10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                     

Commission file number 0-19032

ATMEL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware  (State or other jurisdiction of incorporation or organization) 77-0051991  (I.R.S. Employer Identification Number)

1600 Technology Drive, San Jose, California 95110

(Address of principal executive offices)

(408) 441-0311

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes xNo o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  YesxNoo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting filer o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

On October 26, 2015, the Registrant had 420,302,900 outstanding shares of Common Stock.

ATMEL CORPORATION

FORM 10-Q

QUARTER ENDED SEPTEMBER 30, 2015

	Page
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)	3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014	3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014	4
CONDENSED CONSOLIDATED BALANCE SHEETS AT SEPTEMBER 30, 2015 AND DECEMBER 31, 2014	5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014	6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	7
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	23
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	33
ITEM 4. CONTROLS AND PROCEDURES	34
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	35
ITEM 1A. RISK FACTORS	35
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	53
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	53
ITEM 4. MINE SAFETY DISCLOSURES	53
ITEM 5. OTHER INFORMATION	53
ITEM 6. EXHIBITS	54
SIGNATURES	55
EXHIBITS	56

2

PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Atmel Corporation

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(in thousands, except for per share data)
Net revenue	$	286,533		$	374,485		$	911,174		$	1,067,380
Operating expenses
Cost of revenue	153,177			197,642			489,207			589,309
Research and development	55,832			69,917			174,959			209,751
Selling, general and administrative	64,817			65,324			186,812			194,186
Acquisition-related charges	2,390			7,162			10,600			10,287
Restructuring (credits) charges	(584		)	840			5,445			(967		)
Loss (gain) on sale of assets	427			—			(1,626		)	—
Total operating expenses	276,059			340,885			865,397			1,002,566
Income from operations	10,474			33,600			45,777			64,814
Interest and other income (expense), net	55			(4,731		)	4,917			(5,856		)
Income before income taxes	10,529			28,869			50,694			58,958
Provision for income taxes	(11,134		)	(11,619		)	(28,526		)	(20,306		)
Net (loss) income	$	(605	)	$	17,250		$	22,168		$	38,652
Add: net (income) loss attributable to noncontrolling interest, net of taxes	(9		)	—			25			—
Net (loss) income attributable to Atmel	$	(614	)	$	17,250		$	22,193		$	38,652
Basic net (loss) income per share attributable to Atmel:
Net (loss) income per share	$	—		$	0.04		$	0.05		$	0.09
Weighted-average shares used in basic net (loss) income per share calculations	419,293			418,954			418,072			421,791
Diluted net (loss) income per share attributable to Atmel:
Net (loss) income per share	$	—		$	0.04		$	0.05		$	0.09
Weighted-average shares used in diluted net (loss)income per share calculations	419,293			420,964			419,482			423,700
Cash dividends declared and paid per share	$	0.04		$	—		$	0.12		$	—

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

3

Atmel Corporation

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(in thousands)
Net (loss) income	$	(605	)	$	17,250		$	22,168		$	38,652
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(2,598		)	(8,993		)	(7,535		)	(7,860		)
Actuarial losses related to defined benefit pension plans	(573		)	(18		)	(803		)	(56		)
Reclassification adjustment from sale of investment	1,376			—			1,376			328
Total other comprehensive loss	(1,795		)	(9,011		)	(6,962		)	(7,588		)
Total comprehensive (loss) income	$	(2,400	)	$	8,239		$	15,206		$	31,064

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

4

Atmel Corporation

Condensed Consolidated Balance Sheets

(Unaudited)

	September 30, 2015			December 31, 2014
	(in thousands, except for par value)
ASSETS
Current assets
Cash and cash equivalents	$	218,741		$	206,937
Accounts receivable, net of allowance for doubtful accounts of $5,882 and $5,945, respectively	202,221			222,021
Inventories	267,626			278,242
Prepaids and other current assets	91,620			89,101
Total current assets	780,208			796,301
Fixed assets, net of accumulated depreciation of $1,298,619 and $1,333,103, respectively	139,780			158,281
Goodwill	189,565			191,088
Intangible assets, net of accumulated amortization of $67,396 and $58,471, respectively	41,361			50,286
Other assets	149,984			166,348
Total assets	$	1,300,898		$	1,362,304
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Trade accounts payable	$	72,153		$	97,467
Accrued and other liabilities	119,707			139,696
Deferred income on shipments to distributors	52,144			49,059
Current portion of long-term debt	9,367			7,413
Total current liabilities	253,371			293,635
Long-term debt	55,000			75,000
Other long-term liabilities	131,220			123,670
Total liabilities	439,591			492,305
Commitments and contingencies (Note 8)
Stockholders’ equity
Preferred stock; par value $0.001; Authorized: 5,000 shares; no shares issued and outstanding	—			—
Common stock; par value $0.001; Authorized: 1,600,000 shares; Shares issued and outstanding: 420,292 at September 30, 2015 and 416,178 at December 31, 2014, respectively	420			416
Additional paid-in capital	783,097			756,760
Accumulated other comprehensive loss	(15,144		)	(8,182		)
Retained earnings	89,946			117,992
Total Atmel stockholders’ equity	858,319			866,986
Noncontrolling interest	2,988			3,013
Total stockholders' equity	861,307			869,999
Total liabilities and stockholders’ equity	$	1,300,898		$	1,362,304

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

5

Atmel Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended
	September 30, 2015			September 30, 2014
	(in thousands)
Cash flows from operating activities
Net income	$	22,168		$	38,652
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	42,042			43,747
Deferred income taxes	12,768			(4,439		)
Write-off of equipment deposit	—			1,730
Realized gain on sales of marketable securities	—			(385		)
Gain from foundry arrangements	—			(95		)
Realized gain on sales of investments in privately-held companies	(1,317		)	—
Gain on sale of assets	(1,998		)	—
Curtailment gain	(652		)	—
Accretion of interest on long-term debt	1,297			1,313
Share-based compensation expense	38,943			45,812
Excess tax benefit on share-based compensation	(1,326		)	(1,441		)
Non-cash acquisition-related and other charges, net	(6,052		)	(2,333		)
Changes in operating assets and liabilities, net of acquisitions
Accounts receivable	19,877			(7,256		)
Inventories	10,773			18,551
Current and other assets	6,171			21,579
Trade accounts payable	(22,817		)	12,330
Accrued and other liabilities	(22,523		)	(32,050		)
Income taxes payable	(3,778		)	810
Deferred income on shipments to distributors	3,084			6,094
Net cash provided by operating activities	96,660			142,619
Cash flows from investing activities
Acquisitions of fixed assets	(25,974		)	(37,815		)
Proceeds from sale of assets	20,421			—
Proceeds from sales of investments in privately-held companies	3,817			—
Sales of marketable securities	—			3,071
Proceeds from sale of fixed assets	770			—
Acquisition of businesses, net of cash acquired	—			(139,580		)
Acquisitions of intangible assets	(1,544		)	(2,560		)
Net cash used in investing activities	(2,510		)	(176,884		)
Cash flows from financing activities
Proceeds from issuance of debt	—			90,000
Principal repayments on debt	(20,087		)	(1,353		)
Repurchases of common stock	(11,985		)	(108,480		)
Payment of dividends	(50,239		)	—
Proceeds from issuance of common stock	13,753			13,241
Tax payments related to shares withheld for vested restricted stock units	(14,749		)	(15,709		)
Excess tax benefit on share-based compensation	1,326			1,441
Net cash used in financing activities	(81,981		)	(20,860		)
Effect of exchange rate changes on cash and cash equivalents	(365		)	(1,869		)
Net increase (decrease) in cash and cash equivalents	11,804			(56,994		)
Cash and cash equivalents at beginning of the period	206,937			276,881
Cash and cash equivalents at end of the period	$	218,741		$	219,887

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

6

Atmel Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These unaudited interim condensed consolidated financial statements reflect all normal recurring adjustments which are, in the opinion of management, necessary to state fairly, in all material respects, the financial position of Atmel Corporation (the “Company” or “Atmel”) and its subsidiaries as of September 30, 2015 and the results of operations and comprehensive (loss) income for the three and nine months endedSeptember 30, 2015 and 2014 and cash flows for the nine months endedSeptember 30, 2015 and 2014. All intercompany balances have been eliminated. Because all of the annual disclosures required by U.S. generally accepted accounting principles ("GAAP") are not included, as permitted by the rules of the Securities and Exchange Commission (the “SEC”), these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The December 31, 2014 year-end balance sheet data was derived from the Company’s audited consolidated financial statements, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The condensed consolidated statements of operations for the periods presented are not necessarily indicative of results to be expected for any future period, or for the entire year.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates in these financial statements include provisions for excess and obsolete inventory, sales reserves and allowances, share-based compensation expense, allowances for doubtful accounts receivable, estimates for useful lives associated with long-lived assets, recoverability of goodwill and intangible assets, restructuring charges, liabilities for uncertain tax positions and deferred tax asset valuation allowances. Actual results could differ materially from those estimates.

Pending Acquisition of Atmel by Dialog Semiconductor

On September 19, 2015, Atmel entered into an Agreement and Plan of Merger (as amended, the “Merger Agreement”) with Dialog Semiconductor plc, a corporation organized under the laws of England and Wales (“Dialog”), and Avengers Acquisition Corporation, a Delaware corporation and a wholly-owned direct subsidiary of Dialog (“Merger Sub”). Under the terms of the Merger Agreement, Merger Sub will merge with and into Atmel (the “Merger”), with Atmel being the surviving corporation (the “Surviving Corporation”). The Transaction has been unanimously approved by the boards of directors of both companies.

At the effective time of the Merger, each share of Atmel’s common stock, par value $0.001 per share (the “Common Stock”), issued and outstanding immediately prior to the Merger (other than dissenting shares and shares held by Dialog, Merger Sub, Atmel or any of their respective subsidiaries) will be converted into the right to receive (i) 0.112 American Depositary Shares of Dialog (the “ADSs”), with each whole ADS representing one ordinary share of Dialog (each, a “Dialog Share”), (ii) $4.65 in cash, without interest, and (iii) cash in lieu of fractional ADSs as contemplated in the Merger Agreement (the “Merger Consideration”).

The closing of the transaction is subject to a number of conditions specified in the Merger Agreement, including, among others, the adoption of the Merger Agreement by Atmel’s stockholders, the affirmative vote of the holders of a majority of Dialog’s outstanding ordinary shares, regulatory approvals in the United States, Germany and Romania and the effectiveness under the Securities Act of 1933 of a registration statement on Form F-4 to be filed with the SEC by Dialog registering the ADSs in the United States. The consummation of the Merger is not subject to a financing condition. The Merger Agreement may be terminated by either party under conditions expressly specified in the Merger Agreement, and the payment of applicable termination fees of up to $137.3 million to Dialog, or reimbursement of expenses, as contemplated therein.

Dialog has agreed that it will appoint two directors nominated by Atmel to its board of directors concurrent with the closing of the Merger.

The foregoing description of the pending acquisition of Atmel by Dialog, and the transactions contemplated thereby, does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, a copy of which is attached as Exhibit 2.1 to the Form 8-K filed by the Company on September 21, 2015, and as the Merger Agreement was amended on September 29, 2015, as reflected in a further Form 8-K filed by the Company on September 30, 2015. The Merger Agreement, as amended, and the related Form 8-Ks, are listed in the Exhibit Table of this filing.

Atmel recorded transaction-related costs of approximately $7.8 million, principally for outside financial advisory, legal, and related fees and expenses associated with the pending acquisition in the three months ended September 30, 2015. These costs were recorded in selling, general and administrative expense included in the Condensed Consolidated Statements of Operations for the three months ended September 30, 2015. Additional transaction-related costs are expected to be incurred through the closing of the Merger.

7

Inventories

Inventories are stated at the lower of cost (on a first-in, first-out basis) or market. Market is based on estimated net realizable value. Determining market value of inventories involves numerous judgments, including estimating average selling prices and sales volumes for future periods. The Company establishes provisions for lower of cost or market and excess and obsolescence write-downs, which are charged to cost of revenue. The Company makes a determination regarding excess and obsolete inventory on a quarterly basis. This determination requires an estimate of the future demand for the Company’s products and involves an analysis of historical and forecasted sales levels by product, competitiveness of product offerings, market conditions, product lifecycles, as well as other factors. Excess and obsolete inventory write-downs are recorded when the inventory on hand exceeds management’s estimate of future demand for each product and are charged to cost of revenue.

The Company’s inventories include parts that have a potential for rapid technological obsolescence and are sold in a highly competitive industry. The Company writes down inventory that is considered excess or obsolete. When the Company recognizes a loss on such inventory, it establishes a new, lower-cost basis for that inventory, and subsequent changes in facts and circumstances will not result in the restoration or increase in that newly established cost basis. If inventory with a lower-cost basis is subsequently sold, it will result in higher gross margin for the products making up that inventory.

Inventories are comprised of the following:

	September 30, 2015		December 31, 2014
	(in thousands)
Raw materials and purchased parts	$	10,722	$	12,633
Work-in-progress	172,064		192,206
Finished goods	84,840		73,403
	$	267,626	$	278,242

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standard Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in GAAP when it becomes effective. In July 2015, the FASB deferred the effective date of ASU 2014-09 so that it will apply to annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods). Early application is permitted to the original effective date of December 15, 2016, in which case ASU 2014-09 would apply to annual reporting periods beginning December 15, 2016 (including interim reporting periods within those periods). The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. The ASU requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. The new standard is effective for the Company on January 1, 2016. Early application is permitted. The standard requires an entity to apply the new guidance on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. The Company does not believe that the adoption of the ASU will have a material effect on its consolidated financial statements and disclosure.

Note 2 BUSINESS COMBINATIONS

Newport Media, Inc.

On July 31, 2014, the Company acquired 100% of the equity interest in privately-held Newport Media, Inc. (“NMI”), a provider of low power Wi-Fi and Bluetooth solutions that are expected to enhance the Company’s portfolio of wireless products.

The purchase consideration, net of cash acquired, consisted of $139.6 million payable in cash at the closing of the acquisition, subject to working capital adjustments and deductions for specified closing expenses. In addition, the acquisition agreement provides for an aggregate cash earn-out payment of up to $30.0 million payable if specified revenue targets are achieved over the two years following the acquisition date. The Company recorded a liability of $0.4 million as of July 31, 2014, representing the estimated fair value of the earn-out based on the probability of achievement as of the acquisition date.

8

During the nine months endedSeptember 30, 2015, the Company reversed $0.2 million previously accrued in respect of the potential earn-out through a credit to acquisition-related charges in the Condensed Consolidated Statements of Operations as management determined that revenue targets on which the earn-out is based will not likely be met during 2015.

The Company prepared an initial determination of the fair value of the assets acquired and liabilities assumed as of the acquisition date using preliminary information.  The Company recognized measurement period adjustments made during the fourth quarter of 2014 to the fair value of certain assets acquired and liabilities assumed as a result of further refinements in the Company’s estimates.  These adjustments were retrospectively applied to the July 31, 2014 acquisition date balance sheet.  The effect of these adjustments on the preliminary purchase price allocation was a decrease in goodwill and income tax payable of $1.9 millionand $0.3 million, respectively, and an increase in deferred tax assets of $1.6 million. 

The excess of the fair value of consideration paid over the fair value of the net assets and the identifiable intangible assets acquired and the liabilities assumed resulted in recognition of goodwill of approximately $86.1 million, including workforce, of which $55.2 million is expected to be deductible for tax purposes. The recognition of goodwill primarily related to the expected synergies between the product offerings of NMI and the Company. All goodwill recorded was assigned to the Company's Microcontroller segment.

The Company expensed $2.5 million of advisory, legal, and consulting fees and other costs directly related to the acquisition, which were recorded as acquisition-related charges in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2014. The Company incurred $5.3 million of one-time bonus expense, subject to claw-back and other employment-related terms, for certain employees, which are being recorded ratably through the date on which the bonus is no longer recoverable by the Company. For the three and nine months endedSeptember 30, 2015, the Company recorded $0.2 million and $3.1 million, respectively, of one-time bonus expense as acquisition-related charges and $1.0 million and $4.0 million, respectively, of amortization expense related to identifiable intangible assets in the Condensed Consolidated Statements of Operations.

Note 3 INVESTMENTS

Investments at September 30, 2015 and December 31, 2014 consist of an auction-rate security. For the three months endedSeptember 30, 2015, auctions for the Company's sole auction-rate security continued to fail and as a result this security continues to be illiquid. The Company concluded that the remaining $1.0 million (adjusted cost) of auction-rate security is unlikely to be liquidated within the next twelve months and classified this security as a long-term investment, which is included in other assets in the Condensed Consolidated Balance Sheets. This auction-rate security had a contractual maturity greater than 10 years and totaled $1.0 million (at adjusted cost) as of September 30, 2015.

Note 4 FAIR VALUE OF ASSETS AND LIABILITIES

Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price)”. The accounting standard establishes a consistent framework for measuring fair value and expands disclosure requirements regarding fair value measurements. This accounting standard, among other things, requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The tables below present the balances of investments measured at fair value on a recurring basis:

9

	September 30, 2015
	Total		Level 1		Level 2		Level 3
	(in thousands)
Assets
Cash
Money market funds	$	1,282	$	1,282	$	—	$	—
Other assets
Auction-rate security	1,066		—		—		1,066
Investment funds - Deferred compensation plan assets
Institutional money market funds	1,917		1,917		—		—
Fixed income	1,034		1,034		—		—
Marketable equity securities	3,589		3,589		—		—
Total institutional funds - Deferred compensation plan	6,540		6,540		—		—
Total other assets	7,606		6,540		—		1,066
Total	$	8,888	$	7,822	$	—	$	1,066

	December 31, 2014
	Total		Level 1		Level 2		Level 3
	(in thousands)
Assets
Cash
Money market funds	$	1,267	$	1,267	$	—	$	—
Other assets
Auction-rate security	1,066		—		—		1,066
Investment funds - Deferred compensation plan assets
Institutional money market funds	2,039		2,039		—		—
Fixed income	984		984		—		—
Marketable equity securities	3,576		3,576		—		—
Total institutional funds - Deferred compensation plan	6,599		6,599		—		—
Total other assets	7,665		6,599		—		1,066
Total	$	8,932	$	7,866	$	—	$	1,066

The Company’s investments, with the exception of its auction-rate security, are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices, or broker or dealer quotations. The types of instruments valued based on quoted market prices in active markets include most U.S. government and agency securities and money market securities. Such instruments are generally classified within Level 1 of the fair value hierarchy.

Auction-rate securities are classified within Level 3 because significant assumptions for such securities are not observable in the market. The total amount of assets measured using Level 3 valuation methodologies represented less than 1% of the Company's total assets as of September 30, 2015 and December 31, 2014.

There were no changes in Level 3 assets measured at fair value on a recurring basis for the three and nine months endedSeptember 30, 2015 and the year ended December 31, 2014. There were no transfers between Level 1 and 2 hierarchies for the three and nine months endedSeptember 30, 2015 and the year ended December 31, 2014.  

Note 5 BORROWING ARRANGEMENTS

Senior Secured Revolving Credit Facility

10

On December 6, 2013, the Company entered into a five-year $300.0 million, senior secured revolving credit facility (the “Facility”), the terms of which are set forth in a Credit Agreement (the “Credit Agreement”). The Company may increase the aggregate availability under the Facility through a customary “accordion” feature in an amount not to exceed $250.0 million. The Company recorded debt issuance costs of $2.1 million associated with the Facility which are being amortized over the expected life of the Facility.

Borrowings under the Facility are available for general corporate purposes, including working capital, stock repurchases, acquisitions and other purposes. Amounts outstanding under the Facility are due on the earlier of December 6, 2018 or 180 days prior to the maturity date of any Permitted Convertible Notes (as defined in the Credit Agreement) if, in the latter case, the Company does not otherwise have available sufficient unrestricted cash and other investments to redeem the Permitted Convertible Notes.

The Company may prepay loans under the Credit Agreement at any time, in whole or in part, upon payment of accrued interest and break funding payments, if applicable. The Company may terminate or reduce the Facility at any time without penalty. The obligations under the Facility are guaranteed by certain domestic subsidiaries of the Company, are secured by a pledge of substantially all of the assets of the Company and the guarantors, and include affirmative, negative and financial covenants. Affirmative covenants include, among other things, the delivery of financial statements and other information. Negative covenants include, among other things, limitations on asset sales, mergers and acquisitions, indebtedness, liens, investments and transactions with affiliates. The financial covenants require the Company to maintain compliance with a maximum total leverage ratio, a maximum senior secured leverage ratio and a minimum fixed charge coverage ratio. The Credit Agreement includes customary events of default that include, among other things, non-payment defaults, inaccuracy of representations and warranties, covenant defaults, cross default to material indebtedness, bankruptcy and insolvency defaults, material judgment defaults, ERISA defaults and a change of control default. The occurrence of an event of default could result in an acceleration of obligations under the Credit Agreement.

 As of September 30, 2015, after principal repayments, the Company had $55.0 million of outstanding principal borrowings under the Facility and was in compliance with all financial covenants under the Credit Agreement. No principal payments are due until maturity. Interest on the borrowed amounts equals the applicable periodic LIBOR rate, plus 1.25% per annum, and was $0.4 million and $1.1 million for the three and nine months endedSeptember 30, 2015, respectively. The Facility matures on December 6, 2018.

Other Debt Obligations

The Company had short-term debt obligations amounting to $9.4 million and $7.3 million as of September 30, 2015 and December 31, 2014, respectively. As of September 30, 2015, $7.8 million related to an amount previously advanced from a foreign government and the remaining balance of $1.6 million related to a loan owed to a privately-held company in which the Company owned an equity interest until September 23, 2015. The foreign government advance was repaid in full on October 8, 2015.

Note 6 STOCKHOLDERS’ EQUITY

Share-Based Compensation

The following table summarizes share-based compensation, net of the amount capitalized in inventory, included in operating results:

	Three Months Ended						Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(in thousands)
Cost of revenue	$	1,560		$	1,605		$	4,357		$	4,892
Research and development	3,418			4,632			10,569			13,744
Selling, general and administrative	7,741			8,680			24,017			27,176
Total share-based compensation expense, before income taxes	12,719			14,917			38,943			45,812
Tax benefit	(2,884		)	(3,760		)	(8,557		)	(10,005		)
Total share-based compensation expense, net of income taxes	$	9,835		$	11,157		$	30,386		$	35,807

Restricted Stock Units, Employee Stock Purchase Plan and Stock Options

11

In May 2005, Atmel’s stockholders approved Atmel’s 2005 Stock Plan (as amended, the “2005 Stock Plan”). As of September 30, 2015, 158.0 million shares had been cumulatively authorized for issuance under the 2005 Stock Plan, and 7.9 million shares remained available for issuance without giving effect to any adjustment that may be required by the terms of the 2005 Stock Plan in respect of shares underlying restricted stock or restricted stock units. Under the 2005 Stock Plan, Atmel may issue common stock directly, grant options to purchase common stock or grant restricted stock units payable in common stock to employees, consultants and directors of Atmel. Restricted stock units generally vest on a quarterly basis over a service period of up to four years from the grant date, although restricted stock unit grants to newly-hired employees generally have a one-year cliff vest equal to one-quarter of the total grant. Options, which generally vest over four years, are granted at fair market value on the date of the grant and generally expire ten years from that date.

Activity under Atmel’s 2005 Stock Plan is set forth below: 

			Outstanding Options				Weighted-
					Exercise		Average
	Available for Grant		Number of Options		Price per Share		Exercise Price per Share
	(in thousands, except for per share data)
Balances, December 31, 2014	13,611		3,059		$2.13-$10.01		$	4.57
Restricted stock units issued	(479	)	—		—		—
Plan adjustment for restricted stock units issued	(273	)	—		—		—
Restricted stock units cancelled	363		—		—		—
Plan adjustment for restricted stock units cancelled	210		—		—		—
Performance-based restricted stock units cancelled	253		—		—		—
Plan adjustment for performance-based restricted stock units cancelled	144		—		—		—
Options cancelled/expired/forfeited	2		(2	)	$	3.26	$	3.26
Options exercised	—		(198	)	$2.66-$6.28		$	3.51
Balances, March 31, 2015	13,831		2,859		$2.13-$10.01		$	4.65
Restricted stock units issued	(446	)	—		—		—
Plan adjustment for restricted stock units issued	(254	)	—		—		—
Restricted stock units cancelled	432		—		—		—
Plan adjustment for restricted stock units cancelled	250		—		—		—
Performance-based restricted stock units cancelled	87		—		—		—
Plan adjustment for performance-based restricted stock units cancelled	50		—		—		—
Options cancelled/expired/forfeited	—		—		—		$	—
Options exercised	—		(387	)	$2.13-$6.28		$	4.53
Balances, June 30, 2015	13,950		2,472		$2.13-$10.01		$	4.67
Restricted stock units issued	(4,204	)
Plan adjustment for restricted stock units issued	(2,396	)
Restricted stock units cancelled	306
Plan adjustment for restricted stock units cancelled	176
Performance-based restricted stock units cancelled	24
Plan adjustment for performance-based restricted stock units cancelled	14
Options cancelled/expired/forfeited	3		(3	)	$4.36-$6.28		$	5.00
Options exercised	—		(63	)	$2.13-$6.28		$	3.81
Balances, September 30, 2015	7,873		2,406		$3.24-$10.01		$	4.69
Options vested and expected to vest at September 30, 2015			2,406		$3.24-$10.01		$	4.69
Options exercisable at September 30, 2015			2,400		$3.24-$10.01		$	4.69

Restricted stock units are granted from the pool of options available for grant. Every share underlying restricted stock, restricted stock units (including performance-based restricted stock units), or stock purchase rights issued on or after May 9, 2013 is counted against the numerical limit for options available for grant as 1.57 shares, as reflected in the table above in the line items for "Plan adjustments", except that restricted stock units (including performance-based restricted stock units), or stock purchase rights issued prior to May 9, 2013 but on or after May 18, 2011, are counted against the numerical limit for options available for

12

grant as 1.61 shares, and restricted stock units (including performance-based restricted stock units), or stock purchase rights issued prior to May 18, 2011 and on or after May 14, 2008, are counted against the numerical limit for options available for grants as 1.78 shares. If shares issued pursuant to any restricted stock, restricted stock unit, and stock purchase right agreements are cancelled, forfeited or repurchased by the Company, the number of shares returned to the 2005 Stock Plan will be multiplied by the same ratios above under which such shares were issued and become available for issuance.

The table set forth above does not include 0.6 million restricted stock units granted in August 2015 as performance-based restricted units since the performance criteria for those performance-based restricted units had not been established as of September 30, 2015. As of September 30, 2015 and subject to the exclusion referred to in the preceding sentence, there were 7.9 million shares available for issuance under the 2005 Stock Plan, or 5.0 million shares after giving effect to the applicable ratios under the 2005 Stock Plan for issuances of restricted stock units, as described above.

Pursuant to the terms of the Merger Agreement, at the effective time of the merger (the “Effective Time”), each outstanding option to acquire shares of Atmel’s common stock, par value $0.001 per share (the “Common Stock”) will, contingent upon the occurrence of the Effective Time, accelerate and become vested in full and, to the extent not exercised prior to the Effective Time, will be automatically “net exercised” immediately prior to the Effective Time, with the exercise price and applicable withholding taxes paid by withholding of shares of Common Stock otherwise issuable to the option holder upon the exercise of the option. Each outstanding restricted stock unit, deferred stock unit, performance-based restricted stock unit or similar right (each such unit or right, an “Atmel Unit”) that is vested but not yet issued, will be converted into the right to receive the Merger Consideration. In addition, each Atmel Unit that is unvested and held by an employee or other service provider of Atmel who will continue to be employed by or provide services to, Dialog or the Surviving Corporation will be converted into equivalent awards in respect of Dialog Shares using a customary exchange ratio. For the performance-based Atmel Units granted with a performance period that was intended to end December 31, 2015 (the “2015 PRSUs”), Atmel’s board of directors determined that 57.0% of the target awards should vest contingent upon, and immediately prior to, the occurrence of the Effective Time, with the remaining 2015 PRSUs being converted into time-based awards that vest through November 15, 2017. In addition, in connection with the Merger, Atmel’s board of directors determined that the Atmel Units granted in August 2015, for which performance criteria had not been established prior to the date of the Merger Agreement, will be converted, contingent upon the occurrence of the Effective Time, into time-based awards vesting through November 15, 2018.

If Dialog determines that the assumption and conversion of an Atmel Unit would violate, in respect of the holder thereof, the applicable laws of a non-U.S. jurisdiction set forth in the Merger Agreement, Dialog may treat such Atmel Unit in a different manner so long as the holder of such Atmel Unit receives the full value of the Merger Consideration (less applicable withholdings) in cash not later than the vesting date originally applicable to such Atmel Unit.

Restricted Stock Units

Activity related to restricted stock units is set forth below:

	Number of Units		Weighted-Average Grant Date Fair Value
	(in thousands, except for per share data)
Balances, December 31, 2014	18,163		$	8.40
Restricted stock units issued	479		8.45
Restricted stock units vested	(1,898	)	8.43
Restricted stock units cancelled	(363	)	7.71
Performance-based restricted stock units cancelled	(253	)	7.35
Balances, March 31, 2015	16,128		$	8.43
Restricted stock units issued	446		9.45
Restricted stock units vested	(1,483	)	8.53
Restricted stock units cancelled	(432	)	7.59
Performance-based restricted stock units cancelled	(87	)	8.31
Balances, June 30, 2015	14,572		$	8.48
Restricted stock units issued	4,204		8.07
Restricted stock units vested	(1,612	)	4.17
Restricted stock units cancelled	(306	)	8.11
Performance-based restricted stock units cancelled	(24	)	8.23
Balances, September 30, 2015	16,834		$	8.80

13

As of September 30, 2015, total unearned share-based compensation related to unvested restricted stock units granted (including performance-based restricted stock units) was approximately $99.2 million, including estimated forfeitures, and is expected to be recognized over a weighted-average period of 2.40 years.

Until restricted stock units are vested, they do not have the voting or dividend participation rights of common stock and the shares underlying such restricted stock units are not considered issued and outstanding. Upon vesting of restricted stock units, shares withheld by the Company to pay taxes are retired.

The table set forth above does not include 0.6 million restricted stock units granted in August 2015 as performance-based restricted units since the performance criteria for those performance-based restricted units had not been established as of September 30, 2015.

Performance-Based Restricted Stock Units

On December 11, 2014, the Company adopted the Atmel 2015 Long-Term Performance-Based Incentive Plan (the “2015 Plan”), which provides for the grant of performance-based restricted stock units to Company participants. The Company issued 2.6 million shares under the 2015 Plan for the year ended December 31, 2014. The Company records performance-based restricted stock units issued under the 2015 Plan based on achievement of the “target” performance metrics, which will result in a participant being credited with 100% of the performance-based shares awarded to that participant under the 2015 Plan. Achievement at the “maximum” performance metrics will result in a participant being credited with 200% of the performance-based shares awarded to that participant under the 2015 Plan.

Performance metrics for the 2015 Plan are based on the Company’s publicly-reported non-GAAP earnings per share growth rate from 2014 to 2015 (calculated for the fiscal years ended 2014 and 2015, respectively) to the adjusted earnings per share growth rates of companies included within the well-established Philadelphia Semiconductor Sector IndexSM ("SOX Index") during the same period. For purposes of the 2015 Plan, “adjusted earnings per share” for the applicable measurement period for any company included within the SOX Index means that company’s non-GAAP earnings per share, as publicly reported by that company (which, in the case of the Company, will be its non-GAAP earnings per share), adjusted to exclude for the measurement period (to the extent such adjustments are publicly disclosed) each of the following: share-based compensation expense; restructuring and impairment charges (credits); loss (gain) on sale; acquisition and divestiture related expenses; intellectual property related settlement charges; non-cash tax expenses; other non-recurring tax items; to make equivalent comparisons between the Company’s non-GAAP earnings per share and the adjusted earnings per share for other companies included within the SOX Index. The Company recorded total share-based compensation expense related to the 2015 Plan of $0.5 million and $2.0 million in the three and nine months endedSeptember 30, 2015, respectively. For the treatment of those performance-based restricted stock units in connection with the Merger, see "Restricted Stock Units, Employee Stock Purchase Plan and Stock Options" above.

For participants who are included within the 2015 Plan at any time after January 1, 2015, awards will be pro-rated to reflect the actual time a participant has been an employee of, or a service provider to, the Company. 

On December 17, 2013, the Company adopted the Atmel 2014 Long-Term Performance-Based Incentive Plan (the “2014 Plan”), which ended on December 31, 2014. The Company recorded total share-based compensation expense related to the 2014 Plan of $0.3 million and $1.7 million in the three and nine months endedSeptember 30, 2015, respectively, and $0.7 million and $2.7 million in the three and nine months endedSeptember 30, 2014, respectively.

In August 2015, the Company granted 0.6 million performance-based restricted units for performance periods that will not commence until 2016. The performance criteria for those performance-based restricted units had not been established as of September 30, 2015. For the treatment of those performance-based restricted stock units in connection with the Merger, see "Restricted Stock Units, Employee Stock Purchase Plan and Stock Options" above.

Employee Stock Purchase Plan

         Under the 2010 Employee Stock Purchase Plan (“2010 ESPP”), qualified employees are entitled to purchase shares of Atmel’s common stock at the lower of 85% of the fair market value of the common stock at the date of commencement of the six-month offering period or 85% of the fair market value on the last day of the offering period. Purchases are limited to 10% of an employee’s eligible compensation subject to a maximum annual employee contribution limit of $25,000 of the market value of the shares (determined at the commencement of each of the six month offering period) per calendar year. There were 0.9 million shares purchased under the 2010 ESPP for each of the three months ended September 30, 2015 and 2014 at an average price per share of $6.64 and $6.73, respectively. There were 1.6 million and 1.7 million shares purchased under the 2010 ESPP for each of the nine months endedSeptember 30, 2015 and 2014 at an average price per share of $6.79 and $6.59, respectively. Of the 25.0 million shares authorized for issuance under the 2010 ESPP, 17.3 million shares were available for issuance at September 30, 2015.

The fair value of each purchase under the 2010 ESPP is estimated on the date of the beginning of the offering period using the Black-Scholes option-pricing model. The following assumptions were utilized to determine the fair value of the 2010 ESPP shares:

14

	Three Months Ended				Nine Months Ended
	September 30, 2015		September 30, 2014		September 30, 2015		September 30, 2014
Risk-free interest rate	0.24	%	0.06	%	0.16	%	0.07	%
Expected life (years)	0.50		0.50		0.50		0.50
Expected volatility	30	%	30	%	33	%	31	%
Expected dividend yield	1.94	%	—	%	1.92	%	—

The weighted-average fair value per share under the 2010 ESPP for purchase periods beginning in the nine months endedSeptember 30, 2015 and 2014 were $1.50 and $1.65, respectively. Cash proceeds from the issuance of shares under the Company’s 2010 ESPP were $11.1 million and $11.2 million for the nine months endedSeptember 30, 2015 and 2014, respectively.

Pursuant to the terms of the Merger Agreement, the ESPP will be terminated prior to the Effective Time of the Merger.

Common Stock Repurchase Program

Since 2011, Atmel’s Board of Directors has authorized an aggregate of $1.0 billion of funding for the Company’s common stock repurchase program. The repurchase program does not have an expiration date, and the number of shares repurchased and the timing of repurchases are based on the level of the Company’s cash balances, general business and market conditions, regulatory requirements, and other factors, including alternative investment opportunities. As of September 30, 2015, $197.1 million remained available for the repurchase of common stock under this program.

There were noshares repurchased during the three months ended September 2015. During the nine months ended September 30, 2015, Atmel repurchased 1.4 million shares of its common stock in the open market at an average repurchase price of $8.27 per share excluding commission, and subsequently retired those shares. During the three and nine months endedSeptember 30, 2014, Atmel repurchased 2.9 million and 13.4 million shares, respectively, of its common stock in the open market at an average repurchase price of $8.50 and $8.09 per share, respectively, excluding commission, and subsequently retired those shares. Excluding commission, common stock and additional paid-in capital were reduced by $12.0 million for the nine months ended September 30, 2015, and $25.0 million and $108.5 million for the three and nine months endedSeptember 30, 2014, respectively, as a result of the stock repurchases.

Pursuant to the terms of the Merger Agreement, the Company is not permitted to repurchase any further shares of common stock.

Dividends

On September 24, 2015, the Company paid a cash dividend of $0.04 per common share, the aggregate cost of which was $16.8 million. During the nine months endedSeptember 30, 2015, the Company paid cash dividends of $0.12 per common share, the aggregate cost of which was $50.2 million.

Pursuant to the terms of the Merger Agreement, the Company is not permitted to declare or pay any further dividends.

