ATMEL CORPORATION 
By SAN JOSE, Calif., Feb. 5, 2014 /PRNewswire/ -- Atmel(®) Corporation (Nasdaq: ATML), a leader in microcontroller and touch solutions, today announced financial results for its fourth quarter ended December 31, 2013.
(Logo: http://photos.prnewswire.com/prnh/20120712/MM39691LOGO)
GAAP Non-GAAP
---- --------
Q4 Q3 Q4 Q4 Q3 Q4
2013 2013 2012 2013 2013 2012
----- ----- ----- ----- ----- -----
Net
revenue $353.2 $356.3 $345.1 $353.2 $356.3 $345.1
---- ---- ------ ---- ---- ----
Gross
margin 42.7% 40.3% 38.1% 43.7% 43.1% 41.6%
---- ---- ---- ---- ---- ----
Operating
margin 7.6% 3.1% (3.8)% 12.4% 10.6% 9.7%
--- --- ----- ---- ---- ---
Net
income
(loss) $4.5 $5.4 $(12.3) $43.6 $37.7 $29.4
---- ---- ----- ----- ----- -----
Diluted
EPS $0.01 $0.01 $(0.03) $0.10 $0.09 $0.07
----- ----- ----- ----- ----- -----
(In millions, except for earnings per share data and
percentages)
Revenue for the fourth quarter of 2013 was $353.2 million, a 1% decrease compared to $356.3 million for the third quarter of 2013, and 2% higher compared to $345.1 million for the fourth quarter of 2012. For the full year 2013, revenue of $1.39 billion decreased 3% compared to $1.43 billion for 2012. Excluding the Serial Flash divestiture that occurred in September 2012, full year 2013 revenue was essentially flat as compared to 2012.
GAAP net income totaled $4.5 million or $0.01 per diluted share for the fourth quarter of 2013. This compares to $5.4 million or $0.01 per diluted share for the third quarter of 2013, and a loss of $(12.3) million or $(0.03) per diluted share for the fourth quarter of 2012. GAAP net income for the fourth quarter 2013 was reduced by discrete tax expenses of $23.2 million primarily related to reserves established for non-U.S. tax audits. For the full year of 2013, GAAP net loss was $(24.8) million or $(0.06) per diluted share, compared to GAAP net income of $30.4 million or $0.07 per diluted share for 2012.
GAAP gross margin was 42.7% in the fourth quarter of 2013, which included a $2.2 million loss resulting from facility damage and an unplanned manufacturing shutdown at our Colorado Springs plant. This compares to GAAP gross margin of 40.3% for the third quarter of 2013, which included an $8.9 million loss related to a foundry arrangement, and 38.1% for the fourth quarter of 2012. For the full year 2013, GAAP gross margin was 41.4%, compared to 42.0% for 2012.
Non-GAAP net income for the fourth quarter of 2013 totaled $43.6 million or $0.10 per diluted share, compared to $37.7 million or $0.09 per diluted share in the third quarter of 2013, and $29.4 million or $0.07 per diluted share for the year-ago quarter. For the full year 2013, non-GAAP net income was $120.2 million or $0.27 per diluted share, compared to $145.1 million or $0.32 for 2012. Refer to the non-GAAP reconciliation table included in this release for more details.
Non-GAAP gross margin was 43.7% in the fourth quarter of 2013 compared to 43.1% in the preceding quarter and 41.6% in the fourth quarter of 2012. For the full year 2013, non-GAAP gross margin was 42.5% compared to 43.3% for 2012. Refer to the non-GAAP reconciliation table included in this release for more details.
"Revenue for our microcontroller business increased during 2013, with the core microcontroller business generating robust growth," said Steve Laub, Atmel's President and Chief Executive Officer. "We are well positioned for 2014 with multiple growth drivers tied to our extensive new product introductions and significant margin expansion from ongoing operational initiatives."
