Atmel Reports Fourth Quarter and Full Year 2012 Financial Results

      Atmel Reports Fourth Quarter and Full Year 2012 Financial Results

PR Newswire

SAN JOSE, Calif., Feb. 6, 2013

SAN JOSE, Calif., Feb. 6, 2013 /PRNewswire/ --Atmel^® Corporation (Nasdaq:
ATML), a leader in microcontroller and touch solutions, today announced
financial results for its fourth quarter ended December 31, 2012. 

(Logo: http://photos.prnewswire.com/prnh/20120712/MM39691LOGO)

                          GAAP              Non-GAAP
                  Q4 2012 Q3 2012 Q4 2011   Q4 2012 Q3 2012 Q4 2011
Net revenue       $345.1  $361.0  $383.6    $345.1  $361.0  $383.6
Gross margin      38.1%   43.1%   48.1%     41.6%   43.7%   48.7%
Operating margin  (3.8)%  7.6%    12.8%     9.7%    12.7%   17.9%
Net (loss) income $(12.3) $21.6   $32.9     $29.4   $43.0   $67.5
Diluted EPS       $(0.03) $0.05   $0.07     $0.07   $0.10   $0.14
(In millions, except earnings per share data and percentages)

Revenue for the fourth quarter of 2012 was $345.1 million, a 4% decrease
compared to $361.0 million for the third quarter of 2012, and 10% lower
compared to $383.6 million for the fourth quarter of 2011. Fourth quarter
results for 2012 exclude the Serial Flash product families divested at the end
of the third quarter of 2012. Adjusting for the Serial Flash divestiture,
fourth quarter revenue decreased 2% sequentially and declined 8% from the
fourth quarter of the prior year. For the full year 2012, revenue of $1.43
billion decreased 21% compared to $1.80 billion for 2011.Adjusting for the
Serial Flash divestiture, full year 2012 revenue decreased 19% from 2011.

GAAP net loss totaled $(12.3) million or $(0.03) per diluted share for the
fourth quarter of 2012, principally as a result of a $10.6 million loss
incurred on purchase commitments relating to a take-or-pay supply agreement,
$11.0 million of charges incurred primarily for restructuring activities, and
a $6.5 million write-off of receivables from a foundry supplier. This compares
to GAAP net income of $21.6 million or $0.05 per diluted share for the third
quarter of 2012, and $32.9 million or $0.07 per diluted share for the fourth
quarter of 2011. For the full year of 2012, GAAPnet income was $30.4 million
or $0.07 per diluted share, compared to GAAPnet income of $315.0 million or
$0.68 per diluted share for 2011.

Non-GAAP net income for the fourth quarter of 2012 totaled $29.4 million or
$0.07 per diluted share, compared to non-GAAP net income of $43.0 million or
$0.10 per diluted share in the third quarter of 2012, and non-GAAP net income
of $67.5 million or $0.14 per diluted share for the year-ago quarter. For the
full year 2012, non-GAAP net income was $145.1 million or $0.32 per diluted
share, compared to $438.0 million or $0.92 per diluted share for 2011. Refer
to the non-GAAP reconciliation table included in this release for more
details.

GAAP gross margin was 38.1% in the fourth quarter of 2012, compared to 43.1%
in the third quarter of 2012 and 48.1% in the fourth quarter of 2011. For the
full year 2012, GAAP gross margin was 42.0%, compared to 50.4% for 2011.
Non-GAAP gross margin was 41.6% in the fourth quarter of 2012 as compared to
43.7% in the immediately preceding quarter and 48.7% in the fourth quarter of
2011. Non-GAAP gross margin excludes a $10.6 million loss on purchase
commitments relating to a take-or-pay supply agreement and stock-based
compensation expense. For the full year 2012, non-GAAP gross margin was 43.3%
compared to 50.8% for 2011.

"Our microcontroller business grew four consecutive quarters in what was a
challenging year for the semiconductor industry," said Steve Laub, Atmel's
President and Chief Executive Officer. "As we enter 2013, we are well
positioned with multiple growth opportunities to drive our revenue, while we
remain committed to improving our cost structure which should result in
improved earnings growth and cash flow generation."