Note 7 ACCUMULATED OTHER COMPREHENSIVE LOSS

Comprehensive income is defined as a change in equity of a company during a period, from transactions and other events and circumstances excluding transactions resulting from investments by owners and distributions to owners. The primary difference between net income and comprehensive income for the Company arises from foreign currency translation adjustments, actuarial loss related to defined benefit pension plans and net unrealized loss on investments. The following table summarizes the changes in accumulated balances of other comprehensive loss, net of tax:

	Foreign currency translation adjustments			Defined benefit pension plans			Change in unrealized loss on investments			Total
	(in thousands)
Balance as of December 31, 2014	$	1,053		$	(8,462	)	$	(773	)	$	(8,182	)
Other comprehensive (loss) gain	(7,535		)	(803		)	1,376			(6,962		)
Balance as of September 30, 2015	$	(6,482	)	$	(9,265	)	$	603		$	(15,144	)

15

Note 8 COMMITMENTS AND CONTINGENCIES

Commitments

Indemnification

As is customary in the Company’s industry, the Company’s standard contracts provide remedies to its customers, such as defense, settlement, or payment of judgment for intellectual property claims related to the use of the Company’s products. From time to time, the Company will indemnify customers against combinations of loss, expense, or liability arising from various trigger events related to the sale and the use of the Company’s products and services, usually up to a specified maximum amount. In addition, as permitted under state laws in the United States, the Company has entered into indemnification agreements with its officers and directors and certain employees, and the Company’s bylaws permit the indemnification of the Company’s agents. The estimated fair value of the liability is not material.

Purchase Commitments

As of September 30, 2015, the Company, or its subsidiaries, had certain non-cancellable commitments which were not included in the Condensed Consolidated Balance Sheets. These include outstanding capital purchase commitments of approximately $1.5 million and wafer purchase commitments of approximately $18.2 million.

Contingencies

Legal Proceedings

The Company is party to various legal proceedings. Management currently believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not have a material adverse effect on the Company's financial position, results of operations and statements of cash flows. If an unfavorable ruling were to occur in any of the legal proceedings described below or other legal proceedings that were not deemed material as of September 30, 2015, there exists the possibility of a material adverse effect on the Company's financial position, results of operations and cash flows. The Company has accrued for losses related to litigation that it considers probable and for which the loss can be reasonably estimated. In the event that a probable loss cannot be reasonably estimated, it has not accrued for such losses. Management makes a determination as to when a potential loss is reasonably possible based on relevant accounting literature and then includes appropriate disclosure of the contingency. As the Company continues to monitor litigation matters, whether deemed material as of September 30, 2015 or not, its determination could change, and the Company may decide, at some future date, to establish an appropriate reserve.

Dialog Deal Stockholder Litigation. On September 20, 2015, the Company announced that it had entered into a definitive merger agreement with Dialog Semiconductor plc (“Dialog”) under which Dialog, subject to customary conditions, would acquire all of the outstanding shares of the Company (the “Transaction”). Following that announcement, three putative class actions were filed in courts in Delaware and California against the Company and/or its Directors, Dialog and Avengers Acquisition Corporation (“Merger Sub”), a wholly owned subsidiary of Dialog. The complaints purport to be brought on behalf of all similarly situated Company stockholders and generally allege that the members of the Company’s Board of Directors breached their fiduciary duties to stockholders by approving the Transaction for inadequate consideration, entering into a merger agreement containing preclusive deal protection devices, and failing to take steps to maximize the value to be paid to stockholders. The complaints also assert claims against Dialog, Merger Sub and/or the Company for allegedly aiding and abetting these alleged breaches of fiduciary duties. The complaints seek preliminary and permanent injunctions against the completion of the Transaction or rescission in the event the Transaction has already been completed, or, alternatively, damages in favor of the plaintiffs and the class. The Company and its Directors believe the claims are without merit, and intend to contest them vigorously.

Southern District of New York Action by LFoundry Rousset (“LFR”) and LFR Employees. On March 4, 2014, LFR and Jean-Yves Guerrini, on behalf of himself and a putative class of LFR employees, filed an action in the United States District Court for the Southern District of New York (the "District Court") against the Company, our French subsidiary, Atmel Rousset S.A.S. (“Atmel Rousset”) and LFoundry GmbH (“LF”), LFR’s German parent. The case purports to relate to Atmel Rousset’s June 2010 sale of its wafer manufacturing facility in Rousset, France to LF, and LFR’s subsequent insolvency more than three years later. The Company and Atmel Rousset moved to dismiss the case on numerous grounds - a motion the District Court granted on July 21, 2015. As a result, the District Court dismissed the case on August 21, 2015. Plaintiffs are appealing the dismissal.

Individual Labor Actions by former LFR Employees. Nearly 600 former employees of LFR have filed individual labor actions against Atmel Rousset in a French labor court. As of September 30, 2015, the claimants had not yet provided the legal arguments underpinning their claims, although management believes each will argue that Atmel Rousset, together with LFR, was their co-employer. Atmel Rousset believes each of these actions is entirely devoid of merit and based substantially on the same specious arguments that the Paris Commercial Court summarily rejected in 2014 in related proceedings. Atmel Rousset therefore intends to defend vigorously each of these claims.

Other Contingencies

16

From time to time, the Company is notified of claims that its products may infringe patents, or other intellectual property, issued to or owned by other parties. The Company periodically receives demands for indemnification from its customers with respect to intellectual property matters. The Company also periodically receives claims relating to the quality of its products, including claims for additional labor costs, costs for replacing defective parts, reimbursement to customers for damages incurred in correcting defective products, costs for product recalls or other damages. Receipt of these claims and requests occurs in the ordinary course of the Company's business, and the Company responds based on the specific circumstances of each event. The Company undertakes an accrual for losses relating to those types of claims when it considers those losses “probable” and when a reasonable estimate of loss can be determined.

Product Warranties

The Company accrues for warranty costs based on historical trends of product failure rates and the expected material and labor costs to provide warranty services. The Company’s products are generally covered by a warranty typically ranging from 30 days to three years. Product warranty liability is included in accrued and other liabilities in the Condensed Consolidated Balance Sheets.

Guarantees

In the ordinary course of business, the Company may provide standby letters of credit or other guarantee instruments to certain parties as required for certain transactions initiated by either the Company or its subsidiaries. The Company has not recorded any liability in connection with these guarantee arrangements. Based on historical experience and information currently available, the Company believes it will not be required to make any payments under these guarantee arrangements.

Note 9 INCOME TAXES

The Company estimates its annual effective tax rate at the end of each quarter. In making these estimates, the Company considers, among other things, annual pre-tax income, the geographic mix of pre-tax income and the application and interpretations of tax laws, treaties and judicial developments, as well as possible outcomes of tax audits.

The following table presents the provision for income taxes and the effective tax rates:

	Three Months Ended						Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(in thousands, except for percentages)
Income before income taxes	$	10,529		$	28,869		$	50,694		$	58,958
Provision for income taxes	$	(11,134	)	$	(11,619	)	$	(28,526	)	$	(20,306	)
Effective tax rate	105.75		%	40.25		%	56.27		%	34.44		%

For the three and nine months endedSeptember 30, 2015, the Company’s effective tax rate was higher than the U.S statutory federal income tax rate of 35%, primarily due to a decrease of profits in jurisdictions with lower tax rates, discrete interest charges related to uncertain tax positions, gain on the sale of certain capital assets, nondeductible costs associated with the pending acquisition, and the cumulative impact of a higher annual effective tax rate.

For the three and nine months endedSeptember 30, 2014, the significant components of the tax provision related to jurisdictions that experienced operating profits. The Company’s effective tax rate for the nine months ended September 30, 2014 was lower than the statutory federal income tax rate of 35%, primarily due to income recognized in lower tax jurisdictions.

At September 30, 2015 and December 31, 2014, the Company had $87.4 million and $88.1 million of unrecognized tax benefits, respectively, which, if recognized, would affect the effective tax rate.

The timing for the resolution and closure of tax audits is highly unpredictable. Given the uncertainty, it is reasonably possible that certain tax audits may be concluded within the next 12 months that could materially impact the balance of our gross unrecognized tax benefits. An estimate of the range of increase or decrease that could occur in the next twelve months cannot be made. However, the estimated impact to tax expense and net income from the resolution and closure of tax exams is not expected to be significant within the next 12 months.

Note 10 PENSION PLANS

The Company sponsors defined benefit pension plans that cover substantially all of its French and German employees. Plan benefits are provided in accordance with local statutory requirements. Benefits are based on years of service and employee

17

compensation levels. The plans are unfunded. Pension liabilities and charges are based upon various assumptions, updated annually, including discount rates, future salary increases, employee turnover, and mortality rates.

The Company’s French pension plan provides for termination benefits paid to covered French employees only at retirement, and consists of approximately one to five months of salary. The Company’s German pension plan provides for defined benefit payouts for covered German employees following retirement.

The aggregate net pension expense relating to these two plans are as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2015		September 30, 2014		September 30, 2015		September 30, 2014
	(in thousands)
Service costs	$	282	$	383	$	880	$	1,165
Interest costs	310		378		954		1,151
Amortization of actuarial loss	175		18		501		56
Net pension period cost	$	767	$	779	$	2,335	$	2,372

The Company’s net pension period cost for 2015 is expected to be approximately $3.4 million. Cash funding for benefits paid was $0.1 million and $0.3 million for the three and nine months endedSeptember 30, 2015, respectively. The Company expects total contributions to these plans to be approximately $0.5 million in 2015.

Note 11 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.

A summary of each reportable segment follows:

• Microcontroller. This segment includes Atmel's general purpose microcontroller and microprocessor families, AVR® 8-bit and 32-bit products, Atmel^®| SMART^TM ARM^® based products, Atmel's 8051 8-bit products, designated commercial wireless products, including low power radio and SOC products that meet Bluetooth, Bluetooth Low Energy, Zigbee and Wi-Fi specifications, Atmel's maXTouch capacitive touch product families and optimized products for smart energy, touch button, and mobile sensor hub and LED lighting applications.

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

• Automotive. This segment includes devices for automotive electronics, including products using radio frequency technology.

• Multi-Market and Other. This segment includes application specific and standard products for aerospace applications and legacy products. On April 16, 2015, the Company completed the sale of its XSense touch sensor manufacturing assets and separately licensed to UniPixel, Inc. its XSense intellectual property assets, which the Company retained. See Note 12 for further information.

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 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 income (loss) from operations for each reportable segment is as follows:

18

Information about Reportable Segments

	Micro- Controller		Nonvolatile Memory		Automotive		Multi-Market and Other			Total
	(in thousands)
Three months ended September 30, 2015
Net revenue from external customers	$	201,061	$	34,188	$	34,158	$	17,126		$	286,533
Segment income from operations	$	21,712	$	2,782	$	5,473	$	6,264		$	36,231
Three months ended September 30, 2014
Net revenue from external customers	$	264,432	$	46,908	$	37,273	$	25,872		$	374,485
Segment income from operations	$	36,996	$	11,329	$	5,689	$	850		$	54,864
Nine months ended September 30, 2015
Net revenue from external customers	$	624,850	$	121,089	$	107,119	$	58,116		$	911,174
Segment income from operations	$	56,620	$	24,520	$	14,868	$	16,107		$	112,115
Nine months ended September 30, 2014
Net revenue from external customers	$	754,348	$	122,739	$	114,238	$	76,055		$	1,067,380
Segment income (loss) from operations	$	86,148	$	24,413	$	15,727	$	(608	)	$	125,680

The Company's primary products are semiconductor integrated circuits, which constitute a group of similar products. Therefore, it is impracticable to differentiate the revenue 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						Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(in thousands)
Total segment income from operations	$	36,231		$	54,864		$	112,115		$	125,680
Unallocated amounts:
Share-based compensation expense	(12,719		)	(14,917		)	(38,943		)	(45,812		)
Gain (loss) from manufacturing facility damage and shutdown	—			3,571			—			(3,485		)
Acquisition-related charges	(2,390		)	(7,162		)	(10,600		)	(10,287		)
French building underutilization	(500		)	(822		)	(714		)	(3,284		)
Restructuring credit (charges)	584			(840		)	(5,445		)	967
(Loss) gain related to foundry arrangements	(2,487		)	454			(4,444		)	2,583
Fair value adjustments to inventory from businesses acquired	—			(1,548		)	—			(1,548		)
(Loss) gain on sale of assets	(427		)	—			1,626			—
Merger expenses and other	(7,818		)	—			(7,818		)	—
Consolidated income from operations	$	10,474		$	33,600		$	45,777		$	64,814

19

Geographic sources of revenue were as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2015		September 30, 2014		September 30, 2015		September 30, 2014
	(in thousands)
China, including Hong Kong	$	93,481	$	115,442	$	286,489	$	322,724
United States	49,113		58,969		160,582		162,227
Germany	41,335		51,279		123,880		161,018
South Korea	16,561		31,157		62,641		94,089
Japan	11,254		10,062		39,170		24,463
Singapore	9,073		15,208		28,412		43,445
Taiwan	6,480		21,566		26,930		51,495
France	3,224		3,618		11,775		9,407
Rest of Europe	28,671		34,300		87,410		108,104
Rest of Asia-Pacific	20,459		26,080		63,155		71,862
Rest of the World	6,882		6,804		20,730		18,546
Total net revenue	$	286,533	$	374,485	$	911,174	$	1,067,380

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

The Company had one distributor that accounted for 18% of net revenue in the three months endedSeptember 30, 2015. The Company had onedistributor that accounted for 18% of net revenue in the nine months endedSeptember 30, 2015. No end customer accounted for 10% or more of net revenue in the three and nine months endedSeptember 30, 2015 and 2014. The Company had one distributor that accounted for 15% of net revenue in the three months endedSeptember 30, 2014. The Company had two distributors that accounted for 16% and 10%, respectively, of net revenue in the nine months endedSeptember 30, 2014.

Two distributors accounted for 19% and 13%, respectively, of accounts receivable at September 30, 2015 and no end customer accounted for 10% or more of accounts receivable at September 30, 2015. Three distributors accounted for 15%, 12% and 11%, respectively, of accounts receivable at September 30, 2014 and no end customer accounted for 10% or more of accounts receivable at September 30, 2014.

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

	September 30, 2015		December 31, 2014
	(in thousands)
United States	$	85,049	$	92,466
Philippines	57,579		56,094
Germany	8,300		17,920
France	11,125		13,714
Rest of Asia-Pacific	16,954		20,237
Rest of Europe	5,095		5,854
Total	$	184,102	$	206,285

Excluded from the table above are auction-rate securities of $1.1 million at September 30, 2015 and December 31, 2014, which are included in other assets on the Condensed Consolidated Balance Sheets. Also excluded from the table above as of September 30, 2015 and December 31, 2014 is goodwill of $189.6 million and $191.1 million, respectively, intangible assets, net, of $41.4 million and $50.3 million, respectively, and deferred income tax assets of $104.6 million and $117.3 million, respectively. 

Note 12 SALE OF ASSETS

Sale of Heilbronn Real Estate

20

On September 23, 2015, the Company completed the sale to an unrelated party of its real estate holdings in Heilbronn, Germany and its equity interest in a privately-held company that provides facilities services for the tenants at that property for a total of $11.5 million. The Company also entered into an agreement to lease back a portion of the office space for a three-year period. The total gain of $3.1 million was reduced by Atmel’s proportionate share of the investee’s equity adjustments for other comprehensive loss of $2.1 million upon discontinuation of the equity investment. A portion of the gain equivalent to the present value of the minimum lease payments associated with the sale-leaseback transaction of $1.1 million will be recognized as a reduction to rent expense over the three-year lease term. During the three months ended September 30, 2015, the Company recognized $0.2 million of loss on sale of assets included in the Condensed Consolidated Statement of Operations. 

Sale of XSense

On April 16, 2015, the Company completed the sale of XSense touch sensor assets to UniPixel, Inc. In connection with the transaction, the Company transferred its XSense related manufacturing assets to UniPixel, which also assumed related operating costs, and separately licensed to UniPixel its XSense patent portfolio and other intellectual property, which the Company is retaining. The intellectual property licenses have an initial five-year term, renewable by UniPixel for an additional ten-year term. The Company will receive minimum royalties during the initial five-year term equal to $16.3 million, of which $9.3 million was prepaid in cash at the close of the transaction. Under the terms of the patent license agreement, the Company licensed to UniPixel its pending, published or issued XSense patents as of the close of the transaction and, subject to certain exclusions, any other patents owned or licensable by the Company during the license period to the extent such patents are necessary to make, use, sell or otherwise dispose of licensed XSense products. The Company also agreed to lease facilities and provide transitional support to UniPixel for a limited period of time. 

Upon closing of this transaction, the Company recognized a gain which is summarized in the following table:

	April 16, 2015
	(in thousands)
Total consideration	$	(16,700	)
Fair value of patent license agreement	13,123
Selling and other costs	457
Net assets transferred	961
Gain on sale of assets	$	(2,159	)

The fair value of the patent license revenue to be received from the licensee over the term of the arrangement was determined using an income approach and an assumed discount rate of 40%. The present value of the patent license agreement is reduced over the initial five-year term of the patent license agreement and recognized as royalty revenue over that term. During the three and nine months endedSeptember 30, 2015, the Company recognized $0.7 million and $1.2 million of royalty revenue, respectively, and during the nine months ended September 30, 2015, the Company recognized $2.2 million of gain on sale of assets included in the Condensed Consolidated Statement of Operations.

Note 13 RESTRUCTURING CHARGES

The following table summarizes the activity related to the accrual for restructuring charges detailed by event:

21

	Q2'10		Q2'12			Q1'13			Q3'13			Q3'14			Q4'14			Q1'15			Q2'15			Total
	(in thousands)
Balance at January 1, 2015 - Restructuring Accrual	$	281	$	19		$	3,988		$	9		$	920		$	14,508		$	—		$	—		$	19,725
(Credits) charges – Employee termination costs, net of change in estimate	—		—			(49		)	—			488			6			702			—			1,147
Non-cash - Other	—		—			—			—			(175		)	(6		)	—			—			(181		)
Payments – Employee termination costs	—		—			(524		)	—			(540		)	(14		)	(196		)	—			(1,274		)
Foreign exchange gain	—		—			(31		)	—			(59		)	(1		)	(7		)	—			(98		)
Balance at March 31, 2015 - Restructuring Accrual	$	281	$	19		$	3,384		$	9		$	634		$	14,493		$	499		$	—		$	19,319
(Credits) charges – Employee termination costs, net of change in estimate	—		(210		)	(153		)	(9		)	1,651			899			2,006			698			4,882
Non-cash - Other	—		—			—			—			(213		)	(4		)	—			—			(217		)
Refunds (payments) - Employee termination costs	—		229			(196		)	—			(1,064		)	(4,287		)	(2,508		)	(25		)	(7,851		)
Foreign exchange loss (gain)	—		—			271			—			—			(1,616		)	3			—			(1,342		)
Balance at June 30, 2015 - Restructuring Accrual	$	281	$	38		$	3,306		$	—		$	1,008		$	9,485		$	—		$	673		$	14,791
(Credits) charges – Employee termination costs, net of change in estimate	—		—			—			—			(166		)	(432		)	—			14			(584		)
Non-cash – Other	—		—			—			—			840			(10		)	—			174			1,004
Payments - Employee termination costs	—		—			(582		)	—			(1,646		)	(1,543		)	—			(628		)	(4,399		)
Foreign exchange loss (gain)	—		—			32			—			—			(86		)	—			—			(54		)
Balance at September 30, 2015 - Restructuring Accrual	$	281	$	38		$	2,756		$	—		$	36		$	7,414		$	—		$	233		$	10,758

The Company records restructuring liabilities related to workforce reductions when the accounting recognition criteria are met and consistent with management's approval and commitment to the restructuring plans in each particular quarter. The restructuring plans identify the number of employees to be terminated, job classifications and functions, location and the date the plan is expected to be completed. As of September 30, 2015, the Company expects the majority of the remaining employee termination costs and facility exit costs to be paid by the end of fiscal 2016.

2015 Restructuring Charges

Restructuring charges recorded in 2015 were related to workforce reductions, primarily in the U.S., in connection with the Company's decision to exit the XSense business and workforce reductions and other costs in connection with the Company's decision to shut down an assembly operations plant in the Philippines. These actions, which are consistent with management's approval of the restructuring plan and the communication to affected employees, were intended to align operating expenses with macroeconomic conditions and revenue outlooks, and to improve operational efficiency, competitiveness and business profitability. The Company also recorded additional restructuring charges related to workforce reductions in France in 2015. During the three months ended September 30, 2015, the Company recorded restructuring credits of $0.6 million primarily due to pension curtailment gain upon termination of employees affected by the Philippines restructuring, and gain on sale of certain equipment located in the Philippines, which were offset by employee termination costs. The restructuring charges recorded during the nine months ended September 30, 2015 were $5.4 million.

All employees affected by the Philippines restructuring ceased active service as of September 30, 2015.

2014 Restructuring Charges

Restructuring charges were recorded in the third and fourth quarters of 2014. The charges primarily related to workforce reductions in France. These actions were intended to align operating expenses with macroeconomic conditions and revenue outlooks, and to improve operational efficiency, competitiveness and business profitability. In connection with formulating this restructuring plan, during the third and fourth quarters of 2014, the Company confidentially negotiated and developed a “social plan” in coordination and consultation with the local Works Council. This social plan, which is subject to French law, set forth general parameters, terms and benefits for both voluntary and involuntary employee dismissals.

22

Note 14 NET (LOSS) INCOME PER SHARE ATTRIBUTABLE TO ATMEL COMMON STOCKHOLDERS

A reconciliation of the numerator and denominator of basic and diluted net income per share is as follows:

	Three Months Ended					Nine Months Ended
	September 30, 2015			September 30, 2014		September 30, 2015		September 30, 2014
	(in thousands, except per share data)
Net (loss) income attributable to Atmel	$	(614	)	$	17,250	$	22,193	$	38,652
Weighted-average shares - basic	419,293			418,954		418,072		421,791
Dilutive effect of incremental shares and share equivalents	—			2,010		1,410		1,909
Weighted-average shares - diluted	419,293			420,964		419,482		423,700
Net (loss) income per share:
Basic
Net (loss) income per share attributable to Atmel common stockholders - basic	$	—		$	0.04	$	0.05	$	0.09
Diluted
Net (loss) income per share attributable to Atmel common stockholders - diluted	$	—		$	0.04	$	0.05	$	0.09

The following table summarizes securities that were not included in the “Weighted-average shares - diluted” used for calculation of diluted net income per share, as their effect would have been anti-dilutive:

	Three Months Ended		Nine Months Ended
	September 30, 2015	September 30, 2014	September 30, 2015	September 30, 2014
	(in thousands)
Employee stock options and restricted stock units outstanding	4,535	4,167	5,414	5,381

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with our Condensed Consolidated Financial Statements and the related Notes included in this Form 10-Q. The information contained in this Form 10-Q is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to review and consider carefully the various disclosures made by us in this Form 10-Q and in our other reports filed with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2014. Atmel’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to such reports are available, free of charge, through the “Investors” section of www.atmel.com. We make these reports available as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC. The SEC also maintains a website located at www.sec.gov that contains Atmel’s reports filed with, or furnished to, the SEC. The information disclosed on our website is not incorporated herein and does not form a part of this Form 10-Q.

This discussion contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, particularly statements regarding our outlook for fiscal 2015 and beyond. Such forward looking statements include, but are not limited to, statements about: the expansion of the market for microcontrollers, including in the “Internet of Things” and wearables markets, revenue for our maXTouch products, our gross margin expectations and trends, anticipated revenue by geographic area and the ongoing transition of our revenue base to Asia, expectations or trends involving our operating expenses, capital expenditures, cash flow and liquidity, our factory utilization rates, the effect and timing of new product introductions, our ability to access independent foundry capacity and the corresponding financial condition and operational performance of those foundry partners, including insolvencies of, and litigation related to European foundry suppliers, the effects of our strategic transactions and restructuring efforts, consolidation occurring within the semiconductor industry through mergers and acquisitions, the estimates we use in respect of the amount and/or timing for expensing unearned share-based compensation and similar estimates related to our performance-based restricted stock units, our expectations regarding tax matters and related tax audits, the outcome of litigation (including intellectual property litigation in which we may be involved or in which our customers may be involved, especially in the mobile device sector), and the effects of exchange rates and our ongoing efforts to manage exposure to exchange rate fluctuation and significant devaluation beginning at the end of 2014 of the Euro against the U.S. dollar. Our actual results could differ materially from those projected in any forward-looking statements as a result of a number of factors, risks and uncertainties, including the risk factors set forth in this discussion and in Item 1A - Risk Factors, and elsewhere in this Form 10-Q.

23

Generally, the words “may,” “will,” “could,” “should,” “would,” “anticipate,” “expect,” “intend,” “believe,” “seek,” “estimate,” “plan,” “view,” “continue,” the plural of such terms, the negatives of such terms, or other comparable terminology and similar expressions identify forward-looking statements. The information included in this Form 10-Q is provided as of the filing date with the Securities and Exchange Commission and future events or circumstances could differ significantly from the forward-looking statements included herein. Accordingly, we caution readers not to place undue reliance on such statements. We undertake no obligation to update any forward-looking statements in this Form 10-Q.

OVERVIEW

We are one of the world’s leading suppliers of general purpose microcontrollers, which are self-contained computers-on-a-chip. This product focus has enabled us to develop and maintain a diversified, global customer base that incorporates our semiconductors into industrial products, automotive systems, digital consumer products, mobile computing devices, communications networks, and other electronics in which our products provide embedded processing and critical interface functions. Leveraging our microcontroller technology and experience integrating silicon and firmware, we deliver market leading “capacitive touch” solutions for mobile, industrial, consumer and automotive markets. Our cryptographic products offer highly secure solutions for reliable device protection and authentication. These products also enable secure storage of sensitive and confidential information and trusted identification of devices for the Internet of Things (loT) across wired and wireless networks.

We offer one of the market’s most complete, compelling and easy-to-use product portfolios for the IoT where smart, connected devices allow electronic systems to seamlessly and securely communicate and share information and provide the underpinnings for new and enhanced industrial, consumer and automotive applications. Our solutions are utilized in smart home, factory automation, automotive, mobile and the wearables sectors, which represent among the highest growth opportunities for the semiconductor industry.

We are also a leading supplier of automobile access and networking solutions. Our car access products comprise keyless entry solutions for passive entry/go systems, key fob electronics, car side receiver products and immobilizer functionality. These automobile networking products incorporate the latest industry standards and include stand-alone and integrated LIN and CAN transceiver solutions.

In addition, we design and sell semiconductor products that complement our general microcontroller business, including nonvolatile memory, radio frequency and mixed-signal components and application specific integrated circuits. Our expansive product portfolio, sold through our global distribution channels to a broad customer base, has allowed us to target market segments in which we expect semiconductor content to continue to increase in the future.

Pending Acquisition of Atmel by Dialog

On September 19, 2015, we entered into an Agreement and Plan of Merger, as amended on September 29, 2015, with Dialog Semiconductor Plc, and a Dialog subsidiary, under which Dialog intends to acquire Atmel. We currently expect the transaction, subject to the satisfaction or waiver of customary closing conditions, to close in the first quarter of 2016. See Note 1 of Notes to Condensed Consolidated Financial Statements for further information regarding this transaction.

The pending transaction with Dialog may have significant effects on us, including, among others, deferrals, delays or cancellation of purchase orders by our customers and the significant diversion of management and employee attention from ordinary course matters. For a more extensive discussion of those and other possible effects, see “Risk Factors.”

Sales of Assets

On September 23, 2015, we completed the sale to an unrelated party of our real estate holdings in Heilbronn, Germany and our equity interest in a privately-held company that provides facilities services for the tenants at that property. See Note 12 of Notes to Condensed Consolidated Financial Statements for a further discussion.

On April 16, 2015, in a further effort to focus on our core business, we completed the sale of our XSense manufacturing assets and separately licensed to the buyer our XSense intellectual property assets, which we retained. See Note 12 of Notes to Condensed Consolidated Financial Statements for a further discussion.

24

RESULTS OF OPERATIONS

	Three Months Ended									Nine Months Ended
	September 30, 2015					September 30, 2014				September 30, 2015					September 30, 2014
	(in thousands, except for percentage of net revenue)
Net revenue	$	286,533		100	%	$	374,485	100	%	$	911,174		100	%	$	1,067,380		100	%
Gross margin	133,356			47	%	176,843		47	%	421,967			46	%	478,071			45	%
Research and development	55,832			19	%	69,917		19	%	174,959			19	%	209,751			20	%
Selling, general and administrative	64,817			23	%	65,324		17	%	186,812			21	%	194,186			18	%
Acquisition-related charges	2,390			1	%	7,162		2	%	10,600			1	%	10,287			1	%
Restructuring (credits) charges	(584		)	—	%	840		—	%	5,445			1	%	(967		)	—	%
Loss (gain) on sale of assets	427			—	%	—		—	%	(1,626		)	—	%	—			—	%
Income from operations	10,474			4	%	$	33,600	9	%	45,777			5	%	$	64,814		6	%

Net Revenue

Our net revenue totaled $286.5 million for the three months endedSeptember 30, 2015, a decrease of 23%, or $88.0 million, from $374.5 million in net revenue for the three months endedSeptember 30, 2014. Our net revenue totaled $911.2 million for the nine months endedSeptember 30, 2015, a decrease of 15%, or $156.2 million, from $1,067.4 million in net revenue for the nine months endedSeptember 30, 2014. Our revenue for the three and nine months endedSeptember 30, 2015 was lower than the three and nine months endedSeptember 30, 2014 due principally to the adverse effects of foreign currency translation associated with the decline of the Euro against the U.S. dollar, reduced revenue related to our end-of-life legacy products, commodity sensor hub and touch controller products sold to the mobile end market, and products included within our Multi-Market and Other segment.

Net Revenue — By Operating Segment

Our net revenue by operating segment is summarized as follows:

	Three Months Ended
	September 30, 2015		September 30, 2014		Change			% Change
	(in thousands, except for percentages)
Microcontroller	$	201,061	$	264,432	$	(63,371	)	(24	)%
Nonvolatile Memory	34,188		46,908		(12,720		)	(27	)%
Automotive	34,158		37,273		(3,115		)	(8	)%
Multi-Market and Other	17,126		25,872		(8,746		)	(34	)%
Total net revenue	$	286,533	$	374,485	$	(87,952	)	(23	)%

	Nine Months Ended
	September 30, 2015		September 30, 2014		Change			% Change
	(in thousands, except for percentages)
Microcontroller	$	624,850	$	754,348	$	(129,498	)	(17	)%
Nonvolatile Memory	121,089		122,739		(1,650		)	(1	)%
Automotive	107,119		114,238		(7,119		)	(6	)%
Multi-Market and Other	58,116		76,055		(17,939		)	(24	)%
Total net revenue	$	911,174	$	1,067,380	$	(156,206	)	(15	)%

25

Microcontroller

Microcontroller segment net revenue decreased 24% to $201.1 million for the three months endedSeptember 30, 2015 compared to $264.4 million for the three months endedSeptember 30, 2014. Microcontroller segment net revenue decreased 17% to $624.9 million for the nine months endedSeptember 30, 2015 compared to $754.3 million for the nine months endedSeptember 30, 2014. Microcontroller net revenue represented 70% and 69% of total net revenue for the three and nine months endedSeptember 30, 2015, respectively. Microcontroller net revenue represented 71% of total net revenue for each of the three and nine months endedSeptember 30, 2014, respectively. Revenue decreased primarily as a result of the adverse effect of foreign currency translation associated with the decline of the Euro against the U.S. dollar, reduced revenue related to our end-of-life legacy products, commodity sensor hub and touch controller products sold to the mobile end market.

Nonvolatile Memory

Nonvolatile Memory segment net revenue decreased 27% to $34.2 million for the three months endedSeptember 30, 2015 compared to $46.9 million for the three months endedSeptember 30, 2014. Nonvolatile Memory segment net revenue decreased 1% to $121.1 million for the nine months endedSeptember 30, 2015 compared to $122.7 million for the nine months endedSeptember 30, 2014. The decrease was principally due to a decline in revenue from standard memory products, which was partially offset by stronger demand for secure cryptographic products.

Automotive

Automotive segment net revenue decreased 8% to $34.2 million for the three months endedSeptember 30, 2015 compared to $37.3 million for the three months endedSeptember 30, 2014. Automotive segment net revenue decreased 6% to $107.1 million for the nine months endedSeptember 30, 2015 compared to $114.2 million for the nine months endedSeptember 30, 2014. This decrease was primarily related to the adverse effect of foreign currency translation associated with the decline of the Euro against the U.S. dollar and reduced revenue related to our end-of-life legacy products, partially offset by an increase in demand for our RF automotive products, including in-vehicle networking products.

Multi-Market and Other

Multi-Market and Other segment net revenue decreased 34% to $17.1 million for the three months endedSeptember 30, 2015 compared to $25.9 million for the three months endedSeptember 30, 2014. Multi-Market and Other segment net revenue decreased 24% to $58.1 million for the nine months endedSeptember 30, 2015 compared to $76.1 million for the nine months endedSeptember 30, 2014. The decrease resulted primarily from a decline in our Aerospace business, the adverse effect of foreign currency translation associated with the decline of the Euro against the U.S. dollar and the exit of our XSense business. On April 16, 2015, we completed the sale of our XSense manufacturing assets and the related license of our XSense intellectual property assets, which have been included in this reporting segment. See Note 12 of Notes to Condensed Consolidated Financial Statements for further discussion.

Net Revenue by Geographic Area

Our net revenue by geographic area for the three and nine months endedSeptember 30, 2015, compared to the three and nine months endedSeptember 30, 2014, is summarized in the table below. Revenue is attributed to regions based on the location to which we ship products, which may differ from the region to which products are ultimately sold and invoiced. See Note 11 of Notes to Condensed Consolidated Financial Statements for further discussion.

	Three Months Ended
	September 30, 2015		September 30, 2014		Change			% Change
	(in thousands, except for percentages)
Asia	$	157,308	$	219,515	$	(62,207	)	(28	)%
Europe	73,230		89,197		(15,967		)	(18	)%
United States	49,113		58,969		(9,856		)	(17	)%
Other*	6,882		6,804		78			1	%
Total net revenue	$	286,533	$	374,485	$	(87,952	)	(23	)%

26

	Nine Months Ended
	September 30, 2015		September 30, 2014		Change			% Change
	(in thousands, except for percentages)
Asia	$	506,797	$	608,078	$	(101,281	)	(17	)%
Europe	223,065		278,529		(55,464		)	(20	)%
United States	160,582		162,227		(1,645		)	(1	)%
Other*	20,730		18,546		2,184			12	%
Total net revenue	$	911,174	$	1,067,380	$	(156,206	)	(15	)%

________________________________________

* Primarily includes South Africa, and Central and South America

Net revenue outside the United States accounted for 83% and 82% of our net revenue for the three and nine months endedSeptember 30, 2015, respectively, and 84% and 85%of our net revenue for the three and nine months endedSeptember 30, 2014, respectively.

Our net revenue in Asia decreased by $62.2 million, or 28%, for the three months endedSeptember 30, 2015 compared to the three months endedSeptember 30, 2014. Net revenue in Asia decreased $101.3 million, or 17%, for the nine months endedSeptember 30, 2015 compared to the nine months endedSeptember 30, 2014. The change for both the three and nine months endedSeptember 30, 2015 resulted primarily from a decline in revenue from the mobile and consumer end markets. Net revenue for the Asia region was 55% and 56% of total net revenue for the three and nine months endedSeptember 30, 2015, respectively, compared to 59% and 57% of total net revenue for the three and nine months endedSeptember 30, 2014, respectively.

Our net revenue in Europe decreased by $16.0 million, or 18% for the three months endedSeptember 30, 2015 compared to the three months endedSeptember 30, 2014. Net revenue in Europedecreased$55.5 million, or20%, for the nine months endedSeptember 30, 2015 compared to the nine months endedSeptember 30, 2014. The revenue decreases in both the three and nine months endedSeptember 30, 2015 resulted primarily from adverse movements of the Euro against the U.S. dollar exchange rate and declining demand in the industrial end market. Net revenue for the Europe region was 26% and 24% of total net revenue for the three and nine months endedSeptember 30, 2015, respectively, compared to 24% and 26% of total net revenue for the three and nine months endedSeptember 30, 2014, respectively.    

Our net revenue in the United States decreased by $9.9 million, or 17%, for the three months endedSeptember 30, 2015 compared to the three months endedSeptember 30, 2014. Net revenue in the United States decreased by $1.6 million, or 1%, for the nine months endedSeptember 30, 2015 compared to the nine months endedSeptember 30, 2014. The revenue decreases in the three months ended September 30, 2015 were primarily due to decreased demand in the industrial and consumer end markets. The revenue decreases in the nine months ended September 30, 2015 were primarily due to decreased demand in the industrial end market, partially offset by increased demand in the consumer and communication end markets. Net revenue for the U.S. region was 17% and 18% of total net revenue for the three and nine months endedSeptember 30, 2015, respectively, compared to 16% and 15% of total net revenue for the three and nine months endedSeptember 30, 2014, respectively.

Revenue and Costs — Impact from Changes to Foreign Exchange Rates

Changes in foreign exchange rates have historically had an effect on our net revenue and operating costs. Net revenue denominated in foreign currencies, primarily Euros, were 19% of our total net revenue for each of the three months endedSeptember 30, 2015 and 2014, and 18% and 21% of our total net revenue for the nine months endedSeptember 30, 2015 and 2014, respectively.

Costs denominated in foreign currencies were 19% and 17% of our total costs for the three months endedSeptember 30, 2015 and 2014, respectively, and 19% and 18% of our total costs for the nine months endedSeptember 30, 2015 and 2014.