Cash provided by operations totaled approximately $49.0 million for the fourth quarter of 2013, compared to $82.1 million for the third quarter of 2013 and $78.7 million for the fourth quarter of 2012. Combined cash balances (cash and cash equivalents plus short-term investments) totaled $279.1 million at the end of the fourth quarter of 2013, an increase of $8.2 million from the immediately preceding quarter, even after taking into account the repurchase of $24.2 million in common stock. Cash increases resulted principally from improved operating performance and a reduction in inventory.
Company Highlights
-- Introduced over 125 new core 32-bit microcontroller products during 2013
-- Launched new family of ARM Cortex-M4-based ultra-low power
microcontrollers for sensor hub and battery-operated consumer
applications
-- Expanded family of ARM Cortex-A5 microprocessors with smaller packaging
and extended temperature range for wearables, industrial, automotive and
medical applications
-- Turtle Beach selected Atmel's ultra-low power Wi-Fi system-on-chip
solution for the i60 and Z300 EarForce media headset products
-- maXStylus® mXTS200 second generation Windows 8.1-certified capacitive
active stylus controller shipping in volume quantities to tier-one OEMs
-- Windows 8.1 designs featuring maXTouch® include ASUS Vivo Tab Note 8,
Toshiba Encore WT8, Nokia's Lumia 2520, HP Omni 10 5600us tablet, HP
EliteBook Revolve 810 G2, Lenovo ThinkPad 8, LG Electronics Tab-Book
H160 and Z160
-- maXTouch selected for Sony's new PlayStation 4
-- New Samsung Smart TV remote control touch powered by maXTouch
-- Showcased Atmel's AvantCar(TM) concept, a next-generation automotive
center console featuring maXTouch, XSense®, LIN transceivers and 8-bit
AVR microcontrollers
-- XSense shipping in both HP Omni 10 5600us tablet and HP EliteBook
Revolve 810 G2
-- Closed on an oversubscribed $300 million revolving credit facility
Stock Repurchase
During the fourth quarter of 2013, Atmel repurchased 3.3 million shares of its common stock in the open market at an average price of $7.36 per share.
Non-GAAP Metrics
Non-GAAP net income excludes loss from manufacturing facility damage and shutdown, French building underutilization and other, loss related to foundry arrangements, (recovery) impairment of receivables from foundry suppliers, restructuring (credits) charges, settlement charges, acquisition-related (credits) charges, gain on sale of assets, credit from reserved grant income, share-based compensation expense, as well as the non-GAAP income tax adjustment 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 and full year 2013 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 23012404 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 5, 2014 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 number is 1-404-537-3406. The access code is 23012404.
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.
©2014 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 2014 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) and possible fiscal and budget uncertainties in the United States; 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 or insolvency proceedings 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 XSense and 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, 2012, filed on February 26, 2013. 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,
2013 2013 2012 2013 2012
---- ---- ---- ---- ----
Net revenue $353,220 $356,268 $345,083 $1,386,447 $1,432,110
Operating expenses
Cost of
revenue 202,292 212,801 213,544 812,822 830,791
Research and
development 64,625 66,790 58,872 267,085 251,519
Selling,
general and
administrative 61,298 55,793 66,376 239,580 275,257
Acquisition-
related
(credits)
charges (165) 1,685 1,946 5,534 7,388
Restructuring
(credits)
charges (1,519) 8,149 11,036 50,026 23,986
(Recovery)
impairment
of
receivables
from
foundry
suppliers (78) - 6,495 (600) 6,495
Credit from
reserved
grant
income - - - - (10,689)
Gain on sale
of assets - - - (4,430) -
Settlement
charges - - - 21,600 -
Total
operating
expenses 326,453 345,218 358,269 1,391,617 1,384,747
------- ------- ------- --------- ---------
Income
(loss) from
operations 26,767 11,050 (13,186) (5,170) 47,363
