-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RrYJc+yEnSfeRAgcyceDwvYADuVFirWWypa6YnEscl1Xvuz4MLuc9MpqXjdaSdta WUVT+/Qzxnt/ZuX/0lFXOA== 0000891618-00-000501.txt : 20000207 0000891618-00-000501.hdr.sgml : 20000207 ACCESSION NUMBER: 0000891618-00-000501 CONFORMED SUBMISSION TYPE: 424B4 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20000204 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATMEL CORP CENTRAL INDEX KEY: 0000872448 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 770051991 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B4 SEC ACT: SEC FILE NUMBER: 333-95101 FILM NUMBER: 523390 BUSINESS ADDRESS: STREET 1: 2325 ORCHARD PKWY CITY: SAN JOSE STATE: CA ZIP: 95131 BUSINESS PHONE: 4084410311 MAIL ADDRESS: STREET 1: 2325 ORCHARD PKWY CITY: SAN JOSE STATE: CA ZIP: 95131 424B4 1 PROSPECTUS FILED PURSUANT TO RULE 424(B)(4) 1 Filed Pursuant to Rule 424(b)(4) Registration Statement No. 333-95101 PROSPECTUS 18,000,000 Shares [ATMEL LOGO] COMMON STOCK ------------------------ ATMEL CORPORATION IS OFFERING 18,000,000 SHARES OF ITS COMMON STOCK. ------------------------ OUR COMMON STOCK IS QUOTED ON THE NASDAQ NATIONAL MARKET UNDER THE SYMBOL "ATML." ON FEBRUARY 3, 2000, THE REPORTED LAST SALE PRICE OF OUR COMMON STOCK ON THE NASDAQ NATIONAL MARKET WAS $35 1/2 PER SHARE. ------------------------ INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 7. ------------------------ PRICE $35.50 A SHARE ------------------------
UNDERWRITING PROCEEDS TO PRICE TO DISCOUNTS AND ATMEL PUBLIC COMMISSIONS CORPORATION ------------ ------------- ------------ Per Share................................ $35.50 $1.51 $33.99 Total.................................... $639,000,000 $27,180,000 $611,820,000
The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Morgan Stanley & Co. Incorporated expects to deliver the shares to purchasers on February 9, 2000. ------------------------ MORGAN STANLEY DEAN WITTER CREDIT SUISSE FIRST BOSTON DEUTSCHE BANC ALEX. BROWN MERRILL LYNCH & CO. PRUDENTIAL VOLPE TECHNOLOGY a unit of Prudential Securities February 3, 2000 2 TABLE OF CONTENTS
PAGE ---- Prospectus Summary.................... 3 Risk Factors.......................... 7 Special Note Regarding Forward Looking Statements.......................... 15 Use of Proceeds....................... 16 Dividend Policy....................... 16 Price Range of Common Stock........... 16
PAGE ---- Capitalization........................ 17 Selected Consolidated Financial Data................................ 18 Quarterly Consolidated Financial Data................................ 19 Underwriters.......................... 20 Legal Matters......................... 22 Experts............................... 22 Where You Can Find More Information... 22
------------------------ You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with information different from that contained herein. We are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the common stock. In this prospectus "Atmel," "we," "us" and "our" refer to Atmel Corporation and its subsidiaries. ALL OF THE INFORMATION IN THIS PROSPECTUS GIVES EFFECT TO A TWO-FOR-ONE STOCK SPLIT EFFECTED IN THE FORM OF A 100% STOCK DIVIDEND TO STOCKHOLDERS OF RECORD ON DECEMBER 3, 1999. 3 PROSPECTUS SUMMARY You should read the following summary together with the more detailed information concerning our company and the common stock being sold in this offering and our financial statements and related material appearing in this prospectus and in the documents incorporated by reference in this prospectus. Because this is only a summary, you should read the rest of this prospectus, including the documents incorporated by reference in this prospectus, before you invest in our common stock. Read this entire prospectus carefully, especially the risks described under "Risk Factors." We are a global semiconductor company that designs, develops, manufactures and sells a wide range of highly-integrated semiconductor integrated circuit products. We have been instrumental in developing and commercializing non-volatile memory, or memory that continues to store information after power is turned off. We have leveraged our expertise in non-volatile memories and incorporated it with new technologies to meet the evolving and growing needs of our customers. We offer complex system-on-a-chip solutions for a broad array of markets by combining our leading-edge complementary metal-oxide semiconductor, or CMOS, bipolar CMOS, or BiCMOS, and silicon geranium, or SiGe, process technologies with system-level building blocks such as microcontrollers, digital signal processors, or DSPs, analog cells and non-volatile memory. We believe our capabilities in these areas enable our customers to rapidly introduce leading-edge electronic products that are differentiated by higher performance, advanced features, lower cost, smaller form factor, longer battery life and/or more memory. Our products are used primarily in the following markets: Communications. Communications, including wireless and wireline telecommunications and data networking, is currently our largest end-user market, representing nearly half of our revenues for the year ended December 31, 1999. The rapid global acceptance of the wireless phone has resulted in an increased demand for our products. For the wireless market, we provide non-volatile memory, microcontrollers and ASICs that are used in GSM and CDMA mobile phones and their base stations, as well as two-way pagers, mobile radios and 900 MHz cordless phones, and their respective base stations. We also have a complete range of products based on Bluetooth, a new short-range wireless protocol that enables instant connectivity between electronic devices. High production volumes in the wireless communications market have also made it more cost-effective for our customers to incorporate certain advanced technologies into their lower-cost or lower-volume products, such as those in the consumer electronics segment. Our principal customers in the wireless market include Ericsson, Kenwood, Lucent, Motorola, Nokia, Panasonic, Philips, Qualcomm, Samsung and Sony. The data networking and wireline telecommunications markets are experiencing significant growth based on the rapid adoption of the Internet. For these markets, we provide ASIC, non-volatile memory and programmable logic products that are used in the switches, routers, cable modem termination systems and DSL access multiplexers that are currently being used to build Internet infrastructure. Our principal data networking and wireline telecommunications customers include Alcatel, Cisco, Lucent, Nortel, Siemens, 3Com and Xircom. Consumer Electronics. Our products are also used in a broad variety of consumer electronics products. We provide multimode audio processors and MPEG2-based decoders with programmable transport for complex digital audio streams used in digital TVs, set-top boxes and DVD players. For digital cameras, we provide a single-chip digital camera solution. We provide demodulators and decoders for cable modems. We also offer medium-access controllers for wireless LANs and baseband controllers and network protocol stacks for voice-over Internet protocol, or VoIP, telephone terminals. In addition, we provide secure, encryption-enabled, integrated, tamper-resistant circuits for smart cards. Our principal consumer electronics customers include GemPlus, LG Electronics, Matsushita, Mitsubishi, Philips, Samsung, Schlumberger, Sony and Toppan. 