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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

OR

Commission File Number 0-19032

ATMEL CORPORATION

2325 Orchard Parkway
San Jose, California 95131
(Address of principal executive offices)

(408) 441-0311
Registrant’s telephone number

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]      No [   ]

On August 7, 2002, Registrant had outstanding 466,976,943 shares of Common Stock.

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ATMEL CORPORATION

FORM 10-Q

QUARTER ENDED JUNE 30, 2002

INDEX

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PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

Atmel Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Atmel Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Atmel Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Atmel Corporation
Condensed Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Atmel Corporation
Notes to Condensed Consolidated Financial Statements
June 30, 2002
(Unaudited)

1. Basis of Presentation and Accounting Policies

     These unaudited interim financial statements reflect all normal recurring adjustments which are, in the opinion of management, necessary to present fairly, in all material respects, the financial position of Atmel Corporation (Company or Atmel) and its subsidiaries as of June 30, 2002, and the results of operations, comprehensive income and cash flows for the three and six month periods ended June 30, 2002 and 2001. All material intercompany balances have been eliminated. Because all of the disclosures required by generally accepted accounting principles are not included, these interim statements should be read in conjunction with the audited financial statements and accompanying notes in our Annual Report to Shareholders filed on Form 10-K for the year ended December 31, 2001. The December 31, 2001 year-end condensed balance sheet data was derived from the audited financial statements and does not include all of the disclosures required by generally accepted accounting principles. The statements of operations for the periods presented are not necessarily indicative of results to be expected for any future period, nor for the entire year. Prior year amounts have been reclassified to conform with current presentation.

2. Inventories

     Inventories are stated at the lower of cost (first-in, first-out for raw materials and purchased parts; and average cost for work in progress) or market, and comprise the following:

3. Short Term Investments

     Short term investments at June 30, 2002 and December 31, 2001 comprise debt securities consisting primarily of US government and municipal agency securities, US and foreign corporate debt securities, commercial paper, and guaranteed variable annuities.

     All marketable securities are deemed by management to be available for sale and are reported at fair value with net unrealized gains or losses reported within stockholders’ equity.

4. Income Taxes

     The Company’s tax expense for the six months ended June 30, 2002 of $93.9 million can be primarily attributed to the valuation allowance recorded against the Company’s net deferred tax assets during the period. In view of the cumulative losses incurred during the past four quarters, and based on the Company’s revised projections for future periods, it was determined that it was

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more likely than not that these net deferred tax assets would not be realized. The provision for income taxes for the six months ended June 30, 2002 also includes estimated foreign taxes due to profits in certain of the Company’s foreign subsidiaries.

5. Net Income (Loss) Per share

     A reconciliation of the numerator and denominator of basic and diluted net income per share is provided in the following table.

     For the three months ended June 30, 2002, 50,073 shares of common stock relating to outstanding options and convertible bonds were excluded from the computation of diluted net loss per share because they were anti-dilutive. For the six months ended June 30, 2002, 50,606 shares of common stock relating to options and convertible bonds were excluded from the computation of diluted net income per share because they were anti-dilutive.

6. Segment Reporting

     The Company has four reportable segments: Application Specific Integrated Circuits (ASIC), Microcontrollers, Nonvolatile Memories (NVM) and RF and Automotive. Each segment requires different design, development and marketing resources to produce and sell semiconductor integrated circuits.

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Information about segments (in thousands):

     Reconciliations of segment information to financial statements (in thousands):

     Certain costs which are not specifically identifiable to segments such as start up costs associated with new wafer manufacturing facilities are reported as unallocated amounts. However, all segments benefit from these corporate activities and if allocation of these costs were feasible, segment results would be correspondingly reduced.

7. Asset impairment and restructuring charges (in thousands, except employees)

     The Company recorded an asset impairment charge of $341,383 in the second quarter 2002.

     The asset impairment charge was recorded to write down the carrying value of the equipment in the fabrication facilities in Irving, Texas and North Tyneside, U.K. to their estimated current fair values.

     As a result of the difficult operating conditions that continue to exist in the semiconductor industry and the slow rate of recovery of revenues the Company performed an asset impairment

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review of its fixed assets. The Company determined that due to excess capacity, the future undiscounted cash flows related to the facilities at Irving, Texas and North Tyneside, U.K. will not be sufficient to recover the historical carrying value of the manufacturing equipment in those facilities. The historical carrying values of these assets were written down to the Company’s estimate of fair values and will be depreciated over their remaining useful lives. The estimate of fair values was based on an outside appraisal that assumed the assets would continue in use at their current locations.

