Atmel Reports Second Quarter 2012 Financial Results

Revenue for the second quarter of 2012 was $368.2 million, a 3% increase compared to $357.8 million for the first quarter of 2012, and 23% lower compared to $478.6 million for the second quarter of 2011.  GAAP net income, which includes $14.4 million of pre-tax charges primarily related to restructuring activities in Europe, totaled $0.8 million or $0.00 per diluted share for the second quarter of 2012. This compares to GAAP net income of $20.4 million or $0.05 per diluted share for the first quarter of 2012, and $90.9 million or $0.19 per diluted share for the second quarter of 2011.  

Non-GAAP net income for the second quarter of 2012 totaled $37.4 million or $0.08 per diluted share, compared to non-GAAP net income of $35.3 million or $0.08 per diluted share in the first quarter of 2012, and non-GAAP net income of $124.3 million or $0.26 per diluted share for the year-ago quarter.  Refer to the non-GAAP reconciliation table included in this release for more details.

GAAP gross margin was 44.0% in the second quarter of 2012, as compared to 42.6% in the first quarter of 2012 and 51.8% in the second quarter of 2011. Non-GAAP gross margin was 44.6% in the second quarter of 2012 compared to 43.2% in the immediately preceding quarter and 52.3% in the second quarter of 2011. 

"The second quarter marked strong revenue growth for our core microcontroller business and company gross margin expanded at a healthy rate," said Steve Laub, Atmel's President and Chief Executive Officer. "Our product pipeline remains excellent and positive secular trends, including the launch of Windows 8, will help drive our business over the longer-term."

Second quarter 2012 income from operations on a GAAP basis was $8.2 million or 2.2% of revenue, compared to $25.0 million or 7.0% of revenue for the first quarter of 2012 and $111.0 million or 23.2% of revenue for the second quarter of 2011. Second quarter 2012 income from operations included $14.4 million of restructuring charges and $2.0 million in acquisition related charges, while first quarter 2012 income from operations included a $10.7 million benefit from the release of reserves related to a previously established foreign government grant and $2.0 million in acquisition-related charges.

Non-GAAP income from operations in the second quarter of 2012 was $43.0 million or 11.7% of revenue, compared to first quarter non-GAAP income from operations of $35.6 million or 9.9% of revenue, and second quarter 2011 non-GAAP income from operations of $126.3 million or 26.4% of revenue. 

Income tax provision, on a GAAP basis, totaled $3.7 million for the second quarter of 2012. This compares to an income tax provision of $4.3 million for the first quarter of 2012 and a tax provision of $18.8 million for the second quarter of 2011.  Non-GAAP income tax provision for the second quarter of 2012 was $1.8 million compared to $0.1 million for the first quarter of 2012 and a non-GAAP tax provision of $0.7 million for the second quarter of 2011.

Cash provided from operations totaled approximately $7.9 million for the second quarter of 2012, compared to $60.6 million for the first quarter of 2012 and $42.6 million for the second quarter of 2011.   Combined cash balances (cash and cash equivalents plus short-term investments) totaled $245.7 million at the end of the second quarter of 2012, after spending $44.4 million during the quarter on stock repurchases. 

Company Highlights

  • Announced industry's highest density embedded flash Cortex-M4 processor-based microcontrollers
  • First to achieve ZigBee® Light Link certification, the benchmark for design applications such as consumer lighting and control products
  • Recent maXTouch smartphone introductions include: Samsung's Maestro, Mendel, Minuet, and Jaguar, HTC's One S, Nokia's 808 Pureview, Motorola's Defy XT535, Defy Pro, RAZR V XT889 and Atrix TV XT682, Fujitsu's Raku-Raku, Huawei's Ascend D1, Lenovo's K800 and ZTE's V8000
  • Multiple smartphone wins from Kyocera, BBK Communications, Gionee Communication, OPPO Electronics, Pantech, and YuLong (CoolPad)
  • New tablets utilizing maXTouch include: Acer's Iconia A700, Lenovo's IdeaTab S2, Toshiba's Excite, and ZTE's T98, V9A and V11 
  • Shipping maXTouch® family of automotive-qualified touchscreen controllers
  • maXTouch selected by Ingenico for ultra-compact portable payment terminals
  • Introduced two new families of serial EEPROM products with unique identity addresses for all Internet-connected devices
  • Announced production availability of a low-frequency (LF) RFID transponder device for consumer and industrial identification applications 

Stock Repurchase

During the second quarter of 2012, Atmel repurchased 6.1 million shares of its common stock in the open market at an average price of $7.29 per share.

Non-GAAP Metrics

Non-GAAP net income excludes charges related to restructuring activities, acquisitions, gain or loss on sale of assets, credit from reserved grant income, stock-based compensation, 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 second quarter 2012 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 93706331 and participants are encouraged to initiate their calls 10 minutes prior to the 2:00 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 July 31, 2012 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 93706331.

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.

© 2012 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, new product launches, 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 2012, 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, without limitation, general economic conditions (including solvency issues affecting various European countries); the cyclical nature of the semiconductor industry; the inability to realize the anticipated benefits of transactions related to acquisitions, restructuring activities or other initiatives in a timely manner or at all; the impact of competitive products and pricing; disruption to our business caused by our increased dependence on outside foundries; industry and/or company overcapacity or undercapacity, including capacity constraints of our independent assembly contractors; timely design acceptance by our customers; timely introduction of new products and technologies (including, for example, our XSense and maXStylus products); ability to ramp new products into volume production; industry wide shifts in supply and demand for semiconductor products; financial stability in foreign markets and the impact of foreign exchange rates; adverse changes in tax laws; unanticipated costs and expenses or the inability to identify expenses which can be eliminated; the market price or volatility of our common stock; compliance with U.S. and international laws and regulations by us and our distributors; ability to protect our intellectual property rights; litigation (including intellectual property litigation in which we may be involved or in which our customers may be involved, especially in the mobile device sector), 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, 2011 , filed on February 28, 2012 , 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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