Applied Micro Circuits Corporation Announces First Quarter Fiscal 2006 Financial Results

SAN DIEGO, July 27 /PRNewswire-FirstCall/ -- Applied Micro Circuits Corporation (NASDAQ: AMCC) today reported its financial results for the first quarter of fiscal 2006.

Net revenues for the first quarter of fiscal 2006 were $64.7 million compared to the $64.2 million reported in the fourth quarter of fiscal 2005 and $67.4 million reported in the first quarter of fiscal 2005.

The net loss on a GAAP basis for the first quarter of fiscal 2006 was $4.2 million or $(0.01) per share, compared with a net loss of $5.3 million or $(0.02) per share for the fourth quarter of fiscal 2005 and a net loss of $21.8 million or $(0.07) per share for the first quarter of fiscal 2005.

The pro forma net income for the first quarter of fiscal 2006 was $3.1 million or $0.01 per share, compared to the pro forma net income of $3.6 million or $0.01 per share in the fourth quarter of fiscal 2005 and the pro forma net income of $2.1 million or $0.01 per share in the first quarter of fiscal 2005.

"I'm pleased with our results for this quarter in that we delivered our third consecutive quarter of revenue growth and our second consecutive quarter of pro forma operating profitability," said Kambiz Hooshmand, President and Chief Executive Officer. "This represents my first full quarter at AMCC and I am very excited about the opportunities that lie ahead. AMCC's legacy of technical innovation remains strong. In each of our businesses, we have unique and relevant differentiators that set us apart from our competition. We are keenly focused on leveraging these strengths in the growing segments of our served markets."

AMCC reports its financial results in accordance with GAAP and additionally on a non-GAAP basis referred to as pro forma. These pro forma measures are not in accordance with, nor are they a substitute for, GAAP measures and they may not be consistent with the presentation used by other companies. AMCC uses the pro forma financial measures to evaluate and manage the Company's operations. AMCC is providing this information to investors to allow for the performance of additional financial analysis and because it is consistent with the financial models and estimates published by analysts who follow the Company.

The pro forma results exclude certain items which are required by GAAP such as restructuring costs, amortization of purchased intangibles, acquired in-process research and development charges, stock-based compensation charges related to acquired companies, litigation settlement costs and payroll tax effects of stock option exercises. Income taxes are adjusted to an estimated pro forma effective tax rate. See the attached reconciliation of the GAAP net loss to the pro forma net income, which quantifies the amounts excluded from pro forma basis results.

In addition, AMCC announced plans to restructure and reorganize its operations. The plan includes reducing approximately 5% of the current headcount by eliminating job redundancies. The company expects to incur a charge of approximately $2 million to $3 million in the second quarter of fiscal 2006 and anticipates that the restructuring plan will reduce ongoing operating expenses by approximately $1 million per quarter commencing in the third quarter of fiscal 2006.

AMCC will file a current report on Form 8-K regarding this press release with the U.S. Securities and Exchange Commission today. A copy of the filed current report will be accessible at www.sec.gov or through the company's website provided below.

For More Information

AMCC management will be holding a conference call today, July 27, 2005, at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time to discuss additional details regarding the Company's performance for the first quarter of fiscal 2006 and to provide guidance for the second quarter of fiscal 2006. You may access the conference call via any of the following:

     Teleconference:     913-981-4902
     Conference ID:      7924460
     Web Broadcast:      
http://www.amcc.com
     Replay:             719-457-0820
                         (available for 7 days following the call)

    AMCC Overview

AMCC provides the essential building blocks for the processing, moving and storing of information worldwide. The company blends systems and software expertise with high-performance, high-bandwidth silicon integration to deliver silicon, hardware and software solutions for global wide area networks (WAN), embedded applications such as PowerPC and programmable SOC architectures, storage area networks (SAN), and high-growth storage markets such as Serial ATA (SATA) RAID. AMCC's corporate headquarters are located in San Diego, California. Sales and engineering offices are located throughout the world. For further information regarding AMCC, please visit our web site at http://www.amcc.com.

This news release contains forward-looking statements, including, but not limited to, statements regarding the company's restructuring plan, including the planned reduction of ongoing operating expenses, the anticipated amounts of restructuring costs, the impact of the reduction in force on the company's headcount, and the timetable for completion of the restructuring plan. 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, the company's ability to implement the restructuring plan according to the timetable and to the extent currently anticipated, possible changes in the size and components of the operating expense reductions, the impact of personnel reductions on product development efforts, the company's ability to project accurately cost savings from the plan 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, 2005, and the company's subsequent filings with the Securities and Exchange Commission. Actual results could differ materially from those set forth in the forward-looking statements as a result of such risk factors as well as other risks and uncertainties.