Average exchange rates utilized to translate foreign currency revenue and expenses denominated in Euros were approximately 1.11 and 1.35 Euros to the dollar for the three months endedSeptember 30, 2015 and 2014, respectively, and 1.12 and 1.36 Euros to the dollar for the nine months endedSeptember 30, 2015 and 2014, respectively.

Our net revenue for the three months endedSeptember 30, 2015 would have been approximately $11.2 million higher had the average exchange rate in the three months endedSeptember 30, 2015 remained the same as the average exchange rate in effect for the three months endedSeptember 30, 2014. Our income from operations for the three months endedSeptember 30, 2015 would have been approximately $0.3 million lower had the average exchange rate in the three months endedSeptember 30, 2015 remained the same as the average exchange rate in the three months endedSeptember 30, 2014.

Our net revenue for the nine months endedSeptember 30, 2015 would have been approximately $36.0 million higher had the average exchange rate in the nine months endedSeptember 30, 2015 remained the same as the average exchange rate in

27

effect for the nine months endedSeptember 30, 2014. Our income from operations for the nine months endedSeptember 30, 2015 would have been approximately $4.6 million higher had the average exchange rate in the nine months endedSeptember 30, 2015 remained the same as the average exchange rate in the nine months endedSeptember 30, 2014.

The exchange rate for the Euro against the U.S. dollar declined from 1.22 Euros to the dollar at January 1, 2015 to 1.11 Euros to the dollar at September 30, 2015. “Quantitative easing” undertaken by the European Central Bank, economic uncertainties associated with the financial stability of Greece, and similar economic factors affecting the European Union could cause a further decline in the Euro against the U.S. dollar or could introduce other unusual volatility into the foreign currency markets. As a result of these foreign currency exchange rate fluctuations, it may also be more difficult to detect underlying trends in our business and results of operations. We do not currently maintain a program to hedge transactional exposures in foreign currencies. See "Item 1A - Risk Factors".

Gross Margin

Gross margin was 46.5% and 46.3% for the three and nine months endedSeptember 30, 2015, respectively, compared to 47.2% and 44.8% for the three and nine months endedSeptember 30, 2014, respectively. The quarter over quarter reduction in gross margin was primarily due to the adverse effect of foreign currency translation associated with the decline of the Euro against the U.S. dollar and reduced production volumes partially offset by manufacturing cost improvements and improved margins on new products. The year to date improvement in gross margin, compared to the same period in 2014, was driven by improved margin on new products, a $7.1 million loss related to the manufacturing facility damage and unplanned shutdown at our Colorado Springs plant that occurred in December 2013 and continued into early 2014, and manufacturing cost improvements.

Inventory decreased to $267.6 million at September 30, 2015 from $278.2 million at December 31, 2014, primarily due to lower builds in response to lower customer demand although the number of days of inventory increased to 159 days from 123 days, respectively.

For the nine months endedSeptember 30, 2015, we manufactured approximately 61% of our products in our own wafer fabrication facility compared to 57% for the nine months endedSeptember 30, 2014.

Our cost of revenue includes the costs of wafer fabrication, assembly and test operations, inventory write-downs, royalty expense, freight costs and share-based compensation expense. Our gross margin as a percentage of net revenue fluctuates depending on product mix, manufacturing yields, utilization of manufacturing capacity, reserves for excess and obsolete inventory, and average selling prices, among other factors.

Research and Development

Research and development ("R&D") expenses decreased 20%, or $14.1 million, to $55.8 million for the three months endedSeptember 30, 2015 from $69.9 million for the three months endedSeptember 30, 2014. R&D expenses decreased 17%, or $34.8 million, to $175.0 million for the nine months endedSeptember 30, 2015 from $209.8 million for the nine months endedSeptember 30, 2014. R&D expenses decreased, compared to the same period in 2014, primarily due to a reduction in XSense R&D expense, favorable exchange rate movements and enhanced cost controls. As a percentage of net revenue, R&D expenses totaled 19% for each of the three and nine months endedSeptember 30, 2015, compared to 19% and 20% for the three and nine months endedSeptember 30, 2014, respectively.

We believe that continued strategic investments in R&D, primarily related to new product development are essential for us to remain competitive in the markets we serve.

Selling, General and Administrative

Selling, general and administrative ("SG&A") expenses decreased 1%, or $0.5 million, to $64.8 million for the three months endedSeptember 30, 2015 from $65.3 million for the three months endedSeptember 30, 2014. SG&A expenses decreased 4%, or $7.4 million, to $186.8 million for the nine months endedSeptember 30, 2015 from $194.2 million for the nine months endedSeptember 30, 2014. SG&A expenses decreased, compared to the same period in 2014, primarily due to exchange rate movements, partially offset by the merger-related expense of $7.8 million associated with our pending acquisition by Dialog. As a percentage of net revenue, SG&A expenses totaled 23% and 21% for the three and nine months endedSeptember 30, 2015, respectively, compared to 17% and 18% for the three and nine months endedSeptember 30, 2014, respectively.

Share-Based Compensation

We primarily issue restricted stock units to our employees as equity compensation. Employees may also participate in an Employee Stock Purchase Program ("ESPP") that offers the ability to purchase stock through payroll withholdings at a discount to the market price. We did not issue stock options to our employees as equity compensation during the three and nine months endedSeptember 30, 2015 and 2014. Share-based compensation expense for any stock options and ESPP shares is based on the fair value of the award at the measurement date (grant date). The compensation amount for those options is calculated using a Black-Scholes option valuation model.

28

For restricted stock unit awards, the compensation amount is determined based upon the market price of our common stock on the grant date discounted for expected future dividends. Share-based compensation for restricted stock units, other than performance-based units described below, is recognized as an expense over the applicable vesting term for each employee receiving restricted stock units.

The recognition as expense of the fair value of performance-related share-based awards is determined based upon management’s estimate of the probability and timing for achieving the associated performance criteria, utilizing the fair value of the common stock on the grant date. Share-based compensation for performance-related awards is recognized over the estimated performance period, which may vary from period to period based upon management’s estimates of achievement and the timing to

achieve the related performance goals. These awards vest once the performance criteria are met.

See Note 6 of Notes to Condensed Consolidated Financial Statements for the summary of share-based compensation included in operating results.

Under the Atmel 2015 Long-Term Performance-Based Incentive Plan, we recorded total share-based compensation expense of $0.5 million and $2.0 million for the three and nine months endedSeptember 30, 2015, respectively.

Under the Atmel 2014 Long-Term Performance-Based Incentive Plan, we recorded total share-based compensation expense of $0.3 million and $1.7 million for the three and nine months endedSeptember 30, 2015, respectively, and $0.7 million and $2.7 million in the three and nine months endedSeptember 30, 2014, respectively.

Acquisition-Related Charges

We recorded total acquisition-related charges of $2.4 million and $10.6 million for the three and nine months endedSeptember 30, 2015, respectively, compared to $7.2 million and $10.3 million for the three and nine months endedSeptember 30, 2014, respectively. Acquisition-related charges decreased period-over-period primarily due to one-time bonus expense and advisory, legal and consulting fees incurred with the acquisition of Newport Media, Inc. ("NMI") during the quarter ended September 31, 2014.

Included in those acquisition-related charges is amortization of $2.2 million and $3.3 million for the three months endedSeptember 30, 2015 and 2014, respectively, and $7.5 million and $5.9 million for the nine months endedSeptember 30, 2015 and 2014, respectively, associated with customer relationships, developed technology, trade name, non-compete agreements and backlog. We estimate that charges related to amortization of intangible assets will be approximately $2.0 million for the remainder of 2015.

We also recorded other compensation related charges for these acquisitions of $0.2 million and $3.1 million for the three and nine months endedSeptember 30, 2015, respectively, and $1.1 million and $1.6 million for the three and nine months endedSeptember 30, 2014, respectively.

Restructuring Charges

See Note 13 of Notes to Condensed Consolidated Financial Statements for the summary of activity related to the accrual for restructuring charges detailed by event.

We record restructuring liabilities related to workforce reductions when the accounting recognition criteria are met and consistent with management's approval and commitment to the restructuring plans in each particular quarter. The restructuring plans identify the number of employees to be terminated, job classifications and functions, location and the date the plan is expected to be completed. As of September 30, 2015, we expect the majority of the remaining employee termination costs and facility exit costs to be paid by the end of fiscal 2016.

2015 Restructuring Charges

Restructuring charges recorded in 2015 related to workforce reductions, primarily in the U.S., in connection with our decision to exit the XSense business and workforce reductions and other costs in connection with our decision to shut down an assembly operations plant in the Philippines. These actions, which are consistent with management's approval of the restructuring plan and the communication to affected employees, were intended to align operating expenses with macroeconomic conditions and revenue outlooks, and to improve operational efficiency, competitiveness and business profitability. We also recorded additional restructuring charges related to workforce reductions in France. During the three months ended September 30, 2015, the Company recorded restructuring credits of $0.6 million primarily due to pension curtailment gain upon termination of employees affected by the Philippines restructuring, and gain on sale of certain equipment located in the Philippines, which were offset by employee termination costs. The restructuring charges recorded during the nine months ended September 30, 2015 were $5.4 million.

All employees affected by the Philippines restructuring ceased active service as of September 30, 2015.

2014 Restructuring Charges

29

Restructuring charges were recorded in the third and fourth quarters of 2014. The charges primarily related to workforce reductions in France. These actions were intended to align operating expenses with macroeconomic conditions and revenue outlooks, and to improve operational efficiency, competitiveness and business profitability. In connection with formulating this restructuring plan, during the third and fourth quarters of 2014, we confidentially negotiated and developed a “social plan” in coordination and consultation with the local Works Council. This social plan, which is subject to French law, set forth general parameters, terms and benefits for both voluntary and involuntary employee dismissals.

Based on the information available to us as of the date of this Form 10-Q, the dates on which employees affected by the restructurings in 2013, 2014 and 2015 as described above ceased or are currently expected to cease their service with us, and assuming the absence of material labor discord, litigation or other unforeseen issues arising with respect to those matters, we believe that the estimated annual savings from the restructuring actions described above will be approximately $75.0 million, comprising approximately $25.0 million from cost of sales, approximately $41.0 million from research and development expense and approximately $9.0 million from selling, general and administrative expense. Actual savings realized may differ, however, if our assumptions are incorrect or if other unanticipated events occur. Savings may also be offset, or additional expenses incurred, if, and when, we make additional investments in labor, materials or capital in our business in the future. Savings achieved in connection with one series of restructuring activities may not necessarily be indicative of savings that may be realized in other restructuring activities nor may the timing of savings realized in connection with our restructuring actions be similar to, or consistent with, the timing of benefits realized in other restructuring activities that we may undertake at any time.

Interest and Other Income (Expense), Net

	Three Months Ended						Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(in thousands)
Interest and other income (expense)	$	322		$	(1,796	)	$	1,800		$	(1,706	)
Interest expense	(803		)	(731		)	(2,155		)	(1,722		)
Foreign exchange transaction gains (losses)	536			(2,204		)	5,272			(2,428		)
Total	$	55		$	(4,731	)	$	4,917		$	(5,856	)

Interest and other income (expense), net, resulted in income of $0.06 million and $4.9 million for the three and nine months endedSeptember 30, 2015, respectively, compared to expense of $4.7 million and $5.9 million for the three and nine months endedSeptember 30, 2014, respectively, primarily due to gain on sale of investment in privately-held companies of $1.3 million during the second quarter of 2015 and higher net foreign exchange gains in 2015. Included in interest and other expense, net, was our proportionate share of losses from an investment in a privately-held company that provides facilities services to our site in Heilbronn, Germany; these losses were accounted for under the equity method and equaled $1.8 million and $2.1 million for the three and nine months ended September 30, 2014, respectively. We sold our equity interest in the privately-held company during the third quarter of 2015. See Note 12 of Notes to Condensed Consolidated Financial Statements for further discussion. We continue to have balance sheet exposures in foreign currencies subject to exchange rate fluctuations and may incur further gains or losses in the future as a result of such foreign exchange exposures.

Gain on Sale of Assets

Sale of Heilbronn Real Estate

On September 23, 2015, we completed the sale to an unrelated party of our real estate holdings in Heilbronn, Germany and our equity interest in a privately-held company that provides facilities services for the tenants at that property for a total of $11.5 million. We also entered into an agreement to lease back a portion of the office space for a three-year period. The total gain of $3.1 million was reduced by our proportionate share of the investee’s equity adjustments for other comprehensive income of $2.1 million upon discontinuation of the equity investment. A portion of the gain equivalent to the present value of the minimum lease payments associated with the sale-leaseback transaction of $1.1 million will be recognized as a reduction to rent expense over the three-year lease term. During the three months ended September 30, 2015, we recognized $0.2 million of loss on sale of assets included in the Condensed Consolidated Statement of Operations. 

Sale of XSense

On April 16, 2015, we completed the sale of XSense touch sensor assets to UniPixel, Inc. In connection with the transaction, we transferred our XSense related manufacturing assets to UniPixel, which is also assuming related operating costs, and separately licensed to UniPixel its XSense patent portfolio and other intellectual property, which we have retained. The intellectual property licenses have an initial five-year term, renewable by UniPixel for an additional ten-year term. We will receive minimum royalties during the initial five-year term equal to $16.3 million, of which $9.3 million was prepaid in cash at the close of the transaction. Under the terms of the patent license agreement, we licensed to UniPixel its pending, published or issued XSense patents as of the close of the transaction and, subject to certain exclusions, any other patents owned or licensable by us during the license period to the

30

extent such patents are necessary to make, use, sell or otherwise dispose of licensed XSense products. We also agreed to lease facilities and provide transitional support to UniPixel for a limited period of time. 

Upon closing of this transaction, we recognized a gain of $2.2 million. See Note 12 of Notes to Condensed Consolidated Financial Statements for further discussion.

Provision for Income Taxes

For the three and nine months endedSeptember 30, 2015, we recorded an income tax provision of $11.1 million and $28.5 million, respectively. For the three and nine months endedSeptember 30, 2014, we recorded an income tax provision of $11.6 million and $20.3 million, respectively. For the three and nine months endedSeptember 30, 2015, our effective tax rate was higher than the U.S. statutory federal income tax rate of 35%, primarily due to a decrease of profit in jurisdictions with lower tax rates, discrete interest charges related to uncertain tax positions, gain on the sale of certain capital assets, nondeductible costs associated with the pending acquisition, and the cumulative impact of a higher annual effective tax rate. For the three and nine months endedSeptember 30, 2014, the significant components of the tax provision were from operations in jurisdictions with operating profits. The Company’s effective tax rate for the nine months ended September 30, 2014 was lower than the statutory federal income tax rate of 35%, primarily due to income recognized in lower tax jurisdictions.

We regularly assess our tax provision in light of legislative, bilateral tax treaty, regulatory and judicial developments in the countries in which we do business. We have tax audits in progress in various non-U.S. jurisdictions, including jurisdictions where we have or have had significant operations. To the extent the final tax liabilities are different from the amounts accrued, the increases or decreases will be recorded as income tax expense or benefit in the period of final or effective resolution.

For further discussion of our income tax provision, see Note 9 of Notes to Condensed Consolidated Financial Statements.

Liquidity and Capital Resources

At September 30, 2015, we had $218.7 million of cash and cash equivalents, compared to $206.9 million at December 31, 2014. The fluctuation in cash balances results primarily from the timing of vendor payables and customer receivables, capital purchases of fixed assets, payment of cash dividends, principal repayments under our credit facility, common stock repurchases, and tax payments related to vested restricted stock units. For the nine months ended September 30, 2015, the increase in cash and cash equivalents resulted primarily from decreases in common stock repurchases and capital purchases of fixed assets which were offset by timing of vendor payables. Our current asset to liability ratio, calculated as total current assets divided by total current liabilities, was 3.08 at September 30, 2015 compared to 2.71 at December 31, 2014. Working capital, calculated as total current assets less total current liabilities, increased to $526.8 million at September 30, 2015, compared to $502.7 million at December 31, 2014. Cash provided by operating activities was $96.7 million for the nine months endedSeptember 30, 2015 compared to cash provided by operating activities of $142.6 million for the nine months endedSeptember 30, 2014, and capital expenditures totaled $26.0 million and $37.8 million for the nine months endedSeptember 30, 2015 and 2014, respectively.

As of September 30, 2015, of the $218.7 million aggregate cash and cash equivalents held by us, the amount of cash and cash equivalents held by our foreign subsidiaries was $187.0 million. If the funds held by our foreign subsidiaries were needed for our operations in the United States, the repatriation of some of these funds to the United States could require payment of additional U.S. taxes.

Senior Secured Revolving Credit Facility

On December 6, 2013, we entered into a five-year $300.0 million, senior secured revolving credit facility. As of September 30, 2015, after principal repayments, we had $55.0 million of outstanding principal borrowings and $245.0 million available under the Facility and we were in compliance with all financial covenants under the Credit Agreement. No principal payments are due until maturity. Interest on the borrowed amount equals the applicable periodic LIBOR rate, plus 1.25% per annum, and was $0.4 million and $1.1 million for the three and nine months endedSeptember 30, 2015. The Facility matures on December 6, 2018. We do not expect to make any further repayments of principal pending completion of our Merger with Dialog.

Other Debt Obligations

Our short-term debt obligations amounted to $9.4 million and $7.3 million as of September 30, 2015 and December 31, 2014, respectively. As of September 30, 2015, $7.8 million related to an amount previously advanced from a foreign government and the remaining balance of $1.6 million related to a loan owed to a privately-held company in which the Company owned an equity interest until September 23, 2015. The foreign government advance was repaid in full on October 8, 2015.

Operating Activities

Net cash provided by operating activities was $96.7 million for the nine months endedSeptember 30, 2015, compared to net cash provided by operating activities of $142.6 million for the nine months endedSeptember 30, 2014. Net cash provided by operating activities for the nine months endedSeptember 30, 2015 was determined primarily by adjusting net income of $22.2 million for non-cash depreciation and amortization charges of $42.0 million, and share-based compensation charges of $38.9 million.

31

Accounts receivable decreased by 9% or $19.8 million to $202.2 million at September 30, 2015, from $222.0 million at December 31, 2014. The average number of days of accounts receivable outstanding increased to 64 days for the three months endedSeptember 30, 2015 compared to 58 days for the three months endedDecember 31, 2014, primarily due to greater shipments in the last month of the quarter ended September 30, 2015 in comparison to the last month of the quarter ended December 31, 2014.

Inventories decreased to $267.6 million at September 30, 2015 from $278.2 million at December 31, 2014. Inventories consist of raw wafers, purchased foundry wafers, work-in-progress and finished units. Our number of days of inventory increased to 159 days for the three months endedSeptember 30, 2015 from 123 days for the three months endedDecember 31, 2014, primarily due to the impairment of the XSense manufacturing assets of $26.6 million taken during the fourth quarter of 2014 and, to a lesser extent, the decline in revenue during the three months ended September 30, 2015.

Trade accounts payable and accrued and other current liabilities decreased by 19% or $45.3 million to $191.9 million at September 30, 2015 from $237.2 million at December 31, 2014 primarily due to lower expenditures for capital purchases and enhanced cost controls.

Investing Activities

Net cash used in investing activities was $2.5 million and $176.9 million for the nine months endedSeptember 30, 2015 and 2014, respectively. The decrease in cash used in investing activities period-over-period was primarily due to cash paid of $139.6 million for the acquisition of NMI during the quarter ended September 30, 2014. For the nine months endedSeptember 30, 2015, we paid $26.0 million for acquisitions of fixed assets as compared to $37.8 million in the nine months endedSeptember 30, 2014. The payment was partially offset by proceeds from the sale of Heilbronn Real Estate of $11.5 million, sale of the XSense assets of $8.9 million, and sales of investments in privately-held companies of $3.8 million.

We anticipate 2015 expenditures for capital purchases to be approximately $35.0 million to be used principally to maintain existing manufacturing operations and improve our information technology systems.

Financing Activities

Net cash used in financing activities was $82.0 million and $20.9 million for the nine months endedSeptember 30, 2015 and 2014, respectively. The increase in cash used in financing activities period-over-period was primarily due to the borrowing of $90.0 million under the Facility to assist with the acquisition of NMI during the quarter ended September 30, 2014. The cash used was primarily related to common stock repurchases of $12.0 million in the nine months endedSeptember 30, 2015, compared to $108.5 million in the nine months endedSeptember 30, 2014, cash dividends aggregating $50.2 million and principal repayments under the Facility of $20.1 million. Tax payments related to shares withheld for vested restricted stock units of $14.7 million compared to $15.7 million for the nine months ended September 30, 2015 and 2014, respectively. Proceeds from the issuance of common stock related to exercises of stock options and our employee stock purchase plan totaled $13.8 million and $13.2 million for the nine months endedSeptember 30, 2015 and 2014, respectively.

We believe our existing balances of cash and cash equivalents, together with anticipated cash flow from operations, and borrowing availability under our credit facility will be sufficient to meet our liquidity and capital requirements over the next twelve months. We also expect our operations to generate positive cash flow over that twelve month period.

Since a substantial portion of our operations is conducted through our foreign subsidiaries, our cash flow, ability to service debt, and payments to vendors are partially dependent upon the liquidity and earnings of our subsidiaries as well as the distribution of those earnings, or repayment of loans or other payments of funds by those subsidiaries, to us. Our foreign subsidiaries are separate and distinct legal entities and may be subject to local legal or tax requirements, or other restrictions that may limit their ability to transfer funds to other group entities including the U.S. parent entity, whether by dividends, distributions, loans or other payments.

During 2015 and in future years, our ability to make necessary capital investments or strategic acquisitions, or to pay cash dividends, will depend on our ability to continue to generate sufficient cash flow from operations and to obtain adequate financing if necessary. We believe we have sufficient working capital to fund our future operations, with $218.7 million in cash and cash equivalents as of September 30, 2015, expected future cash flows from operations and borrowing availability under our credit facility or other financing arrangements.

Off-Balance Sheet Arrangements (Including Guarantees)

See the paragraph under the heading “Guarantees” in Note 8 of Notes to Condensed Consolidated Financial Statements for a discussion of off-balance sheet arrangements.

Critical Accounting Policies and Estimates

32

Management’s Discussion and Analysis of Financial Condition and Results of Operations are based upon our Condensed Consolidated Financial Statements, which we have prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe that the estimates, assumptions and judgments involved in provisions for revenue, excess and obsolete inventory, sales reserves and allowances, share-based compensation expense, allowances for doubtful accounts receivable, estimates for useful lives associated with long-lived assets, recoverability of goodwill and intangible assets, restructuring charges, liabilities for uncertain tax positions, deferred tax asset valuation allowances and litigation have the greatest potential impact on our Condensed Consolidated Financial Statements, so we consider these to be our critical accounting policies. Historically, our estimates, assumptions and judgments relative to our critical accounting policies have not differed materially from actual results, although there can be no assurance that results will not differ in the future. The critical accounting estimates associated with these policies are described in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation” of our Annual Report on Form 10-K filed with the SEC on February 26, 2015.

Recent Accounting Pronouncements

See Note 1 of Notes to Condensed Consolidated Financial Statements for information regarding recent accounting pronouncements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We generally classify securities as available-for-sale, and consequently record them in the Condensed Consolidated Balance Sheets at fair value with unrealized gains and losses being recorded as a separate part of stockholders’ equity. We do not currently hedge these interest rate exposures. Given our current profile of interest rate exposures and the maturities of our investment holdings, we believe that an unfavorable change in interest rates would not have a significant negative impact on our statements of operations through September 30, 2015.

Foreign Currency Risk

The U.S. dollar experienced substantial appreciation against the Euro during the nine months endedSeptember 30, 2015. Changes in foreign exchange rates have historically had an effect on our net revenue and operating costs. We expect further volatility to affect, and possible further declines in the value of the Euro in 2015. That volatility and those declines, if substantial, may adversely affect our reported revenue and gross margin. Those same decreases may also cause reductions in our operating costs, although those decreases may not fully offset decreases in gross margin.

When we take an order denominated in a foreign currency we will receive fewer dollars, and lower revenue, than we initially anticipated if that local currency weakens against the dollar before we ship our product. Conversely, revenue will be positively impacted if the local currency strengthens against the dollar before we ship our product. Costs may also be affected by foreign currency fluctuation. For example, in Europe, where we have costs denominated in European currencies, costs will decrease if the local currency weakens. Conversely, all costs will increase if the local currency strengthens against the dollar. This impact is determined assuming that all foreign currency denominated transactions that occurred for the nine months endedSeptember 30, 2015 were recorded using the average foreign currency exchange rates in the nine months endedSeptember 30, 2014. We do not use derivative instruments to hedge our foreign currency risk.

Changes in foreign exchange rates have historically had an effect on our net revenue and operating costs. Net revenue denominated in foreign currencies, primarily Euros, was 19% of our total net revenue for each of the three months endedSeptember 30, 2015 and 2014, and 18% and 21% of our total net revenue for the nine months endedSeptember 30, 2015 and 2014, respectively.

Costs denominated in foreign currencies were 19% and 17% of our total costs for the three months endedSeptember 30, 2015 and 2014, respectively, and 19% and 18% of our total costs for the nine months endedSeptember 30, 2015 and 2014, respectively.

Average exchange rates utilized to translate foreign currency revenue and expenses denominated in Euros were approximately 1.11 and 1.35 Euros to the dollar for the three months endedSeptember 30, 2015 and 2014, respectively, and 1.12 and 1.36 to the dollar for the nine months endedSeptember 30, 2015 and 2014, respectively. Our net revenue for the three months endedSeptember 30, 2015 would have been approximately $11.2 million higher had the average exchange rate in the three months endedSeptember 30, 2015 remained the same as the average exchange rate in effect for the three months endedSeptember 30,

33

2014. Our income from operations would have been approximately $0.3 million lower had the average exchange rate in the three months endedSeptember 30, 2015 remained the same as the average exchange rate in the three months endedSeptember 30, 2014. Our net revenue for the nine months endedSeptember 30, 2015 would have been approximately $36.0 million higher had the average exchange rate in the nine months endedSeptember 30, 2015 remained the same as the average exchange rate in effect for the nine months endedSeptember 30, 2014. Our income from operations for the nine months endedSeptember 30, 2015 would have been approximately $4.6 million higher had the average exchange rate in the nine months endedSeptember 30, 2015 remained the same as the average exchange rate in the nine months endedSeptember 30, 2014.

We also face the risk that our accounts receivable denominated in foreign currencies will be devalued if such foreign currencies weaken quickly and significantly against the dollar. Approximately 20% and 18% of our accounts receivable were denominated in foreign currency as of September 30, 2015 and December 31, 2014, respectively.

Similarly, we face the risk that our accounts payable and debt obligations denominated in foreign currencies will increase if such foreign currencies strengthen quickly and significantly against the dollar. Approximately 4% and 5% of our accounts payable were denominated in foreign currencies at September 30, 2015 and December 31, 2014, respectively. We have not historically sought to hedge our foreign currency exposure, although we may determine to do so in the future.

Our most significant currency exposures generally relate to the Euro, Norwegian Krone and British Pound and to a lesser extent, the Chinese Yuan and Malaysian Ringgit. To provide an assessment of the foreign currency exchange risk associated with our foreign currency exposures within revenue, cost and operating expense, we performed a sensitivity analysis to determine the impact that an adverse change in exchange rates of the U.S. dollar against each of those currencies

would have on our financial statements. A hypothetical weighted-average change of 10% in the exchange rates of all currencies to which we have exposure would have changed our operating income before taxes by approximately $0.6 million for the three months endedSeptember 30, 2015, assuming no offsetting hedge positions. We may experience exposure, over time, to currencies other than those referred to in this paragraph, which may also affect our sensitivity analysis.

There remains ongoing uncertainty regarding the future of the Euro as a common currency and the Eurozone. While we continue to monitor the situation, the elimination of the Euro as a common currency, the withdrawal of member states from the Eurozone, or other events affecting the liquidity, volatility or use of the Euro could have a significant effect on our revenue and operations. In addition, “quantitative easing” undertaken by the European Central Bank, economic uncertainties associated with the financial stability of Greece, and similar economic factors affecting the European Union could cause a further decline in the Euro against the U.S. dollar or could introduce other unusual volatility into the foreign currency markets. As a result of these foreign currency exchange rate fluctuations, it may also be more difficult to detect underlying trends in our business and results of operations. We do not currently maintain a program to hedge transactional exposures in foreign currencies. See "Item 1A - Risk Factors".

Liquidity and Valuation Risk

Approximately $1.1 million of our investment portfolio was invested in an auction-rate security at both September 30, 2015 and December 31, 2014.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Effectiveness of Disclosure Controls and Procedures

As of the end of the period covered by this Form 10-Q, under the supervision of our Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures, as such terms are defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities and Exchange Act of 1934. Based on this evaluation our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Form 10-Q to ensure that information we are required to disclose in reports that we file or submit under the Securities and Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure, and that such information is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

Limitations on the Effectiveness of Controls

Our management, including our Chief Executive Officer and our Chief Financial Officer, does not expect that our disclosure controls or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Atmel have been detected.

Changes in Internal Control over Financial Reporting

34

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are party to various legal proceedings. Our management currently believes, based on information and facts currently known, that the ultimate outcome of these proceedings, individually and in the aggregate, will not have a material adverse effect on our financial position, results of operations and statement of cash flows. If an unfavorable ruling were to occur in any of the legal proceedings described in Note 8 of Notes to Condensed Consolidated Financial Statements, there exists the possibility of a material adverse effect on our financial position, results of operations and cash flows. For more information regarding certain details of these proceedings, see Note 8 of Notes to Condensed Consolidated Financial Statements, which is incorporated by reference into this Item. We accrue for losses related to litigation described in Note 8 of Notes to Condensed Consolidated Financial Statements that we consider probable and for which the loss can be reasonably estimated. We make a determination as to when a potential loss is reasonably probable based on relevant accounting literature and then include appropriate disclosure of the contingency. As we continue to monitor litigation matters, whether deemed material as of September 30, 2015 or not, our determination could change, and we may decide, at some future date, to establish an appropriate reserve.

ITEM 1A. RISK FACTORS

In addition to the other information contained in this Form 10-Q, we have identified the following risks and uncertainties that may have a material adverse effect on our business, financial condition, or results of operations. Investors should carefully consider the risks described below before making an investment decision. The trading price of our common stock could decline due to any of these risks, and investors may lose all or part of their investment. In addition, these risks and uncertainties may affect the “forward-looking” statements described elsewhere in this Form 10-Q and in the documents incorporated herein by reference. They could also affect our actual results of operations, causing them to differ materially from those expressed in “forward-looking” statements.

THE ANNOUNCEMENT AND PENDENCY OF OUR AGREEMENT TO BE ACQUIRED BY DIALOG MAY HAVE AN ADVERSE EFFECT ON OUR BUSINESS AND OUR STOCK PRICE.

Our pending acquisition by Dialog could have an adverse effect on our revenue in the near term if our customers delay, defer or cancel purchases pending completion of the Merger. While we are attempting to address this risk through communications with our customers, current and prospective customers may be reluctant to purchase our products due to uncertainty about the direction of our product offerings and the support and service of our products after the Merger is consummated. Additionally, we are subject to additional risks in connection with the announcement and pendency of the Merger, including:

• the pendency and outcome of any legal proceedings that have been or may be instituted against us, our directors and others relating to the transactions contemplated by the Merger Agreement;

• potential adverse effects on our relationships with our current suppliers and other business partners, or those with which we are seeking to establish business relationships;

• the restrictions imposed on our business and operations under the Merger Agreement, which may prevent us from pursuing opportunities without Dialog’s approval or taking other actions, whether in the form of dividend payments, stock repurchases, restructurings, asset dispositions or otherwise, that we might have undertaken in the absence of this transaction;

• that we may forego opportunities we might otherwise have pursued absent the Merger Agreement;

• potential adverse effects on our ability to attract, recruit, retain and motivate current and prospective employees who may be uncertain about their future roles and relationships with us following the completion of the Merger; and

• the significant diversion of our employees’ and management’s attention resulting from the transactions contemplated by the Merger Agreement.

THE FAILURE OF OUR PENDING ACQUISITION BY DIALOG TO BE COMPLETED MAY ADVERSELY AFFECT OUR BUSINESS AND OUR STOCK PRICE.

35

Each of our and Dialog’s obligation to consummate the Merger is subject to a number of conditions specified in the Merger Agreement, including the following: (i) adoption of the Merger Agreement by Atmel’s stockholders; (ii) affirmative vote of the holders of a majority of Dialog’s outstanding ordinary shares present at a meeting,; (iii) approval for listing on either The NASDAQ Stock Market or the New York Stock Exchange of the ADSs to be issued in the Merger, and written confirmation from the Frankfurt Stock Exchange that it will admit the Dialog Shares underlying the ADSs to trading on the FSE immediately upon issuance of the Dialog Shares; (iv) expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and receipt of antitrust clearances in Germany and Romania; (v) approval of the Merger by the Committee on Foreign Investment in the United States; (vi) absence of laws, orders, judgments and injunctions that enjoin or otherwise prohibit consummation of the Merger or any proceedings instituted by a governmental entity with competent jurisdiction seeking any of the foregoing; (vii) effectiveness under the Securities Act of 1933 of the Form F-4 registration statement to be filed with the U.S. Securities and Exchange Commission (the “SEC”) by Dialog and related registration statements; (viii) subject to certain materiality related standards contained in the Merger Agreement, the accuracy of representations and warranties of Atmel and Dialog and material compliance by Atmel and Dialog with their respective covenants contained in the Merger Agreement; and (ix) the absence of a material adverse effect with respect to the other party. There can be no assurance that these conditions to the completion of the transaction will be satisfied in a timely manner or at all.

If the transaction is not completed, our stock price could fall to the extent that our current price reflects an assumption that the acquisition will be completed. Furthermore, if the acquisition is not completed, we may suffer other consequences that could adversely affect our business, results of operations and stock price, including the following:

• we could be required to pay a termination fee of up to $137.3 million to Dialog under circumstances as described in the Merger Agreement;

• we would have incurred significant costs in connection with the acquisition that we would be unable to recover;

• we may be subject to legal proceedings related to the acquisition;

• the failure of the acquisition to be consummated may result in adverse publicity and a negative impression of us in the investment community;

• any disruptions to our business resulting from the announcement and pendency of the acquisition, including any adverse changes in our relationships with our customers, vendors and employees, may continue or intensify in the event the Merger is not consummated;

• our Chief Executive Officer announced his retirement prior to the execution of the Merger Agreement; if we did not complete the transaction with Dialog, we would need to recruit and hire a new Chief Executive Officer, which would lead to further uncertainty about our business and strategy;

• we may not be able to take advantage of alternative business opportunities or effectively respond to competitive pressures; and

• we may experience employee departures.

LITIGATION AGAINST DIALOG AND US, OR THE MEMBERS OF OUR BOARD OF DIRECTORS, COULD PREVENT OR DELAY THE COMPLETION OF THE TRANSACTION OR RESULT IN THE PAYMENT OF DAMAGES FOLLOWING COMPLETION OF THE TRANSACTION.

Following the announcement on September 20, 2015 of the execution of the Merger Agreement, putative stockholder class action complaints were filed by purported stockholders of the Company. As of October 29, 2015, we had received the following complaints: (i) Kevin Crosby, et al. v. Atmel Corporation, et al., Case No. 11564, filed on October 2, 2015 (Court of Chancery of the State of Delaware); (ii) Craig Martin, et al. v. Steven A. Laub, et al., Case No. 11576, filed on October 5, 2015 (Court of Chancery of the State of Delaware); and (iii) Bill Tsantes et al. v. Atmel Corporation, et al., Case No. 115CV286958, filed on October 16, 2015 (Superior Court of the State of California, County of Santa Clara). The complaints purport to be brought on behalf of all similarly situated Company stockholders and generally allege that the members of our Board of Directors breached their fiduciary duties to our stockholders by approving the Merger for inadequate consideration, entering into a merger agreement containing preclusive deal protection devices, and failing to take steps to maximize the value to be paid to stockholders. The complaints also assert claims against Dialog, Merger Sub and/or the Company for allegedly aiding and abetting these alleged breaches of fiduciary duties. The complaints seek preliminary and permanent injunctions against the completion of the Merger or rescission in the event the Merger has already been completed, or, alternatively, damages in favor of the plaintiffs and the class. While we believe the claims asserted by the plaintiffs to be without merit, the results of these legal proceedings are difficult to predict, and could delay or prevent the Merger from becoming effective in a timely manner. The existence of litigation relating to the Merger could affect the likelihood of obtaining the required approvals from either our or Dialog’s stockholders. Moreover, any future additional litigation could be time consuming and expensive, could divert our management’s attention away from their regular business and, if any lawsuit is adversely resolved against either Dialog, us or members of our Board of Directors (each of whom we are required to indemnify pursuant to

36

indemnification agreements), could have a material adverse effect on our financial condition. One of the conditions to the completion of the Merger is that no governmental entity having jurisdiction over Dialog or us shall have issued an order, decree or ruling or taken any other action enjoining or otherwise prohibiting the completion of the Merger substantially on the terms contemplated by the Merger Agreement, that no law shall have been enacted or promulgated by any such governmental entity that makes the completion of the Merger illegal and that no such governmental entity shall have instituted proceedings seeking any such law or order. Consequently, if a settlement or other resolution is not reached in any lawsuit referenced above and a claimant secures injunctive or other relief prohibiting, delaying or otherwise adversely affecting Dialog’s and/or our ability to complete the Merger on the terms contemplated by the Merger Agreement, then such injunctive or other relief may prevent the Merger from becoming effective in a timely manner or at all.

