OPERATING AND GEOGRAPHICAL SEGMENTS

6 Months Ended

Jun. 30, 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 AVR 8-bit and 32-bit products, ARM based products, capacitive touch products, including maXTouch and Qtouch, 8051 based products, XSense 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 non-recurring items. 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 and six months ended June 30, 2013 and 2012 are as follows:

Information about Reportable Segments

	Micro- Controllers			Nonvolatile Memories		RF and Automotive			ASIC		Total
	(In thousands)
Three months ended June 30, 2013
Net revenue from external customers	$	230,851		$	27,197	$	41,277		$	48,491	$	347,816
Segment (loss) income from operations	(4,585		)	4,202		5,786			16,248		21,651
Three months ended June 30, 2012
Net revenue from external customers	$	220,066		$	47,190	$	47,564		$	53,380	$	368,200
Segment income from operations	3,027			5,031		1,123			15,324		24,505
Six Months Ended June 30, 2013
Net revenue from external customers	$	446,319		$	54,250	$	87,915		$	88,475	$	676,959
Segment (loss) income from operations	(18,244		)	7,670		8,245			23,400		21,071
Six Months Ended June 30, 2012
Net revenue from external customers	$	437,868		$	94,923	$	91,074		$	102,172	$	726,037
Segment income (loss) from operations	9,710			10,377		(814		)	21,455		40,728

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						Six Months Ended
	June 30, 2013			June 30, 2012			June 30, 2013			June 30, 2012
	(In thousands)
Total segment income from operations	$	21,651		$	24,505		$	21,071		$	40,728
Unallocated amounts:
Acquisition-related charges	(1,759		)	(1,956		)	(4,014		)	(3,912		)
Restructuring charges	(582		)	(14,354		)	(43,396		)	(14,354		)
Recovery of receivables from foundry suppliers	83			—			522			—
Credit from reserved grant income	—			—			—			10,689
Gain on sale of assets	—			—			4,430			—
Settlement charges	—			—			(21,600		)	—
Income (loss) from operations	$	19,393		$	8,195		$	(42,987	)	$	33,151

Geographic sources of revenue were as follows:

	Three Months Ended				Six Months Ended
	June 30, 2013		June 30, 2012		June 30, 2013		June 30, 2012
	(In thousands)
United States	$	45,213	$	59,170	$	89,394	$	107,360
Germany	51,521		56,979		100,105		107,904
France	11,802		9,932		17,873		19,649
Japan	8,745		24,846		18,903		34,519
China, including Hong Kong	107,211		66,994		205,901		151,093
Singapore	10,068		10,025		18,795		19,931
South Korea	36,899		36,550		80,110		98,691
Taiwan	10,504		46,727		23,796		66,598
Rest of Asia-Pacific	32,507		12,361		55,312		29,571
Rest of Europe	28,995		37,421		57,388		76,153
Rest of the World	4,351		7,195		9,382		14,568
Total net revenue	$	347,816	$	368,200	$	676,959	$	726,037

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

The Company had one customer and one distributor, which accounted for 16% and 13% of net revenue in the three months ended June 30, 2013, respectively, and 14% and 12% of net revenue in the six months ended June 30, 2013, respectively. One customer accounted for 11% of net revenue in thesix months ended June 30, 2012. Two distributors accounted for 17% and 11%, respectively, of accounts receivable at June 30, 2013. Two distributors accounted for 14% and 12% of accounts receivable at December 31, 2012. 

Physical locations of tangible long-lived assets as of June 30, 2013 and December 31, 2012 were as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
United States	$	103,102	$	85,044
Philippines	55,120		61,594
Germany	22,886		17,602
France	22,178		28,000
Rest of Asia-Pacific	30,687		38,842
Rest of Europe	9,448		9,547
Total	$	243,421	$	240,629

Excluded from the table above is an auction-rate security of $1.1 million at each of June 30, 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 June 30, 2013 and December 31, 2012 are goodwill of $104.5 million and $104.4 million, respectively, intangible assets, net of $31.6 million and $27.3 million, respectively, and deferred income tax assets of $121.4 million and $102.3 million, respectively.