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8-K - FORM 8-K - ATMEL CORP | f58206e8vk.htm |
Exhibit 99.1
NEWS RELEASE
Atmel Reports Fourth Quarter and Full Year 2010
Financial Results
Financial Results
Fourth Quarter Revenues of $458 Million, Up 3% Sequentially
Record Microcontroller Revenues of $288 Million, Up 13% Sequentially
Gross Margin Increases 270 Basis Points Sequentially to 49.5%
Record Microcontroller Revenues of $288 Million, Up 13% Sequentially
Gross Margin Increases 270 Basis Points Sequentially to 49.5%
Full Year 2010 Revenues of $1,644 Million, Up 35%
Record 2010 Microcontroller Revenues of $892 Million, Up 95%
Record 2010 Microcontroller Revenues of $892 Million, Up 95%
SAN JOSE, CA, February 8, 2011 Atmel® Corporation (Nasdaq: ATML), a leader in
microcontroller and touch solutions, today announced financial results for the fourth quarter and
full year ended December 31, 2010.
Revenues for the fourth quarter of 2010 were $457.8 million, a 3% increase compared to $444.3
million for the third quarter of 2010, and a 33% increase compared to $343.6 million for the fourth
quarter of 2009. Fourth quarter results for 2010 exclude the Smart Card business which was divested
at the end of the third quarter of 2010. Adjusting for the Smart Card divestiture, fourth quarter
revenues increased 10% sequentially and 44% from the fourth quarter of the prior year. For the full
year 2010, revenues increased 35% to $1.64 billion, compared to $1.22 billion for 2009.
Net income, on a GAAP basis, totaled $223.1 million or $0.47 per diluted share for the fourth
quarter of 2010. Included in fourth quarter 2010 results was a tax benefit of $133.1 million,
which included $118.1 million, or $0.25 per diluted share, primarily from releasing reserves for
certain deferred tax assets. The fourth quarter 2010 net income compares to net income of $219.8
million or $0.47 per diluted share for the third quarter of 2010, which included a $150.4 million,
or $0.32 per diluted share tax benefit related to the resolution of an IRS tax audit, and a net
loss of $83.3 million or $0.18 per diluted share for the year-ago quarter, including one-time
charges. For the full year of 2010, net income was $423.1 million or $0.90 per diluted share,
compared to a net loss of $109.5 million or a loss of $0.24 per diluted share for 2009.
Non-GAAP net income for the fourth quarter of 2010 totaled $119.5 million or $0.25 per diluted
share compared to non-GAAP net income of $88.6 million or $0.18 per diluted share for the third
quarter of 2010, and non-GAAP net income of $11.3 million or $0.02 per diluted share for the
year-ago quarter. Non-GAAP results for the fourth quarter of 2010
exclude the tax benefit
Atmel Corporation 2325 Orchard Parkway San Jose CA 95131 Phone (408) 441-0311 Fax (408) 487-2600
of $118.1 million. For the full year 2010, non-GAAP net income increased 960% to $284.3
million or $0.59 per diluted share, compared to $26.8 million or $0.06 per diluted share for 2009.
Refer to the non-GAAP reconciliation table included in this release for more details.
Gross margin improved to 49.5% in the fourth quarter of 2010, the highest level achieved since the
third quarter of 1996. This compares to gross margin of 46.8% in the third quarter of 2010 and
37.0% in the fourth quarter of 2009. The sequential gross profit improvement was the result of
increased volumes and improved mix of higher margin products, as well as the third quarter
divestiture of the Smart Card business. For the full year 2010, gross margin increased to 44.3%
compared to 33.9% for 2009.
Our fourth quarter results exceeded our expectations as we continued to experience strong customer
demand and improved product mix across all business segments said Steve Laub, Atmels President
and Chief Executive Officer. Microcontroller revenues reached new records as both our 8-bit and
32-bit products continued to benefit from broad-based strength in the market. Atmels market
leading touchscreen solutions, led by our maXTouch products, continued their strong growth, easily
surpassing our goal of $140 million in revenues during calendar 2010. We remain confident in our
business with continuing design win momentum in our microcontroller products and recently announced
new generation of touch solutions.
Fourth quarter income from operations improved to $93.8 million, or 20.5% of revenues, compared
with $77.7 million, or 17.5% of revenues for the third quarter of 2010, and a loss from operations
of $71.8 million for the fourth quarter 2009. Third quarter 2010 income from operations included a
$5.7 million loss from the sale of the Smart Card business, while fourth quarter 2009 included a
$79.8 million asset impairment charge. For the full year of 2010, income from operations was
$107.5 million, compared to a loss of $124.6 million for 2009.