THE MERGER AGREEMENT CONTAINS CUSTOMARY PROVISIONS THAT MAY LIMIT OUR ABILITY TO PURSUE ALTERNATIVE PROPOSALS, WHICH COULD DISCOURAGE ALTERNATIVE PROPOSALS FROM COMPETING BIDDERS AND/OR REQUIRE US TO PAY A TERMINATION FEE TO DIALOG.

The Merger Agreement contains customary provisions that generally prevent us from pursuing alternative sale proposals, subject to exceptions set forth in the Merger Agreement relating to the receipt of unsolicited offers, and we could be required to pay a termination fee of up to $137.3 million to Dialog under circumstances described in the Merger Agreement. These provisions could discourage an interested third-party bidder from making an alternative proposal to acquire us, even if that party were willing to pay a higher price to our stockholders. If the Merger Agreement is terminated, we may not be able to negotiate an alternative transaction with another party on terms comparable to, or better than, the terms of the Merger Agreement, if at all.

ANY DELAY IN COMPLETING THE MERGER MAY SIGNIFICANTLY REDUCE THE BENEFITS EXPECTED TO BE OBTAINED FROM THE MERGER.

In addition to the required regulatory clearances and approvals described above under “The failure of our pending acquisition by Dialog to be completed may adversely affect our business and our stock price,” the Merger is subject to a number of other conditions described in the Merger Agreement that are beyond our control. We cannot predict whether and when these conditions, and the other required regulatory clearances and approvals will be satisfied. Any delay in completing the Merger within the expected timeframe may significantly reduce the synergies and other benefits that we expect to achieve as a result of the Merger.

OUR REVENUE AND OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY DUE TO A VARIETY OF FACTORS.

Our future operating results are subject to quarterly variations based upon a variety of factors, many of which are not within our control. As further discussed in this “Risk Factors” section, factors that could affect our operating results include, without limitation:

• uncertain or unstable global macroeconomic, geo-political and social conditions, including those in Europe (where deflationary pressures and high unemployment continue to exist and concerns about the financial stability of Greece and other members of the European Union continue), the Middle East (where U.S. military action remains ongoing and Russian intervention in Syria has occurred), and Asia (where economic activity in China has slowed).

• the effect of fluctuations in currency exchange rates, continued political and economic uncertainties within the European Union, or the possible exit of member states (such as Greece) from the European Union;

• restrictions in our revolving credit facility that may limit our flexibility in operating our business;

• the success of our customers’ end products, our ability to introduce new products into the market and to ramp production of new products, and our ability to improve and implement new manufacturing technologies, reduce manufacturing costs and achieve acceptable manufacturing yields;

• the cyclical nature of, and consolidation occurring within, the semiconductor industry;

• disruption to our business caused by our dependence on outside foundries, and the insolvency and liquidation proceedings, and associated litigation, of those foundries in some cases;

• our dependence on selling through independent distributors and our ability to obtain accurate and timely sell-through information from these distributors;

• the complexity of our revenue reporting and dependence on our management’s ability to make judgments and estimates regarding inventory write-downs, future claims for returns and other matters affecting our financial statements;

• our reliance on non-binding customer forecasts and the effect of customer changes to forecasts and actual demand;

• the increasing complexity and added costs, compliance and otherwise, associated with laws and regulations around the world that affect our businesses and activities, including, for example, trade, export control, foreign corrupt practices, and bribery regulations;

37

• compliance with regulations regarding the use of “conflict minerals” and the resulting potential for increased costs for certain metals used in manufacturing our products resulting therefrom;

• the capacity constraints of our independent assembly contractors;

• the effect of intellectual property and other litigation on us and our customers, and our ability to protect our intellectual property rights;

• the highly competitive nature of our markets and our ability to keep pace with technological change;

• our dependence on international sales and operations and the added complexity and compliance costs associated therewith;

• information technology system failures or network disruptions and disruptions caused by our system integration efforts;

• business interruptions, natural disasters, terrorist acts or similar unforeseen events or circumstances;

• our ability to maintain relationships with our key customers, the absence of long-term supply contracts with most of our customers, and product liability claims our customers may bring;

• unanticipated changes to environmental, health and safety regulations or related compliance issues;

• our dependence on certain key personnel;

• uneven expense recognition related to our issuance of performance-based restricted stock units or expectations related to cash-based executive incentive plans;

• the anti-takeover effects of provisions in our certificate of incorporation and bylaws;

• the unfunded nature of our foreign pension plans;

• the effect of acquisitions we may undertake, including our ability to effectively integrate acquisitions into our operations;

• disruptions in the availability of raw materials used in our products;

• the complexity of our global legal entity structure, the effect of intercompany loans within this structure, and the occurrence and outcome of income tax audits for these entities; and

• our receipt of economic grants in various jurisdictions, which may require repayment if we are unable to comply with the terms of such grants.

Any unfavorable changes in any of these or other factors could harm our operating results and may result in volatility or a decline in our stock price.

A VOLATILE, OR FALLING, EURO, OR VOLATILITY IN OTHER NON-U.S. CURRENCIES, MAY ADVERSELY AFFECT OUR REVENUE OR OPERATING RESULTS

Although we conduct transactions principally in the U.S. dollar, approximately 19% of our revenue for the three months endedSeptember 30, 2015 were generated in the Euro currency and approximately 19% of our operating expenses for the three months endedSeptember 30, 2015 were incurred in Euro and other non-U.S. currencies. The exchange rate for the Euro against the U.S. dollar declined from 1.22 Euros to the dollar at January 1, 2015 to 1.12 Euros to the dollar at September 30, 2015. “Quantitative easing” undertaken by the European Central Bank, economic uncertainties associated with the financial stability of Greece, and similar economic factors affecting the European Union could cause a further decline in the Euro against the U.S. dollar or could introduce other unusual volatility into the foreign currency markets. Changes in the value of foreign currencies, including, in particular, the Euro, relative to the U.S. dollar can affect our revenue and operating results due to transactional and translational re-measurements that are reflected in our earnings, which are reported in U.S. dollars. A decrease in the value of the Euro against the U.S. dollar may cause a reduction in our reported revenue. That same decrease may also cause a reduction in our operating costs. Decreases in revenue, and decreases in operating costs, resulting from these foreign currency valuation events may not move in lock-step. Variations in the exchange rate of other foreign currencies may have similar effects, although those variations would not currently be expected to have the same significance as changes in the value of the Euro to our company. As a result of these foreign currency exchange rate fluctuations, it may also be more difficult to detect underlying trends in our business and results of operations. Significant volatility in currency exchange rates may also cause our results of operations to differ from our expectations or the expectations of our investors, which could also cause the trading price of our common stock to be adversely affected. We do not currently maintain a program to hedge transactional exposures in foreign currencies. As of the date of this Form 10-Q, we manage our exchange rate risk by matching foreign currency cash balances with expenses accrued in those foreign

38

currencies.

UNCERTAIN OR UNSTABLE GLOBAL MACRO-ECONOMIC, GEO-POLITICAL AND SOCIAL CONDITIONS MAY AFFECT OUR BUSINESS.

Global macro-economic and geo-political conditions affecting the global economy or social order could adversely affect demand for our products and our business prospects from time to time. These conditions could include:

• slow, uneven economic growth throughout the world;

• continued uncertainty regarding macroeconomic conditions in Europe (including potential deflationary pressures, continuing high unemployment, the financial stability of Greece and other members of the European Union and possible exits from the European Union) and Asia (including an economic slowdown in China);

• geo-political events throughout the world, including, for example, in the Middle East (which has witnessed increased military activities in Iraq and Syria, including renewed U.S. involvement and Russian intervention) and Eastern Europe (involving Russian and Ukrainian territorial claims); and

• social unrest or disorder arising from the threat of global pandemics.

OUR REVOLVING CREDIT FACILITY IS SECURED BY SUBSTANTIALLY ALL OF OUR ASSETS AND MAY LIMIT OUR FLEXIBILITY IN OPERATING OUR BUSINESS. A DEFAULT UNDER THE CREDIT FACILITY COULD SIGNIFICANTLY HARM OUR BUSINESS AND FINANCIAL POSITION.

In December 2013, we entered into a five-year senior secured revolving credit facility for up to $300 million with a group of lenders. Our credit facility is secured by substantially all of our assets. It also imposes restrictions that may limit our ability to engage in certain business activities, including limitations on asset sales, mergers and acquisitions, the incurrence of indebtedness and liens, the making of restricted payments or investments and transactions with affiliates. In addition, the credit facility contains customary financial covenants, including a maximum total-leverage ratio, a maximum senior-secured-leverage ratio, and a minimum fixed-charge-coverage ratio. Our ability to comply with these financial covenants is dependent on our future performance, which is subject to prevailing economic conditions and other factors, including factors that are beyond our control. If we breach any of the covenants under our credit facility and do not obtain appropriate waivers, then, subject to applicable cure periods, our outstanding indebtedness could be declared immediately due and payable, which could result in a foreclosure on the assets securing the credit facility, adversely affect our ability to operate our business or otherwise significantly harm our financial position. At September 30, 2015, we had $55 million in outstanding borrowings under the Facility.

WE DEPEND SUBSTANTIALLY ON THE SUCCESS OF OUR CUSTOMERS' END PRODUCTS, OUR INTRODUCTION OF NEW PRODUCTS INTO THE MARKET AND OUR ABILITY TO REDUCE MANUFACTURING COSTS OVER TIME.

We believe that our future sales will depend substantially on the success of our customers' end products, our ability to introduce new products into the market, and our ability to reduce the manufacturing costs of our products over time. Our new products are generally incorporated into our customers' products or systems at their design stage. However, design wins can precede volume sales by a year or more. In addition, we may not be successful in achieving design wins or design wins may not result in future revenue, which depends in large part on our customers' ability to sell their end products or systems within their respective markets.

Rapid innovation within the semiconductor industry also continually increases pricing pressure, especially on products containing older technologies. We experience continuous pricing pressure, just as many of our competitors do. Product life cycles in our industry are relatively short, and as a result, products tend to be replaced by more technologically advanced substitutes on a regular basis. In turn, demand for older technology falls, causing the price at which such products can be sold to drop, often quickly. As a result, the average selling price of each of our products usually declines as individual products mature and competitors enter the market. To offset average selling price decreases and to continue profitably supplying our products, we rely primarily on reducing costs to manufacture our products, improving our process technologies and production efficiency, increasing product sales to absorb fixed costs and introducing new, higher-priced products that incorporate advanced features or integrated technologies to address new or emerging markets. Our operating results could be harmed if such cost reductions, production improvements, increased product sales and new product introductions do not occur in a timely manner or do not result in new customer demand.

THE CYCLICAL NATURE OF THE SEMICONDUCTOR INDUSTRY CREATES FLUCTUATIONS IN OUR OPERATING RESULTS AND MAY ALSO AFFECT THE JUDGMENTS, ESTIMATES AND ASSUMPTIONS WE APPLY IN PREPARING OUR FINANCIAL STATEMENTS.

The semiconductor industry has historically been cyclical, characterized by annual seasonality and wide fluctuations in product supply and demand. The semiconductor industry has also experienced significant downturns, often in connection with, or in anticipation of, maturing product cycles and declines in general economic conditions.

39

Our operating results have been adversely affected in the past by industry-wide fluctuations in the demand for semiconductors, which resulted in under-utilization of our manufacturing capacity and a related decline in gross margin. Our business may be harmed in the future by cyclical conditions in the semiconductor industry as a whole and by conditions within specific markets served by our products. These fluctuations in demand may also affect inventory write-downs we take or other items in our financial statements. Our inventories are stated at the lower of cost (on a first-in, first-out basis) or market. Determining market value for our inventories involves numerous judgments, estimates and assumptions, including assessing average selling prices and sales volumes for each of our products in future periods. The competitiveness of each product, market conditions and product lifecycles often change over time, resulting in a change in the judgments, estimates and assumptions we apply to establish inventory write-downs. The judgments, estimates and assumptions we apply in evaluating our inventory write-downs, including, for example, shortening or extending the anticipated life of our products, may have a material effect on our financial statements. If we overestimate demand, we may experience excess inventory levels. Inventory adjustments, based on the judgments, estimates and assumptions we make, may affect our results of operations, including our gross margin, in a positive or negative manner, depending on the nature of the adjustment.

A significant portion of our revenue comes from sales to customers supplying consumer markets and from international sales. As a result, our business may be subject to seasonally lower revenue in particular quarters of our fiscal year. The semiconductor industry has also been affected by significant shifts in consumer demand due to economic downturns or other factors, which can exacerbate the cyclicality within the industry and result in further diminished product demand and production over-capacity. We have, in the past, experienced substantial quarter-to-quarter fluctuations in revenue and operating results and expect in the future to continue to experience short-term period-to-period fluctuations in operating results due to general industry and economic conditions.

WE COULD EXPERIENCE DISRUPTION OF OUR BUSINESS DUE TO OUR DEPENDENCE ON OUTSIDE FOUNDRIES OR MANUFACTURING DISRUPTIONS AT OUR OWN WAFER FABRICATION FACILITY.

We rely substantially on independent third-party foundry manufacturing partners to manufacture products for us. As part of our fab-lite strategy, we have expanded and will continue to expand our foundry relationships by entering into new agreements with third-party foundries. If we cannot obtain sufficient capacity commitments, if our foundry partners suffer financial instability, liquidity issues, or insolvency proceedings affecting their ability to manufacture our products, or if our foundry partners experience production delays or quality issues for other reasons, the supply of our products could be disrupted, which could adversely affect our business.

For the nine months endedSeptember 30, 2015, we manufactured approximately 61% of our products in our own wafer fabrication facility compared to 57% for the nine months endedSeptember 30, 2014. Disruptions at our own wafer manufacturing facility in Colorado Springs, Colorado could also adversely affect our business. For example, in December 2013, we experienced an incident in the nitrogen plant at that facility, which disrupted manufacturing for several weeks and affected our ability to fully meet demand in the first quarter of 2014. Because we rely on our Colorado facility for a significant percentage of our wafer supply, disruptions of the kind we experienced in December 2013, or others, could have an adverse effect on our business.

In addition, with respect to the use of external foundries, difficulties in production yields are more likely to occur when transitioning manufacturing processes to new third-party foundries or when qualifying new products at third-party foundries. If our foundry partners fail to deliver quality products and components on a timely basis, our business could be harmed.

We expect over time that an increasing portion of our wafer fabrication will be undertaken by third-party foundries.

Our fab-lite strategy exposes us to the following risks:

• reduced control over delivery schedules and product costs;

• financial instability, liquidity issues, or insolvency proceedings, and related litigation, affecting our foundry partners;

• manufacturing disruptions at our Colorado Springs wafer fabrication facility or at those of our third-party foundries;

• higher than anticipated manufacturing costs;

• inability of our manufacturing subcontractors to develop manufacturing methods appropriate for our products and their unwillingness to devote adequate capacity to produce our products;

• possible abandonment of key fabrication processes by our foundry subcontractors used in products that are strategically important to us;

• reduced control over or decline in product quality and reliability;

• inability to maintain continuing relationships with our foundries;

• restricted ability to meet customer demand when faced with product shortages or order increases; and

40

• increased risk of potential misappropriation of our intellectual property.

If any of the above risks occur, we could experience an interruption in our supply chain, an increase in costs or a reduction in our product quality and reliability, which could delay or decrease our revenue and adversely affect our reputation and our business.

We attempt to mitigate these risks by qualifying multiple foundry subcontractors. However, there can be no guarantee that this or any other mitigation strategy will eliminate or significantly reduce these risks. Additionally, since most independent foundries are located in foreign countries, we are subject to risks generally associated with contracting with foreign manufacturers, including currency exchange fluctuations, political and economic instability, trade restrictions, changes in tariff and freight rates, and import and export regulations. Accordingly, we may experience problems maintaining expected timelines and the adequacy or quality of product deliveries, any of which could have a material adverse effect on our results of operations.

We closely monitor the financial condition of our foundry partners, and although we do not believe that any of our current foundry partners are experiencing financial instability, we have in the past contracted with foundries that did, in fact, encounter material financial instability. Such instability, including potentially, insolvency proceedings, requires an investment of significant management time, may require additional changes in operational planning as conditions develop, may involve litigation, and could have other unexpected adverse effects on our business.

The terms on which we will be able to obtain wafer production for our products, and the timing and volume of such production will be substantially dependent on future agreements to be negotiated with independent foundries. We cannot be certain that the agreements we reach with such foundries will be on favorable terms. For example, any future agreements with independent foundries may be short-term in duration, may not be renewable, and may provide inadequate certainty regarding the future supply and pricing of wafers for our products.

If demand for our products increases significantly, we have no assurances that our third-party foundries will be able to increase their manufacturing capacity to a level that meets our requirements, potentially preventing us from meeting our customer demand and harming our business, reputation and customer relationships. Also, even if our independent foundries are able to meet our increased demand, those foundries may decide to charge significantly higher wafer prices to us, which could reduce our gross margin or require us to offset the increased prices by increasing prices to our customers, either of which could harm our business and operating results.

OUR REVENUE IS DEPENDENT TO A LARGE EXTENT ON SELLING TO END CUSTOMERS THROUGH INDEPENDENT DISTRIBUTORS. THESE DISTRIBUTORS MAY HAVE LIMITED FINANCIAL RESOURCES TO CONDUCT THEIR BUSINESS OR TO REPRESENT OUR INTERESTS EFFECTIVELY, MAY RAISE CREDIT RISKS FOR US, AND MAY TERMINATE OR MODIFY THEIR RELATIONSHIPS WITH US IN A MANNER THAT ADVERSELY AFFECTS OUR SALES.

Sales to distributors accounted for 63% and 59% of our net revenue for the nine months endedSeptember 30, 2015 and 2014, respectively. We are dependent on our distributors to supplement our direct marketing and sales efforts. Our agreements with independent distributors can generally be terminated for convenience by either party upon relatively short notice. Generally, these agreements are non-exclusive and also permit our distributors to offer and promote our competitors’ products.

If any significant distributor or a substantial number of our distributors terminated their relationship with us, decided to market our competitors’ products in preference to our products, were unable or unwilling to sell our products, or were unable to pay us for products sold for any reason, our ability to bring our products to market could be adversely affected, we could have difficulty in collecting outstanding receivable balances, or we could incur other loss of revenue, charges or other adjustments, any of which could have a material adverse effect on our revenue and operating results. In some cases, certain of our distributors in Asia may also have more limited financial resources and constrained balance sheets than distributors in other geographic areas. If these distributors are unable effectively to finance their operations, or to represent our interests effectively because of financial limitations, our business could also be adversely affected.

OUR REVENUE REPORTING IS HIGHLY DEPENDENT ON RECEIVING ACCURATE AND TIMELY SELL-THROUGH INFORMATION FROM OUR DISTRIBUTORS. IF WE RECEIVE INACCURATE OR LATE INFORMATION FROM OUR DISTRIBUTORS, OUR FINANCIAL REPORTING COULD BE MISSTATED.

Our revenue reporting is highly dependent on receiving pertinent, accurate and timely data from our distributors. As our distributors resell products, they provide us with periodic data regarding the products sold, including prices, quantities, end customers, and the amount of our products they still have in stock. Because the data set is large and complex, and because there may be errors or delays in the reported data, we may use estimates and apply judgments to reconcile distributors’ reported inventories to their end customer sales transactions. Actual results could vary unfavorably from our estimates, which could affect our operating results and adversely affect our business.

OUR REVENUE REPORTING IS COMPLEX AND DEPENDENT, IN PART, ON OUR MANAGEMENT’S ABILITY TO MAKE JUDGMENTS AND ESTIMATES REGARDING FUTURE CLAIMS FOR RETURNS. IF OUR JUDGMENTS OR ESTIMATES ABOUT THESE MATTERS ARE INCORRECT OR INACCURATE, OUR REVENUE REPORTING COULD BE ADVERSELY AFFECTED.

41

Our revenue reporting is highly dependent on judgments and estimates that our management is required to make when preparing our financial statements. We currently recognize revenue for our distributors based in the U.S. and Europe in a different manner from the method we use for our distributors based in Asia (excluding Japan).

For sales to certain distributors (primarily based in the U.S. and Europe) with agreements allowing for price protection and product returns, we have not historically had the ability to estimate future claims at the point of shipment, and given that price is not fixed or determinable at that time, revenue is not recognized until the distributor sells the product to its end customer.

For sales to independent distributors in Asia, excluding Japan, we invoice these distributors at full list price upon shipment and issue a rebate, or “credit,” once product has been sold to the end customer and the distributor has met certain reporting requirements. After reviewing the pricing, rebate and quotation-related terms, we concluded that we could reliably estimate future claims; therefore, we recognize revenue at the point of shipment for these Asian distributors, assuming all of the other revenue recognition criteria are met, utilizing amounts invoiced, less estimated future claims. To the extent the percentage of our sales to Asia (excluding Japan) increases, a larger portion of our revenue reporting will be based on this methodology.

If our judgments or estimates are incorrect or inaccurate regarding future claims, our revenue reporting could be adversely affected. In addition, the fact that we recognize revenue differently in the U.S. and Europe than in Asia (excluding Japan) adds further complexity to the preparation of our financial statements, making them potentially more susceptible to inaccuracies or errors over time.

In May 2014, the Financial Accounting Standard Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in GAAP when it becomes effective. In July 2015, the FASB deferred the effective date of ASU 2014-09 such that it will apply to annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods). Early application is permitted to the original effective date of December 15, 2016, whereby ASU 2014-09 would apply to annual reporting periods beginning December 15, 2016 (including interim reporting periods within those periods). The standard permits the use of either the retrospective or cumulative effect transition method. We are evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. We have not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. Our adoption of ASU 2014-09 and selection of a transition method could have an adverse effect on our revenue reporting.

OUR STOCK PRICE MAY BE MORE VOLATILE BASED ON OUR EXPOSURE TO THE MOBILE DEVICE AND CONSUMER MARKET SEGMENTS, WHICH TEND TO EXHIBIT MORE DYNAMIC CHANGE THAN DO INDUSTRIAL OR AUTOMOTIVE MARKETS.

Our exposure to, and the percentage of revenue we derive from, the mobile device and consumer market segments change over time. To the extent that these segments exhibit greater cyclicality, or change, than the industrial or automotive markets in which we also participate, our stock price may be more volatile. Product life cycles in the mobile device and consumer markets are typically shorter than product life cycles in industrial or automotive markets. Significant change continues to occur in the personal computer market as, for example, tablet devices gain additional market share. Mobile devices, as a further example, may undergo product refreshes on an annual basis or on even shorter time frames in some instances. As a result, our market share in those markets may increase or decrease more frequently than might be the case in other market segments in which we participate. The mobile device segment has also become dominated, to a large extent, by Apple and Samsung; other manufacturers have had difficulty retaining market share in recent years, with some well-known brands, including Nokia, Motorola, Blackberry and HTC, being sold or facing significant financial distress. Those market dynamics necessarily affect our business, and if our products are not used in models sold by the dominant device manufacturers, our financial results may be adversely affected or be subject to greater volatility.

If our market share decreases in the mobile and consumer market segments, our revenue may also decline for a period of time until new devices are launched, or a product refresh occurs, incorporating our products. For those reasons, and due to the shorter product life-cycles generally occurring in the mobile and consumer-oriented markets, our stock price may be more volatile than might be the case if we had less exposure to those sectors or if we focused our investments principally on industrial, automotive and similar markets that generally do not experience the same rapid product change.

WE BUILD SEMICONDUCTORS BASED, FOR THE MOST PART, ON NON-BINDING FORECASTS FROM OUR CUSTOMERS. AS A RESULT, CHANGES TO FORECASTS FROM ACTUAL DEMAND MAY RESULT IN EXCESS INVENTORY OR OUR INABILITY TO FILL CUSTOMER ORDERS ON A TIMELY BASIS, WHICH MAY HARM OUR BUSINESS.

42

We schedule production and build semiconductor devices based primarily on non-binding forecasts from customers and our own internal forecasts. Typically, customer orders, consistent with general industry practices, may be cancelled or rescheduled with short notice to us, often with no significant penalty to the customer. In addition, our customers frequently place orders requesting product delivery in a much shorter period than our lead time to fully fabricate and test devices, requiring us to build a buffer stock of certain products in order to anticipate demand. Because the markets we serve are volatile and subject to rapid technological, price and end-user demand changes, our forecasts of required unit quantities to build may be significantly incorrect. Changes to forecasted demand from actual demand may result in us producing unit quantities in excess of orders from customers, which could result in additional expense for the write-down of excess inventory and negatively affect our gross margin and results of operations.

Our forecasting risks may increase as a result of our fab-lite strategy because we have less control over modifying production schedules with our independent third-party manufacturing partners to match changes in forecasted demand and orders by our end customers. If we commit to order foundry wafers and cannot cancel or reschedule our commitment without significant costs or cancellation penalties, we may be forced to purchase inventory in excess of demand, which could result in a write-down of inventories and negatively affect our gross margin and results of operations.

Conversely, failure to produce or obtain sufficient wafers for increased demand could cause us to miss revenue opportunities and could affect our customers’ ability to sell products or meet downstream commitments, which could adversely affect our customer relationships and reputation and thereby materially adversely affect our business, financial condition and results of operations.

OUR INTERNATIONAL SALES AND OPERATIONS ARE SUBJECT TO COMPLEX LAWS RELATING TO TRADE, EXPORT CONTROLS, FOREIGN CORRUPT PRACTICES AND BRIBERY, AMONG MANY OTHER SUBJECTS. ADDED COMPLIANCE COSTS, VIOLATIONS OF OR CHANGES IN THESE LAWS AND REGULATIONS COULD ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS.

For hardware, software or technology exported from, or otherwise subject to the jurisdiction of, the U.S., we are subject to U.S. laws and regulations governing international trade and exports, including, but not limited to, the International Traffic in Arms Regulations (“ITAR”), the Export Administration Regulations (“EAR”) and U.S. economic and trade sanctions administered by the U.S. Department of the Treasury, Office of Foreign Assets Control (“OFAC”) and other regulatory agencies. Hardware, software and technology exported from, or otherwise subject to the jurisdiction of, other countries may also be subject to non-U.S. laws and regulations governing international trade and exports. Under these laws and regulations, we are responsible for obtaining all necessary licenses and approvals for exports of controlled hardware, software and technology, as well as the provision of technical assistance. In many cases, a determination of the applicable export-control laws and related licensing requirements depends on the design intent of a product, the source and origin of a specific technology, the specific technical contributions made by individuals to that technology, the destination of the product, and other matters of an intensely factual nature. We are also required to obtain all necessary export licenses prior to transferring controlled technology or technical data to non-U.S. persons. The U.S. and the European Union continue to impose sanctions on Russia. The imposition of new sanctions, or changes in the nature of existing sanctions or other embargoes, may affect our ability to deliver products to specified countries from time to time, sometimes with little or no advance warning. In those events, if our products are implicated under newly imposed or modified sanctions, those regulatory or administrative actions could have an adverse effect on our business.

In addition, we are required to obtain necessary export licenses prior to the export or re-export of hardware, software or technology to any person or entity identified on government restricted-party lists, including the U.S. Department of Commerce's Denied Persons or Entity or Unverified Lists, the U.S. Department of the Treasury’s Specially Designated Nationals or Blocked Persons List, or the U.S. Department of State’s Debarred List, or on similar lists in jurisdictions outside the United States. Products for use in certain space, satellite, military, nuclear, chemical/biological weapons, rocket systems or unmanned air vehicle applications may also require export licenses and involve many of the same complexities and risks of non-compliance in the U.S. and elsewhere. Due to U.S. economic and trade sanctions, we do not pursue business activities, directly or indirectly, in countries designated by the U.S. as a state sponsor of terrorism or otherwise subject to a U.S. trade embargo, including, as of the date of this Form 10-Q, Cuba, Iran, North Korea, Sudan and Syria.

We continually seek to enhance our export-compliance program, including ongoing analysis of historical and current product shipments and technology transfers. We also work with, and assist, government officials, when requested, to ensure compliance with applicable export laws and regulations, and we continue to develop additional operational procedures to improve our compliance efforts. However, export laws and regulations are highly complex and vary from jurisdiction to jurisdiction; a determination by U.S. or other governments that we have failed to comply with any export-control laws or trade sanctions, including failure to properly restrict an export to the persons or entities set forth on government restricted-party lists, could result in significant civil or criminal penalties, including the imposition of significant fines, denial of export privileges, loss of revenue from certain customers or damages claims from any customers adversely affected by such penalties, and exclusion from participation in U.S. or foreign government contracts. As we review or audit our import and export practices, from time to time, we may discover previously unknown errors in our compliance practices that require corrective actions; these actions could include voluntary disclosures of those matters to appropriate government agencies, discontinuance or suspension of product sales pending a resolution of any reviews, or other adverse interim or final actions. Further, a change in these laws and regulations could restrict our ability to export to previously permitted countries, customers, distributors, foundries or other third parties. For example, in the past, one of our distributors was added to the U.S. Department of Commerce Entity List, resulting in the termination of our relationship with that

43

distributor. Any one or more of these compliance errors, sanctions or a change in law or regulations could have a material adverse effect on our business, financial condition and results of operations. We monitor closely those types of proposed rules and potential changes as they progress through the regulatory process and seek to assess their likely effect on us.

We are also subject to complex laws that seek to regulate the payment of bribes or other forms of compensation to foreign officials or persons affiliated with companies or organizations in which foreign governments may own an interest or exercise control. The U.S. Foreign Corrupt Practices Act requires U.S. companies to comply with an extensive legal framework to prevent bribery of foreign officials. The laws are complex and require that we closely monitor local practices of our overseas offices and distributors. The United States Department of Justice has recently heightened enforcement of these laws. In addition, other countries continue to implement similar laws that may have extraterritorial effect. The United Kingdom, for example, where we have operations, has enacted the U.K. Bribery Act, which could impose significant oversight obligations on us and could be applicable to our operations outside of the United Kingdom. The costs for complying with these and similar laws may be substantial and could reasonably be expected to require significant management time and focus. Any violation of these or similar laws, intentional or unintentional, could have a material adverse effect on our business, financial condition or results of operations. See also “Compliance With Regulations Regarding the Use of ‘Conflict Minerals’ Requires Us to Incur Additional Oversight Expense and Could Limit the Supply and Increase the Cost of Certain Metals Used in Manufacturing Our Products.”

COMPLIANCE WITH REGULATIONS REGARDING THE USE OF "CONFLICT MINERALS" REQUIRES US TO INCUR ADDITIONAL OVERSIGHT EXPENSE AND COULD LIMIT THE SUPPLY AND INCREASE THE COST OF CERTAIN METALS USED IN MANUFACTURING OUR PRODUCTS.

Conflict minerals are commonly found in metals used in the manufacture of semiconductors and other products we manufacture. In May 2015, we filed a Report on Form SD to report that our products were “Conflict Free Undeterminable” based on our diligence review. We expect to undertake further diligence of our supply chain in 2016 and beyond to evaluate the use of conflict minerals. Although the implementation of the conflict minerals requirements did not materially affect our business in 2015, there can be no assurance that the costs associated with ongoing compliance will not increase or that the sourcing, availability and pricing of minerals required for use in our products do not increase as a result of these regulations or changes in the supply chain caused by these regulations. In addition, since our supply chain is complex, if we are not, in the future, able to sufficiently verify the origins of these minerals and metals used in our products, our customers could elect to disqualify us as a future supplier, which could negatively affect our business and results of operations.

WE ARE EXPOSED TO FLUCTUATIONS IN CURRENCY EXCHANGE RATES THAT COULD NEGATIVELY AFFECT OUR FINANCIAL RESULTS AND CASH FLOWS, AND REVENUE AND COSTS DENOMINATED IN FOREIGN CURRENCIES COULD ADVERSELY AFFECT OUR OPERATING RESULTS DUE TO FOREIGN CURRENCY MOVES AGAINST THE DOLLAR.

Because a significant portion of our business is conducted outside the United States, we face exposure to adverse movements in foreign currency exchange rates. These exposures may change over time as business practices evolve and could have a material adverse effect on our financial results and cash flows. Our primary foreign currency exposure relates to revenue and operating expenses in Europe, which are denominated in Euros. See also “A Volatile, or Falling, Euro, or Volatility in Other non-U.S. Currencies, May Adversely Affect Our Revenue or Operating Results.”

When we take an order denominated in a foreign currency, we will receive fewer dollars, and lower revenue, than we initially anticipated if that local currency weakens against the dollar before we ship our product. Conversely, revenue will be positively affected if the local currency strengthens against the dollar before we ship our product. Costs may also be affected by foreign currency fluctuations. For example, in Europe, where we have costs denominated in European currencies, costs will decrease if the local currency weakens against the dollar. Conversely, costs will increase if the local currency strengthens against the dollar.

We also face the risk that our accounts receivable denominated in foreign currencies will be devalued if such foreign currencies weaken quickly and significantly against the dollar. Similarly, we face the risk that our accounts payable and debt obligations denominated in foreign currencies will increase if such foreign currencies strengthen quickly and significantly against the dollar. We have not historically utilized hedging instruments to offset our foreign currency exposure, although we may determine to do so in the future, and there can be no assurance that these or other measures will successfully limit our exposure to changes in foreign currency exchange rates.

WE DEPEND ON INDEPENDENT ASSEMBLY CONTRACTORS THAT MAY NOT HAVE ADEQUATE CAPACITY TO FULFILL OUR NEEDS OR TO MEET OUR QUALITY AND DELIVERY REQUIREMENTS.

After wafer testing, we ship wafers to various independent assembly contractors, where the wafers are separated into die, packaged and, in some cases, further tested. Our reliance on independent contractors to assemble, package and test our products may expose us to significant risks, including the following:

• reduced control over quality and delivery schedules;

• the potential lack of adequate capacity of independent assembly contractors;

44

• discontinuance or phase-out of our contractors’ assembly processes;

• inability of our contractors to develop and maintain assembly and test methods and equipment that are appropriate for our products;

• lack of long-term contracts and the potential inability to secure strategically important service contracts on favorable terms, if at all;

• increased opportunities for potential misappropriation of our intellectual property; and

• financial instability, or liquidity issues, affecting our subcontractors.

In addition, independent contractors could stop, suspend or delay the assembly, packaging or testing of our products for unforeseen reasons. Moreover, because most of our independent assembly contractors are located in foreign countries, we are subject to certain risks generally associated with contracting with foreign suppliers, including currency exchange fluctuations, political and economic instability, trade restrictions, including export controls, and changes in tariff and freight rates. Accordingly, we may experience problems with the timing, adequacy or quality of product deliveries, any of which could have a material adverse effect on our results of operations.

WE MAY FACE BUSINESS DISRUPTION RISKS, AS WELL AS THE RISK OF SIGNIFICANT UNANTICIPATED COSTS, AS WE CONSIDER, OR AS A RESULT OF, CHANGES IN OUR BUSINESS AND ASSET PORTFOLIO.

We are continually reviewing potential changes in our business and asset portfolio throughout our worldwide operations in order to enhance our overall competitiveness and viability. Disposal and restructuring activities that we have undertaken, and may undertake in the future, can divert significant time and resources, involve substantial costs and lead to production and product development delays and may fail to enhance our overall competitiveness and viability as intended, any of which can negatively impact our business. Our disposal activities have in the past and may, in the future, trigger restructuring, impairment and other accounting charges and/or result in a loss on sale of assets. Any of these charges or losses could cause the price of our common stock to decline.

We have in the past and may, in the future, experience labor union or workers’ council objections, or labor unrest actions (including possible strikes), when we seek to reduce our workforces in Europe and other regions. Many of our operations are located in countries and regions that have extensive employment regulations that we must comply with in order to reduce our workforce, and we may incur significant costs to complete such exercises. Any of those events could have an adverse effect on our business and operating results.

We continue to evaluate existing restructuring accruals related to restructuring plans previously implemented. As a result, there may be additional restructuring charges or reversals or recoveries of previous charges. We may incur additional restructuring and asset impairment charges in connection with additional restructuring plans adopted in the future. Any such restructuring or asset impairment charges recorded in the future could significantly harm our business and operating results. As of September 30, 2015, accrued restructuring charges amounted to $10.8 million, and we expect to substantially complete the cash severance payments in respect of those accruals within the next twenty-four months.

IF WE ARE UNABLE TO IMPLEMENT NEW MANUFACTURING TECHNOLOGIES OR FAIL TO ACHIEVE ACCEPTABLE MANUFACTURING YIELDS, OUR BUSINESS WOULD BE HARMED.

Whether demand for semiconductors is rising or falling, we are constantly required by competitive pressures in the industry to implement new manufacturing technologies in order to reduce the geometries of our semiconductors, produce more integrated circuits per wafer and improve our production yields.

Fabrication of our integrated circuits is a highly complex and precise process, requiring production in a tightly-controlled, clean environment. Minute impurities, difficulties in the fabrication process, defects in the masks used to print circuits on a wafer or other factors can cause a substantial percentage of wafers to be rejected or numerous die on each wafer to be nonfunctional. Whether through the use of our foundries or third-party manufacturers, we may experience problems in achieving acceptable yields in the manufacture of wafers, particularly during a transition in the manufacturing process technology for our existing products or with respect to the manufacture of new products.

