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Applied Micro Circuits Corp.$8.45$.05.60%

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 Applied Micro Circuits Corporation Reports Second Quarter Fiscal 2017 Financial Results
   Thursday, October 27, 2016 4:21:27 PM ET

Company Delivers Seventh Sequential Quarter of Revenue Growth

GAAP Loss Narrows to $0.05 per share; Non-GAAP Earnings Total $0.02 per share

Applied Micro Circuits Corporation (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,  March 31,
                                                   2016           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,     June 30,       September 30,     September 30,      September 30,
                                                                2016              2016           2015              2016               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,              June 30,                   September 30,              September 30,              September 30,
                                                                            2016                       2016                       2015                       2016                       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,     June 30,      September 30,     September 30,      September 30,
                                                                    2016              2016          2015              2016               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,      June 30,       September 30,      September 30,      September 30,
                                                                                 2016               2016           2015               2016               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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