SAN JOSE, Calif., Feb. 4, 2015 /PRNewswire/ -- Atmel(®) Corporation (Nasdaq: ATML), a leader in microcontroller and touch solutions, today announced financial results for its fourth quarter ended December 31, 2014.



                 GAAP                                          Non-GAAP
                 ----                                          --------

                Q4 2014         Q3 2014        Q4 2013                  Q4 2014          Q3 2014           Q4 2013
                -------         -------        -------                  -------          -------           -------

    Net revenue          $346.0         $374.5          $353.2                    $346.0            $374.5             $353.2

    Gross
     margin               40.6%         47.2%          42.7%                    49.0%            47.0%             43.7%

    Operating
     margin              (1.6)%          9.0%           8.3%                    14.1%            14.7%             12.4%

    Net income
     (loss)              $(6.5)         $17.3            $7.2                     $49.2             $49.8              $43.6

    Diluted EPS         $(0.02)         $0.04           $0.02                     $0.12             $0.12              $0.10


    (In millions, except earnings per
     share data and percentages)

Revenue for the fourth quarter of 2014 was $346.0 million, an 8% decrease compared to $374.5 million for the third quarter of 2014, and 2% lower compared to $353.2 million for the fourth quarter of 2013. For the full year, revenue of $1.41 billion increased 2% compared to $1.39 billion for 2013.

GAAP gross margin was 40.6% in the fourth quarter of 2014, and includes a $26.6 million charge for the impairment of manufacturing assets related to the XSense business.

Non-GAAP gross margin was 49.0% in the fourth quarter of 2014 compared to 47.0% in the immediately preceding quarter and 43.7% in the fourth quarter of 2013. For the full year 2014, non-GAAP gross margin was 46.3% compared to 42.5% for 2013. Refer to the non-GAAP reconciliation table included in this release for more details.

GAAP net loss totaled $(6.5) million or $(0.02) per diluted share for the fourth quarter of 2014, principally as a result of the impairment of manufacturing assets and a $14.8 million charge incurred for restructuring activities associated with workforce reductions. This compares to $17.3 million or $0.04 per diluted share for the third quarter of 2014, and $7.2 million or $0.02 per diluted share for the fourth quarter of 2013. For the full year 2014, GAAP net income attributable to Atmel Corporation was $32.2 million or $0.08 per diluted share compared to GAAP net loss of $(22.1) million or $(0.05) per diluted share for 2013.

Non-GAAP net income for the fourth quarter of 2014 totaled $49.2 million or $0.12 per diluted share, compared to non-GAAP net income of $49.8 million or $0.12 per diluted share in the third quarter of 2014, and $43.6 million or $0.10 per diluted share for the year-ago quarter. For the full year 2014, non-GAAP net income was $166.4 million or $0.39 per diluted share compared to $120.2 million or $0.27 for 2013. Refer to the non-GAAP reconciliation table included in this release for more details.

"We are pleased with full year 2014 financial performance as our core microcontroller business generated solid growth, Atmel's operating model was transformed to sustainably higher margins and we delivered a record number of new products in the high-growth IoT and security markets," said Steve Laub, Atmel's President and Chief Executive Officer. "Today's initiation of a dividend reflects our confidence in Atmel's long-term business prospects."

Cash provided by operations totaled $37.2 million for the fourth quarter of 2014, compared to $43.9 million for the third quarter of 2014 and $48.4 million for the fourth quarter of 2013. For the full year 2014, cash provided by operating activities totaled $179.8 million compared to $127.1 million for 2013. Combined cash balances (cash and cash equivalents plus short-term investments) totaled $206.9 million at the end of the fourth quarter of 2014, a decrease of $13.0 million from the immediately preceding quarter resulting principally from the repurchase of $21.9 million in common stock during the fourth quarter and a $15 million repayment of debt.