------ ------ ------- ------ ------
Interest and
other
income
(expense),
net 931 1,414 (1,338) 1,959 (5,125)
Income
(loss)
before
income
taxes 27,698 12,464 (14,524) (3,211) 42,238
(Provision
for)
benefit
from income
taxes (23,186) (7,038) 2,192 (21,542) (11,793)
------- ------ ----- ------- -------
Net income
(loss) $4,512 $5,426 $(12,332) $(24,753) $30,445
====== ====== ======== ======== =======
Basic net income (loss) per share:
Net income
(loss) per
share $0.01 $0.01 $(0.03) $(0.06) $0.07
===== ===== ====== ====== =====
Weighted-
average
shares used
in basic
net income
(loss) per
share
calculations 426,021 426,621 429,312 427,460 433,017
======= ======= ======= ======= =======
Diluted net income (loss) per share:
Net income
(loss) per
share $0.01 $0.01 $(0.03) $(0.06) $0.07
===== ===== ====== ====== =====
Weighted-
average
shares used
in diluted
net income
(loss) per
share
calculations 428,008 429,639 429,312 427,460 437,582
======= ======= ======= ======= =======
ATMEL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
December 31, December 31,
2013 2012
---- ----
Current assets
Cash and cash
equivalents $276,881 $293,370
Short-term
investments 2,181 2,687
Accounts
receivable, net 206,757 188,488
Inventories 275,115 348,273
Prepaids and other
current assets 92,234 125,019
Total current
assets 853,168 957,837
Fixed assets, net 184,983 221,044
Goodwill 108,240 104,430
Intangible assets,
net 28,116 27,257
Other assets 178,167 122,965
Total assets $1,352,674 $1,433,533
========== ==========
Current liabilities
Trade accounts
payable $95,872 $103,980
Accrued and other
liabilities 155,406 203,510
Deferred income on
shipments to
distributors 42,594 29,226
Total current
liabilities 293,872 336,716
Other long-term
liabilities 120,727 100,179
Total liabilities 414,599 436,895
------- -------
Stockholders'
equity 938,075 996,638
Total liabilities
and stockholders'
equity $1,352,674 $1,433,533
========== ==========
ATMEL CORPORATION
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(in thousands, except for per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
------------------ -------------------
December 31, September 30, December 31, December 31, December 31,
2013 2013 2012 2013 2012
---- ---- ---- ---- ----
GAAP gross margin $150,928 $143,467 $131,539 $573,625 $601,319
Loss from
manufacturing
facility damage
and shutdown 2,205 - - 2,205 -
Loss related to
foundry
arrangements - 8,938 10,628 7,424 10,628
Share-based
compensation
expense 1,301 1,136 1,329 5,889 8,052
Non-GAAP gross
margin $154,434 $153,541 $143,496 $589,143 $619,999
======== ======== ======== ======== ========
GAAP research and
development
expense $64,625 $66,790 $58,872 $267,085 $251,519
Share-based
compensation
expense (4,804) (3,100) (5,257) 15,529 (22,825)
French building
underutilization
and other (766) - - (766) -
Non-GAAP research
and development
expense $59,055 $63,690 $53,615 $281,848 $228,694
======= ======= ======= ======== ========
GAAP selling,
general and
administrative
expense $61,298 $55,793 $66,376 $239,580 $275,257
Share-based
compensation
expense (9,382) (3,858) (9,818) 24,404 (41,565)
French building
underutilization
and other (179) - - (179) -
Non-GAAP selling,
general and
administrative
expense $51,737 $51,935 $56,558 $263,805 $233,692
======= ======= ======= ======== ========
GAAP income (loss)
from operations $26,767 $11,050 $(13,186) $(5,170) $47,363
Share-based
compensation
expense 15,486 8,094 16,404 45,822 72,442
Acquisition-
related (credits)
charges (165) 1,685 1,946 5,534 7,388
Restructuring
(credits) charges (1,519) 8,149 11,036 50,026 23,986
Loss from
manufacturing
facility damage
and shutdown 2,205 - - 2,205 -
Loss related to
foundry
arrangements - 8,938 10,628 7,424 10,628
(Recovery)
impairment of
receivables from
foundry suppliers (78) - 6,495 (600) 6,495
Credit from
reserved grant
income - - - - (10,689)
French building
underutilization
and other 945 - - 945 -
Gain on sale of
assets - - - (4,430) -
Settlement charges - - - 21,600 -
Non-GAAP income
from operations $43,641 $37,916 $33,323 $123,356 $157,613
======= ======= ======= ======== ========
GAAP (provision
for) benefit from
income taxes $(23,186) $(7,038) $2,192 $(21,542) $(11,793)
Adjustments for
cash tax and other
