3Ware 2004 Annual Report Download

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ANNUAL REPORT Fiscal
2004

Table of contents

  • Page 1
    A N N U A L R E P O R T F i s c a l 2 0 0 4

  • Page 2
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  • Page 3
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  • Page 4
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  • Page 5
    ...ƒigned2definitive2 Â-greement2to2Â-™quire QwÂ-reD2sn™F2moving2into dire™t2Â-nd2network Â-ttÂ-™hed2storÂ-ge2mÂ-rketF2 MARCH 22, 2004 „hroughout2the2™ommuni™Â-tions2mÂ-rket2downturnD2mÂ-ny2yiws2redu™ed2engineering heÂ-d™ount2Â-nd2Â-dopted2more2stÂ-ndÂ-rd2produ™t2useF2„his2shift2to2stÂ-nd...

  • Page 6
    ...ted2™ir™uit2produ™ts2 tÂ-rgeted2Â-t2the2storÂ-ge2mÂ-rketF POSITIONED FOR FUTURE SUCCESS ewgg2™ompleted2 Â-™quisition2of2QwÂ-reF2 APRIL 13, 2004 ƒigned2definitive2 Â-greement2to2Â-™quire2 s€2Â-nd2produ™t2portfolio of2€ower€g2RHH2from sfwD2signed2€ower er™hite™ture2li™enseF2 APRIL 19...

  • Page 7
    ... SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2004 OR ' TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF...

  • Page 8
    ... and Management and Related Stockholder Matters ...Certain Relationships and Related Transactions ...Principal Accountant Fees and Services ...PART IV Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K ... 57 57 57 58 58 59 62 F-1 Signatures ...Financial Statements ...

  • Page 9
    ...on any forward-looking statement. PART I Item 1. Business. In this annual report on Form 10-K, "Applied Micro Circuits Corporation", "AMCC", the "Company",... the fourth quarter of fiscal 2004, we signed a definitive agreement to acquire 3Ware, Inc. 3Ware provides high-performance, high capacity...

  • Page 10
    ... we paid approximately $145.0 million in cash to complete this transaction. In addition, on April 13, 2004, we announced a definitive agreement to acquire intellectual property and a portfolio of assets associated with IBM's 400 series of embedded PowerPC® standard products, (the Embedded Processor...

  • Page 11
    ... have the potential to expand the adoption and flexibility of SANs. The Communications IC and Storage Opportunities Communications IC Industry analysts report that network traffic continues to grow. The continuing adoption of broadband technology and next-generation wireless devices is expected to...

  • Page 12
    performance, highly reliable, power-efficient ICs. These OEMs seek suppliers with a wide skills base including both analog and digital expertise to provide a more complete solution that enables faster integration into the system design and higher performance. Application specific integrated circuits...

  • Page 13
    ...of JNI Corporation, a provider of Fibre Channel hardware and software products that are critical SAN elements, for approximately $196.4 million in cash. In April 2004, we acquired 3ware, Inc. for approximately $145.0 million in cash, which expanded our product offerings in the storage market. In May...

  • Page 14
    ...received from the network processing and switching layers for transmission to the physical layer on their return to the optical network. In fiscal 2004 we introduced our second generation enhanced forward error correction device called Rubicon. We also introduced our first Local Area Network, or LAN...

  • Page 15
    ... and Juniper. Switching Layer: Our switch fabric ICs switch the information in the proper priority and to the proper destinations. During fiscal 2004, we broadened our portfolio of switch fabric devices by acquiring the PRS business from IBM. The PRS business includes packet routing switch fabric...

  • Page 16
    ... delivered to market. RAID Connectors: PCI RAID Adaptors. Through our acquisition of 3ware, we design, manufacture and sell a host of PCI RAID adaptors for both...is available in 2, 4, 8 and 12 port configurations. In April 2004, we introduced the 9000 series of SATA RAID controllers. The 9000 series...