3 4 Computing, Storage and Imaging. The computing and computing peripherals markets are also growing because of the rapid adoption of the Internet. For computing applications, we provide Flash, universal serial bus, or USB, hubs and ASICs for personal computers and servers. For storage applications, we provide servo controllers, read channels and data interfaces for data storage subsystems, hard drives and DVD players. We provide ASICs, non-volatile memory and microcontrollers for laser printers, inkjet printers, copy machines and scanners. Our principal customers in these markets include ACER, Compaq, FujiFilm, Hewlett-Packard, IBM, Lexmark, Maxtor, Microsoft, Polaroid, Seagate, Toshiba and Western Digital. We manufacture more than 90% of our products in our own wafer fabrication facilities, or fabs. We believe that our ability to manufacture a broad range of leading-edge products allows us to offer higher performance, better service and shorter production cycles at a more competitive cost. We strive to continuously expand and upgrade our facilities to meet customer demand. We have developed a broad portfolio of manufacturing capabilities across multiple process technologies, including our proprietary CMOS, Logic, CMOS Logic, bipolar, BiCMOS, SiGe, SiGe BiCMOS, Analog, BCDMOS and radiation tolerant process technologies. We have strategic relationships with industry leaders like Anadigics and M/A-COM to develop products using the SiGe process technology, and today have many foundry customers for SiGe products. We consider SiGe a key technology for our success in providing products to serve the telecommunication and data networking markets. Our wafer fabrication facilities are as follows: - Colorado Springs, Colorado: two 6-inch wafer fabs; - Rousset, France: 8-inch wafer fab; - Heilbronn, Germany: 6-inch wafer fab; - Nantes, France: 6-inch wafer fab; and - Irving, Texas: 8-inch wafer fab (equipment not yet installed). Our business has four segments, each of which requires different design, development and marketing resources to produce and sell semiconductor integrated circuits. - ASIC -- The products in our ASIC segment include full custom application-specific integrated circuits, custom gate arrays and semi-custom cell-based integrated circuits designed to meet specialized customer requirements for their high-performance devices in a broad variety of applications. - Logic -- The products in our Logic segment include microcontrollers, eraseable programmable logic devices, or EPLDs, and field programmable gate arrays, or FPGAs, for sale to customers who use them in a broad variety of applications. - Non-volatile Memories -- The products in our Non-volatile Memories segment include Flash, electrically eraseable programmable read-only memories, or EEPROMs, and eraseable programmable read only memories, or EPROMs, for use in a broad variety of customer applications. - Temic -- The Temic segment is a wholly-owned European subsidiary producing analog, microcontroller and specialty products to service the automotive, telecommunications, consumer and industrial markets. Although some of its products overlap with one or more of the other segments, the Temic segment is managed as a discrete business. In 1999 35% of our sales were made to customers in North America, 31% to customers in Europe, 33% to customers in Asia and 1% to customers in other regions. We distribute our products directly through 17 U.S. sales offices and 24 international sales offices. In addition, we use distributors for indirect distribution, including All American, Arrow Electronics, Avnet, Insight and Pioneer. We were originally incorporated in California in December 1984. In October 1999 we were reincorporated in Delaware. Our principal offices are located at 2325 Orchard Parkway, San Jose, California 95131 and our telephone number is (408) 441-0311. 4 5 RECENT DEVELOPMENTS Wafer Fabrication Facility. We recently acquired an 8-inch wafer fabrication facility located in Irving, Texas from Hitachi Semiconductor (America) Inc. We will begin an installation plan for 0.18-micron manufacturing equipment, and intend to have capacity available by the first quarter of 2001. We acquired the facility to manufacture advanced semiconductors, in particular those using 0.18-micron digital and SiGe bipolar CMOS processes for wireless and telecommunication products. TCS Acquisition. On December 20, 1999, we agreed in principle to acquire Thomson-CSF Semiconducteurs Specifique (TCS), a wholly-owned subsidiary of Thomson-CSF. TCS specializes in the development and manufacture of ASICs, including image sensors, as well as analog, digital and radio frequency ASICs, and products manufactured using SiGe processes. TCS products are used in such applications as digital cameras, fingerprint sensors, and GPS and RF chips, which we believe will provide us with an enhanced ability to provide integrated solutions for the wireless and consumer end markets. Recent Operating Results. On January 20, 2000, we reported our operating results for the quarter and year ended December 31, 1999. The following table shows certain consolidated financial data for the quarter and year ended December 31, 1999. We believe that this information reflects all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation for the periods presented. The operating results for any period are not necessarily indicative of results for any future period.
QUARTER ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, -------------------- ------------------------ 1998 1999 1998 1999 -------- -------- ---------- ---------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Net revenues................................. $288,681 $388,738 $1,111,092 $1,330,161 Operating income (loss)...................... 17,942 56,992 (19,657) 142,978 Net income (loss)............................ 9,960 33,039 (50,038) 53,379 Basic net income (loss) per share............ $ 0.05 $ 0.16 $ (0.25) $ 0.27 Diluted net income (loss) per share.......... $ 0.05 $ 0.16 $ (0.25) $ 0.26
5 6 THE OFFERING Common stock offered......................... 18,000,000 shares Common stock to be outstanding after this 220,089,195 shares(1) offering................................... Use of proceeds.............................. We will use the proceeds of this offering to fund planned capital expenditures and for working capital and other general corporate purposes. See "Use of Proceeds." Nasdaq National Market Symbol................ ATML
SUMMARY CONSOLIDATED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30, ------------------------------------ -------------------- 1996 1997 1998 1998 1999 ---------- -------- ---------- -------- -------- CONSOLIDATED STATEMENT OF OPERATIONS DATA: Net revenues..................... $1,070,288 $958,282 $1,111,092 $822,411 $941,423 Total expenses................... 764,816 933,233 1,130,749 860,010 855,437 ---------- -------- ---------- -------- -------- Operating income (loss).......... 305,472 25,049 (19,657) (37,599) 85,986 Income (loss) before taxes....... 309,153 6,001 (50,931) (61,069) 77,198 ---------- -------- ---------- -------- -------- Net income (loss)................ $ 201,722 $ 1,801 $ (50,038) $(59,998) $ 20,340 ========== ======== ========== ======== ======== Net income (loss) per share: Basic.......................... $ 1.03 $ 0.01 $ (0.25) $ (0.30) $ 0.10 ========== ======== ========== ======== ======== Diluted........................ $ 1.00 $ 0.01 $ (0.25) $ (0.30) $ 0.10 ========== ======== ========== ======== ========
SEPTEMBER 30, 1999 ---------------------------- ACTUAL AS ADJUSTED(2) ---------- -------------- CONSOLIDATED BALANCE SHEET DATA: Cash, cash equivalents and short-term investments........... $ 343,068 $ 954,426 Working capital............................................. 542,755 1,154,113 Total assets................................................ 1,948,260 2,559,618 Long-term obligations, net of current portion............... 718,262 718,262 Stockholders' equity........................................ 796,470 1,407,828
- ------------ (1) Based upon shares outstanding as of December 31, 1999 (assuming no exercise of options after December 31, 1999). Excludes 13,512,529 shares of Common Stock available for grant pursuant to Atmel Corporation's employee stock plans, under which options to purchase 11,419,858 shares of Common Stock were outstanding as of December 31, 1999. (2) Adjusted to give effect to the sale of the 18,000,000 shares of common stock in this offering at the public offering price of $35.50 per share after deducting underwriting discounts and commissions and estimated offering expenses payable by us. 6 7 RISK FACTORS You should carefully consider the risks described below before making an investment decision. The risks described below are not the only ones facing our company. Additional risks not presently known to us or that we currently believe are immaterial may also impair our business operations. Our business could be harmed by any of these risks. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment. In assessing these risks, you should also refer to the other information contained or incorporated by reference in this prospectus, including our financial statements and related notes. OUR REVENUE AND OPERATING RESULTS FLUCTUATE SIGNIFICANTLY DUE TO A VARIETY OF FACTORS, WHICH MAY RESULT IN VOLATILITY OR A DECLINE IN OUR STOCK PRICE Our future operating results will be subject to quarterly variations based upon a wide variety of factors, many of which are not within our control. These factors include: - the cyclical nature of both the semiconductor industry and the markets addressed by our products; - fluctuations in manufacturing yields; - the timing of introduction of new products; - the timing of customer orders; - price erosion; - changes in mix of products sold; - the extent of utilization of manufacturing capacity; - product obsolescence; - availability of supplies and raw materials; - price competition and other competitive factors; and - fluctuations in currency exchange rates. Any unfavorable changes in these factors could harm our operating results. In particular, we believe that our future sales growth will depend substantially on the success of our new products. Our new products are generally incorporated into our customers' products or systems at the design stage. However, design wins may precede volume sales by a year or more. We may not be successful in achieving design wins or any design win may not result in future revenues, which depend in large part on the success of the customer's end product or system. We expect the average selling price of each of our products to decline as individual products mature and competitors enter the market. To offset average selling price decreases, we rely primarily on reducing costs in the manufacturing of those products, increased unit sales to absorb fixed costs and introducing new, higher priced products which incorporate advanced features or integrated technologies to address new or emerging markets. To the extent that such cost reductions and new product introductions do not occur in a timely manner, our operating results could be harmed. From time to time, our quarterly revenues and operating results can become more dependent upon orders booked and shipped within a given quarter and, accordingly, our quarterly results can become less predictable and subject to greater variability. In addition, our continued success will depend in large part on the continued growth of various electronics industries that use semiconductors, including manufacturers of computers, telecommunications equipment, automotive electronics, industrial controls, consumer electronics, data networking equipment and military equipment. Our success will also depend upon a better supply and demand balance within the industry. In 1997, 1998 and early 1999 the semiconductor industry experienced a significant downturn, characterized by, among other things, diminished product demand, production overcapacity and decline of average selling prices of products. While our revenues in 1998 increased as compared to 1997, the increase was 7 8 primarily attributable to the inclusion of revenues from Temic's business, which we acquired in March 1998. Excluding the results of Temic, our revenues decreased in 1998 as compared with 1997, reflecting the cyclical downturn in the worldwide semiconductor industry throughout 1997 and 1998. While sales of our ASIC and logic-related products increased, continued price reduction of our commodity non-volatile memory products (caused by continued weakened business conditions and excess manufacturing capacity in the semiconductor industry) more than offset the impact of higher sales of ASIC and logic-related products in 1998. These non-volatile memory products included our commodity EPROMs and Flash memories. These business conditions in the worldwide semiconductor industry also contributed to our decision to implement a restructuring plan, which was announced in the second quarter of fiscal 1998. The restructuring plan, which resulted in a nonrecurring charge of approximately $66.3 million, included a ten percent work force reduction and an impairment charge to write down the value of certain manufacturing equipment and machinery with older process technology. We also recognized an in-process research and development charge of $23.4 million relating to the Temic acquisition during the second quarter of 1998. IF WE DO NOT SUCCESSFULLY INCREASE OUR MANUFACTURING CAPACITY, WE MAY FACE CAPACITY CONSTRAINTS THAT COULD HARM OUR BUSINESS We currently manufacture our products at our wafer fabrication facilities located in Colorado Springs, Colorado, Heilbronn, Germany, Nantes, France, and Rousset, France. In addition, we currently expect our new facility in Irving, Texas, to be operational and producing wafers by the first quarter of 2001. We believe that we will be able to substantially meet our production needs from these facilities through the end of the fourth quarter of 2002, although this date may vary depending on, among other things, our rate of growth. We will be required to hire, train and manage additional production personnel in order to increase production capacity as planned. We will also be required to successfully implement new manufacturing technologies such as 0.25-micron, 0.18-micron and chemical and mechanical planarization in our wafer manufacturing facilities to increase our manufacturing capacity and yields. If we cannot expand our capacity on a timely basis, we could experience significant capacity constraints that would prevent us from meeting customer demand. In addition, the depreciation and other expenses that we will incur in connection with the expansion of our manufacturing capacity may reduce our gross margins in future periods. We are exploring alternatives for the further expansion of our manufacturing capacity, which would likely occur after 2000, including: - expanding our current wafer fabrication facilities; - purchasing or building one or more additional wafer fabrication facilities; and - entering into strategic relationships to obtain additional capacity. Any of these alternatives could require a significant investment by us, and none of the alternatives for expanding our manufacturing capacity may be available on a timely basis. The cost of expanding our manufacturing capacity at the Irving, Texas facility or elsewhere is expected to be funded through a combination of available cash resources, cash from operations and additional lease, debt or equity financing. We may not be able to obtain the additional financing necessary to fund the expansion of our manufacturing facilities. Expanding our wafer fabrication capacity involves significant risks, including: - shortages of materials and skilled labor; - unavailability of semiconductor manufacturing and testing equipment; - unforeseen environmental or engineering problems; - work stoppages; - approvals and requirements of governmental and regulatory agencies; and - unanticipated cost increases. 8 9 Any one of these risks could delay the building, equipping and production start-up of a new facility or the expansion of an existing facility, and could involve significant additional costs or reduce our anticipated revenues. In addition, the timing of commencement of operation of our Irving, Texas facility will depend upon the availability, timely delivery, successful installation and testing of complex process equipment. As a result of these and other factors, any expanded or new facility may not be completed and in volume production on time or within budget. Furthermore, we may be unable to achieve adequate manufacturing yields in any expanded or new facility in a timely manner, and our revenues may not increase in proportion to the anticipated increase in manufacturing capacity associated with any expanded or new facility. IF WE ARE UNABLE TO EFFECTIVELY UTILIZE OUR WAFER MANUFACTURING CAPACITY AND OUR ABILITY TO ACHIEVE ACCEPTABLE MANUFACTURING YIELDS, OUR BUSINESS WOULD BE HARMED The 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. We may experience problems in achieving acceptable yields in the manufacture of wafers, particularly in connection with the expansion of our manufacturing capacity and related transitions. The interruption of wafer fabrication or the failure to achieve acceptable manufacturing yields at any of our wafer fabrication facilities would harm our business. In 1997 and 1998, we made substantial capital expenditures to increase our wafer fabrication capacity at our facilities in Colorado Springs, Colorado and Rousset, France, and acquired two wafer fabrication facilities in connection with our acquisition of Temic. In 1998, our gross margin declined significantly as a result of the increase in fixed costs and operating expenses related to this expansion of capacity, and lower product margins in many of our non-volatile memory products due to severe price decline. In 1999, the declining gross margin trend reversed, primarily due to a higher unit sales volume over which to spread fixed costs and operating expenses, the inclusion of Temic's positive gross margin for all of 1999 compared to only ten months in 1998, and average selling prices that stabilized in 1999. The improved market conditions experienced in 1999 may not continue or may not permit us to fully utilize our wafer fabrication capacity, and our increases in fixed costs and operating expenses related to manufacturing overcapacity may harm our operating results. If net revenues do not continue to increase sufficiently in future periods our business could be harmed. We experienced production delays and yield difficulties in connection with earlier expansions of our wafer fabrication capacity. Production delays, difficulties in achieving acceptable yields at any of our fabrication facilities or