OPERATING AND GEOGRAPHICAL SEGMENTS

3 Months Ended

Mar. 31, 2013

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, Atmel's 8051 8-bit products, XSense related products and designated wireless products, including low power radio and SOC products that meet ZigBee and Wi-Fi specifications.

• Nonvolatile Memories. This segment includes electrically erasable programmable read-only ("EEPROM") and erasable programmable read-only memory (“EPROM”) devices. In the third quarter of 2012, the Company sold its serial flash product line.

• Radio Frequency (“RF”) and Automotive. This segment includes mixed signal, high voltage and connectivity products for automotive applications, RF identification products and foundry services.

• Application Specific Integrated Circuit (“ASIC”). This segment includes custom application specific integrated circuits designed to meet specialized single-customer requirements, including products that provide hardware security for embedded digital systems, application specific and standard products for aerospace 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 charges, recovery of receivables from foundry supplier, credit from reserved grant income, gain on sale of assets and legal-related settlement charges. Interest and other income (expense), net, foreign exchange gains 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 sell to each other. The Company’s net revenue and segment (loss) income from operations for each reportable segment for the three months ended March 31, 2013 and 2012 are as follows:

Information about Reportable Segments

	Micro- Controllers			Nonvolatile Memories		RF and Automotive			ASIC		Total
	(In thousands)
Three months ended March 31, 2013
Net revenue from external customers	$	215,468		$	27,053	$	46,638		$	39,984	$	329,143
Segment (loss) income from operations	(13,659		)	3,468		2,459			7,152		$	(580	)
Three months ended March 31, 2012
Net revenue from external customers	$	217,802		$	47,733	$	43,510		$	48,792	$	357,837
Segment income (loss) from operations	6,683			5,346		(1,937		)	6,131		$	16,223

The Company's primary products are semiconductor integrated circuits, which it has concluded constitute a single group of similar products. Therefore, it is impracticable to differentiate the revenues from external customers for each product sold. 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
	March 31, 2013			March 31, 2012
	(In thousands)
Total segment (loss) income from operations	$	(580	)	$	16,223
Unallocated amounts:
Acquisition-related charges	(2,255		)	(1,956		)
Restructuring charges	(42,814		)	—
Recovery of receivables from foundry supplier	439			—
Credit from reserved grant income	—			10,689
Gain on sale of assets	4,430			—
Settlement charges	(21,600		)	—
(Loss) income from operations	$	(62,380	)	$	24,956

Geographic sources of revenue were as follows:

	Three Months Ended
	March 31, 2013		March 31, 2012
	(In thousands)
United States	$	44,181	$	48,190
Germany	48,584		50,925
France	6,071		9,717
Japan	10,158		9,673
China, including Hong Kong	98,690		84,099
Singapore	8,727		9,906
South Korea	43,211		62,141
Taiwan	13,292		19,871
Rest of Asia-Pacific	22,805		17,210
Rest of Europe	28,393		38,732
Rest of the World	5,031		7,373
Total net revenue	$	329,143	$	357,837

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

The Company had one customer and one distributor, each of which accounted for 12% of net revenue in the three months ended March 31, 2013. One customer accounted for 15% of net revenue in the three months ended March 31, 2012. Two distributors accounted for 14% and 11% of accounts receivable at March 31, 2013 and one customer accounted for 11% of accounts receivable at March 31, 2013. Three distributors accounted for 15%, 11% and 11% of accounts receivable at March 31, 2012.

Physical locations of tangible long-lived assets as of March 31, 2013 and December 31, 2012 were as follows:

	March 31, 2013		December 31, 2012
	(In thousands)
United States	$	94,624	$	85,044
Philippines	57,446		61,594
Germany	24,541		17,602
France	26,851		28,000
Rest of Asia-Pacific	37,964		38,842
Rest of Europe	5,478		9,547
Total	$	246,904	$	240,629

Excluded from the table above is an auction-rate security of $1.1 million at each of March 31, 2013 and December 31, 2012, which is included in other assets on the condensed consolidated balance sheets. Also excluded from the table above as of March 31, 2013 and December 31, 2012 are goodwill of $104.6 million and $104.4 million, respectively, intangible assets, net of $33.4 million and $27.3 million, respectively, and deferred income tax assets of $115.4 million and $102.3 million, respectively.