Company Highlights


    --  Announced initiation of first cash dividend in Atmel's 30-year history
    --  Expanded Atmel | SMART wireless portfolio with the SAM W25 standalone
        low-power, secure Wi-Fi modules for IoT edge nodes
    --  Announced ultra-low power Bluetooth Smart (BLE) platform delivering the
        industry's lowest power consumption and smallest package
    --  Expanded SmartConnect wireless portfolio with a new Wi-Fi/Bluetooth
        combo platform (WILC3000) for connected home and wearable applications
    --  Joined Thread Group, an alliance created to develop a low-power wireless
        networking protocol designed for IoT applications in and around the home
    --  Unveiled new Atmel® | SMART SAM L21 platform setting a new low-power
        standard for ARM® Cortex® -M0+ based microcontrollers for IoT,
        portable and battery powered applications
    --  Delivered new SAM G ARM® Cortex® -M4 microcontrollers featuring
        high-performance, ultra-low power and the industry's smallest form
        factor, for rapidly growing IoT and wearable markets chosen by EDN as
        one of the Hot 100 Products of 2014
    --  Sampled industry's highest performance ARM® Cortex®-M7-based
        microcontrollers for IoT, industrial, and automotive markets
    --  Launched next-generation low-power 8-bit AVR microcontrollers for
        industrial, consumer and IoT applications
    --  Expanded QTouch® SMART portfolio of capacitive touch buttons, sliders
        and wheels for the safety critical home appliance market
    --  Extended partnership with IAR Systems®  to include over 1,400 new
        example projects in their development tools to support  Atmel | SMART
        microcontrollers and microprocessors
    --  Launched maXTouch(®) U Series powering next-generation advanced
        displays, offering the highest hover distance in the industry and
        enabling the fastest touch response for users compared to any competing
        solution today
    --  Entered strategic partnership with Fingerprint Cards AB for biometric
        fingerprint solutions
    --  Launched new family of local interconnect networking (LIN) transceivers
        for in-vehicle networking
    --  Achieved volume production for new family of control area network (CAN)
        transceivers for the automotive and industrial markets

Stock Repurchase
During the fourth quarter of 2014, Atmel repurchased 2.9 million shares of its common stock in the open market at an average price of $7.63 per share.

Non-GAAP Metrics
Non-GAAP net income excludes share-based compensation expense, acquisition-related charges (credits), restructuring charges (credits), loss from the impairment of manufacturing assets related to the XSense business, (gain) loss from manufacturing facility damage and shutdown, French building underutilization and other, (gain) loss related to foundry arrangements, recovery of receivables from foundry suppliers, settlement charges, gain on sale of assets, fair value adjustments to inventory from businesses acquired, write-down of investments in privately held companies, interest income from sale of assets, non-GAAP income tax adjustment and other non-recurring income tax items, as well as net income attributable to noncontrolling interest. 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 p.m. PT today to discuss the fourth quarter 2014 financial results. The conference call will be webcast live and can also be monitored by dialing 1-706-758-4519. The conference ID number is 52908067 and participants are encouraged to initiate their calls 10 minutes prior to the 2 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 4, 2015 conference call will be available the same day at approximately 5 p.m. PT and will be archived for 48 hours. The replay access number is 1-404-537-3406. The access code is 52908067.

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 intelligent and connected solutions focused on the industrial, consumer, communications, computing and automotive markets.

©2015 Atmel Corporation. Atmel®, Atmel logo and combinations thereof, Enabling Unlimited Possibilities®, and others are registered trademarks or trademarks of Atmel Corporation in the U.S. and other countries. Other terms and product names may be trademarks of others.

Safe Harbor for Forward-Looking Statements
Statements in this release, including those regarding Atmel's forecasts, business outlook, expectations, new product launches, and beliefs, among others, 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 2015 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 and geo-political conditions; 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, financial instability or insolvency proceedings affecting some of those foundries, and associated litigation involving us 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 new maXTouch® products) and implementation of new manufacturing technologies; 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 or volatility 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 or terrorist acts; unanticipated costs and expenses or the inability to identify expenses which can be eliminated; the market price or increased 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, 2013, filed on February 28, 2014. 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
Senior Director, Investor Relations
(408) 437-2026



                                                                                                                   ATMEL CORPORATION

                                                                                                    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                                       (In thousands, except for per share data)

                                                                                                                      (Unaudited)



                                                           Three Months Ended                                     Twelve Months Ended
                                                           ------------------                                     -------------------

                                                          December 31,                September 30,                                                 December 31,            December 31,             December 31,

                                                                                 2014                         2014                                                     2013                     2014                      2013
                                                                                 ----                         ----                                                     ----                     ----                      ----


    Net revenue                                                              $345,954                     $374,485                                                 $353,220               $1,413,334                $1,386,447


    Operating expenses

    Cost of revenue                                                           205,395                      197,642                                                  202,292                  794,704                   812,822