Income tax benefit totaled $133.1 million for the fourth quarter of 2010. This compares to an
income tax benefit of $136.6 million for the third quarter of 2010 and a provision of $10.5 million
for the fourth quarter of 2009. For the full year 2010, income tax benefit was $306.7 million which
compares to an income tax benefit of $26.5 million for the full year of 2009. During 2010, the
company favorably settled tax audits and released reserves for certain deferred tax assets which
contributed $247.9 million of the total tax benefit recorded for the year.
Cash provided from operations totaled approximately $84.6 million for the fourth quarter of 2010,
compared to $95.3 million for the third quarter of 2010 and $55.2 million for the fourth quarter of
2009. Combined cash balances (cash and cash equivalents plus short-term investments) totaled
$521.0 million at the end of the fourth quarter of 2010, a decrease of $76.4 million from the end
of the prior quarter. During the fourth quarter of 2010, the company repaid $80 million of its
revolving credit facility and repurchased $48 million of common stock. Net cash balance (cash
balances less current and long-term debt) was the highest in the companys history at $517.0
million at December 31, 2010.
Fourth Quarter Operational and Company Highlights
| Record microcontroller revenues of $288 million, up 13% sequentially and 107% year-over-year |
| Exceeded goal of $140 million of maXTouch revenues during 2010 | ||
| Gross margin of 49.5%, highest since the third quarter of 1996 | ||
| Repaid $80 million of debt | ||
| Record net cash balance of $517 million |
Recent Product Highlights
| Announced new generation maXTouch E-Series touch controllers |
| Devices offer enhanced analog sensing with up to 768 nodes | ||
| Industrys first 32-bit single-chip touchscreen controller for smartphones, eReaders, and tablets up to 12-inches |
| Atmel maXTouch mXT1386 and mXT616 ramping for touch devices including tablets, mobile Internet devices (MIDs), netbooks, PC notebooks and a range of industrial applications up to 15 inches | ||
| maXTouch shipping in Nokias C7, Motorolas DROID PRO and Defy, HTCs Desire Z and Trophy 7, Sharps SH8128U, and Toshibas Regza T-01C | ||
| Atmel AT32UC3L 32-bit AVR® microcontroller wins two product awards from top Asian trade publications EDN and AET Magazine | ||
| Launched new SAM3N series of flash microcontrollers based on 32-bit ARM Cortex-M3 RISC processor | ||
| Atmel ATmega128RFA1 microcontroller achieved ZigBee© certified status for key remote controller |
Stock Repurchase
During the fourth quarter of 2010, Atmel repurchased 4.7 million shares of its common stock in the
open market at an average price of $10.31 per share.
Non-GAAP Metrics
Non-GAAP net income excludes charges related to restructuring activities, acquisitions, grant
repayments, pension charge related to fab sale, distributor bad debt recovery, unsolicited M&A
expense, loss (gain) on sale of assets, asset impairment charges and stock-based compensation, as
well as the income tax effect of these excluded items and other unusual and 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 2010 financial
results. The conference call will be webcast live and can also be monitored by dialing
1-800-374-0405 or 1-706-758-4519. The conference ID number is 38571228 and participants are
encouraged to initiate their calls 10 minutes in advance of the 2 p.m. PT start time to ensure a
timely connection. The webcast and earnings release will be accessible at http://www.atmel.com/ir/
and will be archived for 12 months.
A replay of the February 8, 2011 conference call will be available the same day at approximately
5:00 p.m. PT and will be archived for 48 hours. The replay access numbers are
1-800-642-1687 within
the U.S. and 1-706-645-9291 for all other locations. The access code is 38571228.
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 industrys 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.
© 2011 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 Atmels forecasts, business outlook, expectations 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 2011 and
expectations regarding market share and product revenue growth, and Atmels 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 general economic conditions; the inability to
realize the anticipated benefits of transactions related to our manufacturing assets, restructuring
plans and other initiatives in a timely manner or at all; the impact of competitive products and
pricing; timely design acceptance by our customers; timely introduction of new products and
technologies; ability to ramp new products into volume production; industry wide shifts in supply
and demand for semiconductor products; industry and/or company overcapacity or undercapacity;
effective and cost efficient utilization of manufacturing capacity; financial stability in foreign
markets and the impact of foreign exchange rates; unanticipated costs and expenses or the inability
to identify expenses which can be eliminated; the market price of our common stock; compliance with
U.S. and international laws and regulations by us and our distributors; unfavorable results of
legal proceedings; and other risks detailed from time to time in Atmels SEC reports and filings,
including our Form 10-K for the year ended December 31, 2009, filed on March 1, 2010, and our
subsequent Form 10-Q reports. Atmel assumes no obligation and does not intend to update any
forward-looking statements, whether as a result of new information, future events or otherwise.