We have previously experienced production delays and yield difficulties in connection with earlier expansions of our wafer fabrication capacity or transitions in manufacturing process technology, including in connection with the introduction of new products. Production delays or difficulties in achieving acceptable yields at our fabrication facility or at the fabrication facilities of our third party manufacturers could materially and adversely affect our operating results. We may not be able to obtain the additional cash from operations or external financing necessary to fund the implementation of new manufacturing technologies, which could materially affect our results of operations.

45

WE MAY, DIRECTLY OR INDIRECTLY, FACE THIRD-PARTY INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS THAT COULD BE COSTLY TO DEFEND, DISTRACT OUR MANAGEMENT TEAM AND EMPLOYEES, AND RESULT IN LOSS OF SIGNIFICANT RIGHTS.

The semiconductor industry is characterized by vigorous protection and pursuit of intellectual property rights or positions, which have on occasion resulted in significant and often protracted and expensive litigation. From time to time we receive communications from third parties asserting patent or other intellectual property rights covering our products or processes. In order to avoid the significant costs associated with our defense in litigation involving such claims, we may license the use of the technologies that are the subject of these claims from such companies and make regular corresponding royalty payments, which may harm our cash position and operating results.

We have in the past been involved in intellectual property infringement lawsuits, which, because of the significant expense associated with the defense of those types of lawsuits, adversely affected our operating results, and we may continue to be subjected to similar suits in the future. In addition to patent infringement lawsuits in which we may be directly involved and named as a defendant, we also may assist our customers, in many cases at our own cost, in defending intellectual property lawsuits involving technologies that are combined with our technologies. See Note 8 of Notes to Condensed Consolidated Financial Statements. The cost of defending against intellectual property lawsuits, responding to subpoenas, preparing our employees to testify, or assisting our customers in defending against such lawsuits, in terms of management time and attention, legal fees and product delays, can be substantial. If such infringement lawsuits are successful, we may be prohibited from using the technologies at issue in the lawsuits, and if we are unable to obtain a license on acceptable terms, license a substitute technology or design new technology to avoid infringement, our business and operating results may be significantly harmed.

Many of our new and existing products and technologies are intended to address needs in specialized and emerging markets. Given the aggressive pursuit and defense of intellectual property rights that are typical in the semiconductor industry, we expect to see an increase in intellectual property litigation in many of the key markets that our products and technologies serve. An increase in infringement lawsuits within these markets generally, even if they do not involve us, may divert management’s attention and resources, which may seriously harm our business, results of operations and financial condition.

As is customary in the semiconductor industry, our standard contracts provide remedies to our customers, such as defense, settlement, or payment of judgments for intellectual property claims related to the use of our products. From time to time, we will indemnify customers against combinations of loss, expense, or liability related to the sale and the use of our products and services. Even if claims or litigation against us are not valid or successfully asserted, defending these claims could result in significant costs and diversion of the attention of management and other key employees.

IF WE ARE UNABLE TO PROTECT OR ASSERT OUR INTELLECTUAL PROPERTY RIGHTS, OUR BUSINESS AND RESULTS OF OPERATIONS MAY BE HARMED.

Our future success will depend, in part, upon our ability to protect and assert our intellectual property rights. We rely on a combination of patent, copyright, trademark and trade secret laws, as well as nondisclosure agreements and other methods, to protect our proprietary technologies. We also enter into confidentiality or license agreements with our employees, consultants and business partners, and control access to and distribution of our documentation and other proprietary information. It is possible that competitors or other unauthorized third parties may obtain, copy, use or disclose our proprietary technologies and processes, despite our efforts to protect them, which would affect the value of our intellectual property rights.

We hold numerous U.S. and foreign patents. We can provide no assurance, however, that these, or any of our future patents, will not be challenged, invalidated or circumvented in ways that detract from their value. Changes in laws may also result in us having less intellectual property protection than we may have experienced historically.

If our patents do not adequately protect our technology, competitors may more easily be able to offer products similar to our products. Our competitors may also be able to design around our patents, which would harm our business, financial position and results of operations.

SIGNIFICANT PATENT LITIGATION IN THE MOBILE-DEVICE SECTOR MAY ADVERSELY AFFECT SOME OF OUR CUSTOMERS. UNFAVORABLE OUTCOMES IN SUCH PATENT LITIGATION COULD AFFECT OUR CUSTOMERS’ ABILITY TO SELL THEIR PRODUCTS AND, AS A RESULT, COULD ULTIMATELY AFFECT THEIR ABILITY TO PURCHASE OUR PRODUCTS IF THEIR MOBILE DEVICE BUSINESS DECLINES.

There is significant ongoing patent litigation throughout the world involving many of our customers, especially in the mobile-device sector. The outcome of these disputes is uncertain. While we may not have a direct involvement in these matters, an adverse outcome that affects the ability of our customers to ship or sell their products could ultimately have an adverse effect on our business. That could happen if these customers reduce their business exposure in the mobile-device sector, are prevented from selling their products in certain markets, including in the U.S. through import bans imposed by the International Trade Commission, seek to reduce their cost structures to help fund the payment of unanticipated licensing fees, or are required to take other actions that slow or hinder their market penetration.

46

OUR MARKETS ARE HIGHLY COMPETITIVE, AND IF WE ARE NOT ABLE TO COMPETE EFFECTIVELY FOR REASONS THAT MAY INCLUDE TECHNOLOGY OR PRODUCT DEVELOPMENT OR INADEQUATE SCALE, WE MAY SUFFER LOSS OF MARKET SHARE OR OTHER ADVERSE FINANCIAL CONSEQUENCES.

We operate in markets that are intensely competitive and characterized by rapid technological change, product obsolescence and price decline. Throughout our product line, we compete with a number of large semiconductor manufacturers, such as Cypress, Freescale, Fujitsu, Hitachi, Infineon, Intel, Microchip, Nordic Semiconductor, NXP Semiconductors, ON Semiconductor, Renesas, Samsung, Silicon Laboratories, STMicroelectronics, Synaptics, and Texas Instruments. Many of these competitors have substantially greater financial, technical, marketing and management resources than we do. Since the beginning of 2014, we have also seen a significant increase in mergers and acquisitions within the semiconductor industry, including, for example, large acquisitions announced by Cypress, Infineon and NXP Semiconductors. These transactions may increase the scale and resources, financial and otherwise, of our competitors and make it more difficult for us to compete.

We also compete with emerging companies that are attempting to sell products in specialized markets that our products address. We compete principally on the basis of the technical innovation and performance of our products, including their speed, density, power usage, reliability and specialty packaging alternatives, as well as on price and product availability. During the last several years, we have experienced significant price competition in several business segments, especially in our nonvolatile memory segment for EPROM and Serial EEPROM products, as well as in our commodity microcontrollers. Competitive pressures in the semiconductor market from existing competitors, new entrants, new technology and cyclical demand, among other factors, can result in declining average selling prices for our products which could cause our revenue and gross margin to decline.

In addition to the factors described above, our ability to compete successfully depends on a number of factors, including the following:

• our success in designing and manufacturing new products that implement new technologies and processes;

• our ability to offer integrated solutions using our advanced nonvolatile memory process with other technologies;

• the rate at which customers incorporate our products into their systems;

• product introductions by our competitors;

• the number and nature of our competitors in a given market;

• our ability to minimize production costs by outsourcing our manufacturing, assembly and testing functions;

• our ability to improve our process technologies and production efficiency; and

• general market and economic conditions.

Many of these factors are outside of our control, and may cause us to be unable to compete successfully in the future, which would materially harm our business.

WE MUST KEEP PACE WITH TECHNOLOGICAL CHANGE TO REMAIN COMPETITIVE.

Our future success substantially depends on our ability to develop and introduce new products that compete effectively on the basis of price and performance and that address customer requirements. We are continually designing and commercializing new and improved products to maintain our competitive position. These new products typically are more technologically complex than their predecessors and have increased risk of deployment delays and quality and yield issues, among other risks.

 The success of new product introductions is dependent upon several factors, including timely completion and introduction of new product designs, achievement of acceptable fabrication yields and market acceptance. Our development of new products and our customers’ decisions to design them into their systems can take as long as three years, depending upon the complexity of the device and the application. Accordingly, new product development requires a long-term forecast of market trends and customer needs, and the successful introduction of our products may be adversely affected by competing products or other technologies serving the markets addressed by our products. Our qualification process involves multiple cycles of testing and improving a product’s functionality to ensure that our products operate in accordance with design specifications. If we experience delays in the introduction of new products, our future operating results could be adversely affected.

In addition, new product introductions frequently depend on our development and implementation of new process technologies, and our future growth will depend in part upon the successful development and market acceptance of these process technologies. Our integrated solution products require more technically sophisticated sales and marketing personnel to market these products successfully to customers. We are developing new products with smaller feature sizes and increased functionality, the fabrication of which will be substantially more complex than fabrication of our current products. If we are unable to design, develop, manufacture, market and sell new products successfully, our operating results will be harmed. Our new product

47

development, process development or marketing and sales efforts may not be successful, our new products may not achieve market acceptance, and price expectations for our new products may not be achieved, any of which could significantly harm our business.

OUR OPERATING RESULTS ARE HIGHLY DEPENDENT ON OUR INTERNATIONAL SALES AND OPERATIONS, WHICH EXPOSES US TO VARIOUS RISKS.

Our revenue outside the United States accounted for 83% and 84% of our net revenue for the three months endedSeptember 30, 2015 and 2014, respectively, and 82% and 85% of our net revenue for the nine months endedSeptember 30, 2015 and 2014, respectively. We expect that revenue derived from international sales will continue to represent a significant portion of net revenue. International sales and operations are subject to a variety of risks, including:

• greater difficulty in protecting intellectual property;

• reduced flexibility and increased cost of effecting staffing adjustments;

• foreign labor conditions and practices;

• adverse changes in tax laws;

• credit and collectibility risks on our trade receivables with customers in certain jurisdictions;

• longer collection cycles;

• legal and regulatory requirements, including antitrust laws, import and export regulations, trade barriers, tariffs and tax laws, and environmental and privacy regulations and changes to those laws and regulations;

• negative effects from fluctuations in foreign currency exchange rates;

• cash repatriation restrictions;

• impact of natural disasters on local infrastructures, including those of our distributors and end customers; and

• general economic and political conditions in these foreign markets.

Some of our distributors, independent foundries, independent assembly, packaging and test contractors and other business partners also have international operations and are subject to the risks described above. Even if we are able to manage the risks of international operations successfully, our business may be adversely affected if our distributors, independent foundries and contractors, and other business partners are not able to manage these risks successfully.

WE MAY BE SUBJECT TO INFORMATION TECHNOLOGY SYSTEM FAILURES, NETWORK DISRUPTIONS OR OTHER SECURITY RISKS, INCLUDING CYBER-ATTACKS, WHICH COULD DAMAGE OUR BUSINESS OPERATIONS, FINANCIAL CONDITION OR REPUTATION. MANAGING THESE RISKS MAY ALSO REQUIRE ADDITIONAL INVESTMENTS AND EXPENDITURES AND INCREASED OPERATING COSTS.

We rely on our information technology, or IT, infrastructure and certain critical information systems for the effective operation of our business, including the reporting of our financial results. These IT systems may be subject to damage or interruption from a number of potential sources, including natural disasters, accidents, power disruptions, telecommunications failures, acts of terrorism or war, computer viruses, physical or electronic break-ins, cyber-attacks, sabotage, vandalism, or similar events or disruptions. In addition, our IT infrastructure continues to evolve as we review and introduce new systems to share and store data and communicate internally and externally, including “cloud-based” systems and social networking technologies. While we believe that this type of IT evolution can enhance our operational and business efficiencies, we may not be able to adapt our business practices and internal security controls quickly enough to address all of the risks, known and unknown, that these changes create.

Technology companies such as ours also continue to face increased global security threats. Hackers may develop and deploy viruses, worms, and other malicious software programs that attack our products or seek to gain access to our networks and proprietary information. We may be required to allocate significant resources, financial and otherwise, to the oversight of these threats and the implementation of effective countermeasures, which could increase our operating expenses.

Our inability to use or access our IT systems at critical points in time could unfavorably affect our business. These disruptions, for example, could adversely affect our ability to access critical business applications, coordinate product development and testing, ship or distribute products, or timely report our financial results. Breaches of our IT system by unauthorized parties could also result in the theft or misuse of our intellectual property, the unauthorized release of customer or employee data, or a violation of privacy or other laws that may lead to significant reputation or other damage to our business.

SYSTEM INTEGRATION DISRUPTIONS COULD HARM OUR BUSINESS.

48

We periodically make enhancements to our integrated financial and supply chain management systems. The enhancement process is complex, time-consuming and expensive. Operational disruptions during the course of such processes or delays in the implementation of such enhancements could adversely affect our operations. Our ability to forecast sales demand, ship products, manage our product inventory and record and report financial and management information on a timely and accurate basis could be impaired while we are making these enhancements.

OUR OPERATIONS AND FINANCIAL RESULTS COULD BE HARMED BY BUSINESS INTERRUPTIONS, NATURAL DISASTERS, TERRORIST ACTS OR OTHER EVENTS BEYOND OUR CONTROL.

Our operations are vulnerable to interruption by fire, earthquake, floods and other natural disasters, power loss, public health issues, geopolitical uncertainties, telecommunications failures, terrorist acts and other events beyond our control. Our headquarters, some of our manufacturing facilities, the manufacturing facilities of some of our third-party foundries and some of our major suppliers’ and customers’ facilities are located near major earthquake faults and in potential terrorist target areas. We do not have a comprehensive disaster recovery plan.

In the event of a major earthquake, other natural or manmade disaster or terrorist act, we could experience loss of life of our employees, destruction of facilities or other business interruptions. The operations of our suppliers could also be affected by natural disasters and other disruptions, which could cause shortages and price increases in various essential materials. We use third-party freight firms for nearly all our shipments from vendors and our manufacturing facilities and for shipments to customers of our final product. We maintain property and business interruption insurance; however, there is no guarantee that such insurance will be available or adequate to protect against all costs associated with such disasters and disruptions.

In recent years, based on insurance market conditions, we have relied to a greater degree on self-insurance. If a major earthquake, other disaster, or a terrorist act affects us and insurance coverage is unavailable for any reason, we may need to spend significant amounts to repair or replace our facilities and equipment, we may suffer a temporary halt in our ability to manufacture and transport products, and we could suffer damages that could materially adversely harm our business, financial condition and results of operations.

WE MAY EXPERIENCE PROBLEMS WITH KEY CUSTOMERS THAT COULD HARM OUR BUSINESS.

Our ability to maintain close, satisfactory relationships with large customers is important to our business. A reduction, delay, or cancellation of orders from our large customers would harm our business. Similarly, the loss of one or more of our key customers, reduced orders by any of our key customers, or significant variations in the timing of orders, could adversely affect our business and results of operations.

WE ARE NOT PROTECTED BY LONG-TERM SUPPLY CONTRACTS WITH OUR CUSTOMERS.

We do not typically enter into long-term supply contracts with our customers, and we cannot be certain as to future order levels from our customers. When we do enter into a long-term contract, the contract is generally terminable at the convenience of the customer. In the event of an early termination by one of our major customers, it is unlikely that we would be able to replace that revenue source in a timely manner or at all, which would harm our financial results.

WE ARE SUBJECT TO ENVIRONMENTAL, HEALTH AND SAFETY REGULATIONS, WHICH COULD IMPOSE UNANTICIPATED REQUIREMENTS ON OUR BUSINESS IN THE FUTURE. ANY FAILURE TO COMPLY WITH CURRENT OR FUTURE ENVIRONMENTAL REGULATIONS MAY SUBJECT US TO LIABILITY OR SUSPENSION OF OUR MANUFACTURING OPERATIONS.

 We are subject to a variety of environmental laws and regulations in each of the jurisdictions in which we operate governing, among other things, air emissions, wastewater discharges, the use, handling and disposal of hazardous substances and wastes, soil and groundwater contamination, and employee health and safety. We could incur significant costs as a result of any failure by us to comply with, or any liability we may incur under, environmental, health, and safety laws and regulations, including the limitation or suspension of production, monetary fines or civil or criminal sanctions, clean-up costs or other future liabilities in excess of our reserves. We are also subject to laws and regulations governing the recycling of our products, the materials that may be included in our products, and our obligation to dispose of our products at the end of their useful lives. For example, the European Directive 2002/95/EC on restriction of hazardous substances (RoHS Directive) bans the placing on the European Union market of new electrical and electronic equipment containing more than specified levels of lead and other hazardous compounds. As more countries enact requirements like the RoHS Directive, and as exemptions are phased out, we could incur substantial additional costs to convert the remainder of our portfolio to comply with such requirements, conduct required research and development, alter manufacturing processes, or adjust our supply-chain management. Such changes could also result in significant inventory obsolescence. In addition, compliance with environmental, health and safety requirements could restrict our ability to expand our facilities or require us to acquire costly pollution-control equipment, incur other significant expenses or modify our manufacturing processes. We also are subject to cleanup obligations at properties that we currently own or at facilities that we may have owned in the past or at which we conducted operations. In the event of the discovery of new or previously unknown contamination, additional requirements with respect to existing contamination, or the imposition of other cleanup obligations at these or other sites for which

49

we are responsible, we may be required to take remedial or other measures that could have a material adverse effect on our business, financial condition and results of operations.

THE LOSS OF ANY KEY PERSONNEL ON WHOM WE DEPEND MAY SERIOUSLY HARM OUR BUSINESS.

Our future success depends in large part on the continued service of our key technical and management personnel and on our ability to continue to attract and retain qualified employees, particularly those highly skilled design, process and test engineers involved in the manufacture of existing products and in the development of new products and processes. The competition for such personnel is intense, and the loss of key employees could harm our business.

ACCOUNTING FOR OUR PERFORMANCE-BASED RESTRICTED STOCK UNITS IS SUBJECT TO JUDGMENTS AND ESTIMATES AND MAY LEAD TO UNPREDICTABLE SHARE-BASED EXPENSE RECOGNITION. THE IMPLEMENTATION PLANS UNDER WHICH OUR PERFORMANCE-BASED RESTRICTED STOCK UNITS ARE ISSUED MAY ALSO AFFECT THE DEDUCTIBILITY OF SOME COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS.

We have issued, and may in the future continue to issue, performance-based restricted stock units to eligible employees, entitling those employees to receive restricted stock if they, and we, meet designated performance criteria established by our compensation committee. We are required to reassess the probability of vesting at each reporting date under any performance-based incentive plan, and any change in our forecasts may result in an increase or decrease to the expense recognized. As a result and as described in this paragraph, the expense recognition for performance-based restricted stock units could change over time, requiring adjustments to our financial statements to reflect changes in our judgment regarding the probability of achieving the performance goals. We recognize the share-based compensation expense in respect of performance-based restricted stock units when we believe it is probable that we will achieve the specified performance criteria. If the performance goals are not achieved, no compensation expense is recognized and any previously recognized compensation expense is reversed. The fair value of each award is recognized over the service period and is reduced for estimated forfeitures. In December 2014, we adopted the 2015 Long-Term Performance-Based Incentive Plan, which provided for the grant of restricted stock units to eligible employees and the possible vesting of those restricted stock units based on achievement of specified performance criteria. Compensation expense for these performance-based restricted stock units will be determined, and may require adjustments from time to time, based on the exercise of management’s judgment as discussed in this paragraph.

The implementation of our performance-based incentive plans may also affect our ability to receive federal income tax deductions for compensation in excess of $1.0 million paid, during any fiscal year, to our named executive officers. To the extent that aspects of performance-based compensation plans such as the ones we have typically adopted are adjusted in the discretion of the compensation committee, the exercise of that discretion, notwithstanding that it is expressly permitted by the terms of a plan, may result in plan compensation awarded to named executive officers not being deductible. Our compensation committee has retained the discretion to implement our performance-based incentive plans, including our 2015 Plan, notwithstanding any potential loss of deductibility, in the manner that it believes most effectively achieves the objectives of our compensation philosophies and the terms of these plans.

PROVISIONS IN OUR RESTATED CERTIFICATE OF INCORPORATION AND BYLAWS MAY HAVE ANTI-TAKEOVER EFFECTS.

Certain provisions of our Restated Certificate of Incorporation, our Bylaws and Delaware law could make it more difficult for a third party to acquire us, even if doing so would benefit our stockholders. Our Board of Directors has the authority to issue up to five million shares of preferred stock and to determine the price, voting rights, preferences and privileges, and restrictions of those shares without the approval of our stockholders. The rights of the holders of common stock will be subject to, and may be harmed by, the rights of the holders of any shares of preferred stock that may be issued in the future. The issuance of preferred stock may delay, defer or prevent a change in control, by making it more difficult for a third party to acquire a majority of our stock. In addition, the issuance of preferred stock could have a dilutive effect on our stockholders. We have no present plans to issue shares of preferred stock.

WE ARE, AND MAY IN THE FUTURE BE, ENGAGED IN LITIGATION THAT IS COSTLY, TIME CONSUMING TO DEFEND OR PROSECUTE AND, IF AN ADVERSE DECISION WERE TO OCCUR, COULD HAVE A HARMFUL EFFECT ON OUR BUSINESS, RESULTS OF OPERATIONS, FINANCIAL CONDITION OR LIQUIDITY DEPENDING ON THE OUTCOME.

We are subject to legal proceedings and claims that arise in the ordinary course of business. See Note 8 of Notes to Condensed Consolidated Financial Statements. Litigation may result in substantial costs and may divert management’s attention and resources, which may seriously harm our business, results of operations, financial condition and liquidity.

We are or recently have been engaged, directly and indirectly through our subsidiaries Atmel Rousset S.A.S. (“Atmel Rousset”) and Atmel B.V., in legal proceedings, in France and in the United States, related to the June 2013 insolvency of the owner of our former manufacturing facility in Rousset, France. Atmel Rousset sold that manufacturing facility, through an arms-length process in June 2010. Nearly 600 former employees of LFoundry Rousset S.A.S. ("LFR") have filed individual labor actions against Atmel Rousset in a French labor court (the “Individual Labor Actions”) based on similar allegations to other proceedings, including proceedings that previously were dismissed with prejudice. We believe the claims in the Individual Labor Actions are entirely devoid

50

of merit and specious. Nonetheless, if the LFR employees were successful in their attempt to recover substantial damages against us, payment of those damages, if payment were ever required or if any damages award were ever capable of enforcement, could have a material adverse effect on our results of operations, financial condition and liquidity.

OUR FOREIGN PENSION PLANS ARE UNFUNDED, AND ANY REQUIREMENT TO FUND THESE PLANS IN THE FUTURE COULD NEGATIVELY AFFECT OUR CASH POSITION AND OPERATING CAPITAL.

We sponsor defined benefit pension plans that cover substantially all of our French and German employees. Plan benefits are managed in accordance with local statutory requirements. Benefits are based on years of service and employee compensation levels. The projected benefit obligation totaled $51.5 million at September 30, 2015 and$49.8 million at December 31, 2014. The plans are unfunded, in compliance with local statutory regulations, and we have no immediate intention of funding these plans. Benefits are paid when amounts become due, commencing when participants retire. We expect to pay approximately $0.5 million in 2015 for benefits earned. Should legislative regulations require complete or partial funding of these plans in the future, it could negatively affect our cash position and operating capital.

FUTURE ACQUISITIONS MAY RESULT IN UNANTICIPATED ACCOUNTING CHARGES OR MAY OTHERWISE ADVERSELY AFFECT OUR RESULTS OF OPERATIONS AND RESULT IN DIFFICULTIES IN INTEGRATING THE OPERATIONS, PERSONNEL, TECHNOLOGIES, PRODUCTS AND INFORMATION SYSTEMS OF ACQUIRED COMPANIES OR BUSINESSES, OR BE DILUTIVE TO EXISTING STOCKHOLDERS.

A key element of our business strategy includes expansion through the acquisition of businesses, assets, products or technologies that allow us to complement our existing product offerings, expand our market coverage, increase our skilled engineering workforce or enhance our technological capabilities. We continually evaluate and explore strategic opportunities as they arise, including business combination transactions, strategic partnerships, and the purchase or sale of assets, including tangible and intangible assets such as intellectual property.

Acquisitions may require significant capital infusions, typically entail many risks and could result in difficulties in assimilating and integrating the operations, personnel, technologies, products and information systems of acquired companies or businesses. We have in the past experienced and may in the future experience delays in the timing and successful integration of an acquired company’s technologies, products and product development plans as a result of unanticipated costs and expenditures, changing relationships with customers, suppliers and strategic partners, difficulties ramping up volume production, or contractual, intellectual property or employment issues. In addition, key personnel of an acquired company may decide not to stay with us post-acquisition. The acquisition of another company or its products and technologies may also require us to enter into a geographic or business market in which we have little or no prior experience. These challenges could disrupt our ongoing business, distract our management and employees, harm our reputation and increase our expenses. These challenges are magnified as the size of the acquisition increases. Furthermore, these challenges would be even greater if we acquired a business or entered into a business combination transaction with a company that was larger and more difficult to integrate than the companies we have historically acquired.

Acquisitions may require large one-time charges and can result in increased debt or contingent liabilities, adverse tax consequences, additional share-based compensation expense and the recording and later amortization of amounts related to certain purchased intangible assets, any of which could adversely affect our results of operations. In addition, we may record goodwill in connection with an acquisition and incur goodwill impairment charges in the future. Any of these charges could cause the price of our common stock to decline.

Acquisitions or asset purchases made entirely or partially for cash may reduce our cash reserves. We may seek to obtain additional cash to fund an acquisition by selling equity or debt securities. Any issuance of equity or convertible debt securities may be dilutive to our existing stockholders.

We cannot assure you that we will be able to consummate any pending or future acquisitions or that we will realize any anticipated benefits or synergies from any of our historic or future acquisitions. We may not be able to find suitable acquisition opportunities that are available at attractive valuations, if at all. Even if we do find suitable acquisition opportunities, we may not be able to consummate the acquisitions on commercially acceptable terms, and any decline in the price of our common stock may make it significantly more difficult and expensive to initiate or consummate additional acquisitions.

We are required under U.S. GAAP to test goodwill for possible impairment on an annual basis and at any other time that circumstances arise indicating the carrying value of our goodwill may not be recoverable. At September 30, 2015, we had $189.6 million of goodwill. We completed our annual test of goodwill impairment in the fourth quarter of 2014 and concluded that we did not have any impairment at that time. However, if we continue to see deterioration in the global economy and the current market conditions in the semiconductor industry worsen, the carrying amount of our goodwill may no longer be recoverable, and we may be required to record a material impairment charge, which would have a negative impact on our results of operations.

DISRUPTIONS TO THE AVAILABILITY OF RAW MATERIALS CAN AFFECT OUR ABILITY TO SUPPLY PRODUCTS TO OUR CUSTOMERS, WHICH COULD SERIOUSLY HARM OUR BUSINESS.

51

The manufacture of semiconductor devices requires specialized raw materials, primarily certain types of silicon wafers. We generally utilize more than one source to acquire these wafers, but there are only a limited number of qualified suppliers capable of producing these wafers in the market. In addition, the raw materials, which include specialized chemicals and gases, and the equipment necessary for our business, could become more difficult to obtain as worldwide use of semiconductors in product applications increases. We have experienced supply shortages and price increases from time to time in the past, and on occasion our suppliers have told us they need more time than expected to fill our orders. Any significant interruption of the supply of raw materials or increase in cost of raw materials could harm our business.

WE COULD FACE PRODUCT LIABILITY CLAIMS THAT RESULT IN SIGNIFICANT COSTS AND DAMAGE TO OUR REPUTATION WITH CUSTOMERS, WHICH WOULD NEGATIVELY AFFECT OUR OPERATING RESULTS.

All of our products are sold with a limited warranty. However, we could incur costs not covered by our warranties, including additional labor costs, costs for replacing defective parts, reimbursement to customers for damages incurred in correcting their defective products, costs for product recalls or other damages. These costs could be disproportionately higher than the revenue and profits we receive from the sales of our products.

Our products have previously experienced, and may in the future experience, manufacturing defects, software or firmware bugs, or other similar quality problems. If any of our products contain defects or bugs, or have reliability, quality or compatibility problems, our reputation may be damaged and customers may be reluctant to buy our products, which could materially and adversely affect our ability to retain existing customers and attract new customers. In addition, any defects, bugs or other quality problems could interrupt or delay sales or shipment of our products to our customers.

We have implemented significant quality control measures to mitigate these risks; however, it is possible that products shipped to our customers will contain defects, bugs or other quality problems. Such problems may divert our technical and other resources from other development efforts. If any of these problems are not found until after we have commenced commercial production of a new product, we may be required to incur significant additional costs or delay shipments, which would negatively affect our business, financial condition and results of operations.

CHANGES IN OUR INCOME TAX POSITIONS OR ADVERSE OUTCOMES RESULTING FROM ONGOING OR FUTURE TAX AUDITS, IN THE U.S. OR FOREIGN JURISDICTIONS, COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

Income tax provisions are subject to significant judgment and estimates and may require material modification as new information is obtained regarding our tax positions, as our business performance changes, or as tax laws, regulations, treaties and interpretations in the U.S. or other jurisdictions change. Our provision for income taxes is subject to volatility and could be adversely affected by many factors including: earnings being lower than anticipated in countries where we operate that have lower tax rates and higher than anticipated in countries that have higher tax rates; changes in the valuation of our deferred tax assets and liabilities; expiration of or lapses in R&D tax credits or similar laws; expiration of or lapses in tax incentives; transfer pricing adjustments, including the effect of intercompany acquisitions under cost sharing arrangements; the legal structure of our foreign subsidiaries and changes to that structure; tax effects of nondeductible compensation; tax costs related to intercompany realignments; changes in accounting principles; or changes in tax laws and regulations, treaties, or interpretations, including possible changes to the taxation of earnings, or the deductibility of expenses (including expenses attributable to foreign income), of our foreign subsidiaries or foreign tax credit rules. If any of these circumstances were to arise, the initial judgments or estimates we use to prepare our financial statements may require adjustment, which could, if material, negatively affect our results of operations and financial condition. For example, the Organization for Economic Co-operation and Development, an international association of 34 countries including the United States, is contemplating changes to numerous long-standing tax principles. These contemplated changes, if finalized and adopted by countries in which we operate, will increase tax uncertainty and may adversely affect our provision for income taxes.

We are also subject to continued examination of our income tax returns by the Internal Revenue Service and other foreign and domestic tax authorities and typically have a number of open audits under way at any time. See Note 9 of Notes to Condensed Consolidated Financial Statements. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. While we believe that the resolution of these audits will not have a material adverse effect on our results of operations, the outcome is subject to significant uncertainties. If we are unable to obtain agreements with the tax authority on the various proposed adjustments, there could be a material adverse effect on our results of operations, cash flows and financial position.

OUR LEGAL ENTITY ORGANIZATIONAL STRUCTURE IS COMPLEX, WHICH COULD RESULT IN UNFAVORABLE TAX OR OTHER CONSEQUENCES, WHICH COULD HAVE AN ADVERSE EFFECT ON OUR NET INCOME AND FINANCIAL CONDITION.

We currently operate legal entities in countries where we conduct manufacturing, design, and sales operations around the world. In some countries, we maintain multiple entities for tax or other purposes. Changes in tax laws, regulations, and related interpretations in the countries in which we operate may adversely affect our results of operations.

52

We have many entities globally and unsettled intercompany balances between some of these entities that could result, if changes in law, regulations or related interpretations occur, in adverse tax or other consequences affecting our capital structure, intercompany interest rates and legal structure.

FROM TIME TO TIME WE RECEIVE GRANTS FROM GOVERNMENTS, AGENCIES AND RESEARCH ORGANIZATIONS. IF WE ARE UNABLE TO COMPLY WITH THE TERMS OF THOSE GRANTS, WE MAY NOT BE ABLE TO RECEIVE OR RECOGNIZE GRANT BENEFITS OR WE MAY BE REQUIRED TO REPAY GRANT BENEFITS PREVIOUSLY PAID TO US AND RECOGNIZE RELATED CHARGES, WHICH WOULD ADVERSELY AFFECT OUR OPERATING RESULTS AND FINANCIAL POSITION.

From time to time, we receive economic incentive grants and allowances from European governments, agencies and research organizations targeted at increasing employment at specific locations. The subsidy grant agreements typically contain economic incentive, headcount, capital and research and development expenditure and other covenants that must be met to receive and retain grant benefits and these programs can be subjected to periodic review by the relevant governments. Noncompliance with the conditions of the grants could result in the forfeiture of all or a portion of any future amounts to be received, as well as the repayment of all or a portion of amounts received to date.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

53

ITEM 6. EXHIBITS

The following Exhibits have been filed with, or incorporated by reference into, this Report:

2.1	Agreement and Plan of Merger among Dialog Semiconductor PLC, Avengers Acquisition Corporation and Atmel Corporation, dated as of September 19, 2015 (which is incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K (Commission File No. 0-19032) filed on September 21, 2015).	Filed Herewith
2.2	Amendment No. 1 to Agreement and Plan of Merger among Dialog Semiconductor PLC, Avengers Acquisition Corporation and Atmel Corporation, dated as of September 29, 2015 (which is incorporated by reference to Exhibit 2.2 to the Registrant's Current Report on Form 8-K (Commission File No. 0-19032) filed on September 30, 2015).
3.1	Amendment to Amended and Restated Bylaws, dated as of September 19, 2015 (which is incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K (Commission File No. 0-19032) filed on September 21, 2015).
10.1	Letter Agreement with Steve Laub, dated August 24, 2015 (which is incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K (Commission File No. 0-19032) filed on August 25, 2015).
10.2	Form of Indemnification Letter Agreement entered into between Registrant and each of its executive officers.	x
31.1	Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a).
31.2	Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a).
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

54

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.

	ATMEL CORPORATION (Registrant)
October 30, 2015	/s/ STEVEN LAUB
	Steven Laub
	President & Chief Executive Officer
	(Principal Executive Officer)
October 30, 2015	/s/ STEVE SKAGGS
	Steve Skaggs
	Senior Vice President & Chief Financial Officer
	(Principal Financial Officer)
October 30, 2015	/s/ HUGO DE LA TORRE
	Hugo De La Torre
	Vice President & Chief Accounting Officer
	(Principal Accounting Officer)

55

EXHIBIT INDEX

The following Exhibits have been filed with, or incorporated by reference into, this Report:

2.1	Agreement and Plan of Merger among Dialog Semiconductor PLC, Avengers Acquisition Corporation and Atmel Corporation, dated as of September 19, 2015 (which is incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K (Commission File No. 0-19032) filed on September 21, 2015).	Filed Herewith
2.2	Amendment No. 1 to Agreement and Plan of Merger among Dialog Semiconductor PLC, Avengers Acquisition Corporation and Atmel Corporation, dated as of September 29, 2015 (which is incorporated by reference to Exhibit 2.2 to the Registrant's Current Report on Form 8-K (Commission File No. 0-19032) filed on September 30, 2015).
3.1	Amendment to Amended and Restated Bylaws, dated as of September 19, 2015 (which is incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K (Commission File No. 0-19032) filed on September 21, 2015).
10.1	Letter Agreement with Steve Laub, dated August 24, 2015 (which is incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K (Commission File No. 0-19032) filed on August 25, 2015).
10.2	Form of Indemnification Letter Agreement entered into between Registrant and each of its executive officers.	x
31.1	Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a).
31.2	Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a).
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

  _________________________________________

56

EX-10.2

Confidential

LETTER AGREEMENT

This Letter Agreement is effective as of [__], 2015, by and between Atmel Corporation (together with its successors and assigns, the “Company”), and the undersigned officer of the Company (“Executive”). In consideration of Executive’s efforts to facilitate the execution, integration and management of the potential transaction being considered by the Company, this Letter Agreement sets forth an agreement between Executive and the Company regarding the treatment of taxes under Section 4985 of the Internal Revenue Code (the “Code”) that could become payable by Executive as a result of the potential transaction, even though the potential transaction is not expected, designed or intended to result in any tax under Section 4985 of the Code.

1. If the Company, the Accountants or the Internal Revenue Service determines that any “specified stock compensation” (within the meaning of Section 4985(e) of the Code) payable or paid by the Company (or any member of its “expanded affiliated group” as defined in Section 4985(e)(4) of the Code) to or for the benefit of Executive or a member of such individual’s family (within the meaning of Section 4985(a) of the Code) is subject to the excise tax imposed by Section 4985 of the Code (including any interest, penalties or additions to tax relating thereto) (the “4985 Excise Tax”), then the Company shall pay to Executive by wire transfer in immediately available funds, or directly remit to the applicable tax authority, no later than ten (10) business days prior to the date the 4985 Excise Tax is required to be paid by Executive, an additional amount (the “4985 Gross-up Payment”) equal to the sum of (a) the 4985 Excise Tax payable by Executive; plus (b) the amount necessary to put Executive in the same net after-tax position (taking into account any and all applicable federal, state, local and foreign income, employment, excise and other taxes (including the 4985 Excise Tax and any income and employment taxes imposed on the 4985 Gross-up Payment pursuant to Section 4985(f)(2) or any other provision of the law)) that Executive would have been in if Executive had not incurred any liability for taxes under Section 4985 of the Code. All payments to Executive under this Letter Agreement shall be made in U.S. dollars.

