Applied Micro Circuits Corporation Reports Second Quarter Fiscal 2011 Financial Results
October 28 2010 - 4:05PM
Applied Micro Circuits Corporation (Nasdaq:AMCC) ("AppliedMicro")
today reported its financial results for the second quarter of
fiscal 2011, ended September 30, 2010.
- Q2 2011 net revenues were $66.0 million, up 8.5% sequentially
and up 34% year over year.
- Q2 2011 GAAP net income was $3.6 million or $0.05 per share
compared to net income of $1.4 million or $0.02 per share for the
first quarter of fiscal 2011.
- Q2 2011 non-GAAP EPS was $0.16 per share on net income of $10.7
million, compared to $0.12 per share on net income of $8.3 million,
from continuing operations, for the first quarter of fiscal
2011.
- Total cash was approximately $182.6 million as of September 30,
2010 and was net of $32.0 million paid for the acquisition of TPack
A/S and $23.1 million spent on repurchasing 2,529,500 AppliedMicro
shares.
- During the quarter ended September 30, 2010, AppliedMicro
completed the acquisition of TPack A/S.
Net revenues for the second quarter of fiscal 2011 were $66.0
million compared to $60.8 million in the first quarter of fiscal
2011, representing a sequential increase of 8.5% and an increase of
34% over the $49.2 million in net revenues reported in the second
quarter of fiscal 2010. Revenues for the first six months were
$126.8 million compared to $94.3 million for the comparable period
last year, a 34% increase.
The net income on a generally accepted accounting principles
(GAAP) basis for the second quarter of fiscal 2011 was $3.6 million
or $0.05 per share. The second quarter GAAP net income compares
with a net income of $1.4 million or $0.02 per share for the first
quarter of fiscal 2011 and a net loss of $(6.7) million or $(0.10)
per share for the second quarter of fiscal 2010. Year to date, GAAP
net income was $5.0 million or $0.07 per share compared to $(3.8)
million or $(0.06) per share for the first six months of fiscal
2010.
Non-GAAP income from continuing operations for the second
quarter of fiscal 2011 was $10.7 million or $0.16 per share,
compared to non-GAAP income from continuing operations of $8.3
million or $0.12 per share in the first quarter of fiscal 2011 and
non-GAAP net income from continuing operations of $1.3 million or
$0.02 per share for the second quarter of fiscal 2010. Year to
date, non-GAAP net income from continuing operations was $19.0
million or $0.28 per share compared to $2.2 million or $0.03 per
share for the first six months of fiscal 2010.
"We had another very good quarter that demonstrated the strength
of our execution. We continued to build our product pipeline and
further strengthened our capabilities with the recently closed
TPack acquisition. AppliedMicro remains well positioned to
capitalize on the OTN market as it rolls into the enterprise
portion of the networks and our recent processor product releases
are being well received by our customers," said Dr.Paramesh Gopi,
President and Chief Executive Officer.
Bob Gargus, Chief Financial Officer, commented, "We had a very
strong quarter with significant improvements in virtually all
profitability measurements. We are pleased with both our income
statement as well as our balance sheet progress. Despite the
excellent quarter we are cautious entering the December quarter
given recent softening in the market."
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 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,
October 28, 2010, at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time
to discuss additional details regarding the Company's performance
for the second quarter of fiscal 2011 and to provide guidance for
the third quarter of fiscal 2011. You may access the
conference call via any of the following:
Teleconference: |
800-901-5218 |
Conference ID: |