Fourth quarter 2012 loss from operations on a GAAP basis was $(13.2) million
or (3.8)% of revenue, compared to income from operations of $27.4 million or
7.6% of revenue for the third quarter of 2012 and $49.0 million or 12.8% of
revenue for the fourth quarter of 2011. Fourth quarter 2012 loss from
operations was adversely affected by a $10.6 million loss incurred on purchase
commitments relating to a take-or-pay supply agreement, $11.0 million of
charges incurred primarily for restructuring activities, a $6.5 million
write-off of receivables from a foundry supplier, and $1.9 million in
acquisition related charges. In comparison, third quarter 2012 income from
operations included a $1.4 million credit to restructuring charges and $1.5
million in acquisition related charges, and fourth quarter 2011 income from
operations included a $1.1 million restructuring credit and $2.3 million in
acquisition related charges. The 2012 GAAP full year income from operations
was $47.4 million compared to $382.0 million for 2011.

Non-GAAP income from operations in the fourth quarter of 2012 was $33.3
million or 9.7% of revenue, compared to third quarter non-GAAP income from
operations of $45.8 million or 12.7% of revenue, and fourth quarter 2011
non-GAAP income from operations of $68.7 million or 17.9% of revenue. For the
full year 2012, non-GAAP income from operations was $157.6 million compared to
$440.3 million for 2011. Refer to the non-GAAP reconciliation table included
in this release for more details.

Income tax benefit, on a GAAP basis, totaled $2.2 million for the fourth
quarter of 2012. This compares to a provision for income taxes of $5.9 million
for the third quarter of 2012 and a provision for income taxes of $14.4
million for the fourth quarter of 2011. Non-GAAP provision for income taxes
for the fourth quarter of 2012 was $2.6 million compared to $2.9 million for
the third quarter of 2012 and a non-GAAP income tax benefit of $0.5 million
for the fourth quarter of 2011. For the full year 2012, the non-GAAP tax
provision was $7.4 million compared to $1.5 million for 2011.

Cash provided from operations totaled approximately $78.7 million for the
fourth quarter of 2012, compared to $53.6 million for the third quarter of
2012 and $43.4 million for the fourth quarter of 2011.For calendar 2012,
operating cash flow exceeded $200 million. Combined cash balances (cash and
cash equivalents plus short-term investments) totaled $296.1 million at the
end of the fourth quarter of 2012, an increase of $6.9 million from the
immediately preceding quarter.

Company Highlights

  oAcquired Ozmo, Inc., a leader in ultra-low power Wi-Fi solutions
  oAtmel and Celeno Communications collaborate on Wi-Fi Direct remote
    controls for consumer products
  oAtmel introduced new family of ARM® Cortex™-A5 processor-based MPUs for
    embedded industrial and consumer applications
  oExpanded ARM® Cortex™-M4 processor-based Flash family to include the SAM4E
    Series, featuring advanced connectivityperipherals, a floating point
    unit, advanced analog capabilities, and higher processing power
  oIntroduced new ATmegaRFR2 AVR® family of devices, offering
    industry'slowest power wireless microcontrollers for 2.4GHz industrial,
    scientific, and medical band (ISM) applications
  oJoined G3-PLC Alliance, expanding development in standards-based smart
    grid communications
  oAtmel and Wasion Group signed memorandum of understanding to develop PRIME
    power line communication solutions for smart metering
  oASUS selected XSense™ touch sensor for their next-generation tablet
  oDemonstrated XSense with curved and ultra-thin 0.55mm Corning® Gorilla®
    Glass
  oWon 2013 CES Innovations Award for XSense
  oExpanded Atmel maXTouch® S family of touchscreen controllers with mXT540S
  oGoogle selected maXTouch to power the touchscreen Nexus 10"Android tablet
  oWindows 8 tablets and Ultrabooks featuring maXTouch include: ASUS' Vivo
    Tab, Vivo Tab RT, X202E, S400, and S56, Bluebird's Pidion BP80 tablet,
    DELL's XPS10, XPS 12 Convertible Touch Ultrabook and Inspiron 15z,
    Fujitsu's Arrows Tab QH55, HP's Envy, Envy X2, and Spectre XT TouchSmart
    Ultrabook, Lenovo's Think Pad Tablet 2 and X230, LG's H160 and Z160
    Tab-Books, Samsung's ATIV Tab RT, Series 5 Slate, and Series 7 Slate, and
    Toshiba's 925t
  oRecent smartphone introductions with maXTouch inside include: Samsung's
    I9105 Galaxy S II Plus, SCH-W889, and GT-B9388, Nokia's Lumia 510 and 620,
    Kyocera's Digno S, Sharp's Aquos SH930W, Fujitsu's F-03E Arrows Kiss,
    Gionee's GN700W, Meizu's MX2 and Xiaomi's MI2
  oIntroduced new LIN family for automotive switch scan and ambient lighting
    applications
  oLaunched industry's first integrated app store and collaboration workspace
    for embedded microcontroller designers in Atmel Studio 6