overcapacity could materially and adversely affect our operating results. THE CYCLICAL NATURE OF THE SEMICONDUCTOR INDUSTRY COULD CREATE FLUCTUATIONS IN OUR OPERATING RESULTS, AS WE EXPERIENCED IN 1997 AND 1998 The semiconductor industry has historically been cyclical, characterized by wide fluctuations in product supply and demand. From time to time, the industry has also experienced significant downturns, often in connection with, or in anticipation of, maturing product cycles and declines in general economic conditions. Downturns of this type occurred in 1997 and 1998. These downturns have been characterized by diminished product demand, production overcapacity and accelerated decline of average selling prices, and in some cases have lasted for more than a year. Our business could be harmed by industry-wide fluctuations in the future. The commodity memory portion of the semiconductor industry, from which we derived more than half of our revenues through 1998, and approximately 45.1 percent of our revenues in the first nine months of 1999, continued to suffer from excess capacity in 1998, which led to substantial price reduction during this period. While these conditions improved in 1999, if they were to resume our growth and operating results would be harmed. In addition, in the past, our operating results were harmed by industry-wide fluctuations in the demand for semiconductors, which resulted in under-utilization of our manufacturing capacity. Our continued success depends in large part on the continued growth of various electronics industries that use semiconductors, including manufacturers of computers, telecommunications equipment, automotive electronics, industrial 9 10 controls, consumer electronics, data networking and military equipment, and a better supply and demand balance within the industry. Our business could be harmed in the future by cyclical conditions in the semiconductor industry or by slower growth in any of the markets served by our customer products. OUR MARKETS ARE HIGHLY COMPETITIVE, AND IF WE DO NOT COMPETE EFFECTIVELY, WE MAY SUFFER PRICE REDUCTIONS, REDUCED REVENUES, REDUCED GROSS MARGINS AND LOSS OF MARKET SHARE We compete 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 AMD, Fujitsu, Intel, Sharp and ST Microelectronics. These competitors have substantially greater financial, technical, marketing and management resources than we do. As we have introduced our new Flash products, we are increasingly competing directly with these competitors, and we may not be able to compete effectively. We also compete with emerging companies attempting to sell products in specialized markets addressed by our products. 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 recent periods, we have experienced significant price competition in our non-volatile memory business and especially for EPROM and Flash products. We expect continuing competitive pressures in our markets from existing competitors and new entrants, which, among other things, could further accelerate the trend of decreasing average selling prices for our products. 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 non-volatile 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; and - general market and economic conditions. Many of these factors are outside of our control, and we may not be able to compete successfully in the future. WE MUST KEEP PACE WITH TECHNOLOGICAL CHANGE TO REMAIN COMPETITIVE The average selling prices of our products historically have decreased over the products' lives and are expected to continue to do so. As a result, our future success depends on our ability to develop and introduce new products which compete effectively on the basis of price and performance and which address customer requirements. We are continually in the process of designing and commercializing new and improved products to maintain our competitive position. 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' decision 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 technologies serving 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 as a result of the qualification process, our future operating results could be harmed. 10 11 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. In addition, our integrated solution products will require more technically sophisticated sales and marketing personnel to market these products successfully to customers. We are developing new products with smaller feature sizes, 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 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. OUR OPERATING RESULTS ARE HIGHLY DEPENDENT ON OUR INTERNATIONAL SALES AND OPERATIONS, WHICH EXPOSES US TO VARIOUS POLITICAL AND ECONOMIC RISKS Foreign product sales to customers accounted for approximately 65%, 60%, 65% and 65% of net revenues in 1996, 1997 and 1998, and the first nine months of 1999, respectively. We expect that revenues derived from international sales will continue to represent a significant portion of net revenues. In addition, in recent years, we have significantly expanded our international operations, most recently through our acquisitions of Temic in 1998. International sales and operations are subject to a variety of risks, including those arising from currency fluctuations, tariffs, trade barriers, taxes, export license requirements and foreign government regulations. Further, we purchase a significant portion of our raw materials and equipment from foreign suppliers, and we incur labor and other operating costs in foreign currencies, particularly at our French and German manufacturing facilities. As a result, we are exposed to changes in foreign currency exchange rates or weak economic conditions in these other countries. Approximately 65% and 59% of our foreign sales in 1998 and the first nine months of 1999, respectively, were denominated in U.S. dollars. During these periods our products became less price competitive in countries with currencies declining in value against the dollar. In 1998, our revenues declined by approximately $7.0 million due to the strengthening of the U.S. dollar against foreign currencies in the markets in which we sell products. In addition, in 1998 business conditions in Asia were severely affected by banking and currency issues which adversely affected our operating results. Furthermore, accounts receivable increased $42.5 million in 1997 due to our extending longer payment terms to customers and a more difficult collection environment because of the financial turmoil in Asia. While these conditions stabilized in 1999, the continuance or worsening of adverse business and financial conditions in Asia, where 35% of our revenues were generated during the first nine months of 1999, would likely harm our operating results. IF WE FAIL TO MAINTAIN SATISFACTORY RELATIONSHIPS WITH MOTOROLA AND OTHER KEY CUSTOMERS OUR BUSINESS MAY BE HARMED In 1996, 1997, 1998 and the first nine months of 1999, 12.0%, 12.6%, 14.0% and 14.9%, respectively, of our net revenues were derived from sales to Motorola. Our ability to maintain close, satisfactory relationships with Motorola and other large customers is important to our business. A reduction, delay, or cancellation of orders from Motorola or our other large customers would harm our business. Moreover, our customers may vary order levels significantly from period to period, and customers may not continue to place orders with us in the future at the same levels as in prior periods. The loss of one or more of our key customers, or reduced orders by any of our key customers, could harm our business and results of operations. OUR FAILURE TO SUCCESSFULLY INTEGRATE BUSINESSES OR PRODUCTS WE HAVE ACQUIRED COULD DISRUPT OR HARM OUR ONGOING BUSINESS We have from time to time acquired complementary businesses, products and technologies. Achieving the anticipated benefits of an acquisition depends, in part, upon whether the integration of the acquired business, products or technology is accomplished in an efficient and effective manner. Moreover, successful acquisitions in the semiconductor industry may be more difficult to accomplish than in other industries because such acquisitions require, among other things, integration of product offerings, manufacturing operations and coordination of sales and marketing and research and development efforts. The difficulties of 11 12 such integration may be increased by the necessity of coordinating geographically separated organizations, the complexity of the technologies being integrated, and the necessity of integrating personnel with disparate business backgrounds and combining two different corporate cultures. The integration of operations following an acquisition requires the dedication of management resources that may distract attention from the day-to-day