  • Page 17
    ... Sunnyvale, California and Andover, Massachusetts in the United States; LaGaude, France and Netanya, Israel. During the fiscal years ended March 31, 2004, 2003 and 2002, we expended $112.6 million, $131.9 million and $154.6 million on research and development activities, respectively. Our IC product...

  • Page 18
    research and development engineers work with marketing managers and customers to develop a comprehensive requirements specification. After the product is designed and commercially released, our engineers continue to work with customers on early design-in efforts to understand requirements for future...

  • Page 19
    ..., Qlogic, Agilent, Hewlett-Packard and LSI Logic. As a result of our acquisition of IBM's 400 series of embedded PowerPC standard products in May 2004, our list of competitors has been expanded to include large technology companies such as Motorola and IBM. In addition, certain of our customers and...

  • Page 20
    Proprietary Rights We rely in part on patents to protect our intellectual property. We have been issued approximately 120 patents, which principally cover certain aspects of the design and architecture of our IC and enterprise storage products. In addition, we have over 200 inventions in various ...

  • Page 21
    ... we ever experienced any work stoppage. Executive Officers of the Registrant Our executive officers and their ages as of May 31, 2004, are as follows: Name Age Position David M. Rickey ...Roger A. Smullen, Sr...Timothy M. Heenan ...Candace H. Kilburn ...Brent E. Little ...Faye Pairman ...Stephen...

  • Page 22
    ... Engineer. Mr. Little earned a B.S. in Electrical Engineering from the University of California, Santa Barbara. Faye Pairman joined AMCC in 2004 when AMCC acquired 3ware. At 3ware, she served as President and Chief Executive Officer. Ms. Pairman has more than 15 years experience in marketing, sales...

  • Page 23
    ... through fiscal 2011 are included in the above summary. We sold 32 acres of undeveloped land in Poway, California during fiscal 2004 for approximately $25 million. Our foreign locations consist of the following: Kanata, Canada; Manchester, United Kingdom; Cheshire, United Kingdom; Munich, Germany...

  • Page 24
    ...The special litigation committee retained independent legal counsel and submitted a report to the court in July 2002. Defendants filed a motion seeking...trial regarding the underlying claims. The motion was granted in January 2004. Discovery in this lawsuit is continuing. We believe that the ...

  • Page 25
    ... the allegations. In February 2003, the special litigation committee issued a report of its investigation which concluded that it is not in the best... material cash payment by JNI. A Court hearing has been set for June 2004 to approve the settlement. In November 2001, a class action lawsuit was filed ...

  • Page 26
    ...sets forth the high and low sales prices of our common stock as reported by the Nasdaq National Market for the periods indicated. Fiscal year ended... $7.18 $6.95 $7.05 $9.20 $3.25 $4.78 $4.80 $5.36 On May 31, 2004, there were approximately 795 holders of record of our common stock. We have not paid ...

  • Page 27
    ... and related Notes, as well as "Management's Discussion and Analysis of Financial Condition and Results of Operations", contained elsewhere in this report. 2004 March 31, 2003 2002 2001 (in thousands, except per share data) 2000 Consolidated Statements of Operations Data: Net revenues ...$ 131,177...

  • Page 28
    ... and has been prepared on the same basis as the annual consolidated financial statements. In our opinion, this quarterly information ... of Financial Condition and Results of Operations", contained elsewhere in this report. Q1(5) Fiscal Year 2004 Fiscal Year 2003 Q2(6) Q3(7) Q4(8) Q1(1) Q2(2) Q3(3)...

  • Page 29
    ... (6) The consolidated operating results for the second quarter of fiscal 2004 include a $5.7 million charge for in-process research and development .... (7) The consolidated operating results for the third quarter of fiscal 2004 include a $16.1 million charge for in-process research and development...

  • Page 30
    ... of operations for the three fiscal years ended March 31, 2004. A brief description is provided of transactions and events that ... of the risks and uncertainties facing us in our periodic reports filed with the SEC in which we report our financial condition and results for the quarter and fiscal year...

