OPERATING AND GEOGRAPHICAL SEGMENTS

3 Months Ended

Mar. 31, 2014

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 operating 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.

During the first quarter of 2014, the Company realigned its business segments to better allocate resources and to focus more effectively on core markets.  As a result, the Company created a new reportable segment entitled "Multi-Market and Other" and eliminated the former Application Specific Integrated Circuit (“ASIC”) segment. A summary of each reportable segment follows:

• Microcontroller. This segment includes AVR 8-bit and 32-bit products, ARM based products, capacitive touch products, including maXTouch and QTouch, 8051 based products, designated wireless products, including low power radio and SOC products that meet Zigbee and Wi-Fi specifications and custom application specific microcontroller products.

• Nonvolatile Memory. This segment includes electrically erasable programmable read-only ("EEPROM"), erasable programmable read-only memory (“EPROM”) devices and secure cryptographic memory products.

• Automotive. This segment includes high voltage, connectivity and mixed signal products for automotive applications and RF identification products.

• Multi-Market and Other. This segment includes application specific and standard products for aerospace, programmable logic products, foundry business and XSense products.

Prior period operating segment presentations have been revised to conform to the Company's new segment reporting.

The Company continually evaluates operating segment performance based on revenue and income or loss from operations excluding share-based compensation and other non-recurring items. Because the Company’s operating 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. Operating segments may also be changed or modified, as is being done with this Quarterly Report on Form 10Q, 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.

Operating 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 is as follows:

Information about Reportable Segments

	Micro- Controller		Nonvolatile Memory		Automotive		Multi-Market and Other			Total
	(in thousands)
Three months ended March 31, 2014
Net revenue from external customers	$	235,141	$	35,651	$	40,971	$	25,598		$	337,361
Segment income (loss) from operations	$	18,826	$	5,047	$	6,754	$	(557	)	$	30,070
Three months ended March 31, 2013
Net revenue from external customers	$	228,366	$	35,157	$	39,479	$	26,141		$	329,143
Segment income from operations	$	4,804	$	4,846	$	1,310	$	3,222		$	14,182

The Company's primary products are semiconductor integrated circuits, which constitutes a 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, 2014			March 31, 2013
	(in thousands)
Total segment income from operations	$	30,070		$	14,182
Unallocated amounts:
Share-based compensation expense	(15,617		)	(14,762		)
Loss from manufacturing facility damage and shutdown	(7,056		)	—
Acquisition-related charges	(1,628		)	(2,255		)
French building underutilization and other	(1,296		)	—
Restructuring credits (charges)	224			(42,814		)
Gain related to foundry arrangements	58			—
Recovery of receivables from foundry supplier	—			439
Settlement charges	—			(21,600		)
Gain on sale of assets	—			4,430
Consolidated income (loss) from operations	$	4,755		$	(62,380	)

Geographic sources of revenue were as follows:

	Three Months Ended
	March 31, 2014		March 31, 2013
	(in thousands)
United States	$	52,910	$	44,181
Germany	59,261		48,584
France	3,080		6,071
Japan	5,540		10,158
China, including Hong Kong	93,201		98,690
Singapore	11,590		8,727
South Korea	33,032		43,211
Taiwan	10,718		13,292
Rest of Asia-Pacific	24,022		22,805
Rest of Europe	38,353		28,393
Rest of the World	5,654		5,031
Total net revenue	$	337,361	$	329,143

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

The Company had two distributors that accounted for 16% and 13%, respectively, of net revenue in the three months ended March 31, 2014. No end customer accounted for 10% or more of net revenue in the three months ended March 31, 2014. The Company had one distributor and one end customer, each of which accounted for 12% of net revenue in the three months ended March 31, 2013.

Two distributors accounted for 17% and 14%, respectively, of accounts receivable at March 31, 2014 and no end customer accounted for 10% or more of accounts receivable at March 31, 2014. Two distributors accounted for 14% and 11%, respectively, of accounts receivable at March 31, 2013 and one end customer accounted for 11% of accounts receivable at March 31, 2013.

Physical locations of tangible long-lived assets were as follows:

	March 31, 2014		December 31, 2013
	(in thousands)
United States	$	112,236	$	104,912
Philippines	52,744		50,472
Germany	23,982		24,244
France	16,849		17,249
Rest of Asia-Pacific	21,671		23,815
Rest of Europe	7,615		7,026
Total	$	235,097	$	227,718

Excluded from the table above as of March 31, 2014 and December 31, 2013 are goodwill of $108.6 millionand$108.2 million, respectively, intangible assets, net of $26.4 millionand$28.1 million, respectively, and deferred income tax assets of $115.3 million and $134.4 million, respectively.