ATMEL CORPORATION SAN JOSE, Calif., Oct. 28, 2015 /PRNewswire/ -- Atmel(®) Corporation (Nasdaq: ATML), a leader in microcontroller and touch solutions, today announced financial results for its third quarter ended September 30, 2015.
GAAP Non-GAAP
---- --------
Q3 2015 Q2 2015 Q3 2014 Q3 2015 Q2 2015 Q3 2014
------- ------- ------- ------- ------- -------
Net revenue $286.5 $306.4 $374.5 $286.5 $306.3 $374.5
------ ------ ------ ------ ------ ------
Gross
margin 46.5% 46.1% 47.2% 48.0% 47.0% 47.0%
---- ---- ---- ---- ---- ----
Operating
margin 3.7% 4.8% 9.0% 12.6% 11.6% 14.7%
--- --- --- ---- ---- ----
Net (loss)
income $(0.6) $6.3 $17.3 $34.7 $33.7 $49.8
----- ---- ----- ----- ----- -----
Diluted EPS $ - $0.02 $0.04 $0.08 $0.08 $0.12
----------- ----- ----- ----- ----- -----
(In millions, except earnings per
share data and percentages)
Revenue for the third quarter of 2015 was $286.5 million, a 6% decrease compared to $306.4 million for the second quarter of 2015, and 23% lower compared to $374.5 million for the third quarter of 2014.
GAAP gross margin was 46.5% in the third quarter of 2015 compared with 46.1% in the second quarter of 2015, and 47.2% in the third quarter of 2014.
Non-GAAP gross margin was 48.0% in the third quarter of 2015 compared to 47.0% in both the immediately preceding quarter and third quarter of 2014. Refer to the non-GAAP reconciliation table included in this release for more details.
GAAP net loss totaled $(0.6) million or $(0.00) per diluted share for the third quarter of 2015, principally as a result of a $11.1 million tax provision related to a higher GAAP tax rate and $7.8 million of merger related expenses. This compares to net income of $6.3 million or $0.02 per diluted share for the second quarter of 2015 and net income of $17.3 million or $0.04 per diluted share for the third quarter of 2014.
Non-GAAP net income for the third quarter of 2015 totaled $34.7 million or $0.08 per diluted share, compared to non-GAAP net income of $33.7 million or $0.08 per diluted share in the second quarter of 2015, and $49.8 million or $0.12 per diluted share for the third quarter of 2014. Refer to the non-GAAP reconciliation table included in this release for more details.
"In a softer industry environment, we are pleased that Atmel's core microcontrollers grew sequentially during the third quarter led by double digit sequential growth in our 32-bit products," said Steve Laub, Atmel's President and Chief Executive Officer. "We are excited about the pending combination with Dialog Semiconductor and the synergies and value this creates for our customers, employees, and stockholders."
Cash provided by operations totaled $30.6 million for the third quarter of 2015, compared to $25.9 million for the second quarter of 2015 and $43.9 million for the third quarter of 2014. Combined cash balances (cash and cash equivalents plus short-term investments) totaled $218.7 million at the end of the third quarter of 2015, an increase of $22.4 million from the immediately preceding quarter resulting principally from the cash generated from operations, a reduction in inventories, lower receivables, lower capital expenditures, and $11.5 million proceeds from the sale of the Heilbronn, Germany facility, offset partially by $4.7 million of capital expenditures and the payment of a $16.8 million dividend during the third quarter.
