OPERATING AND GEOGRAPHICAL SEGMENTS

9 Months Ended

Sep. 30, 2012

Segment Reporting [Abstract]

OPERATING AND GEOGRAPHICAL SEGMENTS

OPERATING AND GEOGRAPHICAL SEGMENTS

The Company designs, develops, manufactures and sells semiconductor integrated circuit products. The Company’s segments represent management’s view of the Company’s businesses and how it allocates Company resources and measures performance of its major components. Each segment consists of product families with similar requirements for design, development and marketing. Each segment requires different design, development and marketing resources to produce and sell products. Atmel’s four operating and reportable segments are as follows:

• Microcontrollers. This segment includes Atmel’s capacitive touch products, including maXTouch and QTouch, AVR 8-bit and 32-bit products, ARM-based products and Atmel’s 8051 8-bit products.

• Nonvolatile Memories.  This segment includes serial interface electrically erasable programmable read-only memory (“SEEPROM”), parallel interface Flash memory, electrically erasable programmable read-only memory (“EEPROM”) and erasable programmable ready-only memory (“EPROM”) devices. This segment also includes products with military and aerospace applications.

• Radio Frequency (“RF”) and Automotive.  This segment includes automotive electronics, wireless and wired devices for industrial, consumer and automotive applications and foundry services for radio frequency products designed for mobile telecommunications markets.

• Application Specific Integrated Circuit (“ASIC”).  This segment includes custom application specific integrated circuits designed to meet specialized single-customer requirements for their high performance devices in a broad variety of specific applications, including products that provide hardware security for embedded digital systems, products with military and aerospace applications and application specific standard products for space applications, power management and secure cryptographic memory products.

The Company evaluates segment performance based on revenue and income or loss from operations excluding acquisition-related charges, restructuring (credits) charges, credit from reserved grant income and gain on sale of assets. Interest and other (expenses) income, net, foreign exchange gains and losses and income taxes are not measured by operating segment. Because the Company’s segments reflect the manner in which management reviews its business, they necessarily involve subjective judgments that management believes are reasonable in light of the circumstances under which they are made. These judgments may change over time or may be modified to reflect new facts or circumstances. Segments may also be changed or modified to reflect products, technologies or applications that are newly created, or that change over time, or other business conditions that evolve, each of which may result in reassessing specific segments and the elements included within each of those segments.

Segments are defined by the products they design and sell. They do not make sales to each other. The Company’s net revenue and segment income from operations for each reportable segment for the three and nine months ended September 30, 2012 and 2011 are as follows:

Information about Reportable Segments

	Micro- Controllers		Nonvolatile Memories		RF and Automotive			ASIC		Total
	(in thousands)
Three Months Ended September 30, 2012
Net revenue from external customers	$	226,125	$	43,948	$	43,289		$	47,628	$	360,990
Segment income (loss) from operations	11,545		6,415		(327		)	9,891		27,524
Three Months Ended September 30, 2011
Net revenue from external customers	$	301,275	$	65,922	$	52,021		$	60,157	$	479,375
Segment income from operations	70,084		15,211		5,036			17,433		107,764
Nine Months Ended September 30, 2012
Net revenue from external customers	$	663,993	$	138,871	$	134,363		$	149,800	$	1,087,027
Segment income (loss) from operations	21,255		16,792		(1,141		)	31,346		68,252
Nine Months Ended September 30, 2011
Net revenue from external customers	$	897,293	$	200,557	$	155,445		$	166,149	$	1,419,444
Segment income from operations	219,341		44,999		15,843			41,816		321,999

The Company does not allocate assets by segment, as management does not use asset information to measure or evaluate a segment’s performance.

Reconciliation of Segment Information to Condensed Consolidated Statements of Operations

	Three Months Ended						Nine Months Ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
	(in thousands)
Total segment income from operations	$	27,524		$	107,764		$	68,252		$	321,999
Unallocated amounts:
Acquisition-related charges	(1,530		)	(1,019		)	(5,442		)	(3,069		)
Restructuring credit (charges)	1,404			—			(12,950		)	(21,210		)
Credit from reserved grant income	—			—			10,689			—
Gain on sale of assets	—			33,428			—			35,310
Consolidated income from operations	$	27,398		$	140,173		$	60,549		$	333,030

Geographic sources of revenue were as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2012		September 30, 2011		September 30, 2012		September 30, 2011
	(in thousands)
United States	$	49,757	$	57,254	$	146,340	$	192,109
Germany	39,773		58,669		137,186		178,068
France	4,998		6,350		22,728		23,769
Japan	13,331		15,342		37,796		44,895
China, including Hong Kong	121,513		157,284		326,772		427,956
Singapore	10,762		11,626		31,796		34,915
South Korea	43,536		67,544		143,474		170,449
Taiwan	14,615		30,943		49,870		124,837
Rest of Asia-Pacific	18,885		17,890		50,879		52,246
Rest of Europe	37,447		48,859		118,189		149,920
Rest of the World	6,373		7,614		21,997		20,280
Total net revenue	$	360,990	$	479,375	$	1,087,027	$	1,419,444

Net revenue is attributed to regions based on ship-to locations.

One customer accounted for more than 10% of net revenue in the three months ended September 30, 2012. Two customers accounted for more than 10% of net revenue in the nine months ended September 30, 2012. One customer accounted for more than 10% of net revenue in the three months ended September 30, 2011 and no single customer accounted for more than 10% of net revenue in the nine months ended September 30, 2011. No single customer accounted for more than 10% of accounts receivable at September 30, 2012. Two distributors accounted for 15% and 14%, respectively, of accounts receivable at December 31, 2011.

Physical locations of tangible long-lived assets as of September 30, 2012 and December 31, 2011 were as follows:

	September 30, 2012		December 31, 2011
	(in thousands)
United States	$	85,657	$	81,777
Philippines	63,558		71,332
Germany	18,552		20,681
France	25,875		30,277
Asia-Pacific	46,274		59,906
Rest of Europe	10,641		10,534
Total	$	250,557	$	274,507

Excluded from the table above are auction-rate securities of $1.1 million and $2.3 million at September 30, 2012 and December 31, 2011, respectively, which are included in other assets on the condensed consolidated balance sheets. Also excluded from the table above as of September 30, 2012 and December 31, 2011 are goodwill of $69.2 million and $67.7 million, respectively, intangible assets, net of $13.8 million and $20.6 million, respectively, and deferred income tax assets of $127.1 million and $121.4 million, respectively.