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 ended September 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.