tax settlements (22,257) (5,449) 4,790 (16,428) (4,410)
Non-GAAP provision
for income taxes $(929) $(1,589) $(2,598) $(5,114) $(7,383)
===== ======= ======= ======= =======
GAAP net income
(loss) $4,512 $5,426 $(12,332) $(24,753) $30,445
Share-based
compensation
expense 15,486 8,094 16,404 45,822 72,442
Acquisition-
related (credits)
charges (165) 1,685 1,946 5,534 7,388
Restructuring
(credits) charges (1,519) 8,149 11,036 50,026 23,986
Loss from
manufacturing
facility damage
and shutdown 2,205 - - 2,205 -
Loss related to
foundry
arrangements - 8,938 10,628 7,424 10,628
(Recovery)
impairment of
receivables from
foundry suppliers (78) - 6,495 (600) 6,495
Credit from
reserved grant
income - - - - (10,689)
French building
underutilization
and other 945 - - 945 -
Gain on sale of
assets - - - (4,430) -
Settlement charges - - - 21,600 -
Tax adjustments 22,257 5,449 (4,790) 16,428 4,410
Non-GAAP net income $43,643 $37,741 $29,387 $120,201 $145,105
======= ======= ======= ======== ========
GAAP net income
(loss) per share -
diluted $0.01 $0.01 $(0.03) $(0.06) $0.07
Share-based
compensation
expense 0.03 0.02 0.04 0.10 0.16
Acquisition-
related (credits)
charges - 0.01 0.01 0.01 0.02
Restructuring
(credits) charges - 0.02 0.02 0.11 0.05
Loss from
manufacturing
facility damage
and shutdown 0.01 - - 0.01 -
Loss related to
foundry
arrangements - 0.02 0.02 0.02 0.02
(Recovery)
impairment of
receivables from
foundry suppliers - - 0.01 - 0.01
Credit from
reserved grant
income - - - - (0.02)
Gain on sale of
assets - - - (0.01) -
Settlement charges - - - 0.05 -
Tax adjustments 0.05 0.01 - 0.04 0.01
Non-GAAP net
income per share
- diluted $0.10 $0.09 $0.07 $0.27 $0.32
===== ===== ===== ===== =====
GAAP diluted shares 428,008 429,639 429,312 427,460 437,582
Adjusted dilutive
stock awards -
non-GAAP 9,503 9,207 14,669 11,841 9,764
Non-GAAP diluted
shares 437,511 438,846 443,981 439,301 447,346
======= ======= ======= ======= =======
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:
-- 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 of the facility's nitrogen plant. All repairs have been completed and the facility has resumed operations. Atmel believes that the 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.
-- French building underutilization and other.
The building underutilization and other relates to charges incurred as a result of the insolvency of our tenant in France 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.
-- Loss related to foundry arrangements.
Loss related to foundry arrangements relates to the increase of estimated losses previously recorded with respect to European foundry "take or pay" arrangements for wafers to be delivered during the remaining term of the arrangement. Atmel believes that it is appropriate to exclude the loss related to foundry arrangements from Atmel's non-GAAP financial measures as these losses are generally not reflective of ongoing operating performance and it enhances the ability of investors to compare Atmel's period-over-period operating results from continuing operations.
-- (Recovery) impairment of receivables from foundry suppliers.
(Recovery) impairment 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) impairment 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.
-- 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 (credits) charges.
Acquisition-related (credits) charges 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, and (3) adjustments to previously recognized earn-out liability on contingent compensation expense related to acquisitions. In most cases, these acquisition-related charges (credits) 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 (credits) 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 (credits) charges.
Restructuring (credits) charges primarily relate to expenses necessary to make infrastructure-related changes to Atmel's operating costs. Restructuring (credits) 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 (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.
-- Credit 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.
-- 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.
-- 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.
SOURCE Atmel Corporation