Stock Repurchase
During the fourth quarter of 2012, Atmel repurchased 3.3 million shares of its
common stock in the open market at an average price of $4.87 per share.

Non-GAAP Metrics
Non-GAAP net income excludes charges related to losses on purchase commitments
relating to the take-or-pay supply agreements, losses relating to receivables
from a foundry supplier, restructuring activities, charges associated with
acquisitions, gain or loss on sale of assets, credit from reserved grant
income, stock-based compensation, as well as the non-GAAP income tax
adjustments and other non-recurring income tax items. A reconciliation of GAAP
results to non-GAAP results is included following the financial statements
below.

Conference Call
Atmel will hold a teleconference at 2:00 p.m. PT today to discuss the fourth
quarter 2012 financial results. The conference call will be webcast live and
can also be monitored by dialing 1-800-374-0405 or 1-706-758-4519. The
conference ID number is 84526682 and participants are encouraged to initiate
their calls 10 minutes prior to the 2:00 p.m. PT start time to ensure a timely
connection. The webcast and earnings release will be accessible at
http://ir.atmel.com/ and will be archived for 12 months.

A replay of the February 6, 2013 conference call will be available the same
day at approximately 5:00 p.m. PT and will be archived for 48 hours. The
replay access numbers are 1-800-585-8367 within the U.S. and 1-404-537-3406
for all other locations. The access code is 84526682.

About Atmel
Atmel is a worldwide leader in the design and manufacture of microcontrollers,
capacitive touch solutions, advanced logic, mixed-signal, nonvolatile memory
and radio frequency (RF) components. Leveraging one of the industry's broadest
intellectual property (IP) technology portfolios, Atmel is able to provide the
electronics industry with complete system solutions focused on industrial,
consumer, communications, computing and automotive markets.

© 2013 Atmel Corporation. Atmel®, Atmel logo and combinations thereof, and
others are registered trademarks or trademarks of Atmel Corporation or its
subsidiaries. Other terms and product names may be trademarks of others.