  • Page 31
    ...During the fourth quarter of fiscal 2004, we signed a definitive agreement to acquire 3Ware, Inc. 3Ware provides high-performance, high capacity...most critical accounting policies have a significant impact on the results we report in our financial statements. We base our estimates and assumptions on ...

  • Page 32
    ...to have indefinite lives are not amortized, but are subject to annual impairment tests. The amounts and useful lives assigned to other ...if any. The goodwill impairment test compares the implied fair value of the reporting unit's goodwill with the carrying amount of that goodwill. The implied fair ...

  • Page 33
    ... of the industry. If a major customer's credit worthiness deteriorates, or our customers' actual defaults exceed our historical experience, our estimates could change and impact our reported results. 25

  • Page 34
    ... of higher shipments of last time buy products in the prior year. See the following table (in thousands): Fiscal Years Ended March 31, 2004 2003 % of Net % of Net Amount Revenue Amount Revenue Increase (Decrease) Change Communications ...Storage ...Other ...Net revenue ... $104,197 13,038 13,942...

  • Page 35
    ... absolute dollars, to increase in the first quarter of fiscal 2005 as a result of the acquisition of 3ware, Inc. on April 1, 2004 and the Embedded Processor Business on May 5, 2004. Future acquisitions of businesses may result in substantial additional charges which would impact the gross margin in...

  • Page 36
    ...2005 as a result of the acquisition of 3ware, Inc. on April 1, 2004 and the PowerPC Business on May 5, 2004. Future acquisitions of businesses may result in ... in our interim or annual operating results. Acquired In-process Research and Development. For the year ended March 31, 2004, we recorded $21...

  • Page 37
    ... long-range planning process, we assess goodwill for impairment annually in the fourth quarter, or more frequently if the indicators of impairment are present. Based on the analysis performed in the fourth quarter of fiscal 2004, which included a discounted cash flow analysis, as well as market...

  • Page 38
    ... manufacturing facility. As a result of the closure of our internal wafer manufacturing facility, we realized annual savings totaling approximately $14 million relating to fixed cost of sales overhead in fiscal 2004. • Global workforce reduction-In an effort to reduce our expenses in July 2002, we...

  • Page 39
    global workforce reduction undertaken in July 2002, we realized approximately $16 million of annual savings relating to operating expenses in fiscal 2004. As the downturn in the telecommunications industry continued it became evident that further cost reductions were necessary. In April of 2003, we ...

  • Page 40
    ...the sale of real estate. Income Taxes. Our income tax benefit in fiscal 2004 was $1.8 million. The benefit primarily reflects the reversal of our income tax... additional income tax benefits were accorded for our tax losses in fiscal 2004 or 2003 because we believe that it is more likely that these ...

  • Page 41
    Gross Profit. The following table presents net revenue, cost of revenue and gross profit for fiscal year ended March 31, 2003 and March 31, 2002 (in thousands): Fiscal Years Ended March 31, 2003 Amount % of Net Revenue 2002 Amount % of Net Revenue Increase (Decrease) Change Net revenue ...Cost of ...

  • Page 42
    ...to decline and for much of the year our book value exceeded our market capitalization. To coincide with our annual long range planning process we assess goodwill for impairment annually in the forth quarter. As a result of a decline in our estimated long-range net revenue, and particularly, the long...

  • Page 43
    Restructuring Charges. Restructuring charges for the fiscal year ended March 31, 2003 were $7.3 million, representing a decrease of 37% from the restructuring charges for the year ended March 31, 2002 of $11.6 million. Interest and Other Income and Expenses. The following table presents interest and...

  • Page 44
    ...periods presented in the consolidated statements of operations (in thousands, except per share amounts): Fiscal Years Ended March 31, 2004 2003 2002 Net loss-as reported ...$(104,877) $(745,541) $(3,605,690) Adjustments: Cumulative effect of accounting change ...- 102,229 - Amortization of goodwill...

  • Page 45
    ...million, offset by $20.8 million of cash from the issuance of our common stock under employee stock plans. On April 1, 2004, the Company completed the acquisition of 3ware, Inc., a provider of high-performance, high-capacity SATA storage solutions. Under the terms of the agreement, AMCC acquired all...