    Research and
     development                                                               64,817                       69,917                                                   63,948                  274,568                   266,408

    Selling, general and
     administrative                                                            67,845                       65,324                                                   59,277                  262,031                   237,559

    Acquisition-related
     charges (charges)                                                          3,480                        7,162                                                    (165)                  13,767                     5,534

    Restructuring
     charges (credits)                                                         14,849                          840                                                  (1,519)                  13,882                    50,026

    Recovery of
     receivables from
     foundry suppliers                                                          (485)                           -                                                    (78)                   (485)                    (600)

    Gain on sale of
     assets                                                                   (4,364)                           -                                                       -                 (4,364)                  (4,430)

    Settlement charges                                                              -                           -                                                       -                       -                   21,600

    Total operating
     expenses                                                                 351,537                      340,885                                                  323,755                1,354,103                 1,388,919
                                                                              -------                      -------                                                  -------                ---------                 ---------

    (Loss) income from
     operations                                                               (5,583)                      33,600                                                   29,465                   59,231                   (2,472)


    Interest and other
     income (expense),
     net                                                                        3,851                      (4,731)                                                     931                  (2,005)                    1,959

    (Loss) income before
     income taxes                                                             (1,732)                      28,869                                                   30,396                   57,226                     (513)

    Provision for income
     taxes                                                                    (1,712)                    (11,619)                                                (23,186)                (22,018)                 (21,542)
                                                                               ------                      -------                                                  -------                  -------                   -------

    Net (loss) income                                                         (3,444)                      17,250                                                    7,210                   35,208                  (22,055)

    Less: net income
     attributable to
     noncontrolling
     interest                                                                 (3,013)                           -                                                       -                 (3,013)                        -
                                                                               ------                          ---                                                     ---                  ------                       ---

    Net (loss) income
     attributable to
     Atmel Corporation                                                       $(6,457)                     $17,250                                                   $7,210                  $32,195                 $(22,055)
                                                                              =======                      =======                                                   ======                  =======                  ========


    Basic net (loss) income per share attributable to Atmel
     Corporation:

    Net (loss) income
     per share                                                                $(0.02)                       $0.04                                                    $0.02                    $0.08                   $(0.05)
                                                                               ======                        =====                                                    =====                    =====                    ======

    Weighted-average
     shares used in
     basic net (loss)
     income per share
     calculations                                                             417,797                      418,954                                                  426,021                  419,103                   427,460
                                                                              =======                      =======                                                  =======                  =======                   =======

    Diluted net (loss) income per share attributable to Atmel
     Corporation:

    Net (loss) income
     per share                                                                $(0.02)                       $0.04                                                    $0.02                    $0.08                   $(0.05)
                                                                               ======                        =====                                                    =====                    =====                    ======

    Weighted-average
     shares used in
     diluted net (loss)
     income per share
     calculations                                                             417,797                      420,964                                                  428,008                  420,910                   427,460
                                                                              =======                      =======                                                  =======                  =======                   =======



                                  ATMEL CORPORATION

                        CONDENSED CONSOLIDATED BALANCE SHEETS

                                   (In thousands)

                                     (Unaudited)



                                December 31,                  December 31,

                                                      2014                       2013
                                                      ----                       ----


    Current assets

    Cash and
     cash
     equivalents                                  $206,937                   $276,881

    Short-
     term
     investments                                         -                     2,181

    Accounts
     receivable,
     net                                           222,021                    206,757

    Inventories                                    278,242                    274,967

    Prepaids
     and other
     current
     assets                                         88,422                     92,234

    Total
     current
     assets                                        795,622                    853,020

    Fixed
     assets,
     net                                           158,281                    184,983

    Goodwill                                       191,088                    108,240

    Intangible
     assets,
     net                                            50,286                     28,116

    Other
     assets                                        166,164                    178,167

    Total
     assets                                     $1,361,441                 $1,352,526
                                                ==========                 ==========


    Current liabilities

    Trade
     accounts
     payable                                       $97,467                    $95,872

    Accrued
     and other
     liabilities                                   147,109                    155,406

    Deferred
     income on
     shipments
     to
     distributors                                   49,059                     42,594

    Total
     current
     liabilities                                   293,635                    293,872

    Other
     long-
     term
     liabilities                                   198,670                    120,727

    Total
     liabilities                                   492,305                    414,599
                                                   -------                    -------


