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 to the tenants at that property for a total of $11.5 million. The Company also entered into an agreement with the same party 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 year ended December 31, 2015, the Company recognized $0.2 million of loss on sale of assets included in the 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 provided transitional support to UniPixel for a limited period of time.

Upon closing this transaction, the Company recognized a gain that 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. For the year ended December 31, 2015, the Company recognized $1.9 million of royalty revenue and recognized $2.2 million of gain on sale of assets included in the Consolidated Statement of Operations.

North Tyneside

In connection with the 2007 sale of land and other assets in North Tyneside, England, the Company had previously sold a portion of its net operating loss carryforwards related to its North Tyneside operations. Following the closure by the relevant tax authorities of matters relating to the surrender of those net operating losses, the Company recorded a gain of $4.4 million, net of related fees of $0.5 million, as gain on sale of assets and $1.3 million as interest income in our consolidated statement of operations for the year ended 2014.

Based on the structure of the North Tyneside entity, the Company holds a 50.2% interest in the shares of North Tyneside. The Company consolidates the financial results of North Tyneside and attributes the share of profit and loss to the noncontrolling interest. Activity subsequent to the 2007 sale of land and other assets has been immaterial.

Serial Flash Product Line

On September 28, 2012, the Company completed the sale of its Serial Flash product line. Under the terms of the sale agreement, the Company transferred assets to the buyer, who assumed certain liabilities, in return for cash consideration of $25.0 million. As part of the sale transaction, the Company also granted the buyer an exclusive option to purchase the Company's remaining $7.0 million of Serial Flash inventory, which the buyer fully exercised during the first quarter of 2013. As a result of the sale of that $7.0 million of remaining inventory, the Company recorded a gain of $4.4 million in 2013 to reflect receipt of payment upon exercise of the related purchase option and the completion of the sale of the Serial Flash product line.