-----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, Tm6JxtthHTLVV1OiSqwCSF6JC53wUu6U9MfNxbKibhs9g3j0OqSY3y7TxDci2GBr EhjaoqwV1A9knjNSHW4SMg== 0000891618-97-003429.txt : 19970815 0000891618-97-003429.hdr.sgml : 19970815 ACCESSION NUMBER: 0000891618-97-003429 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NASD 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: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19032 FILM NUMBER: 97659821 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 10-Q 1 FORM 10-Q FOR PERIOD ENDED JUNE 30, 1997 1 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 QUARTER ENDED JUNE 30, 1997 OR - ----- 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 (Registrant) CALIFORNIA 77-0051991 (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 2325 ORCHARD PARKWAY, SAN JOSE, CALIFORNIA 95131 (Address of principal executive offices) (408) 441-0311 Registrant's telephone number Indicate by a 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 X No ----- ----- ON JUNE 30, 1997, REGISTRANT HAD OUTSTANDING 99,402,499 SHARES OF COMMON STOCK. 2 ATMEL CORPORATION FORM 10-Q QUARTER ENDED JUNE 30, 1997 INDEX
PAGE PART I: FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets at June 30, 1997 and December 31, 1996 1 Condensed Consolidated Income Statements for the three and six month periods ended June 30, 1997 and June 30, 1996 2 Consolidated Statements of Cash Flows for the six months ended June 30, 1997 and June 30, 1996 3 Notes to Consolidated Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5 PART II: OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders 9 Item 6. Exhibits and Reports on Form 8-K 9 SIGNATURES 10
-i- 3 PART I: FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ATMEL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
JUNE 30, 1997 DECEMBER 31, 1996 ---------- ---------- (UNAUDITED) CURRENT ASSETS: Cash and cash equivalents $ 172,610 $ 104,113 Short-term investments 51,255 53,165 Accounts receivable, net 216,832 174,515 Inventories 103,045 70,320 Prepaid taxes and other current assets 70,584 57,910 ---------- ---------- TOTAL CURRENT ASSETS 614,326 460,023 Other assets 26,642 23,849 Long-term investments 103,717 104,619 Fixed assets, net 978,163 867,423 ---------- ---------- TOTAL ASSETS $1,722,848 $1,455,914 ========== ========== CURRENT LIABILITIES: Current portion of long-term debt $ 71,551 $ 71,615 Trade accounts payable and other accrued liabilities 206,533 236,852 Income taxes payable 2,598 0 Deferred income on shipments to distributors 27,212 27,935 ---------- ---------- TOTAL CURRENT LIABILITIES 307,894 336,402 Long-term debt less current portion 508,811 278,576 Deferred income taxes 22,935 22,935 ---------- ---------- TOTAL LIABILITIES 839,640 637,913 Put warrants 16,200 28,250 SHAREHOLDERS' EQUITY: Common stock 350,532 339,421 Retained earnings 516,476 450,330 ---------- ---------- TOTAL SHAREHOLDERS' EQUITY 867,008 789,751 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,722,848 $1,455,914 ========== ==========
The accompanying notes are an integral part of these condensed consolidated financial statements. -1- 4 ATMEL CORPORATION CONDENSED CONSOLIDATED INCOME STATEMENTS (In thousands, except per-share data) (Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 1997 1996 1997 1996 --------- --------- --------- --------- NET REVENUES: $ 224,936 $ 268,748 $ 477,882 $ 508,844 EXPENSES: Cost of sales 125,900 134,959 262,277 255,602 Research and development 29,357 28,009 58,528 51,865 Selling, general and administrative 24,361 29,424 50,304 57,033 --------- --------- --------- --------- TOTAL EXPENSES 179,618 192,392 371,109 364,500 --------- --------- --------- --------- Operating income 45,318 76,356 106,773 144,344 Interest income (expense), net (3,156) 1,016 (5,014) 2,118 --------- --------- --------- --------- Income before taxes 42,162 77,372 101,759 146,462 Taxes on income 14,754 27,081 35,613 51,262 --------- --------- --------- --------- NET INCOME $ 27,408 $ 50,291 $ 66,146 $ 95,200 ========= ========= ========= ========= EARNINGS PER SHARE $ 0.27 $ 0.50 $ 0.65 $ 0.95 ========= ========= ========= ========= SHARES USED IN PER-SHARE CALCULATION 101,246 100,896 101,545 100,634 ========= ========= ========= =========