2. Unless Executive and the Company otherwise agree in writing, any determination required under this Letter Agreement shall be made in writing by the Company’s nationally recognized United States independent public accountants (the “Accountants”), whose determination shall be conclusive and binding upon Executive and the Company for all purposes. For purposes of making the calculations required by this Letter Agreement, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 4985 of the Code. The Accountants shall provide detailed supporting calculations to the Company and Executive as requested by the Company or Executive at least 60 days prior to the date the 4985 Excise Tax is required to by paid by Executive or withheld by the Company. Executive and the Company shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Letter Agreement. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Letter Agreement. The Company and the Accountants shall agree to maintain the confidentiality of any personal tax or other information provided by Executive in connection with this Agreement.

3. In the event that it is subsequently claimed by the Internal Revenue Service or other agency that the 4985 Excise Tax required to be paid by Executive is greater than the amount previously determined by the Accountants, the Company shall promptly pay to Executive, or directly remit to the applicable tax authority, such additional 4985 Gross-up Payment relating to such increased 4985 Excise Tax (including, for the avoidance, of doubt, any additional interest, penalties or additions thereto), as well as prompt reimbursement for reasonable legal, accounting and other related costs and expenses (collectively, the “Additional Third Party Costs”) incurred by Executive in connection with the calculation of the 4985 Excise Tax and 4985 Gross-up Payment, plus the amount necessary to put Executive in the same net after-tax position (taking into account any and all applicable federal, state, local and foreign income, employment, excise and other taxes (including the 4985 Excise Tax and any income and employment taxes imposed on the 4985 Gross-up Payment pursuant to Section 4985(f)(2) or any other provision of the law)) that Executive would have been in if Executive had not incurred any additional 4985 Excise Tax, 4985 Gross-up Payment or Additional Third Party Costs.

This Letter Agreement is unconditional, irrevocable and not subject to offset for any reason. The Company shall take no action that would impair or adversely affect Executive’s ability to receive the full and immediate benefits of this Letter Agreement, as necessary. The Company submits to the exclusive jurisdiction of the state and federal courts sitting in the Northern District of California in the county of San Francisco or Santa Clara for any matter related to, arising under or in connection with this Letter Agreement.

This Letter Agreement does not affect any other terms of, or in any way waive any other rights that Executive may have under, any other agreements between Executive and the Company or the compensation and benefit plans of the Company or any of its affiliates in which Executive currently participates.

[Signature page follows]

The undersigned has executed this Letter Agreement as of the date first set forth above.

ATMEL CORPORATION

By:______________________________

Name:

Title:

EXECUTIVE

______________________________

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Steven Laub, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Atmel Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

October 30, 2015	/s/ STEVEN LAUB
	Steven Laub
	President & Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Steve Skaggs, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Atmel Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

October 30, 2015	/s/ STEVE SKAGGS
	Steve Skaggs
	Senior Vice President, Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Steven Laub, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Atmel Corporation on Form 10-Q for the fiscal quarter ended September 30, 2015 (i) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Atmel Corporation.

October 30, 2015	By:	/s/ STEVEN LAUB
		Steven Laub
		President & Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Steve Skaggs, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Atmel Corporation on Form 10-Q for the fiscal quarter ended September 30, 2015 (i) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Atmel Corporation.

October 30, 2015	By:	/s/ STEVE SKAGGS
		Steve Skaggs
		Senior Vice President, Chief Financial Officer

XML

STOCKHOLDERS’ EQUITY - Performance-Based Restricted Stock Units and Employee Stock Purchase Plan (Narrative) (Details) - USD ($) $ / shares in Units, shares in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014	Aug. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 12,719,000	$ 14,917,000	$ 38,943,000	$ 45,812,000
Purchase price of the entity's common stock expressed as percentage of fair market value at the commencement or end of the offering period	85.00%		85.00%
Share Based Compensation, Arrangement by Share Based Payment Award, Offering Period			6 months
Performance-based Restricted Stock Unites (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Deferred compensation arrangement with individual performance based shares granted percentage			100.00%
Performance-based Restricted Stock Unites (RSUs) | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Deferred compensation arrangement with individual performance based shares granted percentage			200.00%
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized						0.6
Employee Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average fair value of the rights to purchase shares (in dollars per share)	$ 1.50	$ 1.65	$ 1.50	$ 1.65
Cash proceeds from the issuance of shares			$ 11,100,000	$ 11,200,000
2015 Long-term Performance-based Incentive Plan | Performance-based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock units issued					(2.6)
2015 Long-term Performance-based Incentive Plan | Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 500,000		2,000,000
2014 Long-term Performance-based Incentive Plan | Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 300,000	$ 700,000	$ 1,700,000	$ 2,700,000
Employee Stock Purchase Plan 2010
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of employee's eligible compensation as limitation on purchases	10.00%		10.00%
Defined Contribution Plan, Maximum Annual Contributions Per Employee, Amount	$ 25,000
Shares purchased	0.9	0.9	1.6	1.7
Employee Stock Ownership Plan (ESOP), Weighted Average Purchase Price of Shares Purchased	$ 6.64	$ 6.73	$ 6.79	$ 6.59
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	25.0		25.0
Number of shares available for issuances	17.3		17.3

XML

SALE OF ASSETS Sale of Heilbronn Real Estate (Details) - Germany - USD ($) $ in Millions		3 Months Ended
	Sep. 23, 2015	Sep. 30, 2015
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal Group, Including Discontinued Operation, Consideration	$ 11.5
Sale Leaseback Transaction, Lease Terms	three
Gain (Loss) on Disposition of Assets	$ 3.1
Other comprehensive loss related to discontinuation of equity investment	2.1
Sale Leaseback Transaction, Deferred Gain, Net	$ 1.1
Gain on sale of assets		$ 0.2

XML

PENSION PLANS (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) mo plan	Sep. 30, 2014 USD ($)
Defined Benefit Plan Disclosure
Number of types of retirement plans | plan			2
Aggregate net pension expense relating to the two plan types
Service costs	$ 282	$ 383	$ 880	$ 1,165
Interest costs	310	378	954	1,151
Amortization of actuarial loss	175	18	501	56
Net pension period cost	767	$ 779	2,335	$ 2,372
Expected net pension cost for next fiscal year			3,400
Cash funding for benefits paid	$ 100		300
Expected cash funding for benefits to be paid next year			$ 500
Minimum
Defined Benefit Plan Disclosure
Period of salary paid to Company's French employees as termination benefits at retirement, range (in months) | mo			1
Maximum
Defined Benefit Plan Disclosure
Period of salary paid to Company's French employees as termination benefits at retirement, range (in months) | mo			5

XML

SALE OF ASSETS - Sale of XSense (Details) - USD ($) $ in Thousands		3 Months Ended	9 Months Ended
	Apr. 16, 2015	Sep. 30, 2015	Sep. 30, 2015
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Royalty Revenue		$ 700	$ 1,200
Patents
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Finite-Lived Intangible Assets, Fair Value Assumption, Discount Rate	40.00%
XSense [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Intellectual Property License, Term	5 years
Intellectual Property License, Option to Renew, Renewal Period	10 years
Royalty Agreement, Guaranteed Minimum Royalties	$ 16,300
Proceeds from Royalties Received	9,300
Total consideration	(16,700)
Selling and other costs	457
Gain on sale of assets	2,159
XSense [Member] | Discontinued Operations Disposed of by Means Other Than Sale, Exchange
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net assets transferred	961
XSense [Member] | Patents | Royalty Arrangement
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Fair value of patent license agreement	$ 13,123

XML

COMMITMENTS AND CONTINGENCIES - Narrative (Details) $ in Millions	9 Months Ended
	Sep. 30, 2015 USD ($) Employee
Minimum
Loss Contingencies [Line Items]
Product Warranty Period	30 days
Maximum
Loss Contingencies [Line Items]
Product Warranty Period	3 years
Individual Labor Action | Pending Litigation
Loss Contingencies [Line Items]
Loss Contingency, Number of Plaintiffs | Employee	600
Purchase Commitment
Loss Contingencies [Line Items]
Capital purchase commitment	$ 18.2
Purchase Commitment
Loss Contingencies [Line Items]
Capital purchase commitment	$ 1.5

XML

BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Pending Acquisition of Atmel by Dialog Semiconductor (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Sep. 23, 2015	Sep. 19, 2015	Dec. 31, 2014
Pending Acquisition of Atmel by Dialog Semiconductor [Abstract]
Common stock, par value (in dollars per share)	$ 0.001		$ 0.001		$ 0.001	$ 0.001	$ 0.001
ExchangeRatioOfCommonShar						0.112
MergerCashExchangeConsideration						$ 4.65
Loss on Contract Termination	$ 137.3
Business Combination, Acquisition Related Costs	$ 7,818,000	$ 0	$ 7,818,000	$ 0

XML

RESTRUCTURING CHARGES - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended				9 Months Ended
	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Restructuring and Related Activities [Abstract]
Restructuring (credits) charges	$ (584)	$ 4,882	$ 1,147	$ 840	$ 5,445	$ (967)

XML

ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

9 Months Ended

Sep. 30, 2015

Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]

Schedule of Components of Accumulated Other Comprehensive Income, Net of Tax

The following table summarizes the changes in accumulated balances of other comprehensive loss, net of tax:

	Foreign currency translation adjustments			Defined benefit pension plans			Change in unrealized loss on investments			Total
	(in thousands)
Balance as of December 31, 2014	$	1,053		$	(8,462	)	$	(773	)	$	(8,182	)
Other comprehensive (loss) gain	(7,535		)	(803		)	1,376			(6,962		)
Balance as of September 30, 2015	$	(6,482	)	$	(9,265	)	$	603		$	(15,144	)

XML

OPERATING AND GEOGRAPHICAL SEGMENTS - Reconciliation of Segment Information to Consolidated Statements of Operations (Details) - USD ($) $ in Thousands	3 Months Ended				9 Months Ended
	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Segment Reporting [Abstract]
Segment income from operations	$ 36,231			$ 54,864	$ 112,115	$ 125,680
Unallocated amounts:
Allocated Share-based Compensation Expense	12,719			14,917	38,943	45,812
Loss from manufacturing facility damage and shutdown	0			3,571	0	(3,485)
Acquisition-related charges	2,390			7,162	10,600	10,287
French building underutilization	500			822	714	3,284
Restructuring Charges	(584)	$ 4,882	$ 1,147	840	5,445	(967)
Gain from foundry arrangement	(2,487)			454	(4,444)	2,583
ImpairmentOfRecivablesDueFromFoundry	0			1,548	0	1,548
Loss (gain) on sale of assets	(427)			0	1,626	0
MergerRelatedCost	(7,818)			0	(7,818)	0
Income from operations	$ 10,474			$ 33,600	$ 45,777	$ 64,814

XML

STOCKHOLDERS’ EQUITY - Schedule of Activity Under the Entity's 2005 Stock Plan (Details) - $ / shares shares in Thousands	3 Months Ended			12 Months Ended
	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Options exercised, Number of Options (in shares)	0	0	0
Options vested and expected to vest at period end (in shares)	2,406
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number	2,400
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price	$ 4.69
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price	$ 4.69
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Beginning Balance, Number of Options (in shares)	2,472	2,859	3,059
Beginning Balance, Weighted Average Exercise Price per Share	$ 4.67	$ 4.65	$ 4.57
Plan adjustment for restricted stock units	3	0	2
Options cancelled/expired/forfeited, Number of Options	(3)	0	(2)
Options cancelled/expired/forfeited, Weighted Average Exercise Price per Share	$ 5.00	$ 0.00	$ 3.26
Options exercised, Number of Options (in shares)	(63)	(387)	(198)
Options exercised, Weighted Average Exercise Price	$ 3.81	$ 4.53	$ 3.51
Ending Balance, Number of Options (in shares)	2,406	2,472	2,859	3,059
Ending Balance, Weighted Average Exercise Price per Share	$ 4.69	$ 4.67	$ 4.65	$ 4.57
Restricted Stock Units R S U Non Performance Based
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Restricted stock units issued	(4,204)	(446)	(479)
Plan adjustment for restricted stock units	2,396	254	273
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Beginning Balance, Available for Grant (in shares)	13,950	13,831	13,611
Plan adjustment for restricted stock units	176	250	210
Stock units cancelled in the period (in shares)	306	432	363
Ending Balance, Available for Grant (in shares)	7,873	13,950	13,831	13,611
Performance-based Restricted Stock Unites (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Stock units cancelled in the period (in shares)	24	87	253
Performance-based Restricted Stock Units (RSUs) Cancelled
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Plan adjustment for restricted stock units	14	50	144
Range of Exercise Price 4 | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Exercise Price per Share, Minimum			$ 2.66
Exercise Price per Share, Maximum	$ 6.28	$ 6.28	6.28
Range of Exercise Price 5 | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Exercise Price per Share, Minimum	2.13	2.13
Range of Exercise Price $2.13-$10.01 | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Exercise Price per Share, Minimum				$ 2.13
Exercise Price per Share, Maximum				$ 10.01
Range of Exercise Price $2.13-$10.01 | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Exercise Price per Share, Minimum			2.13
Exercise Price per Share, Maximum			$ 10.01
Range of Exercise Price 3 | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Exercise Price per Share, Minimum	3,240	2.13
Exercise Price per Share, Maximum	10,010	$ 10.01
Minimum | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Options cancelled/expired/forfeited, Weighted Average Exercise Price per Share	4.36
Maximum | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Options cancelled/expired/forfeited, Weighted Average Exercise Price per Share	$ 6.28

XML

BORROWING ARRANGEMENTS (Details) - USD ($) $ in Thousands		3 Months Ended	9 Months Ended	12 Months Ended
	Jul. 29, 2014	Sep. 30, 2015	Sep. 30, 2015	Dec. 31, 2013	Dec. 31, 2014	Dec. 06, 2013
Line of Credit Facility [Line Items]
Line of Credit Facility, Fair Value of Amount Outstanding		$ 55,000	$ 55,000		$ 75,000
Interest Expense, Debt		400	1,100
Short-term Debt		9,372	9,372		$ 7,260
Long-term Debt
Line of Credit Facility [Line Items]
Interest rate charged for borrowing	1.25%
Advances from Foreign Government
Line of Credit Facility [Line Items]
Short-term Debt		7,800	7,800
Loan Owed to Privately-Held Company
Line of Credit Facility [Line Items]
Short-term Debt		$ 1,600	$ 1,600
Revolving Credit Facility
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity						$ 300,000
Line of Credit Facility Covenant Additional Financing Allowable				$ 250,000
Issuance cost for credit facility				$ 2,100

XML

OPERATING AND GEOGRAPHICAL SEGMENTS - Schedule of Long-lived Assets by Location (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Segment Reporting Information [Line Items]
Long-lived assets	$ 184,102	$ 206,285
United States
Segment Reporting Information [Line Items]
Long-lived assets	85,049	92,466
Philippines
Segment Reporting Information [Line Items]
Long-lived assets	57,579	56,094
Germany
Segment Reporting Information [Line Items]
Long-lived assets	8,300	17,920
France
Segment Reporting Information [Line Items]
Long-lived assets	11,125	13,714
Rest of Asia-Pacific
Segment Reporting Information [Line Items]
Long-lived assets	16,954	20,237
Rest of Europe
Segment Reporting Information [Line Items]
Long-lived assets	$ 5,095	$ 5,854

XML

INCOME TAXES - Schedule of the (Provision for) Benefit From Income Taxes and the Effective Tax Rates (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
(Provision for) benefit from income taxes
Income before income taxes	$ 10,529	$ 28,869	$ 50,694	$ 58,958
Provision for income taxes	$ (11,134)	$ (11,619)	$ (28,526)	$ (20,306)
Effective Income Tax Rate Reconciliation, Percent	105.75%	40.25%	56.27%	34.44%
U.S. statutory federal income tax rate	35.00%	35.00%	35.00%	35.00%
Unrecognized Tax Benefits that Would Impact Effective Tax Rate	$ 87,400		$ 87,400		$ 88,100

XML

INVESTMENTS

9 Months Ended

Sep. 30, 2015

Investments, Debt and Equity Securities [Abstract]

INVESTMENTS

INVESTMENTS

Investments at September 30, 2015 and December 31, 2014 consist of an auction-rate security. For the three months endedSeptember 30, 2015, auctions for the Company's sole auction-rate security continued to fail and as a result this security continues to be illiquid. The Company concluded that the remaining $1.0 million (adjusted cost) of auction-rate security is unlikely to be liquidated within the next twelve months and classified this security as a long-term investment, which is included in other assets in the Condensed Consolidated Balance Sheets. This auction-rate security had a contractual maturity greater than 10 years and totaled $1.0 million (at adjusted cost) as of September 30, 2015.

XML

STOCKHOLDERS’ EQUITY - Schedule of Activity Related to Restricted Stock Units (Details) - $ / shares shares in Thousands	3 Months Ended
	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Beginning Balance, Number of Units	14,572	16,128	18,163
Ending Balance, Number of Units	16,834	14,572	16,128
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Beginning Balance, Weighted-Average Grant Date Fair Value	$ 8.48	$ 8.43	$ 8.40
Ending Balance, Weighted-Average Grant Date Fair Value	$ 8.80	$ 8.48	$ 8.43
Restricted Stock Units R S U Non Performance Based
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Restricted stock units issued, Number of Units	4,204	446	479
Restricted stock units vested, Number of Units	(1,612)	(1,483)	(1,898)
Restricted stock units cancelled, Number of Units	(306)	(432)	(363)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Restricted stock units issued, Weighted-Average Grant Date Fair Value	$ 8.07	$ 9.45	$ 8.45
Restricted stock units vested, Weighted-Average Grant Date Fair Value	4.17	8.53	8.43
Restricted stock units cancelled, Weighted-Average Grant Date Fair Value	$ 8.11	$ 7.59	$ 7.71
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Restricted stock units cancelled, Number of Units	(24)	(87)	(253)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Restricted stock units cancelled, Weighted-Average Grant Date Fair Value	$ 8.23	$ 8.31	$ 7.35

XML

SALE OF ASSETS (Tables)

9 Months Ended

Sep. 30, 2015

Disposal Group, Not Discontinued Operation, Disposal Disclosures [Abstract]

Summary of Activity

Upon closing of this transaction, the Company recognized a gain which is summarized in the following table:

	April 16, 2015
	(in thousands)
Total consideration	$	(16,700	)
Fair value of patent license agreement	13,123
Selling and other costs	457
Net assets transferred	961
Gain on sale of assets	$	(2,159	)

XML

OPERATING AND GEOGRAPHICAL SEGMENTS (Tables)

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

Information about Reportable Segments

	Micro- Controller		Nonvolatile Memory		Automotive		Multi-Market and Other			Total
	(in thousands)
Three months ended September 30, 2015
Net revenue from external customers	$	201,061	$	34,188	$	34,158	$	17,126		$	286,533
Segment income from operations	$	21,712	$	2,782	$	5,473	$	6,264		$	36,231
Three months ended September 30, 2014
Net revenue from external customers	$	264,432	$	46,908	$	37,273	$	25,872		$	374,485
Segment income from operations	$	36,996	$	11,329	$	5,689	$	850		$	54,864
Nine months ended September 30, 2015
Net revenue from external customers	$	624,850	$	121,089	$	107,119	$	58,116		$	911,174
Segment income from operations	$	56,620	$	24,520	$	14,868	$	16,107		$	112,115
Nine months ended September 30, 2014
Net revenue from external customers	$	754,348	$	122,739	$	114,238	$	76,055		$	1,067,380
Segment income (loss) from operations	$	86,148	$	24,413	$	15,727	$	(608	)	$	125,680

Reconciliation of Segment Information to Condensed Consolidated Statements of Operations

Reconciliation of Segment Information to Condensed Consolidated Statements of Operations

	Three Months Ended						Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(in thousands)
Total segment income from operations	$	36,231		$	54,864		$	112,115		$	125,680
Unallocated amounts:
Share-based compensation expense	(12,719		)	(14,917		)	(38,943		)	(45,812		)
Gain (loss) from manufacturing facility damage and shutdown	—			3,571			—			(3,485		)
Acquisition-related charges	(2,390		)	(7,162		)	(10,600		)	(10,287		)
French building underutilization	(500		)	(822		)	(714		)	(3,284		)
Restructuring credit (charges)	584			(840		)	(5,445		)	967
(Loss) gain related to foundry arrangements	(2,487		)	454			(4,444		)	2,583
Fair value adjustments to inventory from businesses acquired	—			(1,548		)	—			(1,548		)
(Loss) gain on sale of assets	(427		)	—			1,626			—
Merger expenses and other	(7,818		)	—			(7,818		)	—
Consolidated income from operations	$	10,474		$	33,600		$	45,777		$	64,814

Schedule of Geographic Sources of Revenue

Geographic sources of revenue were as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2015		September 30, 2014		September 30, 2015		September 30, 2014
	(in thousands)
China, including Hong Kong	$	93,481	$	115,442	$	286,489	$	322,724
United States	49,113		58,969		160,582		162,227
Germany	41,335		51,279		123,880		161,018
South Korea	16,561		31,157		62,641		94,089
Japan	11,254		10,062		39,170		24,463
Singapore	9,073		15,208		28,412		43,445
Taiwan	6,480		21,566		26,930		51,495
France	3,224		3,618		11,775		9,407
Rest of Europe	28,671		34,300		87,410		108,104
Rest of Asia-Pacific	20,459		26,080		63,155		71,862
Rest of the World	6,882		6,804		20,730		18,546
Total net revenue	$	286,533	$	374,485	$	911,174	$	1,067,380

Schedule of Long-lived Assets by Location

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

	September 30, 2015		December 31, 2014
	(in thousands)
United States	$	85,049	$	92,466
Philippines	57,579		56,094
Germany	8,300		17,920
France	11,125		13,714
Rest of Asia-Pacific	16,954		20,237
Rest of Europe	5,095		5,854
Total	$	184,102	$	206,285

XML

RESTRUCTURING CHARGES - Summary of the Activity Related to the Accrual for Restructuring Charges Detailed by Event (Details) - USD ($) $ in Thousands	3 Months Ended				9 Months Ended
	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Restructuring Cost and Reserve [Line Items]
Balance at beginning of period	$ 14,791	$ 19,319	$ 19,725		$ 19,725
(Credits) charges – Employee termination costs, net of change in estimate	(584)	4,882	1,147	$ 840	5,445	$ (967)
Non-cash - Other	1,004	(217)	(181)
Payments – Employee termination costs	(4,399)	(7,851)	(1,274)
Foreign exchange gain	54	(1,342)	98
Balance at end of period	10,758	14,791	19,319		10,758
Quarter Two 2010
Restructuring Cost and Reserve [Line Items]
Balance at beginning of period	281	281	281		281
(Credits) charges – Employee termination costs, net of change in estimate	0	0	0
Non-cash - Other	0	0	0
Payments – Employee termination costs	0	0	0
Foreign exchange gain	0	0	0
Balance at end of period	281	281	281		281
Quarter Two 2012
Restructuring Cost and Reserve [Line Items]
Balance at beginning of period	38	19	19		19
(Credits) charges – Employee termination costs, net of change in estimate	0	(210)	0
Non-cash - Other	0	0	0
Payments – Employee termination costs	0	229	0
Foreign exchange gain	0	0	0
Balance at end of period	38	38	19		38
Quarter One 2013
Restructuring Cost and Reserve [Line Items]
Balance at beginning of period	3,306	3,384	3,988		3,988
(Credits) charges – Employee termination costs, net of change in estimate	0	(153)	(49)
Non-cash - Other	0	0	0
Payments – Employee termination costs	(582)	(196)	(524)
Foreign exchange gain	(32)	271	31
Balance at end of period	2,756	3,306	3,384		2,756
Quarter Three 2013
Restructuring Cost and Reserve [Line Items]
Balance at beginning of period	0	9	9		9
(Credits) charges – Employee termination costs, net of change in estimate	0	(9)	0
Non-cash - Other		0	0
Payments – Employee termination costs	0	0	0
Foreign exchange gain	0	0	0
Balance at end of period	0	0	9		0
Quarter Three 2014
Restructuring Cost and Reserve [Line Items]
Balance at beginning of period	1,008	634	920		920
(Credits) charges – Employee termination costs, net of change in estimate	(166)	1,651	488
Non-cash - Other	840	(213)	(175)
Payments – Employee termination costs	(1,646)	(1,064)	(540)
Foreign exchange gain	0	0	59
Balance at end of period	36	1,008	634		36
Quarter Four 2014
Restructuring Cost and Reserve [Line Items]
Balance at beginning of period	9,485	14,493	14,508		14,508
(Credits) charges – Employee termination costs, net of change in estimate	(432)	899	6
Non-cash - Other	(10)	(4)	(6)
Payments – Employee termination costs	(1,543)	(4,287)	(14)
Foreign exchange gain	86	(1,616)	1
Balance at end of period	7,414	9,485	14,493		7,414
Quarter One 2015
Restructuring Cost and Reserve [Line Items]
Balance at beginning of period	0	499	0		0
(Credits) charges – Employee termination costs, net of change in estimate	0	2,006	702
Non-cash - Other	0	0	0
Payments – Employee termination costs	0	(2,508)	(196)
Foreign exchange gain	0	3	7
Balance at end of period	0	0	499		0
Quarter Two 2015
Restructuring Cost and Reserve [Line Items]
Balance at beginning of period	673	0	0		0
(Credits) charges – Employee termination costs, net of change in estimate	14	698	0
Non-cash - Other	174	0	0
Payments – Employee termination costs	(628)	(25)	0
Foreign exchange gain	0	0	0
Balance at end of period	$ 233	$ 673	$ 0		$ 233

XML

STOCKHOLDERS’ EQUITY - Schedule of Assumptions Used to Estimate the Fair Value of the Company's ESPP Shares (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend yield			0.00%	0.00%
Employee Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	0.24%	0.06%	0.16%	0.07%
Expected life (years)	6 months	6 months	6 months	6 months
Expected volatility	30.00%	30.00%	33.00%	31.00%
Expected dividend yield	1.94%	0.00%

XML

RESTRUCTURING CHARGES (Tables)

9 Months Ended

Sep. 30, 2015

Restructuring and Related Activities [Abstract]

Summary of the Activity Related to the Accrual for Restructuring Charges Detailed by Event

The following table summarizes the activity related to the accrual for restructuring charges detailed by event:

	Q2'10		Q2'12			Q1'13			Q3'13			Q3'14			Q4'14			Q1'15			Q2'15			Total
	(in thousands)
Balance at January 1, 2015 - Restructuring Accrual	$	281	$	19		$	3,988		$	9		$	920		$	14,508		$	—		$	—		$	19,725
(Credits) charges – Employee termination costs, net of change in estimate	—		—			(49		)	—			488			6			702			—			1,147
Non-cash - Other	—		—			—			—			(175		)	(6		)	—			—			(181		)
Payments – Employee termination costs	—		—			(524		)	—			(540		)	(14		)	(196		)	—			(1,274		)
Foreign exchange gain	—		—			(31		)	—			(59		)	(1		)	(7		)	—			(98		)
Balance at March 31, 2015 - Restructuring Accrual	$	281	$	19		$	3,384		$	9		$	634		$	14,493		$	499		$	—		$	19,319
(Credits) charges – Employee termination costs, net of change in estimate	—		(210		)	(153		)	(9		)	1,651			899			2,006			698			4,882
Non-cash - Other	—		—			—			—			(213		)	(4		)	—			—			(217		)
Refunds (payments) - Employee termination costs	—		229			(196		)	—			(1,064		)	(4,287		)	(2,508		)	(25		)	(7,851		)
Foreign exchange loss (gain)	—		—			271			—			—			(1,616		)	3			—			(1,342		)
Balance at June 30, 2015 - Restructuring Accrual	$	281	$	38		$	3,306		$	—		$	1,008		$	9,485		$	—		$	673		$	14,791
(Credits) charges – Employee termination costs, net of change in estimate	—		—			—			—			(166		)	(432		)	—			14			(584		)
Non-cash – Other	—		—			—			—			840			(10		)	—			174			1,004
Payments - Employee termination costs	—		—			(582		)	—			(1,646		)	(1,543		)	—			(628		)	(4,399		)
Foreign exchange loss (gain)	—		—			32			—			—			(86		)	—			—			(54		)
Balance at September 30, 2015 - Restructuring Accrual	$	281	$	38		$	2,756		$	—		$	36		$	7,414		$	—		$	233		$	10,758

XML

NET INCOME PER SHARE ATTRIBUTABLE TO ATMEL COMMON STOCKHOLDERS (Tables)

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Schedule of Earnings Per Share

A reconciliation of the numerator and denominator of basic and diluted net income per share is as follows:

	Three Months Ended					Nine Months Ended
	September 30, 2015			September 30, 2014		September 30, 2015		September 30, 2014
	(in thousands, except per share data)
Net (loss) income attributable to Atmel	$	(614	)	$	17,250	$	22,193	$	38,652
Weighted-average shares - basic	419,293			418,954		418,072		421,791
Dilutive effect of incremental shares and share equivalents	—			2,010		1,410		1,909
Weighted-average shares - diluted	419,293			420,964		419,482		423,700
Net (loss) income per share:
Basic
Net (loss) income per share attributable to Atmel common stockholders - basic	$	—		$	0.04	$	0.05	$	0.09
Diluted
Net (loss) income per share attributable to Atmel common stockholders - diluted	$	—		$	0.04	$	0.05	$	0.09

Schedule of Antidilutive Securities

The following table summarizes securities that were not included in the “Weighted-average shares - diluted” used for calculation of diluted net income per share, as their effect would have been anti-dilutive:

	Three Months Ended		Nine Months Ended
	September 30, 2015	September 30, 2014	September 30, 2015	September 30, 2014
	(in thousands)
Employee stock options and restricted stock units outstanding	4,535	4,167	5,414	5,381

XML

BUSINESS COMBINATIONS

9 Months Ended

Sep. 30, 2015

Business Combinations [Abstract]

BUSINESS COMBINATIONS

BUSINESS COMBINATIONS

Newport Media, Inc.

On July 31, 2014, the Company acquired 100% of the equity interest in privately-held Newport Media, Inc. (“NMI”), a provider of low power Wi-Fi and Bluetooth solutions that are expected to enhance the Company’s portfolio of wireless products.

The purchase consideration, net of cash acquired, consisted of $139.6 million payable in cash at the closing of the acquisition, subject to working capital adjustments and deductions for specified closing expenses. In addition, the acquisition agreement provides for an aggregate cash earn-out payment of up to $30.0 million payable if specified revenue targets are achieved over the two years following the acquisition date. The Company recorded a liability of $0.4 million as of July 31, 2014, representing the estimated fair value of the earn-out based on the probability of achievement as of the acquisition date.

During the nine months endedSeptember 30, 2015, the Company reversed $0.2 million previously accrued in respect of the potential earn-out through a credit to acquisition-related charges in the Condensed Consolidated Statements of Operations as management determined that revenue targets on which the earn-out is based will not likely be met during 2015.

The Company prepared an initial determination of the fair value of the assets acquired and liabilities assumed as of the acquisition date using preliminary information.  The Company recognized measurement period adjustments made during the fourth quarter of 2014 to the fair value of certain assets acquired and liabilities assumed as a result of further refinements in the Company’s estimates.  These adjustments were retrospectively applied to the July 31, 2014 acquisition date balance sheet.  The effect of these adjustments on the preliminary purchase price allocation was a decrease in goodwill and income tax payable of $1.9 millionand $0.3 million, respectively, and an increase in deferred tax assets of $1.6 million. 

The excess of the fair value of consideration paid over the fair value of the net assets and the identifiable intangible assets acquired and the liabilities assumed resulted in recognition of goodwill of approximately $86.1 million, including workforce, of which $55.2 million is expected to be deductible for tax purposes. The recognition of goodwill primarily related to the expected synergies between the product offerings of NMI and the Company. All goodwill recorded was assigned to the Company's Microcontroller segment.

The Company expensed $2.5 million of advisory, legal, and consulting fees and other costs directly related to the acquisition, which were recorded as acquisition-related charges in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2014. The Company incurred $5.3 million of one-time bonus expense, subject to claw-back and other employment-related terms, for certain employees, which are being recorded ratably through the date on which the bonus is no longer recoverable by the Company. For the three and nine months endedSeptember 30, 2015, the Company recorded $0.2 million and $3.1 million, respectively, of one-time bonus expense as acquisition-related charges and $1.0 million and $4.0 million, respectively, of amortization expense related to identifiable intangible assets in the Condensed Consolidated Statements of Operations.

