Applied Micro Circuits Corporation Reports Third Quarter Fiscal 2011 Financial Results
January 27 2011 - 4:05PM
Applied Micro Circuits Corporation (Nasdaq:AMCC) ("AppliedMicro")
today reported its financial results for the third quarter of
fiscal 2011, ended December 31 2010.
- Q3 2011 net revenues were $62.4 million, down 5.4% sequentially
and up 16% year over year.
- Q3 2011 GAAP net loss was $2.0 million or $0.03 per share
compared to net income of $3.6 million or $0.05 per share for the
second quarter of fiscal 2011.
- Q3 2011 non-GAAP EPS was $0.10 per share on net income of $6.8
million, compared to $0.16 per share on net income of $10.7
million, from continuing operations, for the second quarter of
fiscal 2011.
- Total cash was approximately $190.2 million as of December 31,
2010 compared to $182.6 million at the end of September 2010. The
increase in cash is mainly due to cash flow from operations.
- PQX Universal FEC platform - which is a six 10G port device,
began shipping for revenue in December.
- During the quarter, the Company announced the following new
products:
- Mamba: single and dual-core embedded processing devices as the
first members of the Company's PacketPro(TM) System-on-Chip (SoC)
family.
- Industry's first family of 100 gigabit per second (100G)
optical network processors for the Packet-Optical Transport System
(P-OTS) and IP-over-DWDM transport markets.
Net revenues for the third quarter of fiscal 2011 were $62.4
million compared to $66.0 million in the second quarter of fiscal
2011, representing a sequential decrease of 5.4% and an increase of
16% over the $53.7 million in net revenues reported in the third
quarter of fiscal 2010. Revenues for the first nine months were
$189.1 million compared to $148.0 million for the comparable period
last year, a 28% increase.
The net loss on a generally accepted accounting principles
(GAAP) basis for the third quarter of fiscal 2011 was $2.0 million
or $0.03 per share. The third quarter GAAP net loss compares with a
net income of $3.6 million or $0.05 per share for the second
quarter of fiscal 2011 and a net loss of $3.6 million or $0.05 per
share for the third quarter of fiscal 2010. Year to date, GAAP net
income was $3.0 million or $0.04 per diluted share compared to a
net loss of $7.4 million or $0.11 per share for the first nine
months of fiscal 2010.
Non-GAAP income from continuing operations for the third quarter
of fiscal 2011 was $6.8 million or $0.10 per diluted share,
compared to non-GAAP income from continuing operations of $10.7
million or $0.16 per diluted share in the second quarter of fiscal
2011 and non-GAAP net income from continuing operations of $2.6
million or $0.04 per diluted share for the third quarter of fiscal
2010. Year to date, non-GAAP net income from continuing operations
was $25.8 million or $0.38 per diluted share compared to $4.8
million or $0.07 per diluted share for the first nine months of
fiscal 2010.
"Although we went into the quarter with knowledge of market
softness, our performance for the quarter was slightly better than
expected. During the year, we rolled out seven new leading
edge TSMC 40nm products that are being very well received by our
customers and are adding traction to the future growth of our OTN
and embedded processor markets," said Dr. Paramesh Gopi, President
and Chief Executive Officer.
Bob Gargus, Chief Financial Officer, commented, "We continued to
execute according to plan and beat our estimates. We also did a
good job of managing inventories to help buffer volatile
supply/demand cycles and better service our customers."