     During the Company’s third quarter 2001 a restructuring plan was announced that included the consolidation of manufacturing operations in both the United States and Europe and a projected 2,500 person work force reduction of which approximately 1,400 has been achieved through June 30, 2002. An additional 275 employees were terminated at the end of July 2002 as the result of closing the wafer fabrication facility in Irving, Texas (see “Subsequent event” below). The restructuring charges taken in the third quarter 2001 included an $18,527 charge related to reductions of force in Europe.

     The charges related to the U.S. reduction in force were expensed upon finalization of detailed plans and communications to employees, which has generally been in the periods in which the employees have been terminated. The European reduction in force charges are based on legal requirements and are expected to be paid through the remainder of 2002. At June 30, 2002, approximately 391 employees have been terminated and $11,200 of the European reduction in force costs have been paid.

Subsequent event

     On July 22, 2002 the Company announced the closing of its Irving, Texas 8-inch wafer fabrication facility. This facility was acquired in 2000 and the Company originally intended to commence commercial production in the second half of 2002. However, given the current market conditions in the semiconductor industry, management reassessed its overall manufacturing capacity against the potential anticipated demand and decided to close the facility. The building, land and much of the equipment is available for sale and will be placed on the market in August 2002. The Company intends to complete a sale within one year, however the timing of a final sale is uncertain given the current market for semiconductor manufacturing facilities. Some equipment will be transferred to the Company’s manufacturing facilities in North Tyneside, U.K. At June 30, 2002 the carrying value of the building and land was $66,050 and the carrying value of the equipment was $150,402.

     The costs of terminating approximately 275 employees and decommissioning or transferring the equipment in the plant as a result of the closure are expected to occur primarily in the third quarter 2002. In addition, Atmel has long term contracts for operating supplies for which we may incur termination costs. Ongoing costs will consist of expenses to maintain and secure the facility, remove and transport equipment and expenses to market the facility, none of which are expected to be significant. The Company may also be required to record an additional charge if it determines the net realizable value of the assets it is holding for sale is less than the carrying value of $216 million. The asset impairment charge taken as of June 30, 2002 assumed the assets would continue in use and their current fair value was determined accordingly. The Company’s decision to dispose of the assets located in Irving, Texas results in different appraisal assumptions which may lead to lower current fair values for those assets.

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8. Recent Pronouncements

SFAS 141 and SFAS 142

     In July 2001, the Financial Accounting Standards Board (FASB) issued FASB Statements Nos. 141 and 142 (SFAS 141 and SFAS 142), “Business Combinations” and “Goodwill and Other Intangible Assets.” SFAS 141 replaces APB 16 and eliminates pooling-of-interests accounting prospectively. It also provides guidance on purchase accounting related to the recognition of intangible assets and accounting for negative goodwill. SFAS 142 changes the accounting for goodwill from an amortization method to an impairment-only approach. Under SFAS 142, goodwill will be tested annually and whenever events or circumstances occur indicating that goodwill might be impaired. SFAS 141 and SFAS 142 are effective for all business combinations completed after June 30, 2001. Upon adoption of SFAS 142, amortization of goodwill recorded for business combinations consummated prior to July 1, 2001 ceases, and intangible assets acquired prior to July 1, 2001 that do not meet the criteria for recognition under SFAS 141 are reclassified to goodwill. Companies are required to adopt SFAS 142 for fiscal years beginning after December 15, 2001. The Company adopted SFAS 142 on January 1, 2002, the beginning of our fiscal year 2002. The implementation of these standards did not have a material impact on the Company’s results of operations.

SFAS 143

     In August 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations”. This Statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This Statement applies to all entities. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development, and (or) the normal operation of a long-lived asset, except for certain obligations of lessees. SFAS No. 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002. The Company expects that the initial application of SFAS 143 will not have a material impact on its financial statements.

SFAS 144

     In October 2001, the FASB issued Statement of Accounting Standards No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” (SFAS 144). SFAS 144 supercedes SFAS 121 “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.” SFAS 144 applies to all long-lived assets (including discontinued operations) and consequently amends Accounting Principles Board Opinion No. 30, “Reporting the Results of Operations— Discontinued Events and Extraordinary Items”. SFAS 144 develops one accounting model for long-lived assets that are to be disposed of by sale. SFAS 144 requires that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell. Additionally, SFAS 144 expands the scope of discontinued operations to include all components of an entity with operations that (1) can be distinguished from the rest of the entity and (2) will be eliminated from the ongoing operations of the entity in a disposal transaction. SFAS 144 is effective for the Company for all financial statements issued in calendar 2002 and was used as the guidance for the Company’s asset impairment charge in the second quarter 2002.