  • Page 46
    ... of the risks and uncertainties facing us in our periodic reports filed with the SEC in which we report our financial condition and results for the quarter and fiscal ...decline. Some of the factors that affect our quarterly and annual results, but which are difficult to control or predict are ...

  • Page 47
    the impact on interest income of a significant use of our cash for an acquisition, stock repurchase or other purpose; costs associated with compliance with applicable environmental and other governmental regulations; the effects of changes in accounting standards, including rules regarding the ...

  • Page 48
    ...-buy program in fiscal 2003, our revenues from sales of our non-communications IC products decreased to $13.9 million for the year ended March 31, 2004 from $36.0 million for the year ended March 31, 2003. We will continue to sell products for these markets for the foreseeable future, but the...

  • Page 49
    Our customers are concentrated. The loss of one or more key customers, the diminished demand for our products from a key customer, or the failure to obtain certifications from a key customer or its distribution channel could significantly reduce our revenues and profits. A relatively small number of...

  • Page 50
    materially and adversely affect our business, financial condition and results of operations. Cancellations or deferrals could cause us to hold excess inventory, which could reduce our profit margins, increase product obsolescence and restrict our ability to fund our operations. We generally ...

  • Page 51
    Customers for our products generally have substantial technological capabilities and financial resources. They traditionally use these resources to internally develop their own products. The future prospects for our products in these markets are dependent upon our customers' acceptance of our ...

  • Page 52
    ... of various holdings, types of instruments and maturities. These securities are recorded on the consolidated balance sheets at fair value with unrealized gains or losses reported as 44

  • Page 53
    ...of the significant economic slowdown and the related uncertainties in our industry, we implemented a restructuring plan in the first quarter of fiscal 2004. The plan focused on cost reductions and operating efficiencies, and included workforce reductions. Additionally, in the third quarter of fiscal...

  • Page 54
    products developed by major systems manufacturers. As a result, we could be required to invest significant time and effort and to incur significant expense to redesign our products to ensure compliance with relevant standards. If our products are not in compliance with prevailing industry standards,...

  • Page 55
    ... Technologies, Hewlett-Packard and LSI Logic. As a result of our acquisition of IBM's 400 series of embedded PowerPC® standard products in May 2004, our list of competitors has been expanded to include large technology companies such as Motorola and IBM. Many of these companies have substantially...

  • Page 56
    Our IC products are generally only qualified for production at a single foundry. These suppliers can allocate, and in the past have allocated, capacity to the production of other companies' products while reducing deliveries to us on short notice. Because establishing relationships, designing or ...

  • Page 57
    Our operating results depend on manufacturing output and yields of our ICs, which may not meet expectations. The yields on wafers we have manufactured decline whenever a substantial percentage of wafers must be rejected or a significant number of die on each wafer are nonfunctional. Such declines ...

  • Page 58
    ... would require us to value our employee stock option grants pursuant to an option valuation model, and then amortize that value against our reported earnings over the vesting period in effect for those options. We currently account for stock-based awards to employees in accordance with Accounting...

  • Page 59
    Several of our facilities, including our principal executive offices, are located in California. In 2001, California experienced prolonged energy alerts and blackouts caused by disruption in energy supplies. As a consequence, California continues to experience substantially increased costs of ...

  • Page 60
    ... capitalization, we have been required to record various significant impairment charges against these assets as noted in our financial statements. At March 31, 2004, we have 240.2 million of goodwill and purchased intangible assets. There can be no assurance that we will not be required to take...

  • Page 61
    that others will not independently develop substantially equivalent intellectual property or otherwise gain access to our trade secrets or intellectual property, or disclose such intellectual property or trade secrets, or that we can meaningfully protect our intellectual property. A failure by us to...

  • Page 62
    conditions in the semiconductor, communications or information technology markets; the commencement or outcome of litigation; changes in ratings and estimates of our performance by securities analysts; announcements of merger or acquisition transactions; management changes; our inclusion in certain ...