Safe Harbor for Forward-Looking Statements
Information in this release regarding Atmel's forecasts, business outlook,
expectations, new product launches, and beliefs are forward-looking statements
that involve risks and uncertainties. These statements may include comments
about our future operating and financial performance, including our outlook
for 2013 and beyond, our expectations regarding market share and product
revenue growth, and Atmel's strategies. All forward-looking statements
included in this release are based upon information available to Atmel as of
the date of this release, which may change. These statements are not
guarantees of future performance and actual results could differ materially
from our current expectations. Factors that could cause or contribute to such
differences include, without limitation, general global macroeconomic
conditions (especially in Europe and Asia); the cyclical nature of the
semiconductor industry; the inability to realize the anticipated benefits of
transactions related to acquisitions, restructuring activities or other
initiatives in a timely manner or at all; the impact of competitive products
and pricing; disruption to our business caused by our increased dependence on
outside foundries and the financial instability of those foundries in some
cases; industry and/or company overcapacity or undercapacity, including
capacity constraints of our independent assembly contractors; the success of
our customers' end products and timely design acceptance by our customers;
timely introduction of new products and technologies (including, for example,
our XSense™ and maXTouch® products); our ability to ramp new products into
volume production; our reliance on non-binding customer forecasts and the
absence of long-term supply contracts with most of our customers; financial
stability in foreign markets and the impact of foreign exchange rates;
unanticipated changes in environmental, health and safety regulations; our
dependence on selling through independent distributors; the complexity of our
revenue recognition policies; information technology system failures; business
interruptions, natural disasters and terrorist acts; unanticipated costs and
expenses or the inability to identify expenses which can be eliminated; the
market price or volatility of our common stock; disruptions in the
availability of raw materials; compliance with U.S. and international laws and
regulations by us and our distributors; our dependence on key personnel; our
ability to protect our intellectual property rights; litigation (including
intellectual property litigation in which we may be involved or in which our
customers may be involved, especially in the mobile device sector), and the
possible unfavorable results of legal proceedings; and other risks detailed
from time to time in Atmel's SEC reports and filings, including our Form 10-K
for the year ended December 31, 2011, filed on February 28, 2012, and our
subsequent Form 10-Q reports. Atmel assumes no obligation and does not intend
to update any forward-looking statements, whether as a result of new
information, future events or otherwise.

Investor Contact:
Peter Schuman
Director, Investor Relations
(408) 437-2026

Atmel Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
                        Three Months Ended            Twelve Months Ended
                        December  September December   December    December
                        31,       30,       31,        31,         31,
                        2012      2012      2011       2012        2011
Net revenue             $      $      $       $          $ 
                        345,083   360,990  383,609    1,432,110  1,803,053
Cost of revenue         213,544   205,464   198,952    830,791     894,820
Research and            58,872    59,966    63,669     251,519     255,653
development
Selling, general and    66,376    68,036    70,817     275,257     280,410
administrative
Acquisition-related     1,946     1,530     2,339      7,388       5,408
charges
Restructuring charges   11,036    (1,404)   (1,146)    23,986      20,064
(credit)
Impairment of
receivables from        6,495     -         -          6,495       -
foundry supplier
Credit from reserved    -         -         -          (10,689)    -
grant income
Gain on sale of assets  -         -         -          -           (35,310)
Total operating         358,269   333,592   334,631    1,384,747   1,421,045
expenses
(Loss) income from      (13,186)  27,398    48,978     47,363      382,008
operations
Interest and other      (1,338)   153       (1,736)    (5,125)     (818)
(expense) income, net
(Loss) income before    (14,524)  27,551    47,242     42,238      381,190
income taxes
Benefit from (provision 2,192     (5,915)   (14,381)   (11,793)    (66,200)
for) income taxes
Net (loss) income      $      $     $      $       $   
                        (12,332) 21,636   32,861     30,445      314,990
Basic net (loss) income
per share:
Net (loss) income per   $     $     $      $      $     
share                    (0.03)    0.05   0.07    0.07       0.69
Weighted-average shares
used in basic net       429,312   430,845   451,582    433,017     455,629
(loss) income per share
calculations
Diluted net (loss)
income per share:
Net (loss) income per   $     $     $      $      $     
share                    (0.03)    0.05   0.07    0.07       0.68
Weighted-average shares
used in diluted net     429,312   433,295   456,514    437,582     462,673
(loss) income per share
calculations





Atmel Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
                                             December 31,    December 31,
                                             2012            2011
Current assets
Cash and cash equivalents                    $    293,370 $    329,431
Short-term investments                       2,687           3,079
Accounts receivable, net                     188,488         212,929
Inventories                                  348,273         377,433
Prepaids and other current assets            125,019         116,929
Total current assets                         957,837         1,039,801
Fixed assets, net                            221,044         257,070
Goodwill                                    104,430         67,662
Intangible assets, net                       27,257          20,594
Other assets                                 122,965         141,471
Total assets                                 $  1,433,533  $  1,526,598
Current liabilities
Trade accounts payable                      103,980         76,445
Accrued and other liabilities                203,510         207,118
Deferred income on shipments to distributors 29,226          47,620
Total current liabilities                    336,716         331,183
Other long-term liabilities                  100,179         112,971
Total liabilities                            436,895         444,154
Stockholders' equity                         996,638         1,082,444
Total liabilities and stockholders' equity   $  1,433,533  $  1,526,598