Company Highlights
-- Dialog Semiconductor to acquire Atmel in a cash and stock transaction,
expected to close during the first quarter of 2016
-- Sampling Atmel | SMART ARM® Cortex® M0+ based microcontrollers
featuring ultra-low power capacitive touch with a segment LCD
controller, ideal for IoT, industrial and medical applications
-- Launched new family of Atmel | SMART ARM® Cortex® A5-based
microprocessors delivering world's lowest power MPU with leading
security features for IoT, wearables and industrial applications
-- Shipping world's lowest power and smallest Bluetooth Smart (BLE)
solution, the BTLC1000, for the rapidly growing IoT and wearables
markets
-- Non-mobile touch revenue achieved 50% of quarterly maXTouch revenue led
by continued strong double digit sequential growth of sales to
automotive customers
-- Expanded industry leading automotive qualified series of capacitive
touch controllers with the maXTouch® 641T, industry's first
auto-qualified self and mutual capacitance controllers
-- Announced collaboration with Intel Corporation on Enhanced Privacy ID
(Intel® EPID) technology on all Atmel SmartConnect wireless solutions
ensuring a more secure platform for developing next-generation IoT
solutions
-- Achieved prestigious Golden Unit status for the BitCloud ZigBee PRO
Software Development Kit providing enhanced interoperability for the
latest smart home applications
-- Launched Atmel Studio 7, our next generation integrated design tools
which supports both Atmel 32-bit ARM® Cortex® -M series
microcontrollers and Atmel AVR® based MCUs and bridges the gap between
the Arduino MakerSpace and the commercial MarketPlace
-- Unveiled Atmel START, world's first intuitive web-based platform for
software configuration and code generation for the IoT marketplace
Stock Repurchase
Atmel did not repurchase any shares during the third quarter 2015 and does not expect to make any further repurchases pending the completion of its acquisition by Dialog.
Dialog Transaction Update
-- All required anti-trust filings (U.S., Germany and Romania) have been
submitted.
-- U.S. CFIUS filing has been preliminarily submitted.
-- Dialog has posted to its shareholders the Offering Circular through
which it is seeking authorization to issue Dialog shares in connection
with the merger. The Dialog General Meeting is scheduled for November
19, 2015. As previously disclosed, Dialog shareholder transaction
approval requires the affirmative vote of the holders of a majority of
Dialog shares voting in person or by proxy at the Dialog General
Meeting.
Outlook - Q4 2015
-- Revenue between $266 and $286 million
-- Non-GAAP gross margin between 47.0 and 48.0%
-- Non-GAAP operating expenses between $98 and $102 million
Non-GAAP Metrics
Non-GAAP net income excludes share-based compensation expense, (gain) loss from manufacturing facility damage and shutdown, loss (gain) related to foundry arrangements, fair value adjustments to inventory from businesses acquired, French building underutilization and other (credits), operating results of the exited XSense business for 2015, merger related expenses associated with the Dialog transaction, acquisition-related charges, restructuring (credits) charges, loss (gain) on sale of assets, gain on sale of investments in privately-held companies, write-down of investments in privately-held companies, non-GAAP tax adjustments, as well as net (loss) 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 not hold a conference call due to its pending acquisition by Dialog.
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, automotive, consumer, communications, and computing 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 financial outlook for the fourth quarter of 2015, long-term 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, including our fourth quarter 2015 outlook, which may change. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. The pending acquisition of Atmel by Dialog may have significant effects on Atmel, including, among others, the deferral, delay or cancellation of customer orders and a significant diversion of management and employee attention from ordinary course matters. Other 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; consolidation occurring within the semiconductor industry through mergers and acquisitions; 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 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 and significant devaluation of the Euro against the U.S. dollar; 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, 2014, filed on February 26, 2015. 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 Nine Months Ended
