Atmel Reports Third Quarter 2008 Financial Results (Revenue down 4%)

Atmel is a worldwide leader in the design and manufacture of microcontrollers, advanced logic, mixed-signal, nonvolatile memory and radio frequency (RF) components. Leveraging one of the industry's broadest intellectual property (IP) technology portfolios, Atmel provides the electronics industry with complete system solutions focused on consumer, industrial, security, communications, computing and automotive markets.

Safe Harbor for Forward-Looking Statements

Information in this release regarding Atmel's forecasts, outlook, expectations and beliefs are forward-looking statements that involve risks and uncertainties. These statements include statements about new product introductions, markets for our products and market share gains, restructuring initiatives, manufacturing optimization, cost savings strategies and future operating and financial performance. 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, and we assume no obligation to update any such forward-looking statements. 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 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, effective and cost efficient utilization of manufacturing capacity, financial stability in foreign markets and the impact of foreign exchange rates, the inability to realize the anticipated benefits of our recent strategic transactions, restructuring plans and other initiatives in a timely manner or at all, unanticipated costs and expenses or the inability to identify expenses which can be eliminated, impact of Microchip's and ON Semiconductor's unsolicited acquisition proposal and the Company's response thereto, the market price of our common stock, 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, 2007, filed on February 29, 2008, and our subsequent Form 10-Q reports.

 

     Investor Contact:                  Media Contact:

     Robert Pursel                      Barrett Golden / Sharon Stern
     Director of Investor Relations     Joele Frank, Wilkinson Brimmer Katcher
     408-487-2677                       212-355-4449



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

                                           September 30, June 30, December 31,
                                               2008        2008        2007
    Current assets
    Cash and cash equivalents                $394,231    $354,003    $374,130
    Short-term investments                     26,702      21,786      55,817
    Accounts receivable, net                  220,978     220,956     209,189
    Inventories                               315,358     336,415     357,301
    Current assets held for sale               10,537           -           -
    Prepaids and other current assets          83,736      94,215      88,781
    Total current assets                    1,051,542   1,027,375   1,085,218
    Fixed assets, net                         407,024     471,569     579,566
    Goodwill and intangible assets, net        98,540     109,395      19,552
    Non-current assets held for sale            2,357           -           -
    Other assets                               35,184      42,118      18,417
    Total assets                           $1,594,647  $1,650,457  $1,702,753

    Current liabilities
    Current portion of long-term debt        $131,383    $133,654    $142,471
    Trade accounts payable                    109,976     127,596     191,856
    Accrued and other liabilities             225,793     227,225     266,987
    Liabilities held for sale                   5,368           -           -
    Deferred margin on shipments to
     distributors                              39,237      19,541      19,708
    Total current liabilities                 511,757     508,016     621,022
    Long-term debt less current portion        15,304      18,641      20,408
    Long-term liabilities held for sale        23,986           -           -
    Other long-term liabilities               207,267     245,738     237,844
    Total liabilities                         758,314     772,395          879,274

        Stockholders'  equity                                            836,333          878,062          823,479
        Total  liabilities  and  stockholders'
          equity                                                                $1,594,647    $1,650,457    $1,702,753



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

                                                                    Three  Months  Ended              Nine  Months  Ended
                                                          September      June    September    September    September
                                                                  30,            30,            30,                30,              30,
                                                                2008          2008          2007              2008            2007


        Net  revenues                        $400,008  $420,908  $418,097  $1,232,153  $1,213,657

        Operating  expenses
        Cost  of  revenues                  241,999    267,382    269,063        774,564        783,044
        Research  and
          development                            63,856      68,218      63,609        198,451        200,174
        Selling,  general  and
          administrative                      63,898      68,573      58,518        196,033        184,458
        Acquisition-related
          charges                                      6,690        6,709                -          17,110                    -
        Charges  for  grant
          repayments                                    291            292        1,189                464            1,189
        Restructuring  charges          26,625        8,676        1,386          63,209                528
        Loss  (gain)  on  sale
          of  assets                                          -            810                -        (29,948)                  -
        Asset  impairment  charges
          (recovery)                                7,969                -      (1,057)          7,969          (1,057)
        Total  operating  expenses  411,328    420,660    392,708    1,227,852    1,168,336
        (Loss)  income  from
          operations                            (11,320)          248      25,389            4,301          45,321

        Interest  and  other
          income  (expense),  net          2,530          (859)      1,299          (3,716)          2,888
        (Loss)  income  before
          income  taxes                          (8,790)        (611)    26,688                585          48,209
        Income  tax  benefit
          (provision)                              4,052      (4,296)  (10,135)        (3,442)        (2,038)
        Net  (loss)  income                $(4,738)  $(4,907)  $16,553        $(2,857)      $46,171