     Stockholders'
     equity                                        869,136                    937,927

    Total
     liabilities
     and
     stockholders'
     equity                                     $1,361,441                 $1,352,526
                                                ==========                 ==========



                                                                                   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 31,                 September 30,                                                    December 31,             December 31,              December 31,

                                                   2014                          2014                                                          2013                      2014                       2013
                                                   ----                          ----                                                          ----                      ----                       ----


    GAAP gross margin                          $140,559                      $176,843                                                      $150,928                  $618,630                   $573,625

    (Gain) loss from
     manufacturing facility
     damage and shutdown                              -                      (3,571)                                                        2,205                     3,485                      2,205

    (Gain) loss related to
     foundry arrangements                             -                        (454)                                                            -                  (2,583)                     7,424

    Impairment of XSense
     assets                                      26,624                             -                                                            -                   26,624                          -

    Fair value adjustments
     to inventory from
     businesses acquired                            774                         1,548                                                             -                    2,322                          -

    Share-based
     compensation expense                         1,463                         1,605                                                         1,301                     6,355                      5,889

    Non-GAAP gross margin                      $169,420                      $175,971                                                      $154,434                  $654,833                   $589,143
                                               ========                      ========                                                      ========                  ========                   ========


    GAAP research and
     development expense                        $64,817                       $69,917                                                       $63,948                  $274,568                   $266,408

    Share-based
     compensation expense                       (3,825)                      (4,632)                                                      (4,126)                 (17,569)                  (14,851)

    French building
     underutilization and
     other                                          317                         (608)                                                        (766)                  (1,903)                     (766)

    Non-GAAP research and
     development expense                        $61,309                       $64,677                                                       $59,056                  $255,096                   $250,791
                                                =======                       =======                                                       =======                  ========                   ========


    GAAP selling, general
     and administrative
     expense                                    $67,845                       $65,324                                                       $59,277                  $262,031                   $237,559

    Share-based
     compensation expense                       (8,578)                      (8,680)                                                      (7,361)                 (35,755)                  (22,383)

    French building
     underutilization and
     other                                            9                         (214)                                                        (179)                  (1,055)                     (179)

    Non-GAAP selling,
     general and
     administrative expense                     $59,276                       $56,430                                                       $51,737                  $225,221                   $214,997
                                                =======                       =======                                                       =======                  ========                   ========


    GAAP (loss) income from
     operations                                $(5,583)                      $33,600                                                       $29,465                   $59,231                   $(2,472)

    Share-based
     compensation expense                        13,866                        14,917                                                        12,788                    59,679                     43,124

    (Gain) loss from
     manufacturing facility
     damage and shutdown                              -                      (3,571)                                                        2,205                     3,485                      2,205

    Acquisition-related
     charges (credits)                            3,480                         7,162                                                         (165)                   13,767                      5,534

    French building
     underutilization and
     other                                        (326)                          822                                                           945                     2,957                        945

    Restructuring charges
     (credits)                                   14,849                           840                                                       (1,519)                   13,882                     50,026

    (Gain) loss related to
     foundry arrangements                             -                        (454)                                                            -                  (2,583)                     7,424

    Fair value adjustments
     to inventory from
     businesses acquired                            774                         1,548                                                             -                    2,322                          -

    Recovery of receivables
     from foundry suppliers                       (485)                            -                                                         (78)                    (485)                     (600)

    Gain on sale of assets                      (4,364)                            -                                                            -                  (4,364)                   (4,430)

    Settlement charges                                -                            -                                                            -                        -                    21,600

    Impairment of XSense
     assets                                      26,624                             -                                                            -                   26,624                          -

    Non-GAAP income from
     operations                                 $48,835                       $54,864                                                       $43,641                  $174,515                   $123,356
                                                =======                       =======                                                       =======                  ========                   ========


    GAAP provision for
     income taxes                              $(1,712)                    $(11,619)                                                    $(23,186)                $(22,018)                 $(21,542)

    Adjustments for cash tax
     and other tax
     settlements                                    517                       (9,522)                                                     (22,257)                 (15,444)                  (16,428)

    Non-GAAP provision for
     income taxes                              $(2,229)                     $(2,097)                                                       $(929)                 $(6,574)                  $(5,114)
                                                =======                       =======                                                         =====                   =======                    =======