------------------ -----------------
September 30, June 30, September 30, September 30, September 30,
2015 2015 2014 2015 2014
---- ---- ---- ---- ----
Net revenue $286,533 $306,353 $374,485 $911,174 $1,067,380
Operating expenses
Cost of revenue 153,177 165,039 197,642 489,207 589,309
Research and
development 55,832 59,998 69,917 174,959 209,751
Selling, general
and administrative 64,817 59,922 65,324 186,812 194,186
Acquisition-
related charges 2,390 3,807 7,162 10,600 10,287
Restructuring
(credits) charges (584) 4,882 840 5,445 (967)
Loss (gain) on sale
of assets 427 (2,053) - (1,626) -
Total operating
expenses 276,059 291,595 340,885 865,397 1,002,566
------- ------- ------- ------- ---------
Income from
operations 10,474 14,758 33,600 45,777 64,814
Interest and other
income (expense),
net 55 1,162 (4,731) 4,917 (5,856)
Income before
income taxes 10,529 15,920 28,869 50,694 58,958
Provision for
income taxes (11,134) (9,693) (11,619) (28,526) (20,306)
------- ------ ------- ------- -------
Net (loss) income (605) 6,227 17,250 22,168 38,652
Less: net (income)
loss attributable
to noncontrolling
interest (9) 85 - 25 -
--- --- --- --- ---
Net (loss) income
attributable to
Atmel $(614) $6,312 $17,250 $22,193 $38,652
===== ====== ======= ======= =======
Basic net (loss) income per share attributable to Atmel:
Net (loss) income
per share $ - $0.02 $0.04 $0.05 $0.09
========================= ===== ===== ===== =====
Weighted-average
shares used in
basic net (loss)
income per share
calculations 419,293 417,861 418,954 418,072 421,791
======= ======= ======= ======= =======
Diluted net (loss) income per share attributable to Atmel:
Net (loss) income
per share $ - $0.02 $0.04 $0.05 $0.09
========================= ===== ===== ===== =====
Weighted-average
shares used in
diluted net (loss)
income per share
calculations 419,293 419,158 420,964 419,482 423,700
======= ======= ======= ======= =======
Cash dividends
declared and paid
per share $0.04 $0.04 $ - $0.12 $ -
===== ===== ========================= ===== =========================
ATMEL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30, December 31,
2015 2014
---- ----
Current assets
Cash and
cash
equivalents $218,741 $206,937
Accounts
receivable,
net 202,221 222,021
Inventories 267,626 278,242
Prepaids
and other
current
assets 87,408 89,101
Total
current
assets 775,996 796,301
Fixed
assets,
net 139,780 158,281
Goodwill 189,565 191,088
Intangible
assets,
net 41,361 50,286
Other
assets 149,984 166,348
Total
assets $1,296,686 $1,362,304
========== ==========
Current liabilities
Trade
accounts
payable $67,941 $97,467
Accrued
and other
liabilities 129,074 147,109
Deferred
income on
shipments
to
distributors 52,144 49,059
Total
current
liabilities 249,159 293,635
Other
long-
term
liabilities 186,220 198,670
Total
liabilities 435,379 492,305
------- -------
Stockholders'
equity 861,307 869,999
Total
liabilities
and
stockholders'
equity $1,296,686 $1,362,304
========== ==========
ATMEL CORPORATION
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, June 30, September 30, September 30, September 30,
2015 2015 2014 2015 2014
---- ---- ---- ---- ----
GAAP net revenue $286,533 $306,353 $374,485 $911,174 $1,067,380
Revenue from the XSense
business - (58) - (1,429) -
Non-GAAP net revenue $286,533 $306,295 $374,485 $909,745 $1,067,380
======== ======== ======== ======== ==========
GAAP gross margin $133,356 $141,314 $176,843 $421,967 $478,071
Share-based
compensation expense 1,560 1,682 1,605 4,357 4,892
(Gain) loss from
manufacturing facility
damage and shutdown - - (3,571) - 3,485
Loss (gain) related to
foundry arrangements 2,487 765 (454) 4,444 (2,583)
Fair value adjustments
to inventory from
businesses acquired - - 1,548 - 1,548
Gross margin from the
XSense business - 115 - 1,253 -
Non-GAAP gross margin $137,403 $143,876 $175,971 $432,021 $485,413
======== ======== ======== ======== ========
GAAP research and