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,
January 27, 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 third quarter of fiscal 2011 and to provide guidance for
the fourth quarter of fiscal 2011. You may access the conference
call via any of the following:
Teleconference: |
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866-783-2144 |
Conference ID: |
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37250842 |
Web Broadcast: |
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http://www.apm.com |
Replay: |
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888-286-8010 (access code: 65016340,
available through February 3, 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, 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) |
|
|
|
ASSETS |
December 31, 2010 |
March 31, 2010 |
|
|
|
Current assets: |
|
|
Cash, cash equivalents and
short-term investments |
$ 190,196 |
$ 206,643 |
Accounts receivable, net |
14,266 |
22,892 |
Inventories |
22,323 |
15,387 |
Other current assets |
18,580 |
18,098 |
Total current assets |
245,365 |
263,020 |
Property and equipment, net |
30,819 |
25,879 |
Goodwill |
13,839 |
-- |
Purchased intangibles, net |
28,362 |
16,850 |
Other assets |
8,733 |
10,295 |
Total assets |
$ 327,118 |
$ 316,044 |
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
Accounts payable |
$ 19,885 |
$ 20,074 |
Other current liabilities |
25,190 |
15,096 |
Total current liabilities |
45,075 |
35,170 |
Contingent consideration and other
liabilities |
3,206 |
-- |
Stockholders' equity |
278,837 |
280,874 |
Total liabilities and
stockholders' equity |
$ 327,118 |
$ 316,044 |
|
|
|
|
|
|
|
|
|
|
|
|
APPLIED MICRO CIRCUITS
CORPORATION |
|
|
|
|
|
GAAP CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
|
|
|
|
(in thousands, except
per share data) |
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Nine Months Ended |
|
December 31, 2010 |
September 30, 2010 |
December 31, 2009 |
December 31, 2010 |
December 31, 2009 |
|
|
|
|
|
|
Net revenues |
$ 62,364 |
$ 65,953 |
$ 53,704 |
$ 189,127 |
$ 147,988 |
Cost of revenues |
23,886 |
23,435 |
24,173 |
69,806 |
70,144 |
Gross profit |
38,478 |
42,518 |
29,531 |
119,321 |
77,844 |
Operating expenses: |
|
|
|
|
|
Research and development |
28,684 |
27,339 |
23,599 |
81,800 |
63,841 |
Selling, general and
administrative |
12,729 |
13,087 |
11,454 |
37,440 |
33,964 |
Amortization of purchased
intangibles |
1,488 |
1,079 |
1,005 |
3,572 |
3,015 |
Restructuring charges
(recoveries), net |
33 |
164 |
-- |
566 |
(279) |
Total operating expenses |
42,934 |
41,669 |
36,058 |
123,378 |
100,541 |
Operating income (loss) |
(4,456) |
849 |
(6,527) |
(4,057) |
(22,697) |
Interest and other income (expense) and
other-than-temporary impairment, net |
2,325 |
3,102 |
1,619 |
7,508 |
(217) |
Income (loss) from continuing operations
before income taxes |
(2,131) |
3,951 |
(4,908) |
3,451 |
(22,914) |
Income tax expense (benefit) |
(170) |
376 |
(2,248) |
446 |
(9,384) |
Income (loss) from continuing operations |
(1,961) |
$3,575 |
(2,660) |
3,005 |
(13,530) |
Income (loss) from discontinued operations,
net of income taxes |
-- |
-- |
(934) |
-- |
6,110 |
Net income (loss) |
$ (1,961) |
$ 3,575 |
$ (3,594) |
$ 3,005 |
$ (7,420) |
|
|
|
|
|
|
Basic income (loss) per share: |
|
|
|
|
|
Income (loss) per share from
continuing operations |
$ (0.03) |
$ 0.05 |
$ (0.04) |
$ 0.05 |
$ (0.20) |
Income (loss) per share from
discontinued operations |
0.00 |
0.00 |
(0.01) |
0.00 |
0.09 |
Net income (loss) per
share |
$ (0.03) |
$ 0.05 |
$ (0.05) |
$ 0.05 |
$ (0.11) |
Shares used in calculating
basic income (loss) per share |
64,647 |
65,752 |
66,139 |
65,468 |
66,226 |
|
|
|
|
|
|
Diluted income (loss) per share: |
|
|
|
|
|
Income (loss) per share from
continuing operations |
$ (0.03) |
$ 0.05 |
$ (0.04) |
$ 0.04 |
$ (0.20) |
Income (loss) per share from
discontinued operations |
0.00 |
0.00 |
(0.01) |
0.00 |
0.09 |
Net income (loss) per
share |
$ (0.03) |
$ 0.05 |
$ (0.05) |
$ 0.04 |
$ (0.11) |
Shares used in calculating
diluted income (loss) per share |
64,647 |
68,021 |