89279711 |
Web Broadcast: |
http://www.apm.com |
Replay: |
888-286-8010 (access code: 82420330,
available through November 5, 2010) |
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, 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) |
|
|
|
|
|
|
|
September 30, |
March 31, |
ASSETS |
2010 |
2010 |
|
|
|
|
|
|
Current assets: |
|
|
Cash, cash equivalents and short-term
investments |
$ 182,568 |
$ 206,643 |
Accounts receivable, net |
22,612 |
22,892 |
Inventories |
17,557 |
15,387 |
Other current assets |
15,948 |
18,098 |
Total current assets |
238,685 |
263,020 |
Property and equipment, net |
29,633 |
25,879 |
Goodwill |
13,739 |
-- |
Purchased intangibles, net |
33,218 |
16,850 |
Other assets |
9,130 |
10,295 |
Total assets |
$ 324,405 |
$ 316,044 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
|
Current liabilities: |
|
|
Accounts payable |
$ 20,716 |
$ 20,074 |
Other current liabilities |
21,292 |
15,096 |
Total current liabilities |
42,008 |
35,170 |
Contingent consideration and other
liabilities |
3,206 |
-- |
Stockholders' equity |
279,191 |
280,874 |
Total liabilities and stockholders'
equity |
$ 324,405 |
$ 316,044 |
|
|
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, |
|
2010 |
2010 |
2009 |
2010 |
2009 |
|
|
|
|
|
|
Net revenues |
$ 65,953 |
$ 60,810 |
$ 49,232 |
$ 126,763 |
$ 94,284 |
Cost of revenues |
23,435 |
22,485 |
23,796 |
45,920 |
45,971 |
Gross profit |
42,518 |
38,325 |
25,436 |
80,843 |
48,313 |
Operating expenses: |
|
|
|
|
|
Research and development |
27,339 |
25,777 |
20,828 |
53,116 |
40,242 |
Selling, general and administrative |
13,087 |
11,624 |
11,991 |
24,711 |
22,510 |
Amortization of purchased
intangibles |
1,079 |
1,005 |
1,005 |
2,084 |
2,010 |
Restructuring charges (recoveries),
net |
164 |
369 |
(125) |
533 |
(279) |
Total operating expenses |
41,669 |
38,775 |
33,699 |
80,444 |
64,483 |
Operating income (loss) |
849 |
(450) |
(8,263) |
399 |
(16,170) |
Interest and other income (expense) and
other-than-temporary impairment, net |
3,102 |
2,081 |
(3,425) |
5,183 |
(1,836) |
Income (loss) from continuing operations
before income taxes |
3,951 |
1,631 |
(11,688) |
5,582 |
(18,006) |
Income tax expense (benefit) |
376 |
240 |
(3,617) |
616 |
(7,136) |
Income (loss) from continuing operations |
3,575 |
1,391 |
(8,071) |
4,966 |
(10,870) |
Income from discontinued operations net of
income taxes |
-- |
-- |
1,347 |
-- |
7,044 |
Net income (loss) |
$ 3,575 |
$ 1,391 |
$ (6,724) |
$ 4,966 |
$ (3,826) |
|
|
|
|
|
|
Basic income (loss) per share: |
|
|
|
|
|
Income (loss) per share from continuing
operations |
$ 0.05 |
$ 0.02 |
$ (0.12) |
$ 0.08 |
$ (0.16) |
Income per share from discontinued
operations |
0.00 |
0.00 |
0.02 |
0.00 |
0.10 |
Net income (loss) per share |
$ 0.05 |
$ 0.02 |
$ (0.10) |
$ 0.08 |
$ (0.06) |
Shares used in calculating basic income
(loss) per share |
65,752 |
66,005 |
66,469 |
65,879 |
66,270 |
|
|
|
|
|
|
Diluted income (loss) per share: |
|
|
|
|
|
Income (loss) per share from continuing
operations |
$ 0.05 |
$ 0.02 |
$ (0.12) |
$ 0.07 |
$ (0.16) |
Income per share from discontinued
operations |
0.00 |
0.00 |
0.02 |
0.00 |
0.10 |
Net income (loss) per share |
$ 0.05 |
$ 0.02 |
$ (0.10) |
$ 0.07 |
$ (0.06) |
Shares used in calculating diluted income
(loss) per share |
68,021 |
68,735 |
66,469 |
68,378 |
66,270 |
|
|
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 |
Six Months Ended |
|
September 30, |
June 30, |
September 30, |
September 30, |
September 30, |
|
2010 |
2010 |
2009 |
2010 |
2009 |
|
|
|
|
|
|
GAAP net income (loss) from continuing
operations |
$ 3,575 |
$ 1,391 |
$ (8,071) |
$ 4,966 |
$ (10,870) |
Adjustments: |
|
|
|
|
|
Stock-based compensation charges |
3,975 |
3,846 |
3,767 |
7,821 |
6,382 |
Amortization of purchased
intangibles |
3,802 |
3,630 |
4,268 |