business, and may disrupt key research and development, marketing or sales efforts. The inability of management to successfully integrate any future acquisition could harm our business. Furthermore, products acquired in connection with acquisitions may not gain acceptance in our markets, and we may not achieve the anticipated or desired benefits of such transactions. WE MAY BE SUBJECT TO THIRD-PARTY INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS THAT COULD BE EXPENSIVE TO DEFEND We have from time to time received, and may in the future receive, communications from third parties asserting patent or other intellectual property rights covering our products or processes. In the past, we have received specific allegations from major companies alleging that certain of our products infringe patents owned by such companies. If any litigation were to occur as a result of such allegations in the future, and we do not prevail in any such litigation, and are unable to obtain a satisfactory license, our results of operations may be adversely affected. In addition, 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. In the past, we have has been involved in such litigation, which adversely affected our operating results. We cannot assure you that intellectual property claims will not be made against us in the future or that we will not be prohibited from using the technologies subject to any such claims or be required to obtain licenses and make corresponding royalty payments. In addition, the necessary management attention to and legal costs associated with litigation can have a significant adverse effect on operating results. OUR LONG-TERM DEBT COULD HARM OUR ABILITY TO OBTAIN ADDITIONAL FINANCING, AND OUR ABILITY TO MEET OUR DEBT OBLIGATIONS WILL BE DEPENDENT UPON OUR FUTURE PERFORMANCE We financed our 1997 capital expenditures with long-term debt, which more than doubled during the year, increasing from $278.6 million at December 31, 1996 to $571.4 million at December 31, 1997. Long-term debt increased again in 1998 to $771.1 million at December 31, 1998, due primarily to the issuance of $115.0 million of debt securities and $142.2 million of lease financing related to asset acquisitions. At September 30, 1999, long-term debt was approximately $718.3 million as we reduced our capital expenditures from prior years. The increase in our debt-to-equity ratio could materially and adversely affect our ability to obtain additional financing for working capital, acquisitions or other purposes and could make us more vulnerable to industry downturns and competitive pressures. Our ability to meet our debt obligations will be dependent upon our future performance, which will be subject to the financial, business and other factors affecting our operations, many of which are beyond our control. Since a substantial portion of our operations are conducted through our subsidiaries, the cash flow and the consequent ability to service debt are partially dependent upon the earnings of our subsidiaries and the distribution of those earnings, or upon loans or other payments of funds by those subsidiaries, to us. These subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due pursuant to our long-term debt or to make any funds available therefor, whether by dividends, distributions, loans or other payments. In addition, the payment of dividends or distributions and the making of loans and advances to us by any of our subsidiaries could in the future be subject to statutory or contractual restrictions, could in the future be contingent upon the earnings of those subsidiaries and could in the future be subject to various business considerations. Any right held by us to receive any assets of any of our subsidiaries upon its liquidation or reorganization will be effectively subordinated to the claims of that subsidiary's creditors (including trade creditors), except to the extent that we are recognized as a creditor of such subsidiary, in which case our claims would still be subordinate to any security interest in the assets of such subsidiary and any indebtedness of such subsidiary senior to that held by us. 12 13 WE MAY NEED TO RAISE ADDITIONAL CAPITAL THAT MAY NOT BE AVAILABLE Semiconductor companies that maintain their own fabrication facilities have substantial capital requirements. We made capital expenditures of $312.1 million in 1997, $187.7 million in 1998 and approximately $118.6 million through September 30, 1999, and intend to continue to make capital investments to support business growth and achieve manufacturing cost reductions and improved yields. Our capital expenditure plan for 2000 is approximately $550.0 million, a portion of which is intended to be funded from the proceeds of this offering. We may seek additional equity or debt financing to fund further expansion of our wafer fabrication capacity or to fund other projects. The timing and amount of such capital requirements cannot be precisely determined at this time and will depend on a number of factors, including demand for products, product mix, changes in semiconductor industry conditions and competitive factors. Additional debt or equity financing may not be available when needed or, if available, may not be available on satisfactory terms. WE DEPEND ON INDEPENDENT ASSEMBLY CONTRACTORS WHICH MAY NOT HAVE ADEQUATE CAPACITY TO FULFILL OUR NEEDS AND WHICH MAY NOT MEET OUR QUALITY AND DELIVERY OBJECTIVES We manufacture wafers for our products at our fabrication facilities, and the wafers are then sorted and tested at our facilities. After wafer testing, we ship the wafers to one of our independent assembly contractors located in China, Malaysia, the Philippines, South Korea, Taiwan and Thailand where the wafers are separated into die, packaged and, in some cases, tested. Our reliance on independent contractors to assemble, package and test our products involves significant risks, including reduced control over quality and delivery schedules, the potential lack of adequate capacity and discontinuance or phase-out of the contractors' assembly processes. These independent contractors may not continue to assemble, package and test our products for a variety of reasons. Moreover, because our 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 and changes in tariff and freight rates. Accordingly, we may experience problems in timelines and the adequacy or quality of product deliveries, any of which could have a material adverse effect on our results of operations. WE ARE SUBJECT TO ENVIRONMENTAL 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 federal, state and local governmental regulations related to the discharge or disposal of toxic, volatile or otherwise hazardous chemicals used in our manufacturing processes. While we believe that we have all environmental permits necessary to conduct our business and that our activities conform to present environmental regulations, increasing public attention has been focused on the environmental impact of semiconductor operations. Although we have not experienced any material adverse effect on our operations from environmental regulations, any changes in such regulations may impose the need for additional capital equipment or other requirements. If for any reason we fail to control the use of, or to restrict adequately the discharge of, hazardous substances under present or future regulations, we could be subject to substantial liability or our manufacturing operations could be suspended. WE DEPEND ON CERTAIN KEY PERSONNEL, AND THE LOSS OF ANY KEY PERSONNEL 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 the development of new products and processes. The competition for such personnel is intense, and the loss of key employees, none of whom is subject to an employment agreement for a specified term or a post-employment non-competition agreement, could harm our business. 