Atmel Experiences Declining Revenues, Climbing Losses in Q1, Expresses Confidence in Future

Atmel Corp. revenue for the first quarter of 2013 was $329.1 million, a 5% decrease compared to $345.1 million for the fourth quarter of 2012, and 8% lower compared to $357.8 million for the first quarter of 2012. Adjusting for the Serial Flash divestiture that occurred in September 2012, first quarter 2013 revenue decreased 4% sequentially and declined 5% from the first quarter of the prior year.

GAAP net loss totaled $(47.7) million or $(0.11) per diluted share for the first quarter of 2013, principally as a result of a $42.8 million charge incurred primarily for restructuring activities and $21.6 million of legal-related settlement charges. These charges were offset by a gain on the sale of our Serial Flash product line of $4.4 million. This compares to GAAP net loss of $(12.3) million or $(0.03) per diluted share for the fourth quarter of 2012, and GAAP net income of $20.4 million or $0.05 per diluted share for the first quarter of 2012.

Non-GAAP net income for the first quarter of 2013 totaled $13.6 million or $0.03 per diluted share, compared to non-GAAP net income of $29.4 million or $0.07 per diluted share in the fourth quarter of 2012, and non-GAAP net income of $35.3 million or $0.08 per diluted share for the year-ago quarter. GAAP gross margin was 39.9% in the first quarter of 2013, compared to 38.1% in the fourth quarter of 2012 and 42.6% in the first quarter of 2012. Non-GAAP gross margin was 40.5% in the first quarter of 2013 as compared to 41.6% in the immediately preceding quarter and 43.2% in the first quarter of 2012.

"Improving business conditions, a healthier backlog, and our strong product portfolio provide us increased confidence moving forward this year," said Steve Laub, Atmel's President and Chief Executive Officer. "We are making good progress enhancing our cost structure which we expect to materially benefit our long-term margin profile."

First quarter 2013 loss from operations on a GAAP basis was $(62.4) million or 19.0% of revenue, compared to loss from operations of $(13.2) million or 3.8% of revenue for the fourth quarter of 2012 and income from operations of $25.0 million or 7.0% of revenue for the first quarter of 2012. First quarter 2013 loss from operations was adversely affected by $42.8 million of charges incurred primarily for restructuring activities, legal-related settlement charges of $21.6 million and $2.3 million in acquisition-related charges. These charges were offset by a gain on the sale of our Serial Flash product line of $4.4 million. In comparison, fourth quarter 2012 loss from operations was adversely affected by a $10.6 million loss incurred on purchase commitments relating to a take-or-pay supply agreement, $11.0 million of charges incurred primarily for restructuring activities, a $6.5 million write-off of receivables from a foundry supplier, and $1.9 million in acquisition-related charges, and first quarter 2012 income from operations included a $10.7 million benefit from the release of reserves related to a previously received R&D grant and $2.0 million in acquisition-related charges.

Non-GAAP income from operations in the first quarter of 2013 was $14.2 million or 4.3% of revenue, compared to fourth quarter non-GAAP income from operations of $33.3 million or 9.7% of revenue, and first quarter 2012 non-GAAP income from operations of $35.6 million or 9.9% of revenue. Income tax benefit, on a GAAP basis, totaled $14.4 million for the first quarter of 2013. This compares to a benefit from income taxes of $2.2 million for the fourth quarter of 2012 and a provision for income taxes of $4.3 million for the first quarter of 2012. Non-GAAP provision for income taxes for the first quarter of 2013 was $1.0 million compared to non-GAAP income tax provisions of $2.6 million for the fourth quarter of 2012 and $0.1 million for the first quarter of 2012.

Cash used in operations totaled approximately $12.0 million for the first quarter of 2013, compared to cash provided by operations of $78.7 million for the fourth quarter of 2012 and $60.6 million for the first quarter of 2012. Combined cash balances (cash and cash equivalents plus short-term investments) totaled $244.8 million at the end of the first quarter of 2013, a decrease of $51.2 million from the immediately preceding quarter. The decrease in cash balances during the first quarter of 2013 resulted principally from payments for two acquisitions, a prepayment made to Conductive Inject Technologies to support XSenseâ„¢ production, timing of vendor payables and customer receivables and common stock repurchases.