XML

BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Inventory (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Accounting Policies [Abstract]
Raw materials and purchased parts	$ 10,722	$ 12,633
Work-in-progress	172,064	192,206
Finished goods	84,840	73,403
Inventories	$ 267,626	$ 278,242

XML

STOCKHOLDERS’ EQUITY - Common Stock Repurchase Program and Dividends (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Authorized amount under stock repurchase program	$ 1,000,000		$ 1,000,000
Remaining authorized amount available for stock repurchase	$ 197,100		$ 197,100
Shares of common stock repurchased	0	2,900,000	1,400,000	13,400,000
Average price of shares repurchased (in dollars per share)		$ 8.50	$ 8.27	$ 8.09
Stock Repurchased During Period, Value		$ 25,000	$ 12,000	$ 108,500
Cash dividends declared and paid per share	$ 0.04	$ 0	$ 0.12	$ 0
Payments of Dividends	$ 16,800		$ 50,239	$ 0

XML

OPERATING AND GEOGRAPHICAL SEGMENTS - Narrative (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($) Customer distributor	Sep. 30, 2014 Customer distributor	Sep. 30, 2015 USD ($) Customer distributor	Sep. 30, 2014 Customer distributor	Dec. 31, 2014 USD ($)
Concentration Risk [Line Items]
Goodwill	$ 189,565		$ 189,565		$ 191,088
Finite-Lived Intangible Assets, Net	41,361		41,361		50,286
Deferred Tax Assets, Net of Valuation Allowance, Noncurrent	104,600		104,600		117,300
Auction-rate securities
Concentration Risk [Line Items]
Investment Owned, at Fair Value	$ 1,100		$ 1,100		$ 1,100
Sales Revenue, Goods, Net | Customer Concentration Risk
Concentration Risk [Line Items]
Concentration Risk, Number of Major Customers | Customer	0	0	0	0
Accounts Receivable | Credit Concentration Risk
Concentration Risk [Line Items]
Concentration Risk, Number of Major Distributor | distributor			2	3
Concentration Risk, Number of Major Customers | distributor			0	0
Major Distributor with Largest Balance | Sales Revenue, Goods, Net
Concentration Risk [Line Items]
Concentration Risk, Percentage	18.00%	15.00%	18.00%	16.00%
Major Distributor with Largest Balance | Sales Revenue, Goods, Net | Customer Concentration Risk
Concentration Risk [Line Items]
Concentration Risk, Number of Major Distributor | distributor	1	1	1	2
Major Distributor with Largest Balance | Accounts Receivable | Credit Concentration Risk
Concentration Risk [Line Items]
Concentration Risk, Percentage			19.00%	15.00%
Major Customer with Largest Balance | Sales Revenue, Goods, Net | Credit Concentration Risk
Concentration Risk [Line Items]
Concentration Risk, Percentage	10.00%	10.00%	10.00%	10.00%
Major Customer with Largest Balance | Accounts Receivable | Credit Concentration Risk
Concentration Risk [Line Items]
Concentration Risk, Percentage			10.00%	10.00%
Major Distributor with Second Largest Balance | Sales Revenue, Goods, Net
Concentration Risk [Line Items]
Concentration Risk, Percentage				10.00%
Major Distributor with Second Largest Balance | Accounts Receivable | Credit Concentration Risk
Concentration Risk [Line Items]
Concentration Risk, Percentage			13.00%	12.00%
Major Distributor with Third Largest Balance | Accounts Receivable | Credit Concentration Risk
Concentration Risk [Line Items]
Concentration Risk, Percentage				11.00%

XML

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Income Statement [Abstract]
Net revenue	$ 286,533	$ 374,485	$ 911,174	$ 1,067,380
Operating expenses
Cost of revenue	153,177	197,642	489,207	589,309
Research and development	55,832	69,917	174,959	209,751
Selling, general and administrative	64,817	65,324	186,812	194,186
Acquisition-related charges	2,390	7,162	10,600	10,287
Restructuring (credits) charges	(584)	840	5,445	(967)
Loss (gain) on sale of assets	(427)	0	1,626	0
Total operating expenses	276,059	340,885	865,397	1,002,566
Income from operations	10,474	33,600	45,777	64,814
Interest and other income (expense), net	55	(4,731)	4,917	(5,856)
Income before income taxes	10,529	28,869	50,694	58,958
Provision for income taxes	11,134	11,619	28,526	20,306
Net (loss) income	(605)	17,250	22,168	38,652
Add: net (income) loss attributable to noncontrolling interest, net of taxes	(9)	0	25	0
Net (loss) income attributable to Atmel	$ (614)	$ 17,250	$ 22,193	$ 38,652
Net (loss) income per share	$ 0.00	$ 0.04	$ 0.05	$ 0.09
Weighted-average shares used in basic net (loss) income per share calculations	419,293	418,954	418,072	421,791
Net (loss) income per share	$ 0.00	$ 0.04	$ 0.05	$ 0.09
Weighted-average shares used in diluted net (loss)income per share calculations	419,293	420,964	419,482	423,700
Cash dividends declared and paid per share	$ 0.04	$ 0	$ 0.12	$ 0

XML

ACCUMULATED OTHER COMPREHENSIVE LOSS - Schedule of Components of Accumulated Other Comprehensive Income, Net of Tax (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2015 USD ($)
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Balance as of December 31, 2014	$ (8,182)
Other comprehensive (loss) gain	(6,962)
Balance as of September 30, 2015	(15,144)
Foreign currency translation adjustments
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Balance as of December 31, 2014	1,053
Other comprehensive (loss) gain	(7,535)
Balance as of September 30, 2015	(6,482)
Defined benefit pension plans
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Balance as of December 31, 2014	(8,462)
Other comprehensive (loss) gain	(803)
Balance as of September 30, 2015	(9,265)
Change in unrealized loss on investments
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Balance as of December 31, 2014	(773)
Other comprehensive (loss) gain	1,376
Balance as of September 30, 2015	$ 603

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities
Net income	$ 22,168	$ 38,652
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	42,042	43,747
Deferred income taxes	12,768	(4,439)
Write-off of equipment deposit	0	1,730
Realized gain on sales of marketable securities	0	(385)
Gain from foundry arrangements	0	(95)
Realized gain on sales of investments in privately-held companies	(1,317)	0
Gain on sale of assets	(1,998)	0
Curtailment gain	(652)	0
Accretion of interest on long-term debt	1,297	1,313
Share-based compensation expense	38,943	45,812
Excess tax benefit on share-based compensation	(1,326)	(1,441)
Non-cash acquisition-related and other charges, net	(6,052)	(2,333)
Changes in operating assets and liabilities, net of acquisitions
Accounts receivable	19,877	(7,256)
Inventories	10,773	18,551
Current and other assets	6,171	21,579
Trade accounts payable	(22,817)	12,330
Accrued and other liabilities	(22,523)	(32,050)
Income taxes payable	(3,778)	810
Deferred income on shipments to distributors	3,084	6,094
Net cash provided by operating activities	96,660	142,619
Cash flows from investing activities
Acquisitions of fixed assets	(25,974)	(37,815)
Proceeds from sale of assets	20,421	0
Proceeds from sales of investments in privately-held companies	3,817	0
Sales of marketable securities	0	3,071
Proceeds from Sale of Property, Plant, and Equipment	770	0
Acquisition of businesses, net of cash acquired	0	139,580
Acquisitions of intangible assets	(1,544)	(2,560)
Net cash used in investing activities	(2,510)	(176,884)
Cash flows from financing activities
Proceeds from issuance of debt	0	90,000
Principal repayments on debt	20,087	1,353
Repurchases of common stock	(11,985)	(108,480)
Payment of dividends	(50,239)	0
Proceeds from issuance of common stock	13,753	13,241
Tax payments related to shares withheld for vested restricted stock units	(14,749)	(15,709)
Excess tax benefit on share-based compensation	1,326	1,441
Net cash used in financing activities	(81,981)	(20,860)
Effect of exchange rate changes on cash and cash equivalents	(365)	(1,869)
Net increase (decrease) in cash and cash equivalents	11,804	(56,994)
Cash and cash equivalents at beginning of the period	206,937	276,881
Cash and cash equivalents at end of the period	$ 218,741	$ 219,887

XML

NET INCOME PER SHARE ATTRIBUTABLE TO ATMEL COMMON STOCKHOLDERS - Schedule of Antidilutive Securities (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Employee stock options and restricted stock units outstanding
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	4,535	4,167	5,414	5,381

XML

INVESTMENTS - Narrative (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Investment [Line Items]
Realized gain on investment	$ 0	$ 385
Available-for-sale debt security contractual maturity minimum years	10 years
Auction-rate securities
Investment [Line Items]
Adjusted Cost	$ 1,000

XML

BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Schedule of Inventory

Inventories are comprised of the following:

	September 30, 2015		December 31, 2014
	(in thousands)
Raw materials and purchased parts	$	10,722	$	12,633
Work-in-progress	172,064		192,206
Finished goods	84,840		73,403
	$	267,626	$	278,242

XML

FAIR VALUE OF ASSETS AND LIABILITIES (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Investments measured at fair value on a recurring basis
Maximum percentage of assets measured using Level 3 valuation methodologies to total assets	1.00%	1.00%
Recurring basis
Investments measured at fair value on a recurring basis
Money market funds	$ 1,282	$ 1,267
Total	8,888	8,932
Recurring basis | Other Assets
Investments measured at fair value on a recurring basis
Other Assets, Fair Value Disclosure	7,606	7,665
Recurring basis | Auction-rate securities
Investments measured at fair value on a recurring basis
Other Assets, Fair Value Disclosure	1,066	1,066
Recurring basis | Institutional money market funds
Investments measured at fair value on a recurring basis
Other Assets, Fair Value Disclosure	1,917	2,039
Recurring basis | Fixed income
Investments measured at fair value on a recurring basis
Other Assets, Fair Value Disclosure	1,034	984
Recurring basis | Marketable equity securities
Investments measured at fair value on a recurring basis
Other Assets, Fair Value Disclosure	3,589	3,576
Recurring basis | Total institutional funds - Deferred compensation plan
Investments measured at fair value on a recurring basis
Other Assets, Fair Value Disclosure	6,540	6,599
Recurring basis | Level 1
Investments measured at fair value on a recurring basis
Money market funds	1,282	1,267
Total	7,822	7,866
Recurring basis | Level 1 | Other Assets
Investments measured at fair value on a recurring basis
Other Assets, Fair Value Disclosure	6,540	6,599
Recurring basis | Level 1 | Institutional money market funds
Investments measured at fair value on a recurring basis
Other Assets, Fair Value Disclosure	1,917	2,039
Recurring basis | Level 1 | Fixed income
Investments measured at fair value on a recurring basis
Other Assets, Fair Value Disclosure	1,034	984
Recurring basis | Level 1 | Marketable equity securities
Investments measured at fair value on a recurring basis
Other Assets, Fair Value Disclosure	3,589	3,576
Recurring basis | Level 1 | Total institutional funds - Deferred compensation plan
Investments measured at fair value on a recurring basis
Other Assets, Fair Value Disclosure	6,540	6,599
Recurring basis | Level 3
Investments measured at fair value on a recurring basis
Total	1,066	1,066
Recurring basis | Level 3 | Other Assets
Investments measured at fair value on a recurring basis
Other Assets, Fair Value Disclosure	1,066	1,066
Recurring basis | Level 3 | Auction-rate securities
Investments measured at fair value on a recurring basis
Other Assets, Fair Value Disclosure	$ 1,066	$ 1,066

XML

STOCKHOLDERS’ EQUITY (Tables)

9 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Net of Amount Capitalized

The following table summarizes share-based compensation, net of the amount capitalized in inventory, included in operating results:

	Three Months Ended						Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(in thousands)
Cost of revenue	$	1,560		$	1,605		$	4,357		$	4,892
Research and development	3,418			4,632			10,569			13,744
Selling, general and administrative	7,741			8,680			24,017			27,176
Total share-based compensation expense, before income taxes	12,719			14,917			38,943			45,812
Tax benefit	(2,884		)	(3,760		)	(8,557		)	(10,005		)
Total share-based compensation expense, net of income taxes	$	9,835		$	11,157		$	30,386		$	35,807

Schedule of Activity Under the Entity's 2005 Stock Plan

Activity under Atmel’s 2005 Stock Plan is set forth below: 

			Outstanding Options				Weighted-
					Exercise		Average
	Available for Grant		Number of Options		Price per Share		Exercise Price per Share
	(in thousands, except for per share data)
Balances, December 31, 2014	13,611		3,059		$2.13-$10.01		$	4.57
Restricted stock units issued	(479	)	—		—		—
Plan adjustment for restricted stock units issued	(273	)	—		—		—
Restricted stock units cancelled	363		—		—		—
Plan adjustment for restricted stock units cancelled	210		—		—		—
Performance-based restricted stock units cancelled	253		—		—		—
Plan adjustment for performance-based restricted stock units cancelled	144		—		—		—
Options cancelled/expired/forfeited	2		(2	)	$	3.26	$	3.26
Options exercised	—		(198	)	$2.66-$6.28		$	3.51
Balances, March 31, 2015	13,831		2,859		$2.13-$10.01		$	4.65
Restricted stock units issued	(446	)	—		—		—
Plan adjustment for restricted stock units issued	(254	)	—		—		—
Restricted stock units cancelled	432		—		—		—
Plan adjustment for restricted stock units cancelled	250		—		—		—
Performance-based restricted stock units cancelled	87		—		—		—
Plan adjustment for performance-based restricted stock units cancelled	50		—		—		—
Options cancelled/expired/forfeited	—		—		—		$	—
Options exercised	—		(387	)	$2.13-$6.28		$	4.53
Balances, June 30, 2015	13,950		2,472		$2.13-$10.01		$	4.67
Restricted stock units issued	(4,204	)
Plan adjustment for restricted stock units issued	(2,396	)
Restricted stock units cancelled	306
Plan adjustment for restricted stock units cancelled	176
Performance-based restricted stock units cancelled	24
Plan adjustment for performance-based restricted stock units cancelled	14
Options cancelled/expired/forfeited	3		(3	)	$4.36-$6.28		$	5.00
Options exercised	—		(63	)	$2.13-$6.28		$	3.81
Balances, September 30, 2015	7,873		2,406		$3.24-$10.01		$	4.69
Options vested and expected to vest at September 30, 2015			2,406		$3.24-$10.01		$	4.69
Options exercisable at September 30, 2015			2,400		$3.24-$10.01		$	4.69

Schedule of Activity Related to Restricted Stock Units

Activity related to restricted stock units is set forth below:

	Number of Units		Weighted-Average Grant Date Fair Value
	(in thousands, except for per share data)
Balances, December 31, 2014	18,163		$	8.40
Restricted stock units issued	479		8.45
Restricted stock units vested	(1,898	)	8.43
Restricted stock units cancelled	(363	)	7.71
Performance-based restricted stock units cancelled	(253	)	7.35
Balances, March 31, 2015	16,128		$	8.43
Restricted stock units issued	446		9.45
Restricted stock units vested	(1,483	)	8.53
Restricted stock units cancelled	(432	)	7.59
Performance-based restricted stock units cancelled	(87	)	8.31
Balances, June 30, 2015	14,572		$	8.48
Restricted stock units issued	4,204		8.07
Restricted stock units vested	(1,612	)	4.17
Restricted stock units cancelled	(306	)	8.11
Performance-based restricted stock units cancelled	(24	)	8.23
Balances, September 30, 2015	16,834		$	8.80

Schedule of Assumptions Used to Estimate the Fair Value of the Company's ESPP Shares

The following assumptions were utilized to determine the fair value of the 2010 ESPP shares:

	Three Months Ended				Nine Months Ended
	September 30, 2015		September 30, 2014		September 30, 2015		September 30, 2014
Risk-free interest rate	0.24	%	0.06	%	0.16	%	0.07	%
Expected life (years)	0.50		0.50		0.50		0.50
Expected volatility	30	%	30	%	33	%	31	%
Expected dividend yield	1.94	%	—	%	1.92	%	—

XML

BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These unaudited interim condensed consolidated financial statements reflect all normal recurring adjustments which are, in the opinion of management, necessary to state fairly, in all material respects, the financial position of Atmel Corporation (the “Company” or “Atmel”) and its subsidiaries as of September 30, 2015 and the results of operations and comprehensive (loss) income for the three and nine months endedSeptember 30, 2015 and 2014 and cash flows for the nine months endedSeptember 30, 2015 and 2014. All intercompany balances have been eliminated. Because all of the annual disclosures required by U.S. generally accepted accounting principles ("GAAP") are not included, as permitted by the rules of the Securities and Exchange Commission (the “SEC”), these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The December 31, 2014 year-end balance sheet data was derived from the Company’s audited consolidated financial statements, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The condensed consolidated statements of operations for the periods presented are not necessarily indicative of results to be expected for any future period, or for the entire year.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates in these financial statements include provisions for excess and obsolete inventory, sales reserves and allowances, share-based compensation expense, allowances for doubtful accounts receivable, estimates for useful lives associated with long-lived assets, recoverability of goodwill and intangible assets, restructuring charges, liabilities for uncertain tax positions and deferred tax asset valuation allowances. Actual results could differ materially from those estimates.

Pending Acquisition of Atmel by Dialog Semiconductor

On September 19, 2015, Atmel entered into an Agreement and Plan of Merger (as amended, the “Merger Agreement”) with Dialog Semiconductor plc, a corporation organized under the laws of England and Wales (“Dialog”), and Avengers Acquisition Corporation, a Delaware corporation and a wholly-owned direct subsidiary of Dialog (“Merger Sub”). Under the terms of the Merger Agreement, Merger Sub will merge with and into Atmel (the “Merger”), with Atmel being the surviving corporation (the “Surviving Corporation”). The Transaction has been unanimously approved by the boards of directors of both companies.

At the effective time of the Merger, each share of Atmel’s common stock, par value $0.001 per share (the “Common Stock”), issued and outstanding immediately prior to the Merger (other than dissenting shares and shares held by Dialog, Merger Sub, Atmel or any of their respective subsidiaries) will be converted into the right to receive (i) 0.112 American Depositary Shares of Dialog (the “ADSs”), with each whole ADS representing one ordinary share of Dialog (each, a “Dialog Share”), (ii) $4.65 in cash, without interest, and (iii) cash in lieu of fractional ADSs as contemplated in the Merger Agreement (the “Merger Consideration”).

The closing of the transaction is subject to a number of conditions specified in the Merger Agreement, including, among others, the adoption of the Merger Agreement by Atmel’s stockholders, the affirmative vote of the holders of a majority of Dialog’s outstanding ordinary shares, regulatory approvals in the United States, Germany and Romania and the effectiveness under the Securities Act of 1933 of a registration statement on Form F-4 to be filed with the SEC by Dialog registering the ADSs in the United States. The consummation of the Merger is not subject to a financing condition. The Merger Agreement may be terminated by either party under conditions expressly specified in the Merger Agreement, and the payment of applicable termination fees of up to $137.3 million to Dialog, or reimbursement of expenses, as contemplated therein.

Dialog has agreed that it will appoint two directors nominated by Atmel to its board of directors concurrent with the closing of the Merger.

The foregoing description of the pending acquisition of Atmel by Dialog, and the transactions contemplated thereby, does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, a copy of which is attached as Exhibit 2.1 to the Form 8-K filed by the Company on September 21, 2015, and as the Merger Agreement was amended on September 29, 2015, as reflected in a further Form 8-K filed by the Company on September 30, 2015. The Merger Agreement, as amended, and the related Form 8-Ks, are listed in the Exhibit Table of this filing.

Atmel recorded transaction-related costs of approximately $7.8 million, principally for outside financial advisory, legal, and related fees and expenses associated with the pending acquisition in the three months ended September 30, 2015. These costs were recorded in selling, general and administrative expense included in the Condensed Consolidated Statements of Operations for the three months ended September 30, 2015. Additional transaction-related costs are expected to be incurred through the closing of the Merger.

Inventories

Inventories are stated at the lower of cost (on a first-in, first-out basis) or market. Market is based on estimated net realizable value. Determining market value of inventories involves numerous judgments, including estimating average selling prices and sales volumes for future periods. The Company establishes provisions for lower of cost or market and excess and obsolescence write-downs, which are charged to cost of revenue. The Company makes a determination regarding excess and obsolete inventory on a quarterly basis. This determination requires an estimate of the future demand for the Company’s products and involves an analysis of historical and forecasted sales levels by product, competitiveness of product offerings, market conditions, product lifecycles, as well as other factors. Excess and obsolete inventory write-downs are recorded when the inventory on hand exceeds management’s estimate of future demand for each product and are charged to cost of revenue.

The Company’s inventories include parts that have a potential for rapid technological obsolescence and are sold in a highly competitive industry. The Company writes down inventory that is considered excess or obsolete. When the Company recognizes a loss on such inventory, it establishes a new, lower-cost basis for that inventory, and subsequent changes in facts and circumstances will not result in the restoration or increase in that newly established cost basis. If inventory with a lower-cost basis is subsequently sold, it will result in higher gross margin for the products making up that inventory.

Inventories are comprised of the following:

	September 30, 2015		December 31, 2014
	(in thousands)
Raw materials and purchased parts	$	10,722	$	12,633
Work-in-progress	172,064		192,206
Finished goods	84,840		73,403
	$	267,626	$	278,242

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standard Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in GAAP when it becomes effective. In July 2015, the FASB deferred the effective date of ASU 2014-09 so that it will apply to annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods). Early application is permitted to the original effective date of December 15, 2016, in which case ASU 2014-09 would apply to annual reporting periods beginning December 15, 2016 (including interim reporting periods within those periods). The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. The ASU requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. The new standard is effective for the Company on January 1, 2016. Early application is permitted. The standard requires an entity to apply the new guidance on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. The Company does not believe that the adoption of the ASU will have a material effect on its consolidated financial statements and disclosure.

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Statement of Comprehensive Income [Abstract]
Net (loss) income	$ (605)	$ 17,250	$ 22,168	$ 38,652
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(2,598)	(8,993)	(7,535)	(7,860)
Actuarial losses related to defined benefit pension plans	(573)	(18)	(803)	(56)
Reclassification adjustment from sale of investment	1,376	0	1,376	328
Total other comprehensive loss	(1,795)	(9,011)	(6,962)	(7,588)
Total comprehensive (loss) income	$ (2,400)	$ 8,239	$ 15,206	$ 31,064

XML

OPERATING AND GEOGRAPHICAL SEGMENTS

9 Months Ended

Sep. 30, 2015

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.

A summary of each reportable segment follows:

• Microcontroller. This segment includes Atmel's general purpose microcontroller and microprocessor families, AVR® 8-bit and 32-bit products, Atmel^®| SMART^TM ARM^® based products, Atmel's 8051 8-bit products, designated commercial wireless products, including low power radio and SOC products that meet Bluetooth, Bluetooth Low Energy, Zigbee and Wi-Fi specifications, Atmel's maXTouch capacitive touch product families and optimized products for smart energy, touch button, and mobile sensor hub and LED lighting applications.

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

• Automotive. This segment includes devices for automotive electronics, including products using radio frequency technology.

• Multi-Market and Other. This segment includes application specific and standard products for aerospace applications and legacy products. On April 16, 2015, the Company completed the sale of its XSense touch sensor manufacturing assets and separately licensed to UniPixel, Inc. its XSense intellectual property assets, which the Company retained. See Note 12 for further information.

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 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 income (loss) 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 September 30, 2015
Net revenue from external customers	$	201,061	$	34,188	$	34,158	$	17,126		$	286,533
Segment income from operations	$	21,712	$	2,782	$	5,473	$	6,264		$	36,231
Three months ended September 30, 2014
Net revenue from external customers	$	264,432	$	46,908	$	37,273	$	25,872		$	374,485
Segment income from operations	$	36,996	$	11,329	$	5,689	$	850		$	54,864
Nine months ended September 30, 2015
Net revenue from external customers	$	624,850	$	121,089	$	107,119	$	58,116		$	911,174
Segment income from operations	$	56,620	$	24,520	$	14,868	$	16,107		$	112,115
Nine months ended September 30, 2014
Net revenue from external customers	$	754,348	$	122,739	$	114,238	$	76,055		$	1,067,380
Segment income (loss) from operations	$	86,148	$	24,413	$	15,727	$	(608	)	$	125,680

The Company's primary products are semiconductor integrated circuits, which constitute a group of similar products. Therefore, it is impracticable to differentiate the revenue 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						Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(in thousands)
Total segment income from operations	$	36,231		$	54,864		$	112,115		$	125,680
Unallocated amounts:
Share-based compensation expense	(12,719		)	(14,917		)	(38,943		)	(45,812		)
Gain (loss) from manufacturing facility damage and shutdown	—			3,571			—			(3,485		)
Acquisition-related charges	(2,390		)	(7,162		)	(10,600		)	(10,287		)
French building underutilization	(500		)	(822		)	(714		)	(3,284		)
Restructuring credit (charges)	584			(840		)	(5,445		)	967
(Loss) gain related to foundry arrangements	(2,487		)	454			(4,444		)	2,583
Fair value adjustments to inventory from businesses acquired	—			(1,548		)	—			(1,548		)
(Loss) gain on sale of assets	(427		)	—			1,626			—
Merger expenses and other	(7,818		)	—			(7,818		)	—
Consolidated income from operations	$	10,474		$	33,600		$	45,777		$	64,814

Geographic sources of revenue were as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2015		September 30, 2014		September 30, 2015		September 30, 2014
	(in thousands)
China, including Hong Kong	$	93,481	$	115,442	$	286,489	$	322,724
United States	49,113		58,969		160,582		162,227
Germany	41,335		51,279		123,880		161,018
South Korea	16,561		31,157		62,641		94,089
Japan	11,254		10,062		39,170		24,463
Singapore	9,073		15,208		28,412		43,445
Taiwan	6,480		21,566		26,930		51,495
France	3,224		3,618		11,775		9,407
Rest of Europe	28,671		34,300		87,410		108,104
Rest of Asia-Pacific	20,459		26,080		63,155		71,862
Rest of the World	6,882		6,804		20,730		18,546
Total net revenue	$	286,533	$	374,485	$	911,174	$	1,067,380

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

The Company had one distributor that accounted for 18% of net revenue in the three months endedSeptember 30, 2015. The Company had onedistributor that accounted for 18% of net revenue in the nine months endedSeptember 30, 2015. No end customer accounted for 10% or more of net revenue in the three and nine months endedSeptember 30, 2015 and 2014. The Company had one distributor that accounted for 15% of net revenue in the three months endedSeptember 30, 2014. The Company had two distributors that accounted for 16% and 10%, respectively, of net revenue in the nine months endedSeptember 30, 2014.

Two distributors accounted for 19% and 13%, respectively, of accounts receivable at September 30, 2015 and no end customer accounted for 10% or more of accounts receivable at September 30, 2015. Three distributors accounted for 15%, 12% and 11%, respectively, of accounts receivable at September 30, 2014 and no end customer accounted for 10% or more of accounts receivable at September 30, 2014.

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

	September 30, 2015		December 31, 2014
	(in thousands)
United States	$	85,049	$	92,466
Philippines	57,579		56,094
Germany	8,300		17,920
France	11,125		13,714
Rest of Asia-Pacific	16,954		20,237
Rest of Europe	5,095		5,854
Total	$	184,102	$	206,285

Excluded from the table above are auction-rate securities of $1.1 million at September 30, 2015 and December 31, 2014, which are included in other assets on the Condensed Consolidated Balance Sheets. Also excluded from the table above as of September 30, 2015 and December 31, 2014 is goodwill of $189.6 million and $191.1 million, respectively, intangible assets, net, of $41.4 million and $50.3 million, respectively, and deferred income tax assets of $104.6 million and $117.3 million, respectively.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Oct. 26, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	ATMEL CORP
Entity Central Index Key	0000872448
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Entity Voluntary Filers	No
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		420,302,900
Entity Well Known Seasoned Issuer	Yes
Document Fiscal Focus	2015
Document Fiscal Period Focus	Q3

XML

SALE OF ASSETS

9 Months Ended

Sep. 30, 2015

Disposal Group, Not Discontinued Operation, Disposal Disclosures [Abstract]

SALE OF ASSETS

SALE OF ASSETS

Sale of Heilbronn Real Estate

On September 23, 2015, the Company completed the sale to an unrelated party of its real estate holdings in Heilbronn, Germany and its equity interest in a privately-held company that provides facilities services for the tenants at that property for a total of $11.5 million. The Company also entered into an agreement to lease back a portion of the office space for a three-year period. The total gain of $3.1 million was reduced by Atmel’s proportionate share of the investee’s equity adjustments for other comprehensive loss of $2.1 million upon discontinuation of the equity investment. A portion of the gain equivalent to the present value of the minimum lease payments associated with the sale-leaseback transaction of $1.1 million will be recognized as a reduction to rent expense over the three-year lease term. During the three months ended September 30, 2015, the Company recognized $0.2 million of loss on sale of assets included in the Condensed Consolidated Statement of Operations. 

Sale of XSense

On April 16, 2015, the Company completed the sale of XSense touch sensor assets to UniPixel, Inc. In connection with the transaction, the Company transferred its XSense related manufacturing assets to UniPixel, which also assumed related operating costs, and separately licensed to UniPixel its XSense patent portfolio and other intellectual property, which the Company is retaining. The intellectual property licenses have an initial five-year term, renewable by UniPixel for an additional ten-year term. The Company will receive minimum royalties during the initial five-year term equal to $16.3 million, of which $9.3 million was prepaid in cash at the close of the transaction. Under the terms of the patent license agreement, the Company licensed to UniPixel its pending, published or issued XSense patents as of the close of the transaction and, subject to certain exclusions, any other patents owned or licensable by the Company during the license period to the extent such patents are necessary to make, use, sell or otherwise dispose of licensed XSense products. The Company also agreed to lease facilities and provide transitional support to UniPixel for a limited period of time. 

Upon closing of this transaction, the Company recognized a gain which is summarized in the following table:

	April 16, 2015
	(in thousands)
Total consideration	$	(16,700	)
Fair value of patent license agreement	13,123
Selling and other costs	457
Net assets transferred	961
Gain on sale of assets	$	(2,159	)

The fair value of the patent license revenue to be received from the licensee over the term of the arrangement was determined using an income approach and an assumed discount rate of 40%. The present value of the patent license agreement is reduced over the initial five-year term of the patent license agreement and recognized as royalty revenue over that term. During the three and nine months endedSeptember 30, 2015, the Company recognized $0.7 million and $1.2 million of royalty revenue, respectively, and during the nine months ended September 30, 2015, the Company recognized $2.2 million of gain on sale of assets included in the Condensed Consolidated Statement of Operations.

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Current assets
Cash and cash equivalents	$ 218,741	$ 206,937
Accounts receivable, net of allowance for doubtful accounts of $5,882 and $5,945, respectively	202,221	222,021
Inventories	267,626	278,242
Prepaids and other current assets	91,620	89,101
Total current assets	780,208	796,301
Fixed assets, net of accumulated depreciation of $1,298,619 and $1,333,103, respectively	139,780	158,281
Goodwill	189,565	191,088
Intangible assets, net of accumulated amortization of $67,396 and $58,471, respectively	41,361	50,286
Other assets	149,984	166,348
Total assets	1,300,898	1,362,304
Current liabilities
Trade accounts payable	72,153	97,467
Accrued and other liabilities	119,707	139,696
Deferred income on shipments to distributors	52,144	49,059
Current portion of long-term debt	9,367	7,413
Total current liabilities	253,371	293,635
Long-term debt	55,000	75,000
Other long-term liabilities	131,220	123,670
Total liabilities	$ 439,591	$ 492,305
Commitments and contingencies (Note 8)
Stockholders’ equity
Preferred stock; par value $0.001; Authorized: 5,000 shares; no shares issued and outstanding	$ 0	$ 0
Common stock; par value $0.001; Authorized: 1,600,000 shares; Shares issued and outstanding: 420,292 at September 30, 2015 and 416,178 at December 31, 2014, respectively	420	416
Additional paid-in capital	783,097	756,760
Accumulated other comprehensive loss	(15,144)	(8,182)
Retained earnings	89,946	117,992
Total Atmel stockholders’ equity	858,319	866,986
Noncontrolling interest	2,988	3,013
Total stockholders' equity	861,307	869,999
Total liabilities and stockholders’ equity	$ 1,300,898	$ 1,362,304

XML

STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCKHOLDERS’ EQUITY

STOCKHOLDERS’ EQUITY

Share-Based Compensation

The following table summarizes share-based compensation, net of the amount capitalized in inventory, included in operating results:

	Three Months Ended						Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(in thousands)
Cost of revenue	$	1,560		$	1,605		$	4,357		$	4,892
Research and development	3,418			4,632			10,569			13,744
Selling, general and administrative	7,741			8,680			24,017			27,176
Total share-based compensation expense, before income taxes	12,719			14,917			38,943			45,812
Tax benefit	(2,884		)	(3,760		)	(8,557		)	(10,005		)
Total share-based compensation expense, net of income taxes	$	9,835		$	11,157		$	30,386		$	35,807

Restricted Stock Units, Employee Stock Purchase Plan and Stock Options

In May 2005, Atmel’s stockholders approved Atmel’s 2005 Stock Plan (as amended, the “2005 Stock Plan”). As of September 30, 2015, 158.0 million shares had been cumulatively authorized for issuance under the 2005 Stock Plan, and 7.9 million shares remained available for issuance without giving effect to any adjustment that may be required by the terms of the 2005 Stock Plan in respect of shares underlying restricted stock or restricted stock units. Under the 2005 Stock Plan, Atmel may issue common stock directly, grant options to purchase common stock or grant restricted stock units payable in common stock to employees, consultants and directors of Atmel. Restricted stock units generally vest on a quarterly basis over a service period of up to four years from the grant date, although restricted stock unit grants to newly-hired employees generally have a one-year cliff vest equal to one-quarter of the total grant. Options, which generally vest over four years, are granted at fair market value on the date of the grant and generally expire ten years from that date.

Activity under Atmel’s 2005 Stock Plan is set forth below: 

			Outstanding Options				Weighted-
					Exercise		Average
	Available for Grant		Number of Options		Price per Share		Exercise Price per Share
	(in thousands, except for per share data)
Balances, December 31, 2014	13,611		3,059		$2.13-$10.01		$	4.57
Restricted stock units issued	(479	)	—		—		—
Plan adjustment for restricted stock units issued	(273	)	—		—		—
Restricted stock units cancelled	363		—		—		—
Plan adjustment for restricted stock units cancelled	210		—		—		—
Performance-based restricted stock units cancelled	253		—		—		—
Plan adjustment for performance-based restricted stock units cancelled	144		—		—		—
Options cancelled/expired/forfeited	2		(2	)	$	3.26	$	3.26
Options exercised	—		(198	)	$2.66-$6.28		$	3.51
Balances, March 31, 2015	13,831		2,859		$2.13-$10.01		$	4.65
Restricted stock units issued	(446	)	—		—		—
Plan adjustment for restricted stock units issued	(254	)	—		—		—
Restricted stock units cancelled	432		—		—		—
Plan adjustment for restricted stock units cancelled	250		—		—		—
Performance-based restricted stock units cancelled	87		—		—		—
Plan adjustment for performance-based restricted stock units cancelled	50		—		—		—
Options cancelled/expired/forfeited	—		—		—		$	—
Options exercised	—		(387	)	$2.13-$6.28		$	4.53
Balances, June 30, 2015	13,950		2,472		$2.13-$10.01		$	4.67
Restricted stock units issued	(4,204	)
Plan adjustment for restricted stock units issued	(2,396	)
Restricted stock units cancelled	306
Plan adjustment for restricted stock units cancelled	176
Performance-based restricted stock units cancelled	24
Plan adjustment for performance-based restricted stock units cancelled	14
Options cancelled/expired/forfeited	3		(3	)	$4.36-$6.28		$	5.00
Options exercised	—		(63	)	$2.13-$6.28		$	3.81
Balances, September 30, 2015	7,873		2,406		$3.24-$10.01		$	4.69
Options vested and expected to vest at September 30, 2015			2,406		$3.24-$10.01		$	4.69
Options exercisable at September 30, 2015			2,400		$3.24-$10.01		$	4.69

Restricted stock units are granted from the pool of options available for grant. Every share underlying restricted stock, restricted stock units (including performance-based restricted stock units), or stock purchase rights issued on or after May 9, 2013 is counted against the numerical limit for options available for grant as 1.57 shares, as reflected in the table above in the line items for "Plan adjustments", except that restricted stock units (including performance-based restricted stock units), or stock purchase rights issued prior to May 9, 2013 but on or after May 18, 2011, are counted against the numerical limit for options available for grant as 1.61 shares, and restricted stock units (including performance-based restricted stock units), or stock purchase rights issued prior to May 18, 2011 and on or after May 14, 2008, are counted against the numerical limit for options available for grants as 1.78 shares. If shares issued pursuant to any restricted stock, restricted stock unit, and stock purchase right agreements are cancelled, forfeited or repurchased by the Company, the number of shares returned to the 2005 Stock Plan will be multiplied by the same ratios above under which such shares were issued and become available for issuance.

The table set forth above does not include 0.6 million restricted stock units granted in August 2015 as performance-based restricted units since the performance criteria for those performance-based restricted units had not been established as of September 30, 2015. As of September 30, 2015 and subject to the exclusion referred to in the preceding sentence, there were 7.9 million shares available for issuance under the 2005 Stock Plan, or 5.0 million shares after giving effect to the applicable ratios under the 2005 Stock Plan for issuances of restricted stock units, as described above.

Pursuant to the terms of the Merger Agreement, at the effective time of the merger (the “Effective Time”), each outstanding option to acquire shares of Atmel’s common stock, par value $0.001 per share (the “Common Stock”) will, contingent upon the occurrence of the Effective Time, accelerate and become vested in full and, to the extent not exercised prior to the Effective Time, will be automatically “net exercised” immediately prior to the Effective Time, with the exercise price and applicable withholding taxes paid by withholding of shares of Common Stock otherwise issuable to the option holder upon the exercise of the option. Each outstanding restricted stock unit, deferred stock unit, performance-based restricted stock unit or similar right (each such unit or right, an “Atmel Unit”) that is vested but not yet issued, will be converted into the right to receive the Merger Consideration. In addition, each Atmel Unit that is unvested and held by an employee or other service provider of Atmel who will continue to be employed by or provide services to, Dialog or the Surviving Corporation will be converted into equivalent awards in respect of Dialog Shares using a customary exchange ratio. For the performance-based Atmel Units granted with a performance period that was intended to end December 31, 2015 (the “2015 PRSUs”), Atmel’s board of directors determined that 57.0% of the target awards should vest contingent upon, and immediately prior to, the occurrence of the Effective Time, with the remaining 2015 PRSUs being converted into time-based awards that vest through November 15, 2017. In addition, in connection with the Merger, Atmel’s board of directors determined that the Atmel Units granted in August 2015, for which performance criteria had not been established prior to the date of the Merger Agreement, will be converted, contingent upon the occurrence of the Effective Time, into time-based awards vesting through November 15, 2018.

If Dialog determines that the assumption and conversion of an Atmel Unit would violate, in respect of the holder thereof, the applicable laws of a non-U.S. jurisdiction set forth in the Merger Agreement, Dialog may treat such Atmel Unit in a different manner so long as the holder of such Atmel Unit receives the full value of the Merger Consideration (less applicable withholdings) in cash not later than the vesting date originally applicable to such Atmel Unit.

Restricted Stock Units

Activity related to restricted stock units is set forth below:

	Number of Units		Weighted-Average Grant Date Fair Value
	(in thousands, except for per share data)
Balances, December 31, 2014	18,163		$	8.40
Restricted stock units issued	479		8.45
Restricted stock units vested	(1,898	)	8.43
Restricted stock units cancelled	(363	)	7.71
Performance-based restricted stock units cancelled	(253	)	7.35
Balances, March 31, 2015	16,128		$	8.43
Restricted stock units issued	446		9.45
Restricted stock units vested	(1,483	)	8.53
Restricted stock units cancelled	(432	)	7.59
Performance-based restricted stock units cancelled	(87	)	8.31
Balances, June 30, 2015	14,572		$	8.48
Restricted stock units issued	4,204		8.07
Restricted stock units vested	(1,612	)	4.17
Restricted stock units cancelled	(306	)	8.11
Performance-based restricted stock units cancelled	(24	)	8.23
Balances, September 30, 2015	16,834		$	8.80

As of September 30, 2015, total unearned share-based compensation related to unvested restricted stock units granted (including performance-based restricted stock units) was approximately $99.2 million, including estimated forfeitures, and is expected to be recognized over a weighted-average period of 2.40 years.

Until restricted stock units are vested, they do not have the voting or dividend participation rights of common stock and the shares underlying such restricted stock units are not considered issued and outstanding. Upon vesting of restricted stock units, shares withheld by the Company to pay taxes are retired.

The table set forth above does not include 0.6 million restricted stock units granted in August 2015 as performance-based restricted units since the performance criteria for those performance-based restricted units had not been established as of September 30, 2015.

Performance-Based Restricted Stock Units

On December 11, 2014, the Company adopted the Atmel 2015 Long-Term Performance-Based Incentive Plan (the “2015 Plan”), which provides for the grant of performance-based restricted stock units to Company participants. The Company issued 2.6 million shares under the 2015 Plan for the year ended December 31, 2014. The Company records performance-based restricted stock units issued under the 2015 Plan based on achievement of the “target” performance metrics, which will result in a participant being credited with 100% of the performance-based shares awarded to that participant under the 2015 Plan. Achievement at the “maximum” performance metrics will result in a participant being credited with 200% of the performance-based shares awarded to that participant under the 2015 Plan.