13 14 WE ARE NOT PROTECTED BY LONG-TERM CONTRACTS WITH OUR CUSTOMERS We do not typically enter into long-term 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 will be able to rapidly replace that revenue source, which would harm our financial results. FAILURE TO MANAGE OUR GROWTH MAY SERIOUSLY HARM OUR BUSINESS Our business has grown in recent years through both internal expansion and acquisitions, and continued growth may cause a significant strain on our infrastructure and internal systems. To manage our growth effectively, we must continue to improve and expand our management information systems, and we plan to commence implementing a new SAP enterprise resource planning and management system for our worldwide operations in 2000. Our success depends to a significant extent on the management skills of our executive officers. If we are unable to manage growth effectively, our results of operations will be harmed. IF WE HAVE NOT ADEQUATELY PREPARED FOR THE TRANSITION TO YEAR 2000, OUR BUSINESS COULD BE HARMED We have executed a plan designed to make our computer systems, applications, computer and manufacturing equipment and facilities year 2000 ready. To date, none of our systems, applications, equipment or facilities have experienced material difficulties from the transition to year 2000. However, it is possible that material difficulties could be discovered or could arise. We cannot guarantee that our year 2000 readiness plan has been successfully implemented, and actual results could still differ materially from our plan. In addition, we have communicated with our critical suppliers to determine the extent to which we may be vulnerable to such parties' failure to resolve their own year 2000 issues. Where practicable, we have attempted to mitigate our risks with respect to the failure of these entities to be year 2000 ready. The effect, if any, on our results of operations from any failure of such parties to be year 2000 ready cannot yet be determined. OUR STOCK PRICE HAS FLUCTUATED IN THE PAST AND MAY CONTINUE TO FLUCTUATE IN THE FUTURE The market price of our common stock has experienced significant fluctuations and may continue to fluctuate significantly. The market price of our common stock may be significantly affected by factors such as the announcement of new products or product enhancements by us or our competitors, technological innovations by us or our competitors, quarterly variations in our results of operations, changes in earnings estimates by market analysts and general market conditions or market conditions specific to particular industries. Statements or changes in opinions, ratings, or earnings estimates made by brokerage firms or industry analysts relating to the market in which we do business or relating to us specifically could result in an immediate and adverse effect on the market price of our stock. In addition, in recent years the stock market has experienced extreme price and volume fluctuations. These fluctuations have had a substantial effect on the market prices for many high technology companies, often unrelated to the operating performance of the specific companies. PROVISIONS IN OUR CERTIFICATE OF INCORPORATION MAY HAVE ANTI-TAKEOVER EFFECTS Our board of directors has the authority to issue up to 5,000,000 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. 14 15 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Some of the statements in this prospectus and in the documents incorporated by reference in this prospectus constitute forward-looking statements. In some cases, you can identify forward-looking statements by terms such as may, will, should, expect, plan, intend, forecast, anticipate, believe, estimate, predict, potential, continue or the negative of these terms or other comparable terminology. The forward-looking statements contained in this prospectus involve known and unknown risks, uncertainties and situations that may cause our or our industry's actual results, level of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these statements. These factors include those listed under "Risk Factors" and elsewhere in this prospectus. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You should not place undue reliance on these forward-looking statements. 15 16 USE OF PROCEEDS The net proceeds to us from the sale of 18,000,000 shares of common stock offered by us are estimated to be approximately $611.4 million based on the public offering price of $35.50 per share and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds of this offering to fund the purchase of additional wafer fabrication testing equipment and for working capital and other general corporate purposes. We continuously evaluate strategic acquisitions and investments. We may use a portion of our net proceeds from this offering to acquire technologies or businesses, or make strategic investments in businesses, that are complementary to our business. However, we have no current plans, agreements or commitments and are not currently engaged in any negotiations with respect to any acquisition other than those related to our contemplated acquisition of TCS. Pending these uses, we intend to invest the net proceeds in investment grade, interest bearing securities. DIVIDEND POLICY We have never declared or paid any cash dividend on our capital stock and do not anticipate paying any cash dividends on capital stock in the foreseeable future. We currently intend to retain future earnings, if any, for use in our business. PRICE RANGE OF COMMON STOCK The following table presents the high and low closing sale prices per share for our common stock as reported by the Nasdaq National Market for the periods indicated.
HIGH LOW ---- ---- FISCAL YEAR ENDED DECEMBER 31, 1998: First Quarter............................................... $ 10 1/4 $ 7 Second Quarter.............................................. 10 1/8 6 3/8 Third Quarter............................................... 7 5/16 3 1/64 Fourth Quarter.............................................. 8 3/16 3 19/32 FISCAL YEAR ENDED DECEMBER 31, 1999: First Quarter............................................... 9 13/32 7 1/32 Second Quarter.............................................. 13 3/32 8 9/16 Third Quarter............................................... 20 15/16 13 3/16 Fourth Quarter.............................................. 30 3/8 15 3/8 FISCAL YEAR ENDING DECEMBER 31, 2000: First Quarter (through February 3, 2000).................... 35 1/2 25 1/16
A recent reported last sale price per share for our common stock on the Nasdaq National Market is set forth on the cover page of this Prospectus. At December 31, 1999, there were approximately 1,446 holders of record of our common stock. 16 17 CAPITALIZATION The following table sets forth our capitalization as of September 30, 1999: - On an actual basis, after giving retroactive effect to: (1) our reincorporation in Delaware in October 1999 and a concurrent increase in our authorized common stock from 240,000,000 shares to 500,000,000 shares, and (2) the two-for-one split of our outstanding common stock effected in December 1999; and - As adjusted to give effect to the sale of the 18,000,000 shares of common stock we are offering hereby at the public offering price of $35.50 per share after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
SEPTEMBER 30, 1999 ------------------------ ACTUAL AS ADJUSTED ---------- ----------- (IN THOUSANDS, EXCEPT SHARE INFORMATION) Long-term debt less current portion......................... $ 718,262 $ 718,262 ---------- ---------- Stockholders' equity: Preferred stock, $0.001 par value, 5,000,000 shares authorized; 500,000 designated Series A preferred stock, none issued..................................... -- -- Common stock, $0.001 par value, 500,000,000 shares authorized; 201,234,530 shares outstanding at September 30, 1999, 219,234,530 shares outstanding as adjusted(1)............................................ 387,858 999,216 Accumulated other comprehensive income.................... (13,821) (13,821) Retained earnings......................................... 422,433 422,433 ---------- ---------- Total stockholders' equity................................ 796,470 1,407,828 ---------- ---------- Total capitalization................................. $1,514,732 $2,126,090 ========== ==========
- ------------ (1) Excludes 11,571,590 shares issuable upon exercise of outstanding stock options as of September 30, 1999. 17 18 SELECTED CONSOLIDATED FINANCIAL DATA The following table presents selected balance sheet and statement of operations data as of and for the fiscal years ended December 31, 1994 through 1998 and for the nine month periods ended September 30, 1998 and 1999. The information for the nine month periods is unaudited and has been prepared on the same basis as our annual consolidated financial statements. This data gives retroactive effect to the two-for-one split of our outstanding common stock effected as a stock dividend to stockholders of record as of the close of business on December 3, 1999. Effective January 1, 1999 we changed our fiscal year from a 52 or 53-week year ending on the Monday nearest the last day in December of each year to a calendar year ending December 31. Our fiscal quarters also changed from 13-week quarters to calendar quarters. For presentation purposes, we have indicated that our prior fiscal years ended on December 31, since the impact of this change on the financial results for these periods is immaterial. The results of operations for the nine months ended September 30, 1999 are not necessarily indicative of the results that may be expected for the full year ending December 31, 1999, or any other future period.