The accompanying notes are an integral part of these condensed consolidated financial statements. -2- 5 ATMEL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
SIX MONTHS ENDED JUNE 30, 1997 1996 --------- --------- CASH FROM OPERATING ACTIVITIES Net income $ 66,146 $ 95,200 Items not requiring the use of cash Depreciation and amortization 70,660 49,320 Other 9,939 638 Changes in operating assets and liabilities Accounts receivable (40,532) (29,447) Inventories (32,725) (16,624) Prepaid taxes and other assets (12,674) (11,786) Trade accounts payable and other accrued liabilities (55,161) 78,264 Income taxes payable 2,598 (5,616) Deferred income on shipments to distributors (723) 10,180 --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES 7,528 170,129 --------- --------- CASH FROM INVESTING ACTIVITIES Acquisition of fixed assets (181,709) (273,352) Acquisition of other assets (2,510) (11,251) Purchase of investments (34,904) (51,806) Sale or maturity of investments 37,716 38,941 --------- --------- NET CASH USED BY INVESTING ACTIVITIES (181,407) (297,468) --------- --------- CASH FROM FINANCING ACTIVITIES Proceeds from issuance of convertible bonds 150,000 0 Proceeds from capital leases and notes 136,234 143,967 Principal payments on notes (2,654) (936) Principal payments on capital leases (41,043) (23,956) Proceeds from settlement of warrants 4,425 0 Issuance of Common Stock 7,723 5,185 --------- --------- NET CASH PROVIDED BY FINANCING ACTIVITIES 254,685 124,260 --------- --------- EFFECT OF FOREIGN CURRENCY TRANSLATION ADJUSTMENT (12,309) (4,278) --------- --------- NET CASH PROVIDED (USED) 68,497 (7,357) CASH AT BEGINNING OF PERIOD 104,113 105,534 --------- --------- CASH AT END OF PERIOD $ 172,610 $ 98,177 ========= ========= INTEREST PAID $ 12,495 $ 4,843 ISSUANCE OF COMMON STOCK FOR PURCHASE OF OTHER ASSETS $ 0 $ 2,625 INCOME TAXES PAID $ 29,748 $ 57,303 FIXED ASSET PURCHASES IN ACCOUNTS PAYABLE $ 30,548 $ 13,636
The accompanying notes are an integral part of these condensed consolidated financial statements. -3- 6 ATMEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1997 (In thousands) (Unaudited) 1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES These unaudited interim financial statements reflect all normal recurring adjustments which are, in the opinion of management, necessary to present fairly, in all material respects, the financial position of Atmel Corporation (Company or Atmel) and its subsidiaries as of June 30, 1997 and the results of operations and cash flows for the three month and six month periods ended June 30, 1997 and 1996. Because all of the disclosures required by generally accepted accounting principles are not included, these interim statements should be read in conjunction with the audited financial statements and notes thereto in the Company's Annual Report to Shareholders for the year ended December 31, 1996. The year-end condensed balance sheet data was derived from the audited financial statements and does not include all of the disclosures required by generally accepted accounting principles. The income statements for the periods presented are not necessarily indicative of results to be expected for any future period, nor for the entire year. 2. INVENTORIES Inventories are stated at the lower of cost (first-in, first-out for materials and purchased parts and average cost for work in progress) or market.