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SFAS 145

     In May 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements Nos. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” SFAS No. 145 eliminates Statement 4 (and Statement 64, as it amends Statement 4), which requires gains and losses from extinguishments of debt to be aggregated and, if material, classified as an extraordinary item, net of the related income tax effect. As a result, the criteria in APB Opinion 30 will now be used to classify those gains and losses. SFAS No. 145 amends FASB Statement No. 13 to require that certain lease modifications that have economic effects similar to sale-leaseback transactions are accounted for in the same manner as sale-leaseback transactions. This amendment is consistent with the FASB’s goal of requiring similar accounting treatment for transactions that have similar economic effects. In addition, SFAS 145 makes technical corrections to existing pronouncements. While those corrections are not substantive in nature, in some instances, they may change accounting practice. This statement is effective for fiscal years beginning after May 2002 for the provisions related to the rescission of Statements 4 and 64, and for all transactions entered into beginning May 2002 for the provision related to the amendment of Statement 13 although early adoption is permitted. The Company does not expect the implementation of this standard to have a material impact on the Company’s results of operations.

SFAS 146

     On June 28, the Financial Accounting Standards Board (FASB) adopted FASB Statement No. 146 (SFAS 146), Accounting for Exit or Disposal Activities, effective for exit or disposal activities that are initiated after December 31, 2002, with early adoption encouraged. SFAS 146 addresses significant issues regarding the recognition, measurement, and reporting of costs that are associated with exit and disposal activities, including restructuring activities that are currently accounted for pursuant to the guidance that the Emerging Issues Task Force (EITF) has set forth in EITF Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs incurred in a Restructuring). A fundamental conclusion reached by the Board in this Statement is that an entity’s commitment to a plan, by itself, does not create a present obligation to others that meets the definition of a liability. Therefore, this Statement eliminates the definition and requirements for recognition of exit costs in Issue 94-3. This statement also establishes that fair value is the objective for initial measurement of the liability. The scope of FAS 146 also includes (1) costs related to terminating a contract that is not a capital lease and (2) termination benefits that employees who are involuntarily terminated receive under the terms of a one-time benefit arrangement or an individual deferred-compensation contract. The Company does not expect the implementation of this standard to have a material impact on the Company’s results of operations.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     You should read the following discussion and analysis in conjunction with the Condensed Consolidated Financial Statements and related Notes thereto contained elsewhere in this Report. The information contained in this Quarterly Report on Form 10-Q is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this Report and in our other reports filed with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2001.

Forward Looking Statements

     Investors are cautioned that certain statements in this Form 10-Q are forward looking statements that involve risks and uncertainties. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “views,” and variations of such words and similar expressions are intended to identify such forward looking statements. These statements are based on current expectations and projections about our business and the semiconductor industry and assumptions made by the management and are not guarantees of future performance. Therefore, actual events and results may differ materially from those expressed or forecasted in the forward looking statements due to risk factors identified in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, in the section entitled “Trends, Uncertainties and Risks” on page 21, and similar discussions in our other filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K. The Company undertakes no obligation to update any forward looking statements in this Form 10-Q.

SUBSEQUENT EVENT

     On July 22, 2002 we announced the closing of our Irving, Texas 8-inch wafer fabrication facility. We acquired this facility in 2000 and originally intended to commence commercial production in the second half of 2002. However, given the current market conditions in the semiconductor industry, we reassessed the Company’s overall manufacturing capacity against the potential anticipated demand and decided to close the facility. The building, land and much of the equipment is available for sale and will be placed on the market in August 2002. We intend to complete a sale within one year, however the timing of a final sale is uncertain given the current market for semiconductor manufacturing facilities. Some equipment will be transferred to our manufacturing facilities in North Tyneside, U.K.

     The costs of terminating approximately 275 employees and decommissioning or transferring the equipment in the plant as a result of the closure are expected to occur primarily in the third quarter 2002. In addition, Atmel has long term contracts for operating supplies for which we may incur termination costs. Ongoing costs will consist of expenses to maintain and secure the facility, remove and transport equipment and expenses to market the facility, none of which are expected to be significant. We may also be required to record an additional charge if we determine the net realizable value of the assets we are holding for sale is less than our current carrying value of $216 million. The asset impairment charge taken as of June 30, 2002 assumed the assets would continue in use and their current fair value was determined accordingly. Our

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decision to dispose of the assets located in Irving, Texas results in different appraisal assumptions which may lead to lower current fair values for those assets.