ATMEL CORPORATION
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
(Unaudited)
                            Three Months Ended            Twelve Months Ended
                            December  September December   December  December
                            31,       30,       31,        31,       31,
                            2012      2012      2011       2012      2011
GAAP gross margin           $      $      $       $      $   
                            131,539   155,526  184,657    601,319   908,233
Loss related to foundry     10,628    -         -          10,628    -
arrangement
Stock-based compensation    1,329     2,154     2,057      8,052     7,840
expense
Non-GAAP gross margin       $      $      $       $      $   
                            143,496   157,680  186,714    619,999   916,073
GAAP research and           $     $     $      $      $   
development expense         58,872    59,966   63,669     251,519   255,653
Stock-based compensation    (5,257)   (4,925)   (6,591)    (22,825)  (22,916)
expense
Non-GAAP research and       $     $     $      $      $   
development expense         53,615    55,041   57,078     228,694   232,737
GAAP selling, general and   $     $     $      $      $   
administrative expense      66,376    68,036   70,817     275,257   280,410
Stock-based compensation    (9,818)   (11,150)  (9,873)    (41,565)  (37,369)
expense
Non-GAAP selling, general   $     $     $      $      $   
and administrative expense  56,558    56,886   60,944     233,692   243,041
GAAP (loss) income from     $      $     $      $     $   
operations                  (13,186) 27,398   48,978     47,363    382,008
Stock-based compensation    16,404    18,229    18,521     72,442    68,125
expense
Acquisition-related         1,946     1,530     2,339      7,388     5,408
charges
Restructuring charges       11,036    (1,404)   (1,146)    23,986    20,064
(credit)
Loss related to foundry     10,628    -         -          10,628    -
arrangement
Impairment of receivables   6,495     -         -          6,495     -
from foundry supplier
Credit from reserved grant  -         -         -          (10,689)  -
income
Gain on sale of assets      -         -         -          -         (35,310)
Non-GAAP income from        $     $     $      $      $   
operations                  33,323    45,753   68,692     157,613   440,295
GAAP benefit from           $     $     $       $      $   
(provision for) income      2,192     (5,915) (14,381)  (11,793) (66,200)
taxes
Adjustments for cash tax    4,790     (3,047)   (14,916)   (4,410)   (64,682)
and other tax settlements
Non-GAAP (provision for)    $     $     $      $     $    
benefit from income taxes   (2,598)    (2,868)   535    (7,383)   (1,518)
GAAP net (loss) income      $      $     $      $     $   
                            (12,332) 21,636   32,861     30,445    314,990
Stock-based compensation    16,404    18,229    18,521     72,442    68,125
expense
Acquisition-related         1,946     1,530     2,339      7,388     5,408
charges
Restructuring charges       11,036    (1,404)   (1,146)    23,986    20,064
(credit)
Loss related to foundry     10,628    -         -          10,628    -
arrangement
Impairment of receivables   6,495     -         -          6,495     -
from foundry supplier
Credit from reserved grant  -         -         -          (10,689)  -
income
Gain on sale of assets      -         -         -          -         (35,310)
Tax adjustments             (4,790)   3,047     14,916     4,410     64,682
Non-GAAP net income        $     $     $      $      $   
                            29,387    43,038   67,491     145,105   437,959
GAAP net (loss) income per  (0.03)    $     $      $     $    
share - diluted                         0.05   0.07     0.07    0.68
Stock based compensation    0.04      0.04      0.04       0.16      0.14
expense
Acquisition-related         0.01      -         -          0.02      -
charges
Restructuring charges       0.02      -         -          0.05      0.04
(credit)
Loss related to foundry     0.02      -         -          0.02      -
arrangement
Impairment of receivables   0.01      -         -          0.01      -
from foundry supplier
Credit from reserved grant  -         -         -          (0.02)    -
income
Gain on sale of assets      -         -         -          -         (0.07)
Tax adjustments             -         0.01      0.03       0.01      0.13
Non-GAAP net income per     0.07      $     $      $     $    
share - diluted                        0.10   0.14     0.32    0.92
GAAP diluted shares         429,312   433,295   456,514    437,582   462,673
Adjusted dilutive stock     14,669    11,034    14,524     9,764     11,046
awards - non-GAAP
Non-GAAP diluted shares     443,981   444,329   471,038    447,346   473,719