JUNE 30, 1996 DEC. 31, 1996 -------- -------- Materials and purchased parts $ 11,459 $ 11,123 Work in progress 91,586 59,197 -------- -------- TOTAL $103,045 $ 70,320 ======== ========
3. EARNINGS PER SHARE Earnings per share is computed using the weighted average number of common and common equivalent shares outstanding during the period. Common equivalent shares consist of outstanding stock options. The Financial Accounting Standards Board recently issued Statement No. 128 (SFAS 128), Accounting for Earning Per Share, which establishes standards for computing and presenting earnings per share (EPS) and applies to entities with publicly held common stock or potential common stock. SFAS 128 simplifies the standards for computing EPS and makes them comparable to international standards. It replaces the presentation of primary EPS with a presentation of basic EPS. It also requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. The -4- 7 Company is required to adopt the provisions of SFAS 128 in its financial statements for the year ending December 31, 1997 and is studying the impact of its implementation on the financial statements. 4. PUT WARRANTS In connection with the Company's stock repurchase program, put warrants were sold to an independent third party during the second quarter of 1997. The put warrants entitle the holder to sell shares of Atmel common stock to the Company at specified prices. The Company received $2,088 from the sale of the put warrants. The warrants expire on May 1, 1998, are exercisable, at Atmel's option, at any time before maturity and may be settled in cash at Atmel's option. During the six months ended June 30, 1997, the Company received $4,425 from settlement of warrants. The maximum potential repurchase obligation of $16,200 has been reclassified from shareholders' equity to put warrants as of June 30, 1997. There was no impact on earnings per share in the six months ended June 30, 1997. Additionally, during the same period the Company used the proceeds from the sale of the put warrants to purchase call warrants. These warrants entitle the Company to buy from the same independent third party shares of Atmel common stock. The call warrants have similar expiry date as the put warrants, are exercisable at any time before maturity and may be settled in cash at Atmel's option. There was no impact on earnings per share in the six months ended June 30, 1997. 5. RECENT PRONOUNCEMENTS In June 1997, the Financial Accounting Standards Board issued Statement No. 130 (SFAS 130), Reporting Comprehensive Income. SFAS 130 establishes standards of disclosure and financial statement display for reporting total comprehensive income and its individual components. It is effective for the Company's fiscal year 1998. Also in June 1997, The Financial Accounting Standards Board issued Statement No. 131 (SFAS 131), Disclosures About Segments of an Enterprises and Related Information. SFAS 131 changes current practice under SFAS 14 by establishing a new framework on which to base segment reporting (referred to as the management approach) and also requires interim reporting of segment information. It is effective for the Company's fiscal year 1998. The Company is studying the implications of these new statements and the impact of their implementation on the financial statements. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Investors are cautioned that the Management's Discussion and Analysis of Financial Condition and Results of Operation contains certain trend analysis and other forward looking statements that involve risks and uncertainties. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," variations of such words and similar expressions are intended to identify such forward looking statements. These statements are based on current expectations and projections about -5- 8 the semiconductor industry and assumptions made by the management and are not guarantees of future performance. Therefore, actual events and results may differ materially from those expressed or forecasted in the forward looking statements due to factors such as the effect of changing economic conditions, material changes in currency exchange rates, conditions in the overall semiconductor market (including the historic cyclicality of the industry), risks associated with product demand and market acceptance risks, the impact of competitive products and pricing, delays in new product development and technological risks and other risk factors identified in the Company's filings with the Securities and Exchange Commission, including the Company's Form 10-K Report. RESULTS OF OPERATIONS The following table sets forth for the periods indicated certain operating data as a percentage of net revenues:
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 1997 1996 1997 1996 ---- ---- ----- ----- NET REVENUES 100.0 % 100.0 % 100.0% 100.0% EXPENSES Cost of sales 56.0 50.2 54.9 50.2 Research and development 13.1 10.4 12.2 10.2 Selling, general and administrative 10.8 11.0 10.5 11.2 ---- ---- ----- ----- TOTAL EXPENSES 79.9 71.6 77.7 71.6 OPERATING INCOME 20.1 28.4 22.3 28.4 Interest income (expense), net (1.4) 0.4 (1.0) 0.4 ---- ---- ----- ----- INCOME BEFORE TAXES 18.7 28.8 21.3 28.8 Taxes on income 6.6 10.1 7.5 10.1 ---- ---- ----- ----- NET INCOME 12.1 % 18.7 % 13.8 % 18.7 % ==== ==== ===== =====
Net revenues decreased 16.3 percent to $224.9 million in the quarter ended June 30, 1997 from $268.7 million in the corresponding quarter of 1996. Net revenues for the first six months ended June 30, 1997 decreased 6.1 percent to $477.9 million over the same period last year from $508.8 million. The decrease was primarily due to the strengthening of the U.S. dollar, increased price competition in the Company's EPROM and other non-volatile memory business and delays in qualifications of the Company's new Flash products. Cost of sales as a percentage of net revenues increased to 56.0 percent in the second quarter of 1997, from 50.2 percent in the corresponding period of 1996 and for the first six months to 54.9 percent from 50.2 percent. The increase in cost of sales as a percentage of net revenues was primarily due to lower revenues which was not matched with a corresponding fall in expenses as a result of the capital and operating costs associated with the expansion of the Company's existing wafer fabrication facilities in Colorado Springs, Colorado and Rousset, France, as well as the decline in average selling price related to the mature products and the impact on net revenues of the strengthening of the U.S. dollar against international currencies. The Company plans to incur substantial capital expenditures during the remainder of 1997 to increase its wafer fabrication capacity in its existing facilities and also for installation of equipment at its new facility in Rousset. As a result of the increase in fixed costs and -6- 9 operating expenses related to this planned expansion of capacity, the Company expects that its gross margin could deteriorate further in the future. As a percentage of net revenues, research and development increased to 13.1 percent in the second quarter of 1997, from 10.4 percent in the corresponding quarter of 1996 and for the first six months to 12.2 percent from 10.2 percent. Research and development expense increased 4.8 percent from $28.0 million in the second quarter of 1996 to $29.4 million in the second quarter of 1997. Research and development expense for the first six months of 1997 increased 12.9 percent to $58.5 million from $51.9 million in the corresponding period of 1996. The increase was primarily due to the Company's continued investment in the shrinking of the die size of its integrated circuits, currently from 0.65-micron to 0.5-micron line widths; development of 0.35-micron process technology, enhancement of mature products; development of new products, advanced CMOS process technology, manufacturing improvements and the costs associated with increasing production capacity in Colorado Springs and Rousset. The Company believes that continued investment in process technology and product development are essential for it to remain competitive in the markets it serves and is committed to high levels of expenditures for research and development. Selling, general and administrative expense decreased in absolute dollars to $24.4 million in the second quarter of 1997 from $29.4 million in the second quarter of 1996, and declined as a percentage of net revenues from 11.0 percent in 1996 to 10.8 percent in 1997. Selling, general and administrative expense for the first six months of 1997 decreased in absolute dollars to $50.3 million from $57.0 million in the corresponding period of 1996. The decrease was primarily due to the fact that the Company's selling, general and administrative expense in 1996 included additional provisions for bad debts and legal expenses as well as lower sales commissions for 1997 due to the decline in revenues. The Company reported $3.2 million of net interest expense for the second quarter of 1997, compared to $1.0 million of net interest income for the corresponding period of 1996. For the first six months of 1997, the net interest expense was $5.0 million, compared to $2.1 million of net interest income in the corresponding period of 1996. The decline in net interest income was primarily due to higher interest expense associated with the increase in borrowings used to finance the expansion and construction of the Company's wafer fabrication facilities in Colorado Springs and Rousset, respectively, and realized foreign exchange losses on accounts receivables due to the strengthening of the U.S. dollar. The Company's effective tax rate remained at 35.0 percent for the first six months of 1997. Net income of $27.4 million for the second quarter of 