Gross Margin Improves by over 5 Percentage Points
Revenues for the third quarter of 2005 totaled $418.6 million, versus $412.2 million in the second quarter of 2005 and $413.2 million in the third quarter of 2004. Net loss for the third quarter of 2005 totaled $1.1 million or $0.00 per share. The third quarter results include a restructuring charge of $2.8 million related to headcount reductions. Also included in the third quarter results is $12.0 million of tax benefit resulting from the settlement of a tax audit related to one of our foreign entities. These results compare to a net loss of $42.6 million or $0.09 per share for the second quarter of 2005, as well as a net loss of $18.0 million or $0.04 per share for the third quarter of 2004.
"In the third quarter, we significantly lowered our manufacturing costs, leading to over 5 percentage points of gross margin improvement," stated George Perlegos, Atmel's President and Chief Executive Officer. "We expect to continue steadily reducing manufacturing and research and development spending, which should lead to further improvements in our operating profits.
"Our ASIC revenues grew about 7% sequentially in the third quarter. During the quarter, we increased the percentage of our smart card ICs produced on 0.18-micron line width to over 80%, which contributed to the improved operating results of the ASIC business.
"During the third quarter of 2005, our Microcontroller operating segment sales were down 4% sequentially, due mainly to the seasonal impact of our European military and aerospace business. However, we again saw growth in our proprietary AVR microcontroller products, which also enjoyed strong design win activity. Additionally, we shipped our first AVR units into the US automotive sector during the quarter.
"Sales in our RF and Automotive operating segment in the third quarter were down 5% sequentially. Although our RF BiCMOS business was down during the quarter, we expect to ramp up new designs for CDMA phones during the fourth quarter.
"During the third quarter, our Non Volatile Memory business increased by 4% sequentially, mainly due to increased sales of our serial based products. Both our serial EEPROM and serial DataFlash(R) business enjoyed stronger demand late in the third quarter," concluded Mr. Perlegos.
Outlook
The Company anticipates that for the fourth quarter of 2005, revenues should increase about 1-3%, while gross margin should increase approximately 1 percentage point as compared to the third quarter of 2005. Additionally, R&D is expected to be approximately $67-$70 million, while SG&A is expected to be between $46-$50 million. Net interest expense for the quarter is expected to be approximately $6-$7 million, while income taxes are expected to be approximately $1-$3 million. We anticipate that depreciation and amortization will be approximately $67-$70 million.
Teleconference
Atmel will hold a teleconference for the financial community at 3:00 PM Pacific Time today to discuss the third quarter financial results. Atmel will provide a real-time audio broadcast of the teleconference from the Investor Relations page of its website at http://www.atmel.com. Investors may access the live teleconference by dialing 800-374-0405, and using the passcode 1436228.
A webcast replay will be available for one year after the teleconference at http://www.atmel.com. Atmel will also provide a telephone recording of the teleconference, which will be available shortly after the completion of the call. Interested parties may listen to the playback of the teleconference by calling the following number: 800-642-1687, and using the passcode 1436228, within 48 hours of completion of the call.
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 Atmel's expected fourth quarter operating results, including revenues, gross margins, operating expenses, demand levels, new product shipments and market conditions. 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 statement. 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 the impact of competitive products and pricing, timely design acceptance by our customers, timely introduction of new technologies, ability to ramp new products into volume, 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 other risks detailed from time to time in Atmel's SEC reports and filings, including our Form 10-K, filed on March 25, 2005 and subsequent Form 10-Q reports.
Contact: Steven Horwitz, Director, Investor Relations: 408-487-2677
Atmel Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
2005 2004 2005 2004
Net revenues $418,550 $413,237 $1,250,527 $1,241,435
Operating expenses
Cost of revenues 301,759 298,103 953,954 885,952
Research and development 69,655 65,732 209,938 179,683
Selling, general and
administrative 45,089 44,501 150,717 131,669
Restructuring charge 2,785 -- 2,785 --
Total operating expenses 419,288 408,336 1,317,394 1,197,304
Income (loss) from operations (738) 4,901 (66,867) 44,131
Interest and other expenses,
net (7,012) (5,043) (19,984) (13,651)
Income (loss) before income
taxes (7,750) (142) (86,851) 30,480
Benefit from (provision for)
income taxes 6,653 (17,867) 153 (25,829)
Net income (loss) ($1,097) ($18,009) ($86,698) $4,651
Basic net income (loss) per
share ($0.00) ($0.04) ($0.18) $0.01
Diluted net income (loss) per
share ($0.00) ($0.04) ($0.18) $0.01
Shares used in basic net income
(loss) per share calculations 482,440 476,677 480,948 475,529
Shares used in diluted net
income (loss) per share
calculations 482,440 476,677 480,948 484,680
Atmel Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
September 30, December 31,
2005 2004
Current assets
Cash and cash equivalents $282,388 $346,350
Short-term investments 52,569 58,858
Accounts receivable, net 236,194 228,544
Inventories 313,087 346,589
Other current assets 98,117 91,588
Total current assets 982,355 1,071,929
Fixed assets, net 969,353 1,204,852
Intangible and other assets 39,638 46,742
Total assets $1,991,346 $2,323,523
Current liabilities
Current portion of long-term debt $126,679 $141,383
Convertible notes 221,021 --
Trade accounts payable 127,930 245,240
Accrued and other liabilities 197,497 208,942
Deferred income on shipments to distributors 15,655 18,124
Total current liabilities 688,782 613,689
Long-term debt less current portion 151,186 110,302
Convertible notes less current portion 291 213,648
Other long-term liabilities 256,161 274,288
Total liabilities 1,096,420 1,211,927
Stockholders' equity 894,926 1,111,596
Total liabilities and stockholders' equity $1,991,346 $2,323,523
CONTACT: Steven Horwitz, Director, Investor Relations, of Atmel
Corporation, +1-408-487-2677
Web site: http://www.atmel.com/