Notes to Non-GAAP Financial Measures
To supplement its consolidated financial results presented in accordance with
GAAP, Atmel uses non-GAAP financial measures, including non-GAAP net income
and non-GAAP net income per diluted share, which are adjusted from the most
directly comparable GAAP financial measures to exclude certain items, as shown
above and described below. Management believes that these non-GAAP financial
measures reflect an additional and useful way of viewing aspects of Atmel's
operations that, when viewed in conjunction with Atmel's GAAP results, provide
a more comprehensive understanding of the various factors and trends affecting
Atmel's business and operations.

Atmel uses each of these non-GAAP financial measures for internal purposes and
believes that these non-GAAP measures provide meaningful supplemental
information regarding operational and financial performance. Management uses
these non-GAAP measures for strategic and business decision making, internal
budgeting, forecasting and resource allocation processes. Atmel may, in the
future, determine to present non-GAAP financial measures other than those
presented in this release, which it believes may be useful to investors. Any
such determinations will be made with the intention of providing the most
useful information to investors and will reflect information used by the
company's management in assessing Atmel's business, which may change from time
to time.

Atmel believes that providing these non-GAAP financial measures, in addition
to the GAAP financial results, is useful to investors because the non-GAAP
financial measures allow investors to see Atmel's results "through the eyes"
of management as these non-GAAP financial measures reflect Atmel's internal
measurement processes. Management believes that these non-GAAP financial
measures enable investors to better assess changes in each key element of
Atmel's operating results across different reporting periods on a consistent
basis. Thus, management believes that each of these non-GAAP financial
measures provides investors with another method for assessing Atmel's
operating results in a manner that is focused on the performance of its
ongoing operations. In addition, these non-GAAP financial measures may
facilitate comparisons to Atmel's historical operating results and to
competitors' operating results.

There are limitations in using non-GAAP financial measures because they are
not prepared in accordance with GAAP and may be different from non-GAAP
financial measures used by other companies. In addition, non-GAAP financial
measures may be limited in value because they exclude certain items that may
have a material impact upon Atmel's reported financial results. Management
compensates for these limitations by providing investors with reconciliations
of the non-GAAP financial measures to the most directly comparable GAAP
financial measures. The presentation of non-GAAP financial information is not
meant to be considered in isolation or as a substitute for or superior to the
most directly comparable GAAP financial measures. The non-GAAP financial
measures supplement, and should be viewed in conjunction with, GAAP financial
measures. Investors should review the reconciliations of the non-GAAP
financial measures to their most directly comparable GAAP financial measures
as provided above.

As presented in the "Reconciliation of GAAP Financial Measures to Non-GAAP
Financial Measures" tables above, each of the non-GAAP financial measures
excludes one or more of the following items:

  oLoss from foundry arrangement.

Loss from foundry arrangement relates to the Company's assessment of the
probable loss with respect to a European foundry "take-or-pay" arrangement for
wafers to be delivered during the remaining term of the arrangement.Atmel
believes that it is appropriate to exclude loss from foundry arrangement from
Atmel's non-GAAP financial measures, as it enhances the ability of investors
to compare Atmel's period-over-period operating results from continuing
operations.

  oImpairment of receivables from foundry supplier.