Performance metrics for the 2015 Plan are based on the Company’s publicly-reported non-GAAP earnings per share growth rate from 2014 to 2015 (calculated for the fiscal years ended 2014 and 2015, respectively) to the adjusted earnings per share growth rates of companies included within the well-established Philadelphia Semiconductor Sector IndexSM ("SOX Index") during the same period. For purposes of the 2015 Plan, “adjusted earnings per share” for the applicable measurement period for any company included within the SOX Index means that company’s non-GAAP earnings per share, as publicly reported by that company (which, in the case of the Company, will be its non-GAAP earnings per share), adjusted to exclude for the measurement period (to the extent such adjustments are publicly disclosed) each of the following: share-based compensation expense; restructuring and impairment charges (credits); loss (gain) on sale; acquisition and divestiture related expenses; intellectual property related settlement charges; non-cash tax expenses; other non-recurring tax items; to make equivalent comparisons between the Company’s non-GAAP earnings per share and the adjusted earnings per share for other companies included within the SOX Index. The Company recorded total share-based compensation expense related to the 2015 Plan of $0.5 million and $2.0 million in the three and nine months endedSeptember 30, 2015, respectively. For the treatment of those performance-based restricted stock units in connection with the Merger, see "Restricted Stock Units, Employee Stock Purchase Plan and Stock Options" above.

For participants who are included within the 2015 Plan at any time after January 1, 2015, awards will be pro-rated to reflect the actual time a participant has been an employee of, or a service provider to, the Company. 

On December 17, 2013, the Company adopted the Atmel 2014 Long-Term Performance-Based Incentive Plan (the “2014 Plan”), which ended on December 31, 2014. The Company recorded total share-based compensation expense related to the 2014 Plan of $0.3 million and $1.7 million in the three and nine months endedSeptember 30, 2015, respectively, and $0.7 million and $2.7 million in the three and nine months endedSeptember 30, 2014, respectively.

In August 2015, the Company granted 0.6 million performance-based restricted units for performance periods that will not commence until 2016. The performance criteria for those performance-based restricted units had not been established as of September 30, 2015. For the treatment of those performance-based restricted stock units in connection with the Merger, see "Restricted Stock Units, Employee Stock Purchase Plan and Stock Options" above.

Employee Stock Purchase Plan

         Under the 2010 Employee Stock Purchase Plan (“2010 ESPP”), qualified employees are entitled to purchase shares of Atmel’s common stock at the lower of 85% of the fair market value of the common stock at the date of commencement of the six-month offering period or 85% of the fair market value on the last day of the offering period. Purchases are limited to 10% of an employee’s eligible compensation subject to a maximum annual employee contribution limit of $25,000 of the market value of the shares (determined at the commencement of each of the six month offering period) per calendar year. There were 0.9 million shares purchased under the 2010 ESPP for each of the three months ended September 30, 2015 and 2014 at an average price per share of $6.64 and $6.73, respectively. There were 1.6 million and 1.7 million shares purchased under the 2010 ESPP for each of the nine months endedSeptember 30, 2015 and 2014 at an average price per share of $6.79 and $6.59, respectively. Of the 25.0 million shares authorized for issuance under the 2010 ESPP, 17.3 million shares were available for issuance at September 30, 2015.

The fair value of each purchase under the 2010 ESPP is estimated on the date of the beginning of the offering period using the Black-Scholes option-pricing model. The following assumptions were utilized to determine the fair value of the 2010 ESPP shares:

	Three Months Ended				Nine Months Ended
	September 30, 2015		September 30, 2014		September 30, 2015		September 30, 2014
Risk-free interest rate	0.24	%	0.06	%	0.16	%	0.07	%
Expected life (years)	0.50		0.50		0.50		0.50
Expected volatility	30	%	30	%	33	%	31	%
Expected dividend yield	1.94	%	—	%	1.92	%	—

The weighted-average fair value per share under the 2010 ESPP for purchase periods beginning in the nine months endedSeptember 30, 2015 and 2014 were $1.50 and $1.65, respectively. Cash proceeds from the issuance of shares under the Company’s 2010 ESPP were $11.1 million and $11.2 million for the nine months endedSeptember 30, 2015 and 2014, respectively.

Pursuant to the terms of the Merger Agreement, the ESPP will be terminated prior to the Effective Time of the Merger.

Common Stock Repurchase Program

Since 2011, Atmel’s Board of Directors has authorized an aggregate of $1.0 billion of funding for the Company’s common stock repurchase program. The repurchase program does not have an expiration date, and the number of shares repurchased and the timing of repurchases are based on the level of the Company’s cash balances, general business and market conditions, regulatory requirements, and other factors, including alternative investment opportunities. As of September 30, 2015, $197.1 million remained available for the repurchase of common stock under this program.

There were noshares repurchased during the three months ended September 2015. During the nine months ended September 30, 2015, Atmel repurchased 1.4 million shares of its common stock in the open market at an average repurchase price of $8.27 per share excluding commission, and subsequently retired those shares. During the three and nine months endedSeptember 30, 2014, Atmel repurchased 2.9 million and 13.4 million shares, respectively, of its common stock in the open market at an average repurchase price of $8.50 and $8.09 per share, respectively, excluding commission, and subsequently retired those shares. Excluding commission, common stock and additional paid-in capital were reduced by $12.0 million for the nine months ended September 30, 2015, and $25.0 million and $108.5 million for the three and nine months endedSeptember 30, 2014, respectively, as a result of the stock repurchases.

Pursuant to the terms of the Merger Agreement, the Company is not permitted to repurchase any further shares of common stock.

Dividends

On September 24, 2015, the Company paid a cash dividend of $0.04 per common share, the aggregate cost of which was $16.8 million. During the nine months endedSeptember 30, 2015, the Company paid cash dividends of $0.12 per common share, the aggregate cost of which was $50.2 million.

Pursuant to the terms of the Merger Agreement, the Company is not permitted to declare or pay any further dividends.

XML

BORROWING ARRANGEMENTS

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

BORROWING ARRANGEMENTS

BORROWING ARRANGEMENTS

Senior Secured Revolving Credit Facility

On December 6, 2013, the Company entered into a five-year $300.0 million, senior secured revolving credit facility (the “Facility”), the terms of which are set forth in a Credit Agreement (the “Credit Agreement”). The Company may increase the aggregate availability under the Facility through a customary “accordion” feature in an amount not to exceed $250.0 million. The Company recorded debt issuance costs of $2.1 million associated with the Facility which are being amortized over the expected life of the Facility.

Borrowings under the Facility are available for general corporate purposes, including working capital, stock repurchases, acquisitions and other purposes. Amounts outstanding under the Facility are due on the earlier of December 6, 2018 or 180 days prior to the maturity date of any Permitted Convertible Notes (as defined in the Credit Agreement) if, in the latter case, the Company does not otherwise have available sufficient unrestricted cash and other investments to redeem the Permitted Convertible Notes.

The Company may prepay loans under the Credit Agreement at any time, in whole or in part, upon payment of accrued interest and break funding payments, if applicable. The Company may terminate or reduce the Facility at any time without penalty. The obligations under the Facility are guaranteed by certain domestic subsidiaries of the Company, are secured by a pledge of substantially all of the assets of the Company and the guarantors, and include affirmative, negative and financial covenants. Affirmative covenants include, among other things, the delivery of financial statements and other information. Negative covenants include, among other things, limitations on asset sales, mergers and acquisitions, indebtedness, liens, investments and transactions with affiliates. The financial covenants require the Company to maintain compliance with a maximum total leverage ratio, a maximum senior secured leverage ratio and a minimum fixed charge coverage ratio. The Credit Agreement includes customary events of default that include, among other things, non-payment defaults, inaccuracy of representations and warranties, covenant defaults, cross default to material indebtedness, bankruptcy and insolvency defaults, material judgment defaults, ERISA defaults and a change of control default. The occurrence of an event of default could result in an acceleration of obligations under the Credit Agreement.

 As of September 30, 2015, after principal repayments, the Company had $55.0 million of outstanding principal borrowings under the Facility and was in compliance with all financial covenants under the Credit Agreement. No principal payments are due until maturity. Interest on the borrowed amounts equals the applicable periodic LIBOR rate, plus 1.25% per annum, and was $0.4 million and $1.1 million for the three and nine months endedSeptember 30, 2015, respectively. The Facility matures on December 6, 2018.

Other Debt Obligations

The Company had short-term debt obligations amounting to $9.4 million and $7.3 million as of September 30, 2015 and December 31, 2014, respectively. As of September 30, 2015, $7.8 million related to an amount previously advanced from a foreign government and the remaining balance of $1.6 million related to a loan owed to a privately-held company in which the Company owned an equity interest until September 23, 2015. The foreign government advance was repaid in full on October 8, 2015.

XML

FAIR VALUE OF ASSETS AND LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Schedule of Investment Schedules

The tables below present the balances of investments measured at fair value on a recurring basis:

	September 30, 2015
	Total		Level 1		Level 2		Level 3
	(in thousands)
Assets
Cash
Money market funds	$	1,282	$	1,282	$	—	$	—
Other assets
Auction-rate security	1,066		—		—		1,066
Investment funds - Deferred compensation plan assets
Institutional money market funds	1,917		1,917		—		—
Fixed income	1,034		1,034		—		—
Marketable equity securities	3,589		3,589		—		—
Total institutional funds - Deferred compensation plan	6,540		6,540		—		—
Total other assets	7,606		6,540		—		1,066
Total	$	8,888	$	7,822	$	—	$	1,066

	December 31, 2014
	Total		Level 1		Level 2		Level 3
	(in thousands)
Assets
Cash
Money market funds	$	1,267	$	1,267	$	—	$	—
Other assets
Auction-rate security	1,066		—		—		1,066
Investment funds - Deferred compensation plan assets
Institutional money market funds	2,039		2,039		—		—
Fixed income	984		984		—		—
Marketable equity securities	3,576		3,576		—		—
Total institutional funds - Deferred compensation plan	6,599		6,599		—		—
Total other assets	7,665		6,599		—		1,066
Total	$	8,932	$	7,866	$	—	$	1,066

XML

RESTRUCTURING CHARGES

9 Months Ended

Sep. 30, 2015

Restructuring and Related Activities [Abstract]

RESTRUCTURING CHARGES

RESTRUCTURING CHARGES

The following table summarizes the activity related to the accrual for restructuring charges detailed by event:

	Q2'10		Q2'12			Q1'13			Q3'13			Q3'14			Q4'14			Q1'15			Q2'15			Total
	(in thousands)
Balance at January 1, 2015 - Restructuring Accrual	$	281	$	19		$	3,988		$	9		$	920		$	14,508		$	—		$	—		$	19,725
(Credits) charges – Employee termination costs, net of change in estimate	—		—			(49		)	—			488			6			702			—			1,147
Non-cash - Other	—		—			—			—			(175		)	(6		)	—			—			(181		)
Payments – Employee termination costs	—		—			(524		)	—			(540		)	(14		)	(196		)	—			(1,274		)
Foreign exchange gain	—		—			(31		)	—			(59		)	(1		)	(7		)	—			(98		)
Balance at March 31, 2015 - Restructuring Accrual	$	281	$	19		$	3,384		$	9		$	634		$	14,493		$	499		$	—		$	19,319
(Credits) charges – Employee termination costs, net of change in estimate	—		(210		)	(153		)	(9		)	1,651			899			2,006			698			4,882
Non-cash - Other	—		—			—			—			(213		)	(4		)	—			—			(217		)
Refunds (payments) - Employee termination costs	—		229			(196		)	—			(1,064		)	(4,287		)	(2,508		)	(25		)	(7,851		)
Foreign exchange loss (gain)	—		—			271			—			—			(1,616		)	3			—			(1,342		)
Balance at June 30, 2015 - Restructuring Accrual	$	281	$	38		$	3,306		$	—		$	1,008		$	9,485		$	—		$	673		$	14,791
(Credits) charges – Employee termination costs, net of change in estimate	—		—			—			—			(166		)	(432		)	—			14			(584		)
Non-cash – Other	—		—			—			—			840			(10		)	—			174			1,004
Payments - Employee termination costs	—		—			(582		)	—			(1,646		)	(1,543		)	—			(628		)	(4,399		)
Foreign exchange loss (gain)	—		—			32			—			—			(86		)	—			—			(54		)
Balance at September 30, 2015 - Restructuring Accrual	$	281	$	38		$	2,756		$	—		$	36		$	7,414		$	—		$	233		$	10,758

The Company records restructuring liabilities related to workforce reductions when the accounting recognition criteria are met and consistent with management's approval and commitment to the restructuring plans in each particular quarter. The restructuring plans identify the number of employees to be terminated, job classifications and functions, location and the date the plan is expected to be completed. As of September 30, 2015, the Company expects the majority of the remaining employee termination costs and facility exit costs to be paid by the end of fiscal 2016.

2015 Restructuring Charges

Restructuring charges recorded in 2015 were related to workforce reductions, primarily in the U.S., in connection with the Company's decision to exit the XSense business and workforce reductions and other costs in connection with the Company's decision to shut down an assembly operations plant in the Philippines. These actions, which are consistent with management's approval of the restructuring plan and the communication to affected employees, were intended to align operating expenses with macroeconomic conditions and revenue outlooks, and to improve operational efficiency, competitiveness and business profitability. The Company also recorded additional restructuring charges related to workforce reductions in France in 2015. During the three months ended September 30, 2015, the Company recorded restructuring credits of $0.6 million primarily due to pension curtailment gain upon termination of employees affected by the Philippines restructuring, and gain on sale of certain equipment located in the Philippines, which were offset by employee termination costs. The restructuring charges recorded during the nine months ended September 30, 2015 were $5.4 million.

All employees affected by the Philippines restructuring ceased active service as of September 30, 2015.

2014 Restructuring Charges

Restructuring charges were recorded in the third and fourth quarters of 2014. The charges primarily related to workforce reductions in France. These actions were intended to align operating expenses with macroeconomic conditions and revenue outlooks, and to improve operational efficiency, competitiveness and business profitability. In connection with formulating this restructuring plan, during the third and fourth quarters of 2014, the Company confidentially negotiated and developed a “social plan” in coordination and consultation with the local Works Council. This social plan, which is subject to French law, set forth general parameters, terms and benefits for both voluntary and involuntary employee dismissals.

XML

INCOME TAXES

9 Months Ended

Sep. 30, 2015

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The Company estimates its annual effective tax rate at the end of each quarter. In making these estimates, the Company considers, among other things, annual pre-tax income, the geographic mix of pre-tax income and the application and interpretations of tax laws, treaties and judicial developments, as well as possible outcomes of tax audits.

The following table presents the provision for income taxes and the effective tax rates:

	Three Months Ended						Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(in thousands, except for percentages)
Income before income taxes	$	10,529		$	28,869		$	50,694		$	58,958
Provision for income taxes	$	(11,134	)	$	(11,619	)	$	(28,526	)	$	(20,306	)
Effective tax rate	105.75		%	40.25		%	56.27		%	34.44		%

For the three and nine months endedSeptember 30, 2015, the Company’s effective tax rate was higher than the U.S statutory federal income tax rate of 35%, primarily due to a decrease of profits in jurisdictions with lower tax rates, discrete interest charges related to uncertain tax positions, gain on the sale of certain capital assets, nondeductible costs associated with the pending acquisition, and the cumulative impact of a higher annual effective tax rate.

For the three and nine months endedSeptember 30, 2014, the significant components of the tax provision related to jurisdictions that experienced operating profits. The Company’s effective tax rate for the nine months ended September 30, 2014 was lower than the statutory federal income tax rate of 35%, primarily due to income recognized in lower tax jurisdictions.

At September 30, 2015 and December 31, 2014, the Company had $87.4 million and $88.1 million of unrecognized tax benefits, respectively, which, if recognized, would affect the effective tax rate.

The timing for the resolution and closure of tax audits is highly unpredictable. Given the uncertainty, it is reasonably possible that certain tax audits may be concluded within the next 12 months that could materially impact the balance of our gross unrecognized tax benefits. An estimate of the range of increase or decrease that could occur in the next twelve months cannot be made. However, the estimated impact to tax expense and net income from the resolution and closure of tax exams is not expected to be significant within the next 12 months.

XML

ACCUMULATED OTHER COMPREHENSIVE LOSS

9 Months Ended

Sep. 30, 2015

Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]

ACCUMULATED OTHER COMPREHENSIVE LOSS

ACCUMULATED OTHER COMPREHENSIVE LOSS

Comprehensive income is defined as a change in equity of a company during a period, from transactions and other events and circumstances excluding transactions resulting from investments by owners and distributions to owners. The primary difference between net income and comprehensive income for the Company arises from foreign currency translation adjustments, actuarial loss related to defined benefit pension plans and net unrealized loss on investments. The following table summarizes the changes in accumulated balances of other comprehensive loss, net of tax:

	Foreign currency translation adjustments			Defined benefit pension plans			Change in unrealized loss on investments			Total
	(in thousands)
Balance as of December 31, 2014	$	1,053		$	(8,462	)	$	(773	)	$	(8,182	)
Other comprehensive (loss) gain	(7,535		)	(803		)	1,376			(6,962		)
Balance as of September 30, 2015	$	(6,482	)	$	(9,265	)	$	603		$	(15,144	)

XML

COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Commitments

Indemnification

As is customary in the Company’s industry, the Company’s standard contracts provide remedies to its customers, such as defense, settlement, or payment of judgment for intellectual property claims related to the use of the Company’s products. From time to time, the Company will indemnify customers against combinations of loss, expense, or liability arising from various trigger events related to the sale and the use of the Company’s products and services, usually up to a specified maximum amount. In addition, as permitted under state laws in the United States, the Company has entered into indemnification agreements with its officers and directors and certain employees, and the Company’s bylaws permit the indemnification of the Company’s agents. The estimated fair value of the liability is not material.

Purchase Commitments

As of September 30, 2015, the Company, or its subsidiaries, had certain non-cancellable commitments which were not included in the Condensed Consolidated Balance Sheets. These include outstanding capital purchase commitments of approximately $1.5 million and wafer purchase commitments of approximately $18.2 million.

Contingencies

Legal Proceedings

The Company is party to various legal proceedings. Management currently believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not have a material adverse effect on the Company's financial position, results of operations and statements of cash flows. If an unfavorable ruling were to occur in any of the legal proceedings described below or other legal proceedings that were not deemed material as of September 30, 2015, there exists the possibility of a material adverse effect on the Company's financial position, results of operations and cash flows. The Company has accrued for losses related to litigation that it considers probable and for which the loss can be reasonably estimated. In the event that a probable loss cannot be reasonably estimated, it has not accrued for such losses. Management makes a determination as to when a potential loss is reasonably possible based on relevant accounting literature and then includes appropriate disclosure of the contingency. As the Company continues to monitor litigation matters, whether deemed material as of September 30, 2015 or not, its determination could change, and the Company may decide, at some future date, to establish an appropriate reserve.

Dialog Deal Stockholder Litigation. On September 20, 2015, the Company announced that it had entered into a definitive merger agreement with Dialog Semiconductor plc (“Dialog”) under which Dialog, subject to customary conditions, would acquire all of the outstanding shares of the Company (the “Transaction”). Following that announcement, three putative class actions were filed in courts in Delaware and California against the Company and/or its Directors, Dialog and Avengers Acquisition Corporation (“Merger Sub”), a wholly owned subsidiary of Dialog. The complaints purport to be brought on behalf of all similarly situated Company stockholders and generally allege that the members of the Company’s Board of Directors breached their fiduciary duties to stockholders by approving the Transaction for inadequate consideration, entering into a merger agreement containing preclusive deal protection devices, and failing to take steps to maximize the value to be paid to stockholders. The complaints also assert claims against Dialog, Merger Sub and/or the Company for allegedly aiding and abetting these alleged breaches of fiduciary duties. The complaints seek preliminary and permanent injunctions against the completion of the Transaction or rescission in the event the Transaction has already been completed, or, alternatively, damages in favor of the plaintiffs and the class. The Company and its Directors believe the claims are without merit, and intend to contest them vigorously.

Southern District of New York Action by LFoundry Rousset (“LFR”) and LFR Employees. On March 4, 2014, LFR and Jean-Yves Guerrini, on behalf of himself and a putative class of LFR employees, filed an action in the United States District Court for the Southern District of New York (the "District Court") against the Company, our French subsidiary, Atmel Rousset S.A.S. (“Atmel Rousset”) and LFoundry GmbH (“LF”), LFR’s German parent. The case purports to relate to Atmel Rousset’s June 2010 sale of its wafer manufacturing facility in Rousset, France to LF, and LFR’s subsequent insolvency more than three years later. The Company and Atmel Rousset moved to dismiss the case on numerous grounds - a motion the District Court granted on July 21, 2015. As a result, the District Court dismissed the case on August 21, 2015. Plaintiffs are appealing the dismissal.

Individual Labor Actions by former LFR Employees. Nearly 600 former employees of LFR have filed individual labor actions against Atmel Rousset in a French labor court. As of September 30, 2015, the claimants had not yet provided the legal arguments underpinning their claims, although management believes each will argue that Atmel Rousset, together with LFR, was their co-employer. Atmel Rousset believes each of these actions is entirely devoid of merit and based substantially on the same specious arguments that the Paris Commercial Court summarily rejected in 2014 in related proceedings. Atmel Rousset therefore intends to defend vigorously each of these claims.

Other Contingencies

From time to time, the Company is notified of claims that its products may infringe patents, or other intellectual property, issued to or owned by other parties. The Company periodically receives demands for indemnification from its customers with respect to intellectual property matters. The Company also periodically receives claims relating to the quality of its products, including claims for additional labor costs, costs for replacing defective parts, reimbursement to customers for damages incurred in correcting defective products, costs for product recalls or other damages. Receipt of these claims and requests occurs in the ordinary course of the Company's business, and the Company responds based on the specific circumstances of each event. The Company undertakes an accrual for losses relating to those types of claims when it considers those losses “probable” and when a reasonable estimate of loss can be determined.

Product Warranties

The Company accrues for warranty costs based on historical trends of product failure rates and the expected material and labor costs to provide warranty services. The Company’s products are generally covered by a warranty typically ranging from 30 days to three years. Product warranty liability is included in accrued and other liabilities in the Condensed Consolidated Balance Sheets.

Guarantees

In the ordinary course of business, the Company may provide standby letters of credit or other guarantee instruments to certain parties as required for certain transactions initiated by either the Company or its subsidiaries. The Company has not recorded any liability in connection with these guarantee arrangements. Based on historical experience and information currently available, the Company believes it will not be required to make any payments under these guarantee arrangements.

XML

PENSION PLANS

9 Months Ended

Sep. 30, 2015

Pension and Other Postretirement Benefit Expense [Abstract]

PENSION PLANS

PENSION PLANS

The Company sponsors defined benefit pension plans that cover substantially all of its French and German employees. Plan benefits are provided in accordance with local statutory requirements. Benefits are based on years of service and employee compensation levels. The plans are unfunded. Pension liabilities and charges are based upon various assumptions, updated annually, including discount rates, future salary increases, employee turnover, and mortality rates.

The Company’s French pension plan provides for termination benefits paid to covered French employees only at retirement, and consists of approximately one to five months of salary. The Company’s German pension plan provides for defined benefit payouts for covered German employees following retirement.

The aggregate net pension expense relating to these two plans are as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2015		September 30, 2014		September 30, 2015		September 30, 2014
	(in thousands)
Service costs	$	282	$	383	$	880	$	1,165
Interest costs	310		378		954		1,151
Amortization of actuarial loss	175		18		501		56
Net pension period cost	$	767	$	779	$	2,335	$	2,372

The Company’s net pension period cost for 2015 is expected to be approximately $3.4 million. Cash funding for benefits paid was $0.1 million and $0.3 million for the three and nine months endedSeptember 30, 2015, respectively. The Company expects total contributions to these plans to be approximately $0.5 million in 2015.

XML

BUSINESS COMBINATIONS - Narrative (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended		12 Months Ended
	Jul. 31, 2014	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Business Acquisition [Line Items]
NMI potential earn-out	$ 30,000
Earn-out on acquisition date	400
Fair value of earn-out reversal				$ 200
Goodwill		$ 189,565		189,565		$ 191,088
Acquisition-related charges		2,390	$ 7,162	10,600	$ 10,287
NMI [Member]
Business Acquisition [Line Items]
Payments to Acquire Businesses, Gross	139,600
Goodwill	86,100
NMI goodwill - Deductible for Tax	$ 55,200
Acquisition-related charges						2,500
Goodwill
Business Acquisition [Line Items]
Goodwill, Purchase Accounting Adjustments						1,900
income taxes
Business Acquisition [Line Items]
Goodwill, Purchase Accounting Adjustments						300
Deferred Tax Asset [Domain]
Business Acquisition [Line Items]
Goodwill, Purchase Accounting Adjustments						1,600
Deferred Bonus
Business Acquisition [Line Items]
Business Combination, Separately Recognized Transactions, Additional Disclosures, Acquisition Cost Expensed						$ 5,300
Bonus
Business Acquisition [Line Items]
Business Combination, Separately Recognized Transactions, Additional Disclosures, Acquisition Cost Expensed		200		3,100
Acquisition-related intangible assets
Business Acquisition [Line Items]
Business Combination, Separately Recognized Transactions, Additional Disclosures, Acquisition Cost Expensed		$ 1,000		$ 4,000

XML

OPERATING AND GEOGRAPHICAL SEGMENTS - Schedule of Geographic Sources of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Segment Reporting Information [Line Items]
Net revenue	$ 286,533	$ 374,485	$ 911,174	$ 1,067,380
China, including Hong Kong
Segment Reporting Information [Line Items]
Net revenue	93,481	115,442	286,489	322,724
United States
Segment Reporting Information [Line Items]
Net revenue	49,113	58,969	160,582	162,227
Germany
Segment Reporting Information [Line Items]
Net revenue	41,335	51,279	123,880	161,018
South Korea
Segment Reporting Information [Line Items]
Net revenue	16,561	31,157	62,641	94,089
Japan
Segment Reporting Information [Line Items]
Net revenue	11,254	10,062	39,170	24,463
Singapore
Segment Reporting Information [Line Items]
Net revenue	9,073	15,208	28,412	43,445
Taiwan
Segment Reporting Information [Line Items]
Net revenue	6,480	21,566	26,930	51,495
France
Segment Reporting Information [Line Items]
Net revenue	3,224	3,618	11,775	9,407
Rest of Europe
Segment Reporting Information [Line Items]
Net revenue	28,671	34,300	87,410	108,104
Rest of Asia-Pacific
Segment Reporting Information [Line Items]
Net revenue	20,459	26,080	63,155	71,862
Rest of the World
Segment Reporting Information [Line Items]
Net revenue	$ 6,882	$ 6,804	$ 20,730	$ 18,546

XML

BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Inventories

Inventories

Inventories are stated at the lower of cost (on a first-in, first-out basis) or market. Market is based on estimated net realizable value. Determining market value of inventories involves numerous judgments, including estimating average selling prices and sales volumes for future periods. The Company establishes provisions for lower of cost or market and excess and obsolescence write-downs, which are charged to cost of revenue. The Company makes a determination regarding excess and obsolete inventory on a quarterly basis. This determination requires an estimate of the future demand for the Company’s products and involves an analysis of historical and forecasted sales levels by product, competitiveness of product offerings, market conditions, product lifecycles, as well as other factors. Excess and obsolete inventory write-downs are recorded when the inventory on hand exceeds management’s estimate of future demand for each product and are charged to cost of revenue.

The Company’s inventories include parts that have a potential for rapid technological obsolescence and are sold in a highly competitive industry. The Company writes down inventory that is considered excess or obsolete. When the Company recognizes a loss on such inventory, it establishes a new, lower-cost basis for that inventory, and subsequent changes in facts and circumstances will not result in the restoration or increase in that newly established cost basis. If inventory with a lower-cost basis is subsequently sold, it will result in higher gross margin for the products making up that inventory.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standard Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in GAAP when it becomes effective. In July 2015, the FASB deferred the effective date of ASU 2014-09 so that it will apply to annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods). Early application is permitted to the original effective date of December 15, 2016, in which case ASU 2014-09 would apply to annual reporting periods beginning December 15, 2016 (including interim reporting periods within those periods). The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. The ASU requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. The new standard is effective for the Company on January 1, 2016. Early application is permitted. The standard requires an entity to apply the new guidance on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. The Company does not believe that the adoption of the ASU will have a material effect on its consolidated financial statements and disclosure.

XML

INCOME TAXES (Tables)

9 Months Ended

Sep. 30, 2015

Income Tax Disclosure [Abstract]

Schedule of the (Provision for) Benefit From Income Taxes and the Effective Tax Rates

The following table presents the provision for income taxes and the effective tax rates:

	Three Months Ended						Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(in thousands, except for percentages)
Income before income taxes	$	10,529		$	28,869		$	50,694		$	58,958
Provision for income taxes	$	(11,134	)	$	(11,619	)	$	(28,526	)	$	(20,306	)
Effective tax rate	105.75		%	40.25		%	56.27		%	34.44		%

XML

OPERATING AND GEOGRAPHICAL SEGMENTS - Schedule of Segment Reporting Information, by Segment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Segment Reporting Information [Line Items]
Net revenue	$ 286,533	$ 374,485	$ 911,174	$ 1,067,380
Segment income from operations	36,231	54,864	112,115	125,680
Micro-Controllers
Segment Reporting Information [Line Items]
Net revenue	201,061	264,432	624,850	754,348
Segment income from operations	21,712	36,996	56,620	86,148
Nonvolatile Memories
Segment Reporting Information [Line Items]
Net revenue	34,188	46,908	121,089	122,739
Segment income from operations	2,782	11,329	24,520	24,413
RF and Automotive
Segment Reporting Information [Line Items]
Net revenue	34,158	37,273	107,119	114,238
Segment income from operations	5,473	5,689	14,868	15,727
Multi-market and other
Segment Reporting Information [Line Items]
Net revenue	17,126	25,872	58,116	76,055
Segment income from operations	$ 6,264	$ 850	$ 16,107	$ (608)

XML

STOCKHOLDERS’ EQUITY - Schedule of Share-based Compensation, Net of Amount Capitalized (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 12,719	$ 14,917	$ 38,943	$ 45,812
Total share-based compensation expense, before income taxes	12,719	14,917	38,943	45,812
Tax benefit	(2,884)	(3,760)	(8,557)	(10,005)
Total share-based compensation expense, net of income taxes	9,835	11,157	30,386	35,807
Cost of revenue
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	1,560	1,605	4,357	4,892
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	3,418	4,632	10,569	13,744
Selling, general and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 7,741	$ 8,680	$ 24,017	$ 27,176

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 5,882	$ 5,945
Accumulated depreciation of fixed assets	1,298,619	1,333,103
Accumulated amortization of intangibles	$ 67,396	$ 58,471
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, Authorized shares	5,000	5,000
Preferred stock, Shares issued	0	0
Preferred stock, Shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, Authorized shares	1,600,000	1,600,000
Common stock, Shares issued	420,292	416,178
Common stock, Shares outstanding	420,292	416,178

XML

FAIR VALUE OF ASSETS AND LIABILITIES

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

FAIR VALUE OF ASSETS AND LIABILITIES

FAIR VALUE OF ASSETS AND LIABILITIES

Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price)”. The accounting standard establishes a consistent framework for measuring fair value and expands disclosure requirements regarding fair value measurements. This accounting standard, among other things, requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The tables below present the balances of investments measured at fair value on a recurring basis:

	September 30, 2015
	Total		Level 1		Level 2		Level 3
	(in thousands)
Assets
Cash
Money market funds	$	1,282	$	1,282	$	—	$	—
Other assets
Auction-rate security	1,066		—		—		1,066
Investment funds - Deferred compensation plan assets
Institutional money market funds	1,917		1,917		—		—
Fixed income	1,034		1,034		—		—
Marketable equity securities	3,589		3,589		—		—
Total institutional funds - Deferred compensation plan	6,540		6,540		—		—
Total other assets	7,606		6,540		—		1,066
Total	$	8,888	$	7,822	$	—	$	1,066

	December 31, 2014
	Total		Level 1		Level 2		Level 3
	(in thousands)
Assets
Cash
Money market funds	$	1,267	$	1,267	$	—	$	—
Other assets
Auction-rate security	1,066		—		—		1,066
Investment funds - Deferred compensation plan assets
Institutional money market funds	2,039		2,039		—		—
Fixed income	984		984		—		—
Marketable equity securities	3,576		3,576		—		—
Total institutional funds - Deferred compensation plan	6,599		6,599		—		—
Total other assets	7,665		6,599		—		1,066
Total	$	8,932	$	7,866	$	—	$	1,066

The Company’s investments, with the exception of its auction-rate security, are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices, or broker or dealer quotations. The types of instruments valued based on quoted market prices in active markets include most U.S. government and agency securities and money market securities. Such instruments are generally classified within Level 1 of the fair value hierarchy.

Auction-rate securities are classified within Level 3 because significant assumptions for such securities are not observable in the market. The total amount of assets measured using Level 3 valuation methodologies represented less than 1% of the Company's total assets as of September 30, 2015 and December 31, 2014.

There were no changes in Level 3 assets measured at fair value on a recurring basis for the three and nine months endedSeptember 30, 2015 and the year ended December 31, 2014. There were no transfers between Level 1 and 2 hierarchies for the three and nine months endedSeptember 30, 2015 and the year ended December 31, 2014.

XML

NET INCOME PER SHARE ATTRIBUTABLE TO ATMEL COMMON STOCKHOLDERS - Schedule of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Earnings Per Share [Abstract]
Net (loss) income attributable to Atmel	$ (614)	$ 17,250	$ 22,193	$ 38,652
Weighted-average shares - basic (in shares)	419,293	418,954	418,072	421,791
Dilutive effect of incremental shares and share equivalents (in shares)	0	2,010	1,410	1,909
Weighted-average shares - diluted (in shares)	419,293	420,964	419,482	423,700
Basic
Net income per share attributable to Atmel common stockholders - basic (in dollars per share)	$ 0.00	$ 0.04	$ 0.05	$ 0.09
Diluted
Net income per share attributable to Atmel common stockholders - diluted (in dollars per share)	$ 0.00	$ 0.04	$ 0.05	$ 0.09

XML

PENSION PLANS (Tables)

9 Months Ended

Sep. 30, 2015

Pension and Other Postretirement Benefit Expense [Abstract]

Schedule of Aggregate Net Pension Expense Relating to the Two Plan Types

The aggregate net pension expense relating to these two plans are as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2015		September 30, 2014		September 30, 2015		September 30, 2014
	(in thousands)
Service costs	$	282	$	383	$	880	$	1,165
Interest costs	310		378		954		1,151
Amortization of actuarial loss	175		18		501		56
Net pension period cost	$	767	$	779	$	2,335	$	2,372

XML

STOCKHOLDERS’ EQUITY - Restricted Stock Units, Employee Stock Purchase Plan and Stock Options and Restricted Stock Units (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Sep. 23, 2015	Sep. 19, 2015	Aug. 31, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock repurchased	0	2,900,000	1,400,000	13,400,000
Share available for grant after ratio adjustment	5,000,000		5,000,000
Common stock, par value (in dollars per share)	$ 0.001		$ 0.001		$ 0.001	$ 0.001				$ 0.001
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total shares authorized	158,000,000		158,000,000
Number of shares available for issuances	7,873,000		7,873,000					13,950,000	13,831,000	13,611,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period			4 years
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	$ 99.2		$ 99.2
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition			2 years 4 months 25 days
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period			4 years
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period			10 years
Stock Plan 2005
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share counted against the numerical limit for options available for grant on or after May 9, 2013	1.57		1.57
Shares counted against the numerical limit for options available for grant on or after May 18, 2011 (in shares)	1.61		1.61
Shares counted against the numerical limit for options available for grant prior to May 18, 2011 (in shares)	1.78		1.78
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage			57.00%
Total shares authorized							600,000

XML

NET INCOME PER SHARE ATTRIBUTABLE TO ATMEL COMMON STOCKHOLDERS

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

NET INCOME PER SHARE ATTRIBUTABLE TO ATMEL COMMON STOCKHOLDERS

NET (LOSS) INCOME PER SHARE ATTRIBUTABLE TO ATMEL COMMON STOCKHOLDERS

A reconciliation of the numerator and denominator of basic and diluted net income per share is as follows:

	Three Months Ended					Nine Months Ended
	September 30, 2015			September 30, 2014		September 30, 2015		September 30, 2014
	(in thousands, except per share data)
Net (loss) income attributable to Atmel	$	(614	)	$	17,250	$	22,193	$	38,652
Weighted-average shares - basic	419,293			418,954		418,072		421,791
Dilutive effect of incremental shares and share equivalents	—			2,010		1,410		1,909
Weighted-average shares - diluted	419,293			420,964		419,482		423,700
Net (loss) income per share:
Basic
Net (loss) income per share attributable to Atmel common stockholders - basic	$	—		$	0.04	$	0.05	$	0.09
Diluted
Net (loss) income per share attributable to Atmel common stockholders - diluted	$	—		$	0.04	$	0.05	$	0.09

The following table summarizes securities that were not included in the “Weighted-average shares - diluted” used for calculation of diluted net income per share, as their effect would have been anti-dilutive:

	Three Months Ended		Nine Months Ended
	September 30, 2015	September 30, 2014	September 30, 2015	September 30, 2014
	(in thousands)
Employee stock options and restricted stock units outstanding	4,535	4,167	5,414	5,381