                         APPLIED MICRO CIRCUITS CORPORATION
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                  ($ in thousands)

                                                   June 30,          March 31,
      ASSETS                                         2005               2005
                                                  (unaudited)
      Current assets:
       Cash, cash equivalents and short-
        term investments                          $379,371           $423,392
       Accounts receivable, net                               23,694                          28,601
              Inventories                                                                    16,399                          18,014
              Other  current  assets                                                  15,585                          51,448
                Total  current  assets                                              435,049                        521,455
            Property  and  equipment,  net                                      44,668                          44,461
            Other  assets                                                                      2,071                            1,965
            Goodwill  and  purchased  intangibles                      528,051                        534,514
                Total  assets                                                        $1,009,839                  $1,102,395

            LIABILITIES  AND  STOCKHOLDERS'  EQUITY

            Current  liabilities:
              Accounts  payable                                                        $19,747                        $24,016
              Other  current  liabilities                                        33,691                        101,147
              Current  portion  of  long-term  debt
                &  capital  leases                                                                  7                                  34
                  Total  current  liabilities                                    53,445                        125,197
            Stockholders'  equity                                                  956,394                        977,198
                Total  liabilities  and
                  stockholders'  equity                                      $1,009,839                  $1,102,395



                                                  APPLIED  MICRO  CIRCUITS  CORPORATION
                                GAAP  CONDENSED  CONSOLIDATED  STATEMENTS  OF  OPERATIONS
                                                                          (unaudited)
                                                (in  thousands,  except  per  share  data)

                                                                                                    Three  months  ended
                                                                                          June  30,      March  31,      June  30,
                                                                                              2005              2005                2004

              Net  revenues                                                    $64,673        $64,204          $67,402
              Cost  of  revenues                                              30,833          30,073            31,492
              Gross  profit                                                      33,840          34,131            35,910
              Operating  expenses:
                Research  and  development                            22,974          24,562            30,990
                Selling,  general  and
                  administrative                                              15,550          14,353            14,378
                Stock-based  compensation:
                  Research  and  development                                696                708              1,032
                  Selling,  general  and
                    administrative                                                  785                763              1,323
                  Amortization  of  purchased
                    intangibles                                                    1,267            1,608              1,557
                  Acquired  in-process  research  and
                    development                                                          --                  --            13,400
                  Restructuring  charges                                        --            1,233                    --
                  Litigation  settlement,  net                              --                350                    --
                    Total  operating  expenses                        41,272          43,577            62,680
              Operating  loss                                                  (7,432)        (9,446)        (26,770)
              Interest  and  other  income,  net                    3,404            4,108              5,281
              Loss  before  income  taxes                              (4,028)        (5,338)        (21,489)
              Income  tax  expense                                                176                  --                  335
              Net  loss                                                            $(4,204)      $(5,338)      $(21,824)

              Basic  and  diluted  loss  per  share:
                Loss  per  share                                                $(0.01)        $(0.02)          $(0.07)
                  Shares  used  in  calculating  basic
                    and  diluted  loss  per  share                  306,327        308,448          311,519



                                                  APPLIED  MICRO  CIRCUITS  CORPORATION
                                  PRO  FORMA  CONSOLIDATED  STATEMENTS  OF  OPERATIONS
                                                                      (unaudited)
                                            (in  thousands,  except  per  share  data)

                                                                                                      Three  months  ended
                                                                                          June  30,      March  31,    June  30,
                                                                                              2005              2005              2004

                Net  revenues                                                  $64,673        $64,204        $67,402
                Cost  of  revenues                                            25,611          24,833          24,635
                Gross  profit                                                    39,062          39,371          42,767
                Operating  expenses:
                  Research  and  development                          22,974          24,555          30,990
                  Selling,  general  and
                    administrative                                            15,550          14,350          14,376
                            Total  operating  expenses                38,524          38,905          45,366
                Operating  income  (loss)                                    538                466          (2,599)
                Interest  and  other  income,  net                  3,404            4,108            5,281
                Income  before  income  taxes                          3,942            4,574            2,682
                Income  tax  expense                                              867            1,006                590
                Net  income                                                        $3,075          $3,568          $2,092

                Diluted  income  per  share:
                  Income  per  share                                            $0.01            $0.01            $0.01
                  Shares  used  in  calculating
                    diluted  income  per  share                      307,357        310,420        318,327
 


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