development expense $55,832 $59,998 $69,917 $174,959 $209,751
Share-based
compensation expense (3,418) (3,573) (4,632) (10,569) (13,744)
French building
underutilization and
other charges (360) (376) (608) (440) (2,220)
Research and development
expense from the XSense
business - (156) - (1,613) -
Non-GAAP research and
development expense $52,054 $55,893 $64,677 $162,337 $193,787
======= ======= ======= ======== ========
GAAP selling, general
and administrative
expense $64,817 $59,922 $65,324 $186,812 $194,186
Share-based
compensation expense (7,741) (7,282) (8,680) (24,017) (27,176)
French building
underutilization and
other charges (140) (126) (214) (274) (1,064)
Selling, general and
administrative expense
from the XSense
business - 37 - 101 -
Merger-related expenses (7,818) - - (7,818) -
Non-GAAP selling,
general and
administrative expense $49,118 $52,551 $56,430 $154,804 $165,946
======= ======= ======= ======== ========
GAAP income from
operations $10,474 $14,758 $33,600 $45,777 $64,814
Share-based
compensation expense 12,719 12,537 14,917 38,943 45,812
(Gain) loss from
manufacturing facility
damage and shutdown - - (3,571) - 3,485
Loss (gain) related to
foundry arrangements 2,487 765 (454) 4,444 (2,583)
Fair value adjustments
to inventory from
businesses acquired - - 1,548 - 1,548
French building
underutilization and
other charges 500 502 822 714 3,284
Operating loss from the
XSense business - 234 - 2,765 -
Merger-related expenses 7,818 - - 7,818 -
Acquisition-related
charges 2,390 3,807 7,162 10,600 10,287
Restructuring (credits)
charges (584) 4,882 840 5,445 (967)
Loss (gain) on sale of
assets 427 (2,053) - (1,626) -
Non-GAAP income from
operations $36,231 $35,432 $54,864 $114,880 $125,680
======= ======= ======= ======== ========
GAAP provision for
income taxes $(11,134) $(9,693) $(11,619) $(28,526) $(20,306)
Non-GAAP tax adjustments (9,530) (8,144) (9,522) (23,541) (15,961)
Non-GAAP provision for
income taxes $(1,604) $(1,549) $(2,097) $(4,985) $(4,345)
======= ======= ======= ======= =======
GAAP net (loss) income
attributable to Atmel $(614) $6,312 $17,250 $22,193 $38,652
Share-based
compensation expense 12,719 12,537 14,917 38,943 45,812
(Gain) loss from
manufacturing facility
damage and shutdown - - (3,571) - 3,485
Loss (gain) related to
foundry arrangements 2,487 765 (454) 4,444 (2,583)
Fair value adjustments
to inventory from
businesses acquired - - 1,548 - 1,548
French building
underutilization and
other charges 500 502 822 714 3,284
Operating loss from the
XSense business - 234 - 2,765 -
Merger-related expenses 7,818 - - 7,818 -
Acquisition-related
charges 2,390 3,807 7,162 10,600 10,287
Restructuring (credits)
charges (584) 4,882 840 5,445 (967)
Loss (gain) on sale of
assets 427 (2,053) - (1,626) -
Gain on sale of
investments in
privately-held
companies - (1,317) - (1,317) -
Write-down of
investments in
privately-held
companies - - 1,805 - 1,805
Non-GAAP tax adjustments 9,530 8,144 9,522 23,541 15,961
Net income (loss)
attributable to
noncontrolling interest 9 (85) - (25) -
Consolidated non-GAAP
net income $34,682 $33,728 $49,841 $113,495 $117,284
======= ======= ======= ======== ========
GAAP net (loss) income
per share -diluted
attributable to Atmel $ - $0.02 $0.04 $0.05 $0.09
Share-based
compensation expense 0.03 0.03 0.04 0.09 0.11
(Gain) loss from
manufacturing facility
damage and shutdown - - (0.01) - 0.01
Loss (gain) related to
foundry arrangements 0.01 - - 0.01 (0.01)
Fair value adjustments
to inventory from
businesses acquired - - - - -
French building
underutilization and
other charges - - - - 0.01
Operating loss from the
XSense business - - - 0.01 -
Merger-related expenses 0.02 - - 0.02 -
Acquisition-related
charges - 0.01 0.02 0.02 0.02
Restructuring (credits)
charges - 0.01 - 0.01 -
Loss (gain) on sale of
assets - (0.01) - - -
Gain on sale of
investments in
privately-held
companies - - - - -
Write-down of
investments in
privately-held
companies - - 0.01 - -
Non-GAAP tax adjustments 0.02 0.02 0.02 0.06 0.04
Net income (loss)
attributable to
noncontrolling interest - - - - -
Consolidated non-GAAP
net income per share -
diluted $0.08 $0.08 $0.12 $0.27 $0.27
===== ===== ===== ===== =====
GAAP diluted shares 419,293 419,158 420,964 419,482 423,700
Adjusted dilutive stock