  • Page 63
    ... balance sheets at fair value with unrealized gains or losses reported as a separate component of accumulated other comprehensive income. We... Points (150 BPS) (100 BPS) (50 BPS) Fair Value as of March 31, 2004 Valuation of Securities Given an Interest Rate Increase of X Basis Points (50 BPS) (100 ...

  • Page 64
    ...Page F-l and the Quarterly Comparisons included in Item 6 of this report. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial...15(e) of the Securities Exchange Act of 1934) as of March 31, 2004 (the "Evaluation Date"). Based on that evaluation, our chief executive officer...

  • Page 65
    PART III Certain information required by Part III is omitted from this report because we will file a definitive proxy statement within 120 days after the end of our fiscal year pursuant to Regulation 14A for our 2004 annual meeting of stockholders, and the information included in the proxy statement...

  • Page 66
    ... shares for the grant of nonstatutory stock options to our employees, directors and consultants and our affiliates under this plan. At March 31, 2004, approximately 32.4 million shares were outstanding and 27.7 million shares were available for future grant under the 2000 Equity Incentive Plan. In...

  • Page 67
    ... of the Company are included herein as required under Item 8 of this report. See Index to Financial Statements on page F-l. (2) Financial Statement Schedules For the three fiscal years ended March 31, 2004-Schedule II Valuation and Qualifying Accounts Schedules not listed above have been omitted...

  • Page 68
    ...Incorporated by reference to identically numbered exhibits filed with the Company's Annual Report, Form 10-K for the year ended March 31, 2001. Incorporated by reference to identically numbered exhibits filed with the Company's Annual Report, Form 10-K for the year ended March 31, 1999. Incorporated...

  • Page 69
    ...Annual Report on Form 10-K for the year ended March 31, 2000. (12) Incorporated by reference to identically numbered exhibits filed with the Company's Quarterly Report... the following current reports on Form 8-K with the SEC during the quarter ended March 31, 2004: On March 2, 2004, we announced that...

  • Page 70
    ... Board of Directors, President and Chief Executive Officer Date: June 10, 2004 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person ... for him in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other ...

  • Page 71
    INDEX TO FINANCIAL STATEMENTS Page Report of Ernst & Young LLP, Independent Registered Public Accounting Firm ...Consolidated Balance Sheets as of March 31, 2004 and 2003 ...Consolidated Statements of Operations for the fiscal years ended March 31, 2004, 2003 and 2002 ...Consolidated Statements of ...

  • Page 72
    REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors Applied Micro Circuits Corporation We have audited the accompanying consolidated balance sheets of Applied Micro Circuits Corporation as of March 31, 2003 and 2004... March 31, 2004, in conformity with...

  • Page 73
    ...-2,000, none issued and outstanding ...Common stock, $0.01 par value: Authorized shares-630,000 at March 31, 2004 ...Issued and outstanding shares-310,985 at March 31, 2004 and 303,751 at March 31, 2003 ...Additional paid-in capital ...Deferred compensation, net ...Accumulated other comprehensive...

  • Page 74
    APPLIED MICRO CIRCUITS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Fiscal Years Ended March 31, 2004 2003 2002 Net revenues ...Cost of revenues (1) ...Gross profit ...Operating expenses: Research and development ...Selling, general and administrative ......

  • Page 75
    APPLIED MICRO CIRCUITS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Fiscal Years Ended March 31, 2004 2003 2002 Operating activities: Net loss ...Adjustments to reconcile net loss to net cash used for operating activities Depreciation and amortization ...Write-off of inventories...

  • Page 76
    ... notes ...- - - - Comprehensive income (loss): Net loss ...- - - - Foreign currency translation loss ...- - - - Unrealized loss on short-term investments, net of tax ...- - - - Total comprehensive loss ... Balance, March 31, 2004 ...310,985 $3,110 $5,937,568

  • Page 77
    ...eliminated in consolidation. During the year ended March 31, 2004 the Company completed two purchase acquisitions. The accompanying consolidated ... management to make estimates and assumptions that affect the amounts reported in the financial statements and disclosures made in the accompanying notes...