    GAAP net (loss) income
     attributable to Atmel
     Corporation                               $(6,457)                      $17,250                                                        $7,210                   $32,195                  $(22,055)

    Share-based
     compensation expense                        13,866                        14,917                                                        12,788                    59,679                     43,124

    (Gain) loss from
     manufacturing facility
     damage and shutdown                              -                      (3,571)                                                        2,205                     3,485                      2,205

    Acquisition-related
     charges (credits)                            3,480                         7,162                                                         (165)                   13,767                      5,534

    French building
     underutilization and
     other                                        (326)                          822                                                           945                     2,957                        945

    Restructuring charges
     (credits)                                   14,849                           840                                                       (1,519)                   13,882                     50,026

    (Gain) loss related to
     foundry arrangements                             -                        (454)                                                            -                  (2,583)                     7,424

    Fair value adjustments
     to inventory from
     businesses acquired                            774                         1,548                                                             -                    2,322                          -

    Recovery of receivables
     from foundry suppliers                       (485)                            -                                                         (78)                    (485)                     (600)

    Gain on sale of assets                      (4,364)                            -                                                            -                  (4,364)                   (4,430)

    Settlement charges                                -                            -                                                            -                        -                    21,600

    Impairment of XSense
     assets                                      26,624                             -                                                            -                   26,624                          -

    Interest income from
     sale of assets                             (1,295)                            -                                                            -                  (1,295)                         -

    Write-down of
     investments in
     privately-held
     companies                                        -                        1,805                                                             -                    1,805                          -

    Tax adjustments                               (517)                        9,522                                                        22,257                    15,444                     16,428

    Net income attributable
     to noncontrolling
     interest                                     3,013                             -                                                            -                    3,013                          -

    Consolidated non-GAAP
     net income                                 $49,162                       $49,841                                                       $43,643                  $166,446                   $120,201
                                                =======                       =======                                                       =======                  ========                   ========


    GAAP net (loss) income
     per share -diluted
     attributable to Atmel
     Corporation                                $(0.02)                        $0.04                                                         $0.02                     $0.08                    $(0.05)

    Share-based
     compensation expense                          0.03                          0.04                                                          0.02                      0.14                       0.10

    (Gain) loss from
     manufacturing facility
     damage and shutdown                              -                       (0.01)                                                         0.01                      0.01                          -

    Acquisition-related
     charges (credits)                             0.01                          0.02                                                             -                     0.03                       0.01

    French building
     underutilization and
     other                                            -                            -                                                            -                     0.01                          -

    Restructuring charges
     (credits)                                     0.03                             -                                                            -                     0.03                       0.11

    (Gain) loss related to
     foundry arrangements                             -                            -                                                            -                   (0.01)                      0.02

    Fair value adjustments
     to inventory from
     businesses acquired                              -                            -                                                            -                        -                         -

    Recovery of receivables
     from foundry suppliers                           -                            -                                                            -                        -                         -

    Gain on sale of assets                       (0.01)                            -                                                            -                   (0.01)                    (0.01)

    Settlement charges                                -                            -                                                            -                        -                      0.05

    Impairment of XSense
     assets                                        0.07                             -                                                            -                     0.07                          -

    Interest income from
     sale of assets                                   -                            -                                                            -                        -                         -

    Write-down of
     investments in
     privately-held
     companies                                        -                         0.01                                                             -                        -                         -

    Tax adjustments                                   -                         0.02                                                          0.05                      0.04                       0.04

    Net income per share
     attributable to
     noncontrolling interest                       0.01                             -                                                            -                     0.01                          -

    Consolidated non-GAAP
     net income per share  -
      diluted                                     $0.12                         $0.12                                                         $0.10                     $0.39                      $0.27
                                                  =====                         =====                                                         =====                     =====                      =====


    GAAP diluted shares                         417,797                       420,964                                                       428,008                   420,910                    427,460

    Adjusted dilutive stock
     awards - non-GAAP                            9,482                         7,297                                                         9,503                     5,788                     11,841

    Non-GAAP diluted shares                     427,279                       428,261                                                       437,511                   426,698                    439,301
                                                =======                       =======                                                       =======                   =======                    =======

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 its 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:


    --  Share-based compensation expense.