awards - non-GAAP 7,576 6,486 7,297 5,680 6,676
Non-GAAP diluted shares 426,869 425,644 428,261 425,162 430,376
======= ======= ======= ======= =======
ATMEL CORPORATION
NET REVENUE - BY OPERATING SEGMENT
(In thousands)
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, June 30, September 30, September 30, September 30,
2015 2015 2014 2015 2014
---- ---- ---- ---- ----
Microcontroller $201,061 $205,003 $264,432 $624,850 $754,348
Nonvolatile Memory 34,188 43,153 46,908 121,089 122,739
Automotive 34,158 37,216 37,273 107,119 114,238
Multi-Market and Other 17,126 20,981 25,872 58,116 76,055
Total Company Revenue $286,533 $306,353 $374,485 $911,174 $1,067,380
======== ======== ======== ======== ==========
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.
Management 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.
-- (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. Management 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.
-- Loss (gain) related to foundry arrangements.
Loss (gain) related to foundry arrangements relates to the reduction of estimated loss (gain) previously recorded with respect to European foundry "take or pay" arrangements for wafers that were delivered during the term of the arrangement. Management believes that it is appropriate to exclude loss (gain) 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.
-- 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.
-- French building underutilization and other charges.
French building underutilization and other charges 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. Management 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.
-- Operating loss from the XSense business.
Assets related to the XSense business were sold on April 16, 2015. Operating results of this business, including revenue, gross margin and operating expenses, have been excluded from non-GAAP results beginning in the first quarter of 2015 after management determined to discontinue its investment and exit this business. Management believes that excluding the XSense operating results from non-GAAP measures provides investors a basis to compare operating results from continuing operations.
-- Merger related expenses.
Merger-related expenses relate to expenses associated with Atmel's pending acquisition by Dialog Semiconductor. Management believes that it is appropriate to exclude these charges as they are not reflective of ongoing operating performance of Atmel's business and can distort period-over-period comparisons.
-- Acquisition-related charges.
Acquisition-related 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, (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. Management believes that 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.
-- 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. Management believes that it is appropriate to exclude restructuring (credits) charges 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.
-- Loss (gain) on sale of assets.
Loss (gain) on sale of assets reflects the sale of the XSense assets and sale of Heilbronn, Germany real estate. Management believes that it is appropriate to exclude these gains as they are not reflective of the ongoing operating performance and should be excluded from period-over-period comparisons.
-- Gain on sale of investments in privately-held companies.
Gain on sale of investments in privately-held companies. Management believes that it is appropriate to exclude these gains as they are not reflective of the ongoing operating performance and should be excluded from period-over-period comparisons.
-- 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.
-- 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 revenue for that period.
-- Net (income) loss attributable to noncontrolling interest.
Net (income) loss 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) losses are individually discrete events and generally not reflective of the ongoing operating performance of Atmel's business and can distort period-over-period comparisons.
http://photos.prnewswire.com/prnvar/20120712/MM39691LOGO
Logo - http://photos.prnewswire.com/prnh/20120712/MM39691LOGO
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/atmel-reports-third-quarter-2015-financial-results-300167456.html
SOURCE Atmel