66,139 |
67,549 |
66,226 |
|
|
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 |
Nine Months Ended |
|
|
December 31, 2010 |
September 30, 2010 |
December 31, 2009 |
December 31, 2010 |
December 31, 2009 |
|
|
|
|
|
|
|
GAAP net income (loss) from
continuing operations |
$ (1,961) |
$ 3,575 |
$ (2,660) |
$ 3,005 |
$ (13,530) |
Adjustments: |
|
|
|
|
|
|
Stock-based
compensation charges |
5,089 |
3,975 |
3,737 |
12,910 |
10,119 |
Amortization of
purchased intangibles |
4,757 |
3,802 |
3,630 |
12,189 |
12,486 |
Acquisition
transaction expenses |
-- |
859 |
-- |
859 |
-- |
Restructuring
charges (recoveries), net |
33 |
164 |
-- |
566 |
(279) |
Impairment of
strategic investment |
-- |
-- |
-- |
-- |
2,000 |
Other-than-temporary investment impairment |
(774) |
(1,688) |
261 |
(3,370) |
3,569 |
Payroll taxes on
certain stock option exercises |
-- |
4 |
-- |
4 |
-- |
Income tax adjustments |
|
(379) |
44 |
(2,330) |
(352) |
(9,534) |
Total GAAP to
Non-GAAP adjustments |
8,726 |
7,160 |
5,298 |
22,806 |
18,361 |
|
|
|
|
|
|
|
Non-GAAP income from continuing
operations |
$ 6,765 |
$ 10,735 |
$ 2,638 |
$ 25,811 |
$ 4,831 |
|
|
|
|
|
|
|
Diluted income per share from
continuing operations |
$ 0.10 |
$ 0.16 |
$ 0.04 |
$ 0.38 |
$ 0.07 |
|
|
|
|
|
|
|
Shares used in calculating
diluted income per share |
65,890 |
68,021 |
68,095 |
67,549 |
67,746 |
|
|
|
|
|
|
|
Income (loss) per share from
continuing operations: |
|
|
|
|
|
GAAP income (loss) per
share |
|
$ (0.03) |
$ 0.05 |
$ (0.04) |
$ 0.04 |
$ (0.20) |
GAAP to non-GAAP
adjustments |
0.13 |
0.11 |
0.08 |
0.34 |
0.27 |
Non-GAAP income per
share from continuing operations |
$ 0.10 |
$ 0.16 |
$ 0.04 |
$ 0.38 |
$ 0.07 |
|
|
|
|
|
|
|
Reconciliation of shares used in
calculating non-GAAP income per share: |
|
|
|
|
|
Shares used in
calculating the basic income (loss) per share |
64,647 |
65,752 |
66,139 |
65,468 |
66,226 |
Adjustment for
dilutive securities |
1,243 |
2,269 |
1,956 |
2,081 |
1,520 |
Non-GAAP shares
used in the EPS calculation |
65,890 |
68,021 |
68,095 |
67,549 |
67,746 |
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|
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 |
Nine Months Ended |
|
December 31, 2010 |
September 30, 2010 |
December 31, 2009 |
December 31, 2010 |
December 31, 2009 |
GROSS PROFIT: |
|
|
|
|
|
GAAP gross profit |
$ 38,478 |
$ 42,518 |
$ 29,531 |
$ 119,321 |
$ 77,844 |
Gross loss from discontinued
operations |
-- |
-- |
6 |
-- |
441 |
Amortization of purchased
intangibles |
3,269 |
2,723 |
2,625 |
8,617 |
9,471 |
Stock-based compensation
expense |
164 |
180 |
164 |
497 |
418 |
Non-GAAP gross profit |
$ 41,911 |
$ 45,421 |
$ 32,326 |
$ 128,435 |
$ 88,174 |
|
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
|
GAAP operating expenses |
$ 42,934 |
$ 41,669 |
$ 36,058 |
$ 123,378 |
$ 100,541 |
Operating expenses from
discontinued operations |
-- |
-- |
34 |
-- |
1,494 |
Stock-based compensation
expense |
(4,925) |
(3,795) |
(3,573) |
(12,413) |
(9,701) |
Amortization of purchased
intangibles |
(1,488) |
(1,079) |
(1,005) |
(3,572) |
(3,015) |
Acquisition transaction
expenses |
-- |
(859) |
-- |
(859) |
-- |
Restructuring (charges)
recoveries, net |
(33) |
(164) |
-- |
(566) |
279 |
Payroll taxes on certain stock
option exercises |
-- |
(4) |
-- |
(4) |
-- |
Non-GAAP operating expenses |
$ 36,488 |
$ 35,768 |
$ 31,514 |
$ 105,964 |
$ 89,598 |
|
|
|
|
|
|
INTEREST AND OTHER INCOME (EXPENSE)
AND OTHER-THAN-TEMPORARY IMPAIRMENT, NET: |
|
|
|
|
|
GAAP interest and other income
and other-than-temporary impairment, net |
$ 2,325 |
$ 3,102 |
$ 1,619 |
$ 7,508 |
$ (217) |
Impairment of
strategic investment |
-- |
-- |
-- |
-- |
2,000 |
Other-than-temporary investment impairment |
(774) |
(1,688) |
261 |
(3,370) |
3,569 |
Non-GAAP interest and other
income, net |
$ 1,551 |
$ 1,414 |
$ 1,880 |
$ 4,138 |
$ 5,352 |
|
|
|
|
|
|
INCOME TAX EXPENSE
(BENEFIT): |
|
|
|
|
|
GAAP income tax expense (benefit) |
$ (170) |
$ 376 |
$ (2,248) |
$ 446 |
$ (9,384) |
Income tax expense (benefit)
from discontinued operations |
-- |
-- |
906 |
-- |
4,203 |
Income tax adjustments |
