Atmel Reports Third Quarter 2011 Financial Results

Third Quarter Revenues of $479 Million

(PRNewswire) — Atmel® Corporation (Nasdaq: ATML), a leader in microcontroller and touch solutions, today announced financial results for its third quarter ended September 30, 2011.

Revenues for the third quarter of 2011 were $479.4 million, up slightly from $478.6 million for the second quarter of 2011, and an 8% increase compared to $444.3 million for the third quarter of 2010.  Adjusting for the Smart Card divestiture completed at the end of the third quarter of 2010, third quarter 2011 revenues increased 15% from the third quarter of the prior year.

Net income, on a GAAP basis, totaled $116.7 million or $0.25 per diluted share for the third quarter of 2011. Included in net income for the third quarter was a $33.4 million gain from the sale of the company's corporate headquarters.  This compares to second quarter 2011 net income of $90.9 million, or $0.19 per diluted share.  The third quarter 2011 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 significant tax benefit from the settlement of an IRS tax audit of $150.4 million.

Non-GAAP net income for the third quarter of 2011 totaled $124.0 million or $0.26 per diluted share, compared to non-GAAP net income of $124.3 million or $0.26 per diluted share, in the second quarter of 2011, and non-GAAP net income of $88.4 million or $0.18 per diluted share for the year-ago quarter.  Refer to the non-GAAP reconciliation table included in this release for more details.

Gross margin was 50.1% in the third quarter of 2011, as compared to 51.8% in the second quarter of 2011 and an increase from 46.8% in the third quarter of 2010.

"We are pleased with our third quarter financial performance, especially in light of the weaker macro environment. Our results confirm the value of our strategic focus on high growth microcontroller opportunities and our transition to a fab-lite manufacturing model," said Steve Laub, Atmel's President and Chief Executive Officer. "Due to global economic uncertainties, we are adjusting our business activities consistent with the current market conditions.  We remain confident that our strategy, operational focus, superior product portfolio and market penetration will enable us to continue to outpace our industry throughout this period."

Third quarter income from operations was $140.2 million, or 29.2% of revenues, compared with $111.0 million, or 23.2% of revenues, for the second quarter of 2011 and $77.7 million, or 17.5% of revenues, for the third quarter of 2010. Third quarter 2011 income from operations included a $33.4 million gain from the sale of our corporate headquarters, while third quarter 2010 income from operations included a $5.7 million loss from the sale of the former Smart Card business and restructuring charges of $1 million.

Income tax provision totaled $23.2 million for the third quarter of 2011. This compares to an income tax provision of $18.8 million for the second quarter of 2011 and a tax benefit of $136.6 million for the third quarter of 2010.  The income tax benefit for the third quarter of 2010 included a $150.4 million, or $0.32 per diluted share, tax benefit from the settlement of an IRS tax audit resulting in the release of tax reserves of approximately $102 million, plus a $48.4 million tax refund.

Cash provided from operations totaled approximately $61.1 million for the third quarter of 2011, compared to $42.6 million for the second quarter of 2011 and $95.3 million for the third quarter of 2010.   Combined cash balances (cash and cash equivalents plus short-term investments) totaled $482.6 million at the end of the third quarter of 2011, after spending $56.3 million during the quarter on stock repurchases.  Net cash balance (cash balances less current and long-term debt) was $478.1 million at September 30, 2011.  

Operational and Company Highlights

  • Highest quarterly revenues since the first quarter of 2001
  • Tenth consecutive quarter of sequential revenue growth
  • Net income of $116.7 million or $0.25 per diluted share
  • Acquired ADD Semiconductor, a leader in power line communication solutions for the smart energy sector
  • maXTouch® E Series cumulatively shipped over 15 million units ending the third quarter of 2011

Product Highlights

  • Recent maXTouch smartphone introductions include: Samsung's Galaxy Note, HTC's Titan and Rhyme, Motorola's Electrify, Droid Razr, and Atrix 2, Huawei's Vision, Asus Padfone, Kyocera's Milano, Nokia's recently introduced 600, 700, and 701 smartphones
  • New tablets powered by maXTouch include: Samsung's Galaxy Tab 7.7,  Asus' EeePad Slider SL101, Huawei's Slim 7,  Lenovo's IdeaPad K1, and Dell's Streak 10 Pro
  • Announced maXStylus™, Atmel's revolutionary active stylus for tablets and smartphones
  • Atmel chosen by Microsoft as a co-engineering partner for its new touch-centric Windows 8 operating system
  • Announced new Atmel family of ARM Cortex™M4 products
  • Introduced Wi-Fi capability for AVR and ARM-based microcontrollers with Redpine Signals

Stock Repurchase

During the third quarter of 2011, Atmel repurchased 6.1 million shares of its common stock in the open market at an average price of $9.23 per share.

Non-GAAP Metrics

Non-GAAP net income excludes charges related to restructuring activities, acquisitions, gain on sale of assets, and stock-based compensation, asset impairment charges, pension charges related to the fab sale, as well as the non-GAAP income tax adjustment and other 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 third quarter 2011 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 12299698 and participants are encouraged to initiate their calls 10 minutes prior to the 2 p.m. PT start time to ensure a timely connection. The webcast and earnings release will be accessible at and will be archived for 12 months.

A replay of the November 1, 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 1-800-585-8367 within the U.S. and 1-404-537-3406 for all other locations. The access code is 12299698.

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 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 Atmel's 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, 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, 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 (including solvency issues affecting various European countries); the inability to realize the anticipated benefits of transactions related to our manufacturing assets, restructuring plans or 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; litigation (including intellectual property litigation in which we may be involved or in which our customers may be involved), 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, 2010 , filed on March 1, 2011 , 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.

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