NINE MONTHS ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30, ---------------------------------------------------------- ----------------------- 1994 1995 1996 1997 1998 1998 1999 -------- -------- ---------- ---------- ---------- ---------- ---------- (IN THOUSANDS, EXCEPT PER SHARE DATA) CONSOLIDATED STATEMENTS OF OPERATIONS DATA: Net revenues............................ $375,093 $634,241 $1,070,288 $ 958,282 $1,111,092 $ 822,411 $ 941,423 Expenses: Cost of sales......................... 195,955 323,530 539,215 602,239 717,147 536,566 592,142 Research and development.............. 43,035 69,795 110,239 137,896 174,808 125,982 136,649 Selling, general and administrative... 48,301 73,474 115,362 150,098 149,069 107,737 126,646 Restructuring and in-process research and development charges............. -- -- -- 43,000 89,725 89,725 -- -------- -------- ---------- ---------- ---------- ---------- ---------- Total expenses.......................... 287,291 466,799 764,816 933,233 1,130,749 860,010 855,437 -------- -------- ---------- ---------- ---------- ---------- ---------- Operating income (loss)................. 87,802 167,442 305,472 25,049 (19,657) (37,599) 85,986 Other income (expense), net............. 2,274 4,820 3,681 (19,048) (31,274) (23,470) (8,788) -------- -------- ---------- ---------- ---------- ---------- ---------- Income (loss) before taxes.............. 90,076 172,262 309,153 6,001 (50,931) (61,069) 77,198 Provision for (benefit from) income taxes................................. 30,626 58,569 107,431 4,200 (893) (1,071) 27,790 -------- -------- ---------- ---------- ---------- ---------- ---------- Income (loss) before cumulative effect of accounting change.................. 59,450 113,693 201,722 1,801 (50,038) (59,998) 49,408 Cumulative effect of accounting change, net of tax effect..................... -- -- -- -- -- -- (29,068) -------- -------- ---------- ---------- ---------- ---------- ---------- Net income (loss)....................... $ 59,450 $113,693 $ 201,722 $ 1,801 $ (50,038) $ (59,998) $ 20,340 ======== ======== ========== ========== ========== ========== ========== Diluted net income (loss) per share: Basic................................. $ 0.33 $ 0.60 $ 1.03 $ 0.01 $ (0.25) $ (0.30) $ 0.10 ======== ======== ========== ========== ========== ========== ========== Diluted............................... $ 0.33 $ 0.58 $ 1.00 $ 0.01 $ (0.25) $ (0.30) $ 0.10 ======== ======== ========== ========== ========== ========== ========== BALANCE SHEET DATA: Working capital......................... $ 64,580 $132,597 $ 123,621 $ 410,085 $ 492,172 $ 352,557 $ 542,755 Total assets............................ 540,946 919,621 1,455,914 1,822,040 1,962,737 2,001,616 1,948,260 Long-term obligations, net of current portion............................... 46,514 88,455 278,576 571,389 771,069 503,648 718,262 Stockholders' equity.................... 358,088 588,768 789,751 786,434 732,195 707,492 796,470
18 19 QUARTERLY CONSOLIDATED FINANCIAL DATA The following tables set forth our unaudited quarterly statement of operations data for each of the seven quarters ended September 30, 1999, such data expressed as a percentage of our net revenues, and our unaudited consolidated net revenues by segment, for each of these seven quarters. This quarterly information is unaudited and has been prepared on the same basis as our annual consolidated financial statements. In our opinion, this quarterly information reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the information for the periods presented. The operating results for any quarter are not necessarily indicative of results for any future period.
QUARTER ENDED ------------------------------------------------------------------------------ MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, 1998 1998 1998 1998 1999 1999 1999 --------- -------- --------- -------- --------- -------- --------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Net revenues................................. $260,392 $288,205 $273,814 $288,681 $290,037 $311,142 $340,244 Expenses: Cost of sales.............................. 164,192 199,675 172,699 180,581 186,165 194,210 211,767 Research and development................... 36,659 43,394 45,929 48,826 47,229 43,124 46,296 Selling, general and administrative........ 27,826 39,115 40,796 41,332 35,920 44,405 46,321 Restructuring and in-process research and development charges...................... -- 89,725 -- -- -- -- -- -------- -------- -------- -------- -------- -------- -------- Total expenses............................... 228,677 371,909 259,424 270,739 269,314 281,739 304,384 Operating income (loss)...................... 31,715 (83,704) 14,390 17,942 20,723 29,403 35,860 Other income (expense), net.................. (4,443) (9,338) (9,689) (7,804) 5,367 (5,335) (8,820) -------- -------- -------- -------- -------- -------- -------- Income (loss) before taxes................... 27,272 (93,042) 4,701 10,138 26,090 24,068 27,040 Provision for (benefit from) income taxes.... 479 (1,633) 83 178 9,392 8,664 9,734 -------- -------- -------- -------- -------- -------- -------- Income (loss)................................ 26,793 (91,409) 4,618 9,960 16,698 15,404 17,306 Cumulative effect of accounting change, net of tax effect.............................. -- -- -- -- (29,068) -- -- -------- -------- -------- -------- -------- -------- -------- Net income (loss)............................ $ 26,793 $(91,409) $ 4,618 $ 9,960 $(12,370) $ 15,404 $ 17,306 ======== ======== ======== ======== ======== ======== ======== Net income (loss) per share: Basic...................................... $ 0.14 $ (0.46) $ 0.02 $ 0.05 $ (0.06) $ 0.08 $ 0.09 ======== ======== ======== ======== ======== ======== ======== Diluted.................................... $ 0.13 $ (0.46) $ 0.02 $ 0.05 $ (0.06) $ 0.07 $ 0.08 ======== ======== ======== ======== ======== ======== ========
AS A PERCENTAGE OF NET REVENUES ------------------------------------------------------------------------------ MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, 1998 1998 1998 1998 1999 1999 1999 --------- -------- --------- -------- --------- -------- --------- Net revenues.................................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Expenses: Cost of sales............................... 63.1 69.3 63.0 62.6 64.2 62.4 62.2 Research and development.................... 14.1 15.0 16.8 16.9 16.3 13.8 13.6 Selling, general and administrative......... 10.7 13.6 14.9 14.3 12.4 14.3 13.6 Restructuring and in-process research and development charges....................... 0.0 31.1 0.0 0.0 0.0 0.0 0.0 ----- ----- ----- ----- ----- ----- ----- Total expenses................................ 87.8 129.0 94.7 93.8 92.9 90.5 89.4 Operating income (loss)....................... 12.2 (29.0) 5.3 6.2 7.1 9.5 10.6 Other income (expense), net................... (1.7) (3.3) (3.6) (2.7) 1.8 (1.7) (2.6) ----- ----- ----- ----- ----- ----- ----- Income (loss) before taxes.................... 10.5 (32.3) 1.7 3.5 8.9 7.8 8.0 Provision for (benefit from) income taxes..... 0.2 (0.6) 0.0 0.1 3.2 2.8 2.9 ----- ----- ----- ----- ----- ----- ----- Income (loss) before cumulative effect of accounting change........................... 10.3 (31.7) 1.7 3.4 5.7 5.0 5.1 Cumulative effect of accounting change, net of tax effect.................................. 0.0 0.0 0.0 0.0 (10.0) 0.0 0.0 ----- ----- ----- ----- ----- ----- ----- Net income (loss)............................. 10.3% (31.7)% 1.7% 3.4% (4.3)% 5.0% 5.1% ===== ===== ===== ===== ===== ===== =====
NET REVENUES BY SEGMENT, QUARTER ENDED ------------------------------------------------------------------------------ MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, 1998 1998 1998 1998 1999 1999 1999 --------- -------- --------- -------- --------- -------- --------- (IN THOUSANDS) Non-volatile Memories........................ $149,012 $114,628 $113,987 $116,035 $124,083 $136,852 $163,933 Temic........................................ 22,500 72,502 68,357 75,072 66,070 68,111 66,842 ASIC......................................... 64,642 69,125 68,455 76,245 79,624 79,373 83,754 Logic........................................ 24,238 31,950 23,015 21,329 20,260 26,806 25,715 -------- -------- -------- -------- -------- -------- -------- Total net revenues................... $260,392 $288,205 $273,814 $288,681 $290,037 $311,142 $340,244 ======== ======== ======== ======== ======== ======== ========
