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Atmel Corp. Reports Operating Results (10-K)

February 28, 2012 | About:
10qk

10qk

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Atmel Corp. (ATML) filed Annual Report for the period ended 2011-12-31.

Atmel Corp has a market cap of $4.73 billion; its shares were traded at around $10.49 with a P/E ratio of 15.7 and P/S ratio of 2.6.

Highlight of Business Operations:

(1)We recorded asset impairment charges (recovery) of $11.9 million, $79.8 million, $8.0 million and $(1.1) million for the years ended December 31, 2010, 2009, 2008 and 2007, respectively, and restructuring charges of $20.1 million, $5.3 million, $6.7 million, $71.3 million and $13.2 million for the years ended December 31, 2011, 2010, 2009, 2008 and 2007, respectively, related primarily to employee termination costs, facility closure costs, sales of businesses and other operations, and the related realignment of our businesses in response to those changes. We recorded a gain on sale of assets of $35.3 million for the year ended December 31, 2011 related to the sale of our headquarters located in San Jose, California and a gain on sale of assets of $0.2 million and $32.7 million for the

In connection with the sale of our Rousset, France manufacturing operations to LFoundry GmbH ("LFoundry") in 2010, we entered into ancillary agreements with LFoundry, including a manufacturing services agreement ("MSA") under which we agreed to purchase wafers from LFoundry's affiliate, LFoundry Rousset SAS ("LFoundry Rousset"), for four years following the closing on a "take-or-pay" basis. As future wafer purchases under the supply agreement were negotiated at pricing above our estimate of their fair value at the time we purchase the wafers from LFoundry Rousset, we recorded a charge in 2010 to recognize the present value of the estimated impact of this unfavorable commitment over the term of the MSA. Despite this charge, the sale of our Rousset manufacturing operations resulted in lower fixed costs, less capital investment risk, and lower foreign exchange rate exposure over the long-term. Our analysis indicated that the difference between the contract prices and market prices over the term of the agreement totaled $103.7 million, and when present value is considered, the fair value of the "take-or-pay" agreement resulted in a charge of $92.4 million, recorded in the second quarter of 2010. The gross value of the MSA charge is being recognized as a credit to cost of revenues over the term of the MSA as the wafers are purchased and the present value discount of $11.2 million is being recognized as interest expense over the same term. For 2011 and 2010, we recorded a credit to cost of revenues of $31.9 million and $14.9 million, respectively, and interest expense of $4.5 million and $2.9 million, respectively, in connection with the MSA. In 2010, we recorded a loss on the sale of our Rousset manufacturing operations of $94.1 million, inclusive of the $92.4 million charge described above.

Research and development ("R&D") expenses increased 8%, or $17.8 million, to $255.7 million for the year ended December 31, 2011 from $237.8 million for the year ended December 31, 2010. R&D expenses increased for the year ended December 31, 2011, primarily due to increased employee related expenses of $13.2 million related to increases in product development staffing, increased stock-based compensation expense of $3.6 million and decreased grant income of $3.3 million offset by decreased mask costs and spending on new product development expense of $5.1 million. R&D expenses, including the items described above, for the year ended December 31, 2011, were favorably affected by approximately $6.3 million due to foreign exchange rate fluctuations, compared to rates in effect and the related expenses for the year ended December 31, 2010. As a percentage of net revenues, R&D expenses totaled 14% for each of the years ended December 31, 2011 and 2010.

Selling, general and administrative ("SG&A") expenses increased 6%, or $16.1 million, to $280.4 million for the year ended December 31, 2011 from $264.3 million for the year ended December 31, 2010. SG&A expenses increased in 2011, primarily due to increased employee-related costs of $19.6 million as a result of increased employee benefits and increased stock-based compensation expense of $4.3 million, offset by a decrease in outside services of $4.8 million and reduced tax and audit fees of $1.3 million. SG&A expenses, including the items described above, were favorably affected by approximately $3.1 million due to foreign exchange rate fluctuations, compared to rates in effect and the related expenses incurred for the year ended December 31, 2010. As a percentage of net revenues, SG&A expenses totaled 16% of net revenues for each of the years ended December 31, 2011 and 2010.

SG&A expenses increased 19%, or $43.0 million, to $264.3 million for the year ended December 31, 2010 from $221.3 million for the year ended December 31, 2009. SG&A expenses increased in 2010, primarily due to increased employee-related costs of $14.4 million, increased performance-related stock-based compensation expense of $19.9 million, $3.0 million of increased commissions for our sales representatives and costs of additional outside services of $7.6 million. SG&A expenses, including the items described above, were favorably affected by approximately $1.1 million due to foreign exchange rate fluctuations, compared to rates in effect and the related expenses incurred for the year ended December 31, 2009. As a percentage of net revenues, SG&A expenses totaled 16% and 18% of net revenues for the years ended December 31, 2010 and 2009, respectively.

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