  • Page 78
    ... and losses and declines in value judged to be other than temporary are determined based on the specific identification method and are reported in the consolidated statements of operations. Strategic Equity Investments The Company enters into certain equity investments for the promotion of business...

  • Page 79
    ... and future acquired goodwill will be subject to impairment tests annually, or earlier if indicators of potential impairment exist. All ...thousands, except per share data): Fiscal Years Ended March 31, 2004 2003 2002 Net loss-as reported ...$(104,877) $(745,541) $(3,605,690) Adjustments: Cumulative...

  • Page 80
    ... TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) The Company performs its annual impairment review during the fourth quarter each fiscal year or... in a business combination. That is, the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized...

  • Page 81
    ... information under SFAS 123 and SFAS 148 is as follows: Fiscal Years Ended March 31, 2004 2003 2002 (In thousands, except per share amounts) Net loss-as reported ...$(104,877) $ (745,541) $(3,605,690) Plus: Reported stock-based compensation ...21,203 131,886 147,065 Less: Fair value stock-based...

  • Page 82
    ... entered into with VIEs created before January 31, 2003, the provisions of FIN 46 are effective at the end of the first reporting period ending after March 15, 2004. The Company has completed a review of its strategic equity investments as well as other arrangements to determine whether it is the...

  • Page 83
    ... to the cumulative effect of adopting FAS 142. Year Ended March 31, 2004 2003 (in thousands, except per share data) Net revenue ...Net loss before...the estimated fair value with unrealized gains and losses excluded from earnings and reported, net of tax, in comprehensive income (loss). The basis for ...

  • Page 84
    ...Available-for-sale securities by contractual maturity are as follows (in thousands): March 31, 2004 Due in one year or less ...Due after one year through two years ...Greater ...when an other-than-temporary decline has occurred. During fiscal 2004, the Company recognized a gain of $1.0 million when of...

  • Page 85
    ... Accounts receivable ...Less: allowance for bad debts ... $24,994 $ 6,964 (1,710) (1,330) $23,284 $ 5,634 Inventories (in thousands): March 31, 2004 2003 Finished goods ...Work in process ...Raw materials ... $5,061 2,376 1,053 $8,490 $4,455 2,252 471 $7,178 Property and equipment: Useful Life...

  • Page 86
    ...(102,229) - (186,389) (3,784) (3,201) $192,541 $ 72,499 The estimated future amortization expense of purchased intangible assets as of March 31, 2004 is as follows (in thousands): Fiscal year 2005 ...Fiscal year 2006 ...Fiscal year 2007 ...Fiscal year 2008 ...Fiscal year 2009 ...Thereafter ...Total...

  • Page 87
    ... 600 7,118 11,159 10,250 $35,539 $ 7,078 6,304 3,563 - 9,067 $26,012 Interest income, net (in thousands): Fiscal Years Ended March 31, 2004 2003 2002 Interest income ...Net realized gains (losses) on short-term investments ...Interest expense ... $28,181 $38,341 $46,890 6,858 9,526 801 (32) (148...

  • Page 88
    ...to calculate basic and diluted loss per share consists of the following (in thousands, except per share data): Fiscal Years Ended March 31, 2004 2003 2002 Net loss (numerator): Loss before cumulative effect of accounting change ...Cumulative effect of accounting change ...Net loss ...Shares used in...

  • Page 89
    ...As a result of the closure of the Company's internal wafer manufacturing facility, the Company realized annual savings totaling approximately $14 million relating to fixed cost of sales overhead in fiscal 2004. • Global workforce reduction-In an effort to reduce the Company's expenses in July 2002...

  • Page 90
    ... activities, the Company anticipated it would realize approximately $4 million of annual savings relating to fixed cost of sales overhead and approximately $36 million of annual savings relating to operating expenses in fiscal 2004. However, in November 2003 the Company elected to reoccupy a portion...