Investor Contact:
Peter Schuman
Director, Investor Relations
(408) 518-8426
Director, Investor Relations
(408) 518-8426
###
Atmel Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||
2010 | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||
Net revenues |
$ | 457,806 | $ | 444,344 | $ | 343,580 | $ | 1,644,060 | $ | 1,217,345 | ||||||||||
Operating expenses |
||||||||||||||||||||
Cost of revenues |
231,161 | 236,225 | 216,541 | 915,876 | 804,338 | |||||||||||||||
Research and development |
60,148 | 56,277 | 55,842 | 236,812 | 212,045 | |||||||||||||||
Selling, general and administrative |
69,688 | 65,940 | 58,560 | 264,296 | 221,334 | |||||||||||||||
Acquisition-related charges |
1,167 | 1,167 | 3,604 | 1,600 | 16,349 | |||||||||||||||
Charges for grant repayments |
253 | 236 | 276 | 1,000 | 1,554 | |||||||||||||||
Restructuring charges |
1,590 | 1,080 | 679 | 5,253 | 6,681 | |||||||||||||||
Asset impairment charges |
| | 79,841 | 11,922 | 79,841 | |||||||||||||||
Loss (gain) on sale of assets |
| 5,715 | | 99,767 | (164 | ) | ||||||||||||||
Total operating expenses |
364,007 | 366,640 | 415,343 | 1,536,526 | 1,341,978 | |||||||||||||||
Income (loss) from operations |
93,799 | 77,704 | (71,763 | ) | 107,534 | (124,633 | ) | |||||||||||||
Interest and other (expense) income, net |
(3,838 | ) | 5,530 | (1,010 | ) | 8,818 | (11,406 | ) | ||||||||||||
Income (loss) before income taxes |
89,961 | 83,234 | (72,773 | ) | 116,352 | (136,039 | ) | |||||||||||||
Benefit from (provision for) income taxes |
133,130 | 136,578 | (10,494 | ) | 306,723 | 26,541 | ||||||||||||||
Net income (loss) |
$ | 223,091 | $ | 219,812 | $ | (83,267 | ) | $ | 423,075 | $ | (109,498 | ) | ||||||||
Basic net income (loss) per share: |
||||||||||||||||||||
Net income (loss) |
$ | 0.49 | $ | 0.48 | $ | (0.18 | ) | $ | 0.92 | $ | (0.24 | ) | ||||||||
Weighted-average shares used in basic
income (loss) per share calculations |
457,311 | 459,588 | 454,040 | 458,482 | 451,755 | |||||||||||||||
Diluted net income (loss) per share: |
||||||||||||||||||||
Net income (loss) |
$ | 0.47 | $ | 0.47 | $ | (0.18 | ) | $ | 0.90 | $ | (0.24 | ) | ||||||||
Weighted-average shares used in diluted
net income (loss) per share calculations |
471,369 | 468,173 | 454,040 | 469,580 | 451,755 | |||||||||||||||
Atmel Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 501,455 | $ | 437,509 | ||||
Short-term investments |
19,574 | 38,631 | ||||||
Accounts receivable, net |
231,876 | 194,099 | ||||||
Inventories |
276,650 | 226,296 | ||||||
Current assets held for sale |
| 16,139 | ||||||
Prepaids and other current assets |
123,620 | 83,434 | ||||||
Total current assets |
1,153,175 | 996,108 | ||||||
Fixed assets, net |
260,124 | 203,219 | ||||||
Goodwill |
54,676 | 56,408 | ||||||
Intangible assets, net |
17,603 | 29,841 | ||||||
Non-current assets held for sale |
| 83,260 | ||||||
Other assets |
164,464 | 24,006 | ||||||
Total assets |
$ | 1,650,042 | $ | 1,392,842 | ||||
Current liabilities |
||||||||
Current portion of long-term debt |
$ | 81 | $ | 85,462 | ||||
Trade accounts payable |
160,011 | 105,692 | ||||||
Accrued and other liabilities |
217,904 | 152,572 | ||||||
Current liabilities held for sale |
| 11,284 | ||||||
Deferred income on shipments to distributors |
66,708 | 44,691 | ||||||
Total current liabilities |
444,704 | 399,701 | ||||||
Long-term debt less current portion |
3,976 | 9,464 | ||||||
Long-term liabilities held for sale |
| 4,014 | ||||||
Other long-term liabilities |
148,306 | 215,256 | ||||||
Total liabilities |
596,986 | 628,435 | ||||||
Stockholders equity |