Share-based compensation expense relates primarily to equity awards such as stock options and restricted stock units. This includes share-based compensation expense related to performance-based restricted stock units for which Atmel recognizes share-based compensation expense to the extent management believes it is 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. Share-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 share-based compensation provide investors with a basis to measure Atmel's core performance against the performance of other companies without the variability created by share-based compensation as a result of the variety of equity awards used by other companies and the varying methodologies and assumptions used.


    --  Acquisition-related charges (credits).

Acquisition-related charges (credits) include: (1) amortization of purchased intangibles, which include acquired intangibles such as customer relationships, backlog, core developed technology, trade names and non-compete agreements, (2) contingent compensation expense, which includes compensation resulting from the employment retention of certain key employees established in accordance with the terms of the acquisitions, (3) adjustments to previously recognized earn-out liability on contingent compensation expense related to acquisitions, and (4) direct costs related to acquisitions such as banker, legal and accounting fees. 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 (credits) 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.


    --  Restructuring charges (credits)

Restructuring charges (credits) primarily relate to expenses necessary to make infrastructure-related changes to Atmel's operating costs. Restructuring charges (credits) 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 (credits) 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.


    --  Impairment of XSense manufacturing assets.

Impairment of XSense manufacturing assets reflects a $26.6 million charge for the write-down of assets used in the manufacture of XSense touch sensors. The company has determined to discontinue its investment in the XSense business and to exit the business.


    --  (Gain) loss from manufacturing facility damage and shutdown.

Atmel experienced an unplanned shutdown of its semiconductor manufacturing operations in Colorado Springs, Colorado in the fourth quarter of 2013 due to damage to the facility's nitrogen plant. All repairs were completed in the first quarter of 2014 and the facility has resumed normal operations. During the third quarter 2014 we received an insurance payment of $3.6 million related to our facility damage claim. Atmel believes that the gain and loss from the manufacturing facility damage and shutdown is an individually discrete event that is not generally reflective of ongoing operating performance and should be excluded from period-over-period comparisons.


    --  (Gain) loss related to foundry arrangements.

(Gain) loss related to foundry arrangements relates to the reduction of estimated (gain) loss previously recorded with respect to European foundry "take or pay" arrangements for wafers that were delivered during the term of the arrangement. Atmel believes that it is appropriate to exclude (gain) loss related to foundry arrangements 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.


    --  French building underutilization and other.

French building underutilization and other relates to charges incurred as a result of the insolvency of our tenant in France in the first quarter of 2014, and prior year real estate taxes relating to an audit assessment of the same facilities in France. Atmel believes that it is appropriate to exclude these charges as they are individually discrete events and generally not reflective of the ongoing operating performance and should be excluded from period-over-period comparisons.


    --  Recovery of receivables from foundry suppliers.

Recovery of receivables from foundry suppliers relates to the company's assessment of the probability of collecting on receivables from European foundry suppliers for certain services provided by Atmel to those foundries. Atmel believes that it is appropriate to exclude recovery of receivables from foundry suppliers 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.


    --  Gain 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.


    --  Settlement charges.

Settlement charges related to legal settlements undertaken in connection with actual or anticipated litigation, or activities undertaken in preparation for, or anticipation of, possible litigation related to intellectual property, customer claims or other matters affecting the business that are generally not reflective of ongoing company performance or ordinary course of litigation expenses.


    --  Write-down of investments in privately-held companies.

Write-down of investments in privately-held companies relates to Atmel's proportional share of income or losses from investments accounted for under the equity method which is recorded in interest and other (expense) income, net. Atmel excludes this item from its non-GAAP financial measures primarily because this is generally not reflective of ongoing operating performance of Atmel's business and can distort period-over-period comparisons.


    --  Fair value adjustments to inventory from businesses acquired.

In connection with the acquisition of businesses, Atmel recognizes the assets acquired and liabilities assumed based on their estimated fair value at the date of acquisition. In connection with the Newport Media, Inc. acquisition in the third quarter of 2014, Atmel recorded a fair value increase to inventory which is amortized over the expected inventory turns and recognized in cost of revenue. Excluding the fair value adjustments from businesses acquired 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.


    --  Interest income from sale of assets.

Atmel recognized interest income from the sale proceeds of certain non-strategic assets that were not aligned 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.


    --  Non-GAAP tax adjustments.

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 for the current period/year. 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.


    --  Net income attributable to noncontrolling interest.

Net income attributable to noncontrolling interest relates the share of profit and loss allocated to a noncontrolling interest in one of Atmel's subsidiaries. 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.

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