7,432 |
8,856 |
Acquisition transaction expenses |
859 |
-- |
-- |
859 |
-- |
Restructuring charges (recoveries),
net |
164 |
369 |
(125) |
533 |
(279) |
Impairment of strategic investment |
-- |
-- |
2,000 |
-- |
2,000 |
Other-than-temporary investment
impairment |
(1,688) |
(908) |
3,133 |
(2,596) |
3,308 |
Payroll taxes on certain stock option
exercises |
4 |
-- |
-- |
4 |
-- |
Income tax adjustments |
44 |
(17) |
(3,658) |
27 |
(7,204) |
Total GAAP to Non-GAAP adjustments |
7,160 |
6,920 |
9,385 |
14,080 |
13,063 |
|
|
|
|
|
|
Non-GAAP income from continuing
operations |
$ 10,735 |
$ 8,311 |
$ 1,314 |
$ 19,046 |
$ 2,193 |
|
|
|
|
|
|
Diluted income per share from continuing
operations |
$ 0.16 |
$ 0.12 |
$ 0.02 |
$ 0.28 |
$ 0.03 |
|
|
|
|
|
|
Shares used in calculating diluted income per
share |
68,021 |
68,735 |
68,409 |
68,378 |
67,571 |
|
|
|
|
|
|
Income (loss) per share from continuing
operations: |
|
|
|
|
|
GAAP income (loss) per share |
$ 0.05 |
$ 0.02 |
$ (0.12) |
$ 0.07 |
$ (0.16) |
GAAP to non-GAAP adjustments |
0.11 |
0.10 |
0.14 |
0.21 |
0.19 |
Non-GAAP income per share from continuing
operations |
$ 0.16 |
$ 0.12 |
$ 0.02 |
$ 0.28 |
$ 0.03 |
|
|
|
|
|
|
Reconciliation of shares used in
calculating non-GAAP income per share: |
|
|
|
|
Shares used in calculating the basic
income (loss) per share |
65,752 |
66,005 |
66,469 |
65,879 |
66,270 |
Adjustment for dilutive
securities |
2,269 |
2,730 |
1,940 |
2,499 |
1,301 |
Non-GAAP shares used in the EPS
calculation |
68,021 |
68,735 |
68,409 |
68,378 |
67,571 |
|
|
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 |
Six Months Ended |
|
September 30, |
June 30, |
September 30, |
September 30, |
September 30, |
|
2010 |
2010 |
2009 |
2010 |
2009 |
GROSS PROFIT: |
|
|
|
|
|
GAAP gross profit |
$ 42,518 |
$ 38,325 |
$ 25,436 |
$ 80,843 |
$ 48,313 |
Gross loss from discontinued
operations |
-- |
-- |
652 |
-- |
435 |
Amortization of purchased
intangibles |
2,723 |
2,625 |
3,263 |
5,348 |
6,846 |
Stock-based compensation expense |
180 |
153 |
143 |
333 |
254 |
Non-GAAP gross profit |
$ 45,421 |
$ 41,103 |
$ 29,494 |
$ 86,524 |
$ 55,848 |
|
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
|
GAAP operating expenses |
$ 41,669 |
$ 38,775 |
$ 33,699 |
$ 80,444 |
$ 64,483 |
Operating expenses from discontinued
operations |
-- |
-- |
321 |
-- |
1,460 |
Stock-based compensation expense |
(3,795) |
(3,693) |
(3,624) |
(7,488) |
(6,128) |
Amortization of purchased
intangibles |
(1,079) |
(1,005) |
(1,005) |
(2,084) |
(2,010) |
Acquisition transaction expenses |
(859) |
-- |
-- |
(859) |
-- |
Restructuring (charges) recoveries,
net |
(164) |
(369) |
125 |
(533) |
279 |
Payroll taxes on certain stock option
exercises |
(4) |
-- |
-- |
(4) |
-- |
Non-GAAP operating expenses |
$ 35,768 |
$ 33,708 |
$ 29,516 |
$ 69,476 |
$ 58,084 |
|
|
|
|
|
|
INTEREST AND OTHER INCOME (EXPENSE)
AND OTHER-THAN-TEMPORARY IMPAIRMENT, NET: |
|
|
|
|
|
GAAP interest and other income and
other-than-temporary impairment, net |
$ 3,102 |
$ 2,081 |
$ (3,425) |
$ 5,183 |
$ (1,836) |
Impairment of strategic investment |
-- |
-- |
2,000 |
-- |
2,000 |
Other-than-temporary investment
impairment |
(1,688) |
(908) |
3,133 |
(2,596) |
3,308 |
Non-GAAP interest and other income,
net |
$ 1,414 |
$ 1,173 |
$ 1,708 |
$ 2,587 |
$ 3,472 |
|
|
|
|
|
|
INCOME TAX EXPENSE
(BENEFIT): |
|
|
|
|
|
GAAP income tax expense (benefit) |
$ 376 |
$ 240 |
$ (3,617) |
$ 616 |
$ (7,136) |
Income tax expense (benefit) from
discontinued operations |
-- |
-- |
(304) |
-- |
3,297 |
Income tax adjustments |
(44) |
17 |
3,972 |
(27) |
3,876 |
Non-GAAP income tax expense (benefit) |
$ 332 |
$ 257 |
$ 51 |
$ 589 |
$ 37 |
|
|
|
|
|
|
RESEARCH AND DEVELOPMENT
: |
|
|
|
|
|
GAAP research and development |
$ 27,339 |
$ 25,777 |
$ 20,828 |
$ 53,116 |
$ 40,242 |
Research and development from