  • Page 91
    ...The following tables provide detailed activity related to each of our restructuring activities during the year ended March 31, 2004 (in thousands): Facilities Consolidation and Operating Lease Commitments Property and Equipment Impairments Workforce Reduction Total July 2001 Restructuring Program...

  • Page 92
    ..., 305,000 shares of common stock were subject to repurchase. At March 31, 2004, there were no shares of common stock subject to repurchase. Options are granted at...(options in thousands): Fiscal Years Ended March 31, 2004 2003 2002 Weighted Weighted Weighted Average Average Average Exercise Exercise...

  • Page 93
    ... fair market value of the common stock on the first or last day of the offering period, whichever is lower. At March 31, 2004, approximately 8.6 million shares had been issued under this plan and approximately 5.8 million shares were available for future issuance. Common Shares Reserved for Future...

  • Page 94
    ...Company. Such program may be discontinued at any time. As of March 31, 2004, the Company had not made any purchases under the program. Under a similar ...federal statutory rate (35%) to income before income taxes as follows (in thousands): 2004 $ Fiscal Years Ended March 31, 2003 % $ % 2002 $ % Tax at...

  • Page 95
    ...,664 (309,664) $ - $ 159,733 60,572 32,944 6,257 - - 1,551 261,057 (53) (163,027) (163,080) 97,977 (97,977) $ - At March 31, 2004, the Company has federal and state research and development tax credit carryforwards of approximately $67.8 million and $35.2 million, respectively, which will begin to...

  • Page 96
    ... of the leases, the Company is required to make monthly payments of approximately $26,000 through March 31, 2005. Annual future minimum payments as of March 31, 2004, are as follows (in thousands): Fiscal Years Ending March 31, Operating Leases Capital Leases 2005 ...2006 ...2007 ...2008 ...2009...

  • Page 97
    ... in any of the three years ended March 31, were as follows: 2004 2003 2002 Harris Corporation ...Nortel Networks Corporation ...Cisco Systems ...* Less than 10...special litigation committee retained independent legal counsel and submitted a report to the court in July 2002. Defendants filed a ...

  • Page 98
    ...March, 2003, the Court dismissed the action, with prejudice. In April, 2004, Plaintiffs filed a notice of appeal. In October 2001, a stockholder ...the allegations. In February 2003, the special litigation committee issued a report of its investigation which concluded that it is not in the best...

  • Page 99
    ... as well. In February 2003, the special litigation committee issued a report of its investigation which concluded that it was not in the best ...a material cash payment by JNI. A Court hearing has been set for June 2004 to approve the settlement. In November 2001, a class action lawsuit was filed ...

  • Page 100
    ... were within the limits on such expenses approved by the board of directors. 13. Subsequent Events (unaudited) On April 1, 2004, the Company completed the acquisition of 3ware, Inc., a provider of high-performance, high-capacity Serial ATA (SATA) storage solutions. Under the terms of the agreement...

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    ... of Period Charged to Costs and Expenses Charged to Other Accounts Balance At End Of Period Description Deductions Year ended March 31, 2004: Allowance for doubtful accounts ...Year ended March 31, 2003: Allowance for doubtful accounts ...Year ended March 31, 2002: Allowance for doubtful accounts...

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    CORPORATE HEADQUARTERS Applied Micro Circuits Corporation (AMCC) TPWH2ƒequen™e2hrive ƒÂ-n2hiegoD2ge2WPIPIERQSV €honeX2@VSVA2RSHEWQQQ pÂ-xX2@VSVA2RSHEWVVS ANNUAL MEETING „he2ewgg2Â-nnuÂ-l2meeting2of2 sto™kholders2will2˜e2held2Â-t2IHXHH2Â-FmF on2‡ednesdÂ-yD2ƒeptem˜er2ID2PHHRD2 Â-t2ewggÀs2f...

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    APPLIED MICRO CIRCUITS CORPORATION 6290 Sequence Drive San Diego California 92121-4358 T: 858-450-9333 www.amcc.com