1997 decreased by 45.5 percent from $50.3 million in the corresponding period of the prior year. Net income for the first six months of 1997 decreased 30.5 percent to $66.1 million from $95.2 million in the corresponding period of 1996. LIQUIDITY AND CAPITAL RESOURCES At June 30, 1997, the Company had $223.9 million in cash and short-term investments, an increase of $66.6 million from December 31, 1996, and $306.4 million in net working capital, an increase of $182.8 million from December 31, 1996. At June 30, 1997, the Company had long-term investments of $103.7 million, a decrease of $0.9 million from December 31, 1996. These investments consisted of state and municipal securities, United States government obligations and corporate bonds. In May 1997, Atmel S.A., a wholly owned subsidiary of the Company, completed a convertible debt financing, -7- 10 which raised approximately $150 million, to fund the continued expansion of its wafer fabrication facilities in Colorado Springs and Rousset, as well as for working capital and other general corporate purposes. During the six months ended June 30, 1997, the Company generated net cash flows from operations of $7.5 million and spent $181.7 million on fixed assets, principally for expanding wafer fabrication capacities at Colorado Springs and Rousset. The Company currently plans to spend an additional $180.0 million through 1997 to complete the expansion of its wafer fabrication facilities. The Company believes that its existing sources of liquidity, together with cash flows from operations, lease financing on equipment and other short- and medium-term bank borrowing, will be sufficient to meet the Company's liquidity and capital requirements through 1997. The Company may, however, seek additional equity or debt financing to fund the expansion of its wafer fabrication capacity or other projects; the timing and amount of such capital requirements cannot be precisely determined at this time. There can be no assurance that such financing would be available in amounts or terms acceptable to the Company. -8- 11 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS At the Company's Annual Meeting of Stockholders held on April 30, 1997, the following matters were voted upon by stockholders pursuant to proxies solicited pursuant to Regulation 14A. The following individuals were elected to the Board of Directors:
Votes For Votes Withheld (Shares In Thousands) (Shares In Thousands) --------------------- --------------------- George Perlegos 84,900 1,197 Gust Perlegos 84,883 1,214 Tsung-Ching Wu 84,903 1,194 Norm Hall 84,864 1,233 T. Peter Thomas 85,077 1,020
The following proposal was approved at the Company's Annual Meeting of Stockholders:
Affirmative Negative Votes Votes Abstained (Sh In '000) (Sh In '000) (Sh In '000) ------------ ------------ ------------ Ratify the appointment of Coopers & Lybrand LLP as independent auditors for the fiscal year ending December 31, 1997 85,863 82 143
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) Exhibits: 11.1 Statement of Computation of Earnings Per Share. (B) Reports on Form 8-K: There were no reports filed on Form 8-K during the quarter ended June 30, 1997. -9- 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ATMEL CORPORATION ------------------------------ (Registrant) AUGUST 13, 1997 /S/ GEORGE PERLEGOS ------------------------------ GEORGE PERLEGOS President, Chief Executive Officer (Principal Executive Officer) AUGUST 13, 1997 /S/ KRIS CHELLAM ------------------------------ KRIS CHELLAM Vice President, Finance and Administration (Principal Financial and Accounting Officer) -10- 13 INDEX TO EXHIBITS EXHIBIT NUMBER EXHIBITS - -------- -------- 11.1 Statement fo Computation of Earnings per Share 27 Financial Data Schedule EX-11.1 2 STATEMENT OF COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11.1 ATMEL CORPORATION STATEMENT OF COMPUTATION OF EARNINGS PER SHARE (In thousands, except per-share data) (Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 1997 1996 1997 1996 -------- -------- -------- -------- WEIGHTED AVERAGE SHARES OUTSTANDING FOR THE PERIOD Common stock 99,354 97,872 99,196 97,696 Dilutive employee stock options and warrants 1,892 3,024 2,349 2,938 -------- -------- -------- -------- SHARES USED IN PER-SHARE CALCULATION 101,246 100,896 101,545 100,634 ======== ======== ======== ======== NET INCOME $ 27,408 $ 50,291 $ 66,146 $ 95,200 ======== ======== ======== ======== EARNINGS PER SHARE $ 0.27 $ 0.50 $ 0.65 $ 0.95 ======== ======== ======== ========
Fully diluted earnings per share does not differ significantly from primary earnings per share. EX-27 3 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 172,610 51,255 216,832 0 103,045 614,326 978,163 0 1,722,848 307,894 0 0 0 350,532 0 1,722,848 477,882 477,882 262,277 371,109 0 0 5,014 101,759 35,613 0 0 0 0 66,146 0.65 0.65
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