OVERVIEW

     Beginning late in the fourth quarter 2000 the global semiconductor industry began to experience a downturn that has continued through the second quarter 2002. Our revenues have decreased sequentially quarter to quarter from the fourth quarter 2000 through the first quarter 2002 as unit shipments and average selling prices declined. However, our second quarter 2002 revenues increased from the first quarter 2002 revenues.

     Revenues for the first six months of 2002 decreased $302 million or 34% from the same period in 2001 due to lower average selling prices, offset by higher unit shipments.

     Second quarter 2002 revenues decreased $52 million, or 14% from the comparable period of 2001 due to lower average selling prices, offset by higher unit shipments.

     Second quarter 2002 revenues increased by $39 million, or 14% from our first quarter 2002 revenues, reversing the trend of the prior five quarters, due to higher unit shipments.

     While our revenues increased in the second quarter from the first quarter the market environment remains very challenging and we are to a large extent dependent on orders booked and shipped within each quarter. The third quarter is historically a slow quarter due principally to the summer months in Europe, and accordingly is substantially dependent on strong September shipping activity.

     We recorded an asset impairment charge of $341 million in the second quarter 2002 to write down to current fair value the book value of our fabrication equipment in Irving, Texas and North Tyneside, U.K. The estimate of current fair value underlying the charge was based on an outside appraisal that assumed the assets would continue in use at their current locations. See Note 7 of Notes to Condensed Consolidated Financial Statements and “Asset Impairment Charges” below in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

RESULTS OF OPERATIONS

     The following table sets forth for the periods indicated certain operating data as a percentage of net revenues:

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Net Revenues — By Segment

     We reorganized the Company’s structure during the fourth quarter 2001 to better manage our business. Atmel’s operating segments now consist of: (1) application specific integrated circuits (ASICs); (2) microcontroller products (Microcontroller); (3) commodity oriented nonvolatile memory products (Nonvolatile Memory); and (4) radio frequency and automotive products (RF and Automotive). As a result, operating segments have changed from prior quarters. The following table presents 2001 quarterly revenues organized by the new operating segments.

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     Our net revenues by segment compared to prior periods are summarized as follows (in thousands):

ASIC

     ASIC revenues decreased by $9 million in the first half 2002 compared to the same period in 2001. The decrease occurred during the first quarter 2002 and resulted from a decline in average selling prices, offset by an increase in unit shipments.

     Revenues increased by $13 million in the second quarter 2002 compared to the same period in 2001 due to increased unit shipments. Lower average selling prices partially offset the higher shipments.

     Revenues also increased by $9 million in the second quarter 2002 compared to the first quarter 2002 as the result of higher unit shipments. Lower average selling prices offset the higher shipments.

Microcontroller

     Microcontroller revenues decreased by $29 million in the first half 2002 compared to the same period in 2001. The decrease occurred during the first quarter 2002 and was the result of lower average selling prices and lower unit shipments.

     Revenues in the second quarter 2002 were consistent with the same period in 2001 due to lower average selling prices offset by higher unit shipments

     Revenues increased by $10 million in the second quarter 2002 compared to the first quarter 2002 as the result of higher unit shipments, partially offset by lower average selling prices.

Nonvolatile Memory

     Nonvolatile Memory revenues decreased $221 million in the first half 2002 compared to the first half 2001 as the result of lower average selling prices, offset by higher unit shipments.

     Revenues decreased $57 million in the second quarter 2002 compared to the same quarter 2001 due to lower average selling prices, offset by higher unit shipments.

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     Revenues increased by $13 million in the second quarter 2002 compared to the first quarter 2002 as the result of higher unit shipments. Average selling prices were comparable, quarter to quarter.

RF and Automotive

     RF and Automotive revenues decreased $43 million in the first half 2002 compared to the same period in 2001 as the result of lower average selling prices and lower unit shipments.

     Revenues decreased $7 million in the second quarter 2002 compared to the same quarter 2001 due to lower average selling prices and lower unit shipments.

     Revenues increased by $7 million in the second quarter 2002 compared to the first quarter 2002 as the result of higher unit shipments, partially offset by lower average selling prices.

Net Revenues — By Geographic Area

     The Company’s net revenues by geographic areas are summarized as follows (in thousands):