discontinued operations |
-- |
-- |
83 |
-- |
677 |
Stock-based compensation expense |
(1,931) |
(1,971) |
(1,594) |
(3,902) |
(2,866) |
Payroll taxes on certain stock option
exercises |
(2) |
-- |
-- |
(2) |
-- |
Non-GAAP research and development |
$ 25,406 |
$ 23,806 |
$ 19,317 |
$ 49,212 |
$ 38,053 |
|
|
|
|
|
|
SELLING, GENERAL AND ADMINISTRATIVE
: |
|
|
|
|
|
GAAP selling, general and
administrative |
$ 13,087 |
$ 11,624 |
$ 11,991 |
$ 24,711 |
$ 22,510 |
Selling, general and administrative from
discontinued operations |
-- |
-- |
238 |
-- |
783 |
Stock-based compensation expense |
(1,864) |
(1,722) |
(2,030) |
(3,586) |
(3,262) |
Acquisition transaction expenses |
(859) |
-- |
-- |
(859) |
-- |
Payroll taxes on certain stock option
exercises |
(2) |
-- |
-- |
(2) |
-- |
Non-GAAP selling, general and
administrative |
$ 10,362 |
$ 9,902 |
$ 10,199 |
$ 20,264 |
$ 20,031 |
|
|
APPLIED MICRO CIRCUITS
CORPORATION |
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS |
(in
thousands) |
(unaudited) |
|
|
|
Six Months Ended
September 30, |
|
|
2010 |
2009 |
Operating activities: |
|
|
|
Net income (loss) |
|
$ 4,966 |
$ (3,826) |
Adjustments to reconcile net
income (loss) to net cash provided by (used for) operating
activities: |
Depreciation |
|
3,639 |
3,173 |
Amortization of purchased
intangibles |
|
7,432 |
8,856 |
Stock-based compensation expense: |
|
|
|
Stock options |
|
2,076 |
2,090 |
Restricted stock units |
|
5,745 |
4,292 |
Other-than-temporary
impairment of marketable securities |
-- |
3,454 |
Impairment of strategic investment |
|
-- |
2,000 |
Tax benefit from other comprehensive
income |
|
-- |
(4,007) |
Capitalization of prior years mask set
costs |
|
(1,177) |
-- |
Net (gain) loss on disposals of
property |
|
(320) |
24 |
Net gain on sale of storage business
unit |
|
-- |
(11,366) |
Changes in operating assets
and liabilities, net of amounts acquired: |
|
|
Accounts receivable |
|
850 |
(3,738) |
Inventories |
|
(2,170) |
6,720 |
Other assets |
|
(1,515) |
(503) |
Accounts payable |
|
321 |
(4,398) |
Accrued payroll and other accrued
liabilities |
|
1,847 |
(6,365) |
Deferred tax liability |
|
656 |
-- |
Deferred revenue |
|
186 |
(1,723) |
Net cash provided by (used for) operating
activities |
|
22,536 |
(5,317) |
Investing activities: |
|
|
|
Proceeds from sales and
maturities of short-term investments |
36,132 |
42,735 |
Purchases of short-term
investments |
|
(90,012) |
(33,093) |
Proceeds from sale of property and
equipment |
|
345 |
-- |
Purchase of property, equipment and other
assets |
|
(5,987) |
(3,664) |
Proceeds from sale of strategic
investment |
|
4,991 |
-- |
Purchase of sale of strategic
investment |
|
-- |
(1,000) |
Proceeds from sale of storage business
unit |
|
-- |
21,527 |
Purchase of a business, net of cash
acquired |
|
(31,484) |
|
Net cash provided by (used for) investing
activities |
|
(86,015) |
26,505 |
Financing activities: |
|
|
|
Proceeds from issuances of common
stock |
|
4,036 |
1,767 |
Funding of restricted stock units
withheld for taxes |
|
(2,361) |
(666) |
Repurchases of common stock |
|
(23,112) |
-- |
Funding of structured stock repurchase
agreements |
|
(10,000) |
(21,797) |
Funds received from
structured stock repurchase agreements |
15,512 |
12,044 |
Other |
|
(356) |
(55) |
Net cash used for financing
activities |
|
(16,281) |
(8,707) |
Net increase (decrease) in cash and cash
equivalents |
|
(79,760) |
12,481 |
Cash and cash equivalents at the beginning of
the period |
|
122,526 |
99,337 |
Cash and cash equivalents at the end of the
period |
|
42,766 |
111,818 |
CONTACT: Applied Micro Circuits Corporation
Investor Relations Contact:
Bob Gargus
(408) 542-8752
rgargus@apm.com
Media Contact:
Tally Kaplan-Porat
(408) 702-3139
tkaplan@apm.com
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