        Basic  net  (loss)  income
          per  share:
        Net  (loss)  income                  $(0.01)    $(0.01)      $0.03          $(0.01)          $0.09
        Weighted-average  shares
          used  in  basic  net  (loss)
          income  per  share
          calculations                        447,013    445,793    485,540        445,826        487,731
        Diluted  net  (loss)
          income  per  share:
        Net  (loss)  income                  $(0.01)    $(0.01)      $0.03          $(0.01)          $0.09
        Weighted-average  shares
          used  in  diluted  net
          (loss)  income  per  share
          calculations                        447,013    445,793    489,791        445,826        492,747



                                                            Atmel  Corporation
              Reconciliation  of  GAAP  Net  (Loss)  Income  to  Non-GAAP  Net  Income
                                        (In  thousands,  except  per  share  data)
                                                                  (Unaudited)

                                                                    Three  Months  Ended                Nine  Months  Ended
                                                          September      June    September    September    September
                                                                  30,            30,            30,                30,              30,
                                                                2008          2008          2007              2008            2007


        GAAP  net  (loss)  income      $(4,738)  $(4,907)    $16,553        $(2,857)    $46,171

        Special  items:
        Stock-based  compensation
          expense                                      7,426        6,353          4,893          20,086        11,506
        Acquisition-related
          charges                                      6,690        6,709                  -          17,110                  -
        Charges  for  grant
          repayments                                    291            292          1,189                464          1,189
        Restructuring  charges          26,625        8,676          1,386          63,209              528
        Loss  (gain)  on  sale
          of  assets                                          -            810                  -        (29,948)                -
        Asset  impairment  charges
          (recovery)                                7,969                -        (1,057)          7,969        (1,057)
        Income  tax  effect  of
          non-GAAP  items                      (1,653)        (658)          (160)        (2,811)          (300)
        Total  special  items              47,348      22,182          6,251          76,079        11,866
        Non-GAAP  net  income            $42,610    $17,275      $22,804        $73,222      $58,037

        Diluted  non-GAAP  net
          income  per  share:
        Net  income                                  $0.09        $0.04          $0.05            $0.16          $0.12

        Excluding  impact  of
          conversion  of  European
          distributors  to  sell
          through  model:

        Revenue  from  conversion
          of  European  distributors
          to  sell  through  model        19,891                -                  -          19,891                  -
        Cost  of  revenues  from
          conversion  of  European
          distributors  to  sell
          through  model                        (9,183)                                              (9,183)
        Income  Tax  effect  from
          conversion  of  European
          distributors  to  sell
          through  model                            (664)              -                  -              (664)                -
        Total  impact  from
          conversion  of  European
          distributors  to  sell
          through  model                        10,044                -                  -          10,044                  -
        Non-GAAP  net  income  from
          conversion  of  European
          distributors  to  sell
          through  model                      $52,654    $17,275      $22,804        $83,266      $58,037

        Impact  of  conversion  to
          non-GAAP  net  income  per
          diluted  share                          $0.02              $-                $-            $0.02                $-
        Non-GAAP  net  income  per
          diluted  share  excluding
          impact  of  conversion            $0.11        $0.04          $0.05            $0.18          $0.12



                                                                                    Atmel  Corporation
                                                                Reconciliation  of  GAAP  Gross  Profit
                                                            Margins  to  Non-GAAP  Gross  Profit  Margins
                                                                  (In  thousands,  except  percentages)
                                                                                          (Unaudited)

                                                                    Three  Months  Ended              Nine  Months  Ended
                                                          September      June    September    September    September
                                                                  30,            30,            30,                30,              30,
                                                                2008          2008          2007              2008            2007

        Net  revenues                        $400,008    $420,908  $418,097  $1,232,153  $1,213,657
        Cost  of  revenues                  241,999      267,382    269,063        774,564        783,044
        GAAP  gross  profit
          margin  percentage                    39.5%          36.5%        35.6%            37.1%            35.5%

        Stock-based  compensation
          expense  in  costs  of
          revenues                                  (1,087)          (984)        (487)        (2,908)        (1,488)
        Non-GAAP  cost  of
          revenues                                240,912      266,398    268,576        771,656        781,556
        Non-GAAP  gross  profit
          margin  percentage                    39.8%          36.7%        35.8%            37.4%            35.6%



                                                            Atmel  Corporation
                                Supplemental  Financial  Information  (Non-GAAP)
                        (In  thousands,  except  percentages  and  per  share  data)
                                                                  (  Unaudited)

                                                                                                        Including          Excluding
                                                                                                      adjustments      adjustments
                                                                                                              for                      for
                                                                                                  EU  Distributor  EU  Distributor
                                                                          As  Reported      Conversion          Conversion
                                                                                (GAAP)          (Non-GAAP)          (Non-GAAP)

        Revenue                                                    $400,008              $400,008            $419,899

        Gross  Profit                                            158,009                159,096              169,804
        Gross  Profit  %                                              39.5%                    39.8%                  40.4%

        Operating  Income                                    (11,320)                37,681                48,389
        Operating  Income  %                                      -2.8%                      9.4%                  11.5%

        Net  Income                                                  (4,738)                42,610                52,654
        Net  Income  %                                                  -1.2%                    10.7%                  12.5%

        Net  (loss)  income  per  share                  (0.01)                    0.09                    0.11

 




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