
Cash and cash equivalents at the end of the period  84,402  122,526
CONTACT: Investor Relations Contact:
         Applied Micro Circuits Corporation
         Bob Gargus
         Phone: (408) 542-8752
         E-Mail: rgargus@apm.com
         
         Media Contact:
         Applied Micro Circuits Corporation
         Tally Kaplan-Porat
         Phone: (408) 702-3139
         E-Mail: tkaplan@apm.com

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