Impairment of receivables from foundry supplier relates to the Company's
assessment of the probability of collecting on receivables from a European
foundry supplier for certain services provided by Atmel to that foundry.
Atmel believes that it is appropriate to exclude impairment of receivables
from foundry supplier from Atmel's non-GAAP financial measures, as it enhances
the ability of investors to compare Atmel's period-over-period operating
results from continuing operations.

  oStock-based compensation expense.

Stock-based compensation expense relates primarily to equity awards such as
stock options and restricted stock units. This includes stock-based
compensation expense related to performance-based restricted stock units for
which Atmel recognizes stock-based compensation expense to the extent
management believes it probable that Atmel will achieve the performance
criteria which occurs before these awards actually vest. If the performance
goals are unlikely to be met, no compensation expense is recognized and any
previously recognized compensation expense is reversed. Stock-based
compensation is a non-cash expense that varies in amount from period to period
and is dependent on market forces that are often beyond Atmel's control. As a
result, management excludes this item from Atmel's internal operating
forecasts and models. Management believes that non-GAAP measures adjusted for
stock-based compensation provide investors with a basis to measure Atmel's
core performance against the performance of other companies without the
variability created by stock-based compensation as a result of the variety of
equity awards used by other companies and the varying methodologies and
assumptions used. 

  oAcquisition-related charges.

Acquisition-related charges include: (1) amortization of intangibles, which
include acquired intangibles such as customer relationships, backlog, core
developed technology, trade names and non-compete agreements and (2)
contingent compensation expense, which include compensation resulting from the
employment retention of certain key employees established in accordance with
the terms of the acquisitions. In most cases, these acquisition-related
charges are not factored into management's evaluation of potential
acquisitions or Atmel's performance after completion of acquisitions, because
they are not related to Atmel's core operating performance. In addition, the
frequency and amount of such charges can vary significantly based on the size
and timing of acquisitions and the maturities of the businesses being
acquired. Excluding acquisition-related charges from non-GAAP measures
provides investors with a basis to compare Atmel against the performance of
other companies without the variability caused by purchase accounting.

  oRestructuring charges (credit).

Restructuring charges primarily relate to expenses necessary to make
infrastructure-related changes to Atmel's operating costs. Restructuring
charges are excluded from non-GAAP financial measures because they are not
considered core operating activities. Although Atmel has engaged in various
restructuring activities in recent years, each has been a discrete event based
on a unique set of business objectives. Atmel believes that it is appropriate
to exclude restructuring charges (credit) from Atmel's non-GAAP financial
measures, as it enhances the ability of investors to compare Atmel's
period-over-period operating results from continuing operations.

  oCredit from reserved grant income.

Atmel recognized a credit from reserved grant income as a result of a
ministerial decision executed by the Greek government providing for a partial
refund of an outstanding state grant previously made. Based on the execution
of this ministerial decision and the subsequent publication of that decision,
management determined that it would not be required to repay the full amount
of the outstanding grant. Atmel believes that it is appropriate to exclude
credit from reserved grant income from Atmel's non-GAAP financial measures, as
it enhances the ability of investors to compare Atmel's period-over-period
operating results from continuing operations.

  oGain on sale of assets.

Atmel recognizes gains resulting from the sale of certain non-strategic assets
that no longer align with Atmel's long-term operating plan. Atmel excludes
these items from its non-GAAP financial measures primarily because these gains
are individually discrete events and generally not reflective of the ongoing
operating performance of Atmel's business and can distort period-over-period
comparisons.

  oNon-GAAP tax adjustment.

In conjunction with the implementation of Atmel's global structure changes
which took effect January 1, 2011, the company changed its methodology for
reporting non-GAAP taxes. Beginning in the first quarter of 2011, Atmel's
non-GAAP tax amounts approximate operating cash tax expense, similar to the
liability reported on Atmel's tax returns. This approach is designed to
enhance the ability of investors to understand the company's tax expense on
its current operations, provide improved modeling accuracy, and substantially
reduce fluctuations caused by GAAP adjustments which may not reflect actual
cash tax expense.

Atmel forecasts its annual cash tax liability and allocates the tax to each
quarter in proportion to earnings for that period.

SOURCE Atmel Corporation

Website: http://www.atmel.com
 
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