19 20 UNDERWRITERS Under the terms and subject to the conditions contained in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom Morgan Stanley & Co. Incorporated, Credit Suisse First Boston Corporation, Deutsche Bank Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Prudential Securities Incorporated are acting as representatives, have severally agreed to purchase, and we have agreed to sell to them, severally, the number of shares indicated below:
NUMBER OF NAME SHARES ---- ---------- Morgan Stanley & Co. Incorporated........................... 8,100,000 Credit Suisse First Boston Corporation...................... 3,240,000 Deutsche Bank Securities Inc. .............................. 1,620,000 Merrill Lynch, Pierce, Fenner & Smith Incorporated................................... 1,620,000 Prudential Securities Incorporated.......................... 1,620,000 Banc of America Securities LLC.............................. 300,000 A. G. Edwards & Sons, Inc. ................................. 300,000 Edward D. Jones & Co., L.P. ................................ 300,000 PaineWebber Incorporated.................................... 300,000 SoundView Technology Group, Inc. ........................... 300,000 Warburg Dillon Read LLC..................................... 300,000 ---------- Total............................................. 18,000,000 ==========
The underwriters are offering the shares subject to their acceptance of the shares from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of common stock offered by this prospectus, other than those covered by the underwriters' over-allotment option described below, if any such shares are taken. The underwriters initially propose to offer part of the shares of common stock directly to the public at the public offering price set forth on the cover page of this prospectus and part to certain dealers at a price that represents a concession not in excess of $.98 a share under the public offering price. Any underwriter may allow, and the dealers may reallow, a concession not in excess of $.10 a share to other underwriters or to certain other dealers. After the public offering of the shares of common stock, the offering price and other selling terms may from time to time be varied by the representatives of the underwriters. We have agreed that, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the underwriters, during the period ending 90 days after the date of this prospectus, we will not, directly or indirectly: - Offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock; or - Enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of common stock, 20 21 whether any such transaction described above is to be settled by delivery of common stock or such other securities, in case or otherwise. The restrictions described in the previous paragraph do not apply to: - The sale to the underwriters of the shares of common stock under the underwriting agreement; - The issuance by us of shares of common stock upon the exercise of an option or warrant or the conversion of a security outstanding on the date of this prospectus which is described in the prospectus; or - The issuance of shares of common stock or options to purchase shares of common stock pursuant to our employee benefit plans that are in existence on the date of the prospectus and consistent with past practices. In order to facilitate the offering of the common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the common stock. Specifically, the underwriters may over-allot in connection with the offering, creating a short position in the common stock for their own account. In addition, to cover over-allotments or to position in the common stock for their own account. In addition, to cover over-allotments or to stabilize the price of the common stock, the underwriters may bid for, and purchase, shares of common stock in the open market. Finally, the underwriting syndicate may reclaim selling concessions allowed to an underwriter or a dealer for distributing the common stock in the offering if the syndicate repurchases previously distributed shares of common stock in transactions to cover syndicate short positions, in stabilization transactions or otherwise. Any of these activities may stabilize or maintain the market price of the common stock above independent market levels. The underwriters are not required to engage in these activities and may end any of these activities at any time. The underwriting agreement provides that we and the underwriters will indemnify each other against certain liabilities, including liabilities under the Securities Act. Morgan Stanley & Co. Incorporated was the initial purchaser of $296,000,000 aggregate principal amount of our Zero Coupon Convertible Subordinated Debentures due 2018. These debentures were purchased in April 1998 and resold to "qualified institutional buyers" pursuant to Rule 144A under the Securities Act. Morgan Stanley & Co. Incorporated received a customary fee in connection with this transaction. 21 22 LEGAL MATTERS The validity of the issuance of the shares of common stock we are offering by this prospectus will be passed upon for us by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto, California. Certain legal matters in connection with this offering will be passed upon for the underwriters by Gray Cary Ware & Freidenrich LLP, Palo Alto, California. EXPERTS Our consolidated financial statements and schedule as of December 31, 1998 and 1997 and for each of the years in the three-year period ended December 31, 1998, incorporated by reference to the Annual Report on Form 10-K as amended on Form 10-K/A for the year ended December 31, 1998 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. WHERE YOU CAN FIND MORE INFORMATION We file reports, proxy statements and other information with the Commission, in accordance with the Securities Exchange Act of 1934. You may read and copy our reports, proxy statements and other information filed by us at the public reference facilities of the Commission in Washington, D.C., New York, New York and Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for further information about the public reference rooms. Our reports, proxy statements and other information filed with the Commission are available to the public over the Internet at the Commission's World Wide Web site at http://www.sec.gov. Our web address is http://www.atmel.com. The Commission allows us to "incorporate by reference" the information we filed with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be a part of this prospectus, and information that we file later with the Commission will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings made by us with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until our offering is complete. - The description of the common stock in our Registration Statement on Form 8-A filed on February 20, 1991 (as amended on March 14, 1991), under Section 12(g) of the Exchange Act; - The description of our Preferred Shares Rights Agreement in our Registration Statement on Form 8-A/12G filed on September 15, 1998, as amended on Form 8-A/12G/A filed on December 6, 1999, under Section 12(g) of the Exchange Act; - Our Annual Report on Form 10-K filed on March 23, 1999, as amended on Form 10-K/A filed on July 21, 1999 for the fiscal year ended December 31, 1998; - Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999, June 30, 1999 and September 30, 1999; and - Our Current Reports on Form 8-K, dated November 5, 1999 and January 20, 2000. Any statement contained in a document that is incorporated by reference will be modified or superseded for all purposes to the extent that a statement contained in this prospectus (or in any other document that is subsequently filed with the Commission and incorporated by reference) modifies or is contrary to that previous statement. Any statement so modified or superseded will not be deemed a part of this prospectus except as so modified or superseded. You may request a copy of these filings, at no cost, by writing or telephoning us at the following address: Investor Relations, Atmel Corporation, 2325 Orchard Parkway, San Jose, California 95131, (408) 441-0311. 22 23 [ATMEL LOGO] -----END PRIVACY-ENHANCED MESSAGE-----