1,053,056 | 764,407 | ||||||
Total liabilities and stockholders
equity |
$ | 1,650,042 | $ | 1,392,842 | ||||
Atmel Corporation
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income
(In thousands, except per share data)
(Unaudited)
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income
(In thousands, except per share data)
(Unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||
2010 | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||
GAAP net income (loss) |
$ | 223,091 | $ | 219,812 | $ | (83,267 | ) | $ | 423,075 | $ | (109,498 | ) | ||||||||
Special items: |
||||||||||||||||||||
Stock-based compensation expense |
15,639 | 13,249 | 10,680 | 60,510 | 30,058 | |||||||||||||||
Acquisition-related charges |
1,167 | 1,167 | 3,604 | 1,600 | 16,349 | |||||||||||||||
Charges for grant repayments |
253 | 236 | 276 | 1,000 | 1,554 | |||||||||||||||
Restructuring charges |
1,590 | 1,080 | 679 | 5,253 | 6,681 | |||||||||||||||
Asset impairment charges |
| | 79,841 | 11,922 | 79,841 | |||||||||||||||
Loss (gain) on sale of assets |
| 5,715 | | 99,767 | (164 | ) | ||||||||||||||
Pension charge related to fab sale |
| | | 907 | | |||||||||||||||
Distributor bad debt recovery |
| | | | (3,200 | ) | ||||||||||||||
Unsolicited M&A expense |
| | | | 5,884 | |||||||||||||||
Income tax effect of non-GAAP items |
(4,222 | ) | (2,257 | ) | (500 | ) | (71,771 | ) | (691 | ) | ||||||||||
Non-GAAP tax adjustments |
(118,061 | ) | (150,404 | ) | | (247,915 | ) | | ||||||||||||
Total special items |
(103,634 | ) | (131,214 | ) | 94,580 | (138,727 | ) | 136,312 | ||||||||||||
Non-GAAP net income |
$ | 119,457 | $ | 88,598 | $ | 11,313 | $ | 284,348 | $ | 26,814 | ||||||||||
Diluted non-GAAP net income per share: |
||||||||||||||||||||
Non-GAAP net income |
$ | 0.25 | $ | 0.18 | $ | 0.02 | $ | 0.59 | $ | 0.06 | ||||||||||
Non-GAAP weighted-average shares used
in diluted non-GAAP net income per
share calculations |
480,609 | 479,374 | 476,633 | 478,809 | 469,545 | |||||||||||||||
Reconciliation of GAAP to non-GAAP shares used in
diluted net income per share calculations:
diluted net income per share calculations:
Three Months Ended | Twelve Months Ended | |||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||
2010 | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||
Diluted weighted-average shares used in
per share calculations GAAP |
471,369 | 468,173 | 454,040 | 469,580 | 451,755 | |||||||||||||||
Adjusted dilutive stock awards non-GAAP |
9,240 | 11,201 | 22,593 | 9,229 | 17,790 | |||||||||||||||
Diluted weighted-average shares used in
per share calculations non-GAAP |
480,609 | 479,374 | 476,633 | 478,809 | 469,545 | |||||||||||||||
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 (loss) 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 Atmels operations
that, when viewed in conjunction with Atmels GAAP results, provide a more comprehensive
understanding of the various factors and trends affecting Atmels 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
companys 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
Atmels results through the eyes of management as these non-GAAP financial measures reflect
Atmels internal measurement processes. Management believes that these non-GAAP financial measures
enable investors to better assess changes in each key element of Atmels 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 Atmels 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 Atmels 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 Atmels 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 in above.