379 |
(44) |
1,423 |
352 |
5,299 |
Non-GAAP income tax expense (benefit) |
$ 209 |
$ 332 |
$ 81 |
$ 798 |
$ 118 |
|
|
|
|
|
|
RESEARCH AND DEVELOPMENT
: |
|
|
|
|
|
GAAP research and development |
$ 28,684 |
$ 27,339 |
$ 23,599 |
$ 81,800 |
$ 63,841 |
Research and development from
discontinued operations |
-- |
-- |
10 |
-- |
687 |
Stock-based compensation
expense |
(2,809) |
(1,931) |
(1,692) |
(6,711) |
(4,558) |
Payroll taxes on certain stock
option exercises |
-- |
(2) |
-- |
(2) |
-- |
Non-GAAP research and development |
$ 25,875 |
$ 25,406 |
$ 21,917 |
$ 75,087 |
$ 59,970 |
|
|
|
|
|
|
SELLING, GENERAL AND ADMINISTRATIVE
: |
|
|
|
|
|
GAAP selling, general and
administrative |
$ 12,729 |
$ 13,087 |
$ 11,454 |
$ 37,440 |
$ 33,964 |
Selling, general and
administrative from discontinued operations |
-- |
-- |
24 |
-- |
807 |
Stock-based compensation
expense |
(2,116) |
(1,864) |
(1,881) |
(5,702) |
(5,143) |
Acquisition transaction
expenses |
-- |
(859) |
-- |
(859) |
-- |
Payroll taxes on certain stock
option exercises |
-- |
(2) |
-- |
(2) |
-- |
Non-GAAP selling, general and
administrative |
$ 10,613 |
$ 10,362 |
$ 9,597 |
$ 30,877 |
$ 29,628 |
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APPLIED MICRO CIRCUITS
CORPORATION |
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS |
(in
thousands) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
December 31, |
|
|
|
|
|
|
|
|
|
2010 |
2009 |
Operating
activities: |
|
|
|
|
|
|
|
Net income
(loss) |
|
|
|
|
|
$ 3,005 |
$ (7,420) |
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities: |
|
|
Depreciation |
|
|
|
|
|
5,433 |
4,881 |
Amortization of
purchased intangibles |
|
|
|
|
12,188 |
12,486 |
Stock-based
compensation expense: |
|
|
|
|
|
|
Stock
options |
|
|
|
|
|
4,049 |
3,224 |
Restricted stock
units |
|
|
|
|
|
8,861 |
6,895 |
Other-than-temporary impairment of marketable securities |
|
|
-- |
4,047 |
Impairment of
strategic investment |
|
|
|
|
-- |
2,000 |
Tax benefit from
other comprehensive income |
|
|
|
-- |
(5,077) |
Capitalization of
prior years mask set costs |
|
|
|
(1,177) |
-- |
Net (gain) loss on
disposals of property |
|
|
|
(323) |
66 |
Net gain on sale of
storage business unit |
|
|
|
-- |
(11,366) |
Changes in
operating assets and liabilities, net of amounts acquired: |
|
|
|
|
Accounts
receivable |
|
|
|
|
|
9,196 |
(248) |
Inventories |
|
|
|
|
|
|
(6,936) |
8,974 |
Other
assets |
|
|
|
|
|
(3,750) |
(1,797) |
Accounts
payable |
|
|
|
|
|
(510) |
515 |
Accrued payroll and
other accrued liabilities |
|
|
|
4,046 |
(7,513) |
Deferred tax
liability |
|
|
|
|
|
656 |
-- |
Deferred
revenue |
|
|
|
|
|
1,140 |
(1,216) |
Net cash provided
by operating activities |
|
|
|
35,878 |
8,451 |
Investing
activities: |
|
|
|
|
|
|
|
Proceeds from sales
and maturities of short-term investments |
|
|
78,627 |
176,182 |
Purchases of
short-term investments |
|
|
|
|
(100,407) |
(159,357) |
Proceeds from sale
of property and equipment |
|
|
|
365 |
-- |
Purchase of
property, equipment and other assets |
|
|
|
(8,978) |
(4,976) |
Proceeds from sale
of strategic investment |
|
|
|
4,991 |
-- |
Purchase 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 |
|
|
|
(56,886) |
32,376 |
Financing
activities: |
|
|
|
|
|
|
|
Proceeds from
issuances of common stock |
|
|
|
4,321 |
1,972 |
Funding of
restricted stock units withheld for taxes |
|
|
|
(2,518) |
(744) |
Repurchases of
common stock |
|
|
|
|
(23,310) |
(8,076) |
Funding of
structured stock repurchase agreements |
|
|
(10,000) |
(31,797) |
Funds received from
structured stock repurchase agreements |
|
|
15,512 |
22,484 |
Other |
|
|
|
|
|
|
|
(329) |
(32) |
Net cash used for
financing activities |
|
|
|
|
(16,324) |
(16,193) |
Net increase (decrease) in cash
and cash equivalents |
|
|
(37,332) |
24,634 |
Cash and cash equivalents at the
beginning of the period |
|
|
122,526 |
99,337 |
Cash and cash equivalents at the
end of the period |
|
|
|
85,194 |
123,971 |
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
Applied Micro Circuits (NASDAQ:AMCC)
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