As presented in the Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income tables above,
each of the non-GAAP financial measures excludes one or more of the following items:
| Stock-based compensation expense. |
Stock-based compensation expense relates primarily to equity awards such as stock options and
restricted stock units. This includes stock-based compensation expense related to
performance-based restricted stock units for which Atmel recognizes stock-based compensation
expense to the extent management believes it probable that Atmel will achieve the performance
criteria which occurs before these awards actually vest. If the performance goals are unlikely to
be met, no compensation expense is recognized and any previously recognized
compensation expense is reversed. Stock-based compensation is a non-cash expense that varies in amount from period to
period and is dependent on market forces that are often beyond Atmels control. As a result,
management excludes this item from Atmels internal operating forecasts and models. Management
believes that non-GAAP measures adjusted for stock-based compensation provide investors with a basis to measure
Atmels core performance against the performance of other companies without the variability created
by stock-based compensation as a result of the variety of equity awards used by other companies and
the varying methodologies and assumptions used.
| Acquisition-related charges. |
Acquisition-related charges include: (1) amortization of intangibles, which include acquired
intangibles such as customer relationships, backlog, core developed technology, trade names and
non-compete agreements and (2) contingent compensation expense, which include compensation
resulting from the employment retention of certain key employees established in accordance with the
terms of the acquisitions. In most cases, these acquisition-related charges are not factored into
managements evaluation of potential acquisitions or Atmels performance after completion of
acquisitions, because they are not related to Atmels core operating performance. In addition, the
frequency and amount of such charges can vary significantly based on the size and timing of
acquisitions and the maturities of the businesses being acquired. Excluding acquisition-related
charges from non-GAAP measures provides investors with a basis to compare Atmel against the
performance of other companies without the variability caused by purchase accounting.
| Charges for grant repayments. |
Grant repayments primarily relate to contractual obligations to repay incentive amounts received
from various government entities recorded in prior periods (including interest) as a result of
restructuring activity. Atmel excludes these amounts from non-GAAP financial measures primarily
because grant repayments occur infrequently, and excluding ongoing related interest charges
enhances the ability of investors to compare Atmels period over period operating results from
continuing operations.
| Restructuring charges. |
Restructuring charges primarily relate to expenses necessary to make infrastructure-related changes
to Atmels operating costs. Restructuring charges are excluded from non-GAAP financial measures
because they are not considered core operating activities. Although Atmel has engaged in various
restructuring activities in recent years, each has been a discrete event based on a unique set of
business objectives. Atmel believes that it is appropriate to exclude restructuring charges from
Atmels non-GAAP financial measures, as it enhances the ability of investors to compare Atmels
period-over-period operating results from continuing operations.
| Asset impairment charges. |
When certain criteria are met, Atmel records an impairment charge for the difference between the
fair value and the carrying value of the assets. Atmel believes that is it is appropriate to
exclude these non-cash charges from Atmels non-GAAP financial measures, as it enhances the ability
of investors to compare Atmels period-over-period operating results from continuing operations.
| Loss (gain) on sale of assets. |
Atmel recognizes losses (gains) resulting from the sale of certain non-strategic assets that no
longer align with Atmels long-term operating plan. Atmel excludes these items from its non-GAAP
financial measures primarily because these losses (gains) are individually discrete events and
generally not reflective of the ongoing operating performance of Atmels business and can distort
the period-over-period comparison.
| Pension charge related to fab sale. |
Pension charge related to fab sale relates to pension charges associated with the release of
related accumulated other comprehensive loss as a result of Atmels sale of its manufacturing
operations in Rousset, France and the transfer of employees to the fab buyer. Atmel believes that
it is appropriate to exclude this adjustment from
Atmels non-GAAP financial measures, as it
enhances the ability of investors to compare Atmels period-over-period operating results from
continuing operations.
| Distributor bad debt recovery. |
Distributor bad debt recovery relates to a reserve and subsequent partial collection for receivables
from an Asian distributor whose business was extraordinarily impacted following their addition to
the US governments Entity List which prohibits the company from shipping products to the
distributor. Management believes that it is appropriate to exclude this recovery from Atmels
non-GAAP financial measures, as it enhances the ability of investors to compare Atmels
period-over-period operating results from continuing operations.
| Unsolicited M&A expense. |
The company incurred certain expenses for corporate advisors related to the 2009 take-over bid from
Microchip Technology, Inc. and ON Semiconductor Corporation. Management believes that it is
appropriate to exclude these expenses from Atmels non-GAAP financial measures, as it enhances the
ability of investors to compare Atmels period-over-period operating results from continuing
operations.
| Income tax effect of non-GAAP items. |
Atmel adjusts for the income tax effect resulting from the non-GAAP adjustments as described above.
| Non-GAAP tax adjustments |
Atmel adjusts for unusual or one-time tax items such as significant tax audit settlements and
valuation reserve adjustments on deferred tax assets. Management believes that it is appropriate to
exclude these items from Atmels non-GAAP financial measures, as it enhances the ability of
investors to compare Atmels period-over-period operating results from continuing operations.