-----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, Hs3aqN+HWigICiupBm/7P9HP0TvinMZ1UHIqnfi4XmmSm9fE1YUvOIRq0l0wfsEb +7uUZTRRpQoZsCUmxrz3Xg== 0000950005-96-000578.txt : 19960927 0000950005-96-000578.hdr.sgml : 19960927 ACCESSION NUMBER: 0000950005-96-000578 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATMEL CORP CENTRAL INDEX KEY: 0000872448 STANDARD INDUSTRIAL CLASSIFICATION: 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: 96610103 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 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, 1996 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, 1996, Registrant had outstanding 98,022,907 shares of Common Stock. ATMEL CORPORATION FORM 10-Q QUARTER ENDED JUNE 30, 1996 INDEX -----
Page ---- Part I: Financial Information Item 1. Financial Statements Condensed Consolidated Balance Sheets at June 30, 1996 and December 31, 1995 1 Condensed Consolidated Income Statements for the three and six month periods ended June 30, 1996 and June 30, 1995 2 Consolidated Statements of Cash Flows for the six months ended June 30, 1996 and June 30, 1995 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 8 Item 6. Exhibits and Reports on Form 8-K 8 Signatures 10
-i- PART I: FINANCIAL INFORMATION Item 1. Financial Statements Atmel Corporation Condensed Consolidated Balance Sheets (Dollars in thousands)
June 30, 1996 December 31, 1995 ------------- ----------------- (Unaudited) Current assets: Cash and cash equivalents $ 98,177 $ 105,534 Short-term investments 63,672 74,454 Accounts receivable, net 129,743 101,599 Inventories 65,165 48,542 Prepaid taxes and other current assets 47,719 35,933 ---------- ---------- Total current assets 404,476 366,062 Other assets 17,370 9,684 Long-term investments 95,238 71,590 Fixed assets, net 700,730 472,285 ---------- ---------- Total assets $1,217,814 $ 919,621 ========== ========== Current liabilities: Current portion of long-term debt $ 62,278 $ 47,203 Trade accounts payable and other accrued liabilities 231,036 154,549 Income taxes payable 4,150 9,765 Deferred income on shipments to distributors 32,128 21,948 ---------- ---------- Total current liabilities 329,592 233,465 Long-term debt less current portion 191,789 88,455 Deferred income taxes 8,933 8,933 Put warrants 73,099 0 Shareholders' equity: Common stock 270,593 340,160 Retained earnings 343,808 248,608 ---------- ---------- Total shareholders' equity 614,401 588,768 ---------- ---------- Total liabilities and shareholders' equity $1,217,814 $ 919,621 ========== ========== The accompanying notes are an integral part of these consolidated financial statements.
-1- Atmel Corporation Condensed Consolidated Income Statements (Amounts in thousands, except per share data) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, 1996 1995 1996 1995 ---- ---- ---- ---- Net revenues $268,748 $145,906 $508,844 $265,166 Expenses: Cost of sales 134,959 74,873 255,602 136,264 Research and development 28,009 16,745 51,865 31,086 Selling, general and administrative 29,424 18,229 57,033 32,365 --------- --------- --------- ---------- Total expenses 192,392 109,847 364,500 199,715 --------- --------- --------- ---------- Operating income 76,356 36,059 144,344 65,451 Interest income, net 1,016 1,112 2,118 1,761 --------- --------- --------- --------- Income before taxes 77,372 37,171 146,462 67,212 Taxes on income 27,081 12,638 51,262 22,852 --------- --------- --------- ---------- Net income $ 50,291 $ 24,533 $ 95,200 $ 44,360 ========= ========= ========= ========== Earnings per share $ 0.50 $ 0.26 $ 0.95 $ 0.47 ========= ========= ========= ========== Common shares and equivalents 100,896 95,790 100,634 95,020 ========= ========= ========= ========== The accompanying notes are an integral part of these consolidated financial statements.
-2- Atmel Corporation Consolidated Statements of Cash Flows (Dollars in thousands) (Unaudited)
Six Months Ended June 30, 1996 1995 ---- ---- Cash from operating activities Net income $ 95,200 $ 44,360 Items not requiring the use of cash Depreciation and amortization 49,320 25,955 Other 638 0 Changes in operating assets and liabilities Accounts receivable (29,447) (9,395) Inventories (16,624) (1,139) Prepaid taxes and other assets (11,786) (948) Trade accounts payable and other accrued liabilities 78,264 (17,434) Income taxes payable (5,616) 3,539 Deferred income on shipments to distributors 10,180 1,649 ----------- ----------- Net cash provided by operating activities 170,129 46,587 ----------- ----------- Cash from investing activities Acquisition of fixed assets (273,352) (101,841) Acquisition of other assets (11,251) (9,083) Purchase of investments (51,806) (13,432) Sale or maturity of investments 38,941 16,443 ----------- ----------- Net cash used by investing activities (297,468) (107,913) ----------- ----------- Cash from financing activities Issuance of common stock 5,185 108,156 Principal payments on notes (936) (784) Proceeds from capital leases and notes 143,967 18,056 Principal payments on capital leases (23,956) (17,687) ------------ ----------- Net cash provided by financing activities 124,260 107,741 ----------- ----------- Effect of foreign currency translation adjustment (4,278) 0 ----------- ----------- Net cash provided (used) (7,357) 46,415 Cash at beginning of period 105,534 35,556 ----------- ----------- Cash at end of period $ 98,177 $ 81,971 =========== =========== Interest paid $ 4,843 $ 3,587 Issuance of common stock for purchase of other assets $ 2,625 $ 0 Income taxes paid $ 57,303 $ 13,882 Fixed asset purchases in accounts payable $ 13,636 $ 8,910 The accompanying notes are an integral part of these consolidated financial statements.
-3- Atmel Corporation Notes to Consolidated Financial Statements June 30, 1996 (Dollars 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, 1996 and the results of operations and cash flows for the three month and six month periods ended June 30, 1996 and 1995. 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, 1995. 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 December 31, 1995 ------------- ----------------- Materials and purchased parts $ 9,348 $ 6,340 Work in progress 55,817 42,202 -------- --------- Total $65,165 $48,542 ======== ========= 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. 4. Put Warrants In connection with the Company's stock repurchase program, put warrants were sold to an independent third party during the six months ended June 30, 1996. The put warrants entitle the holder to sell shares of Atmel common stock to the Company at specified prices. The Company received $9,223 from the sale of the put warrants. The warrants expire at various dates between January 22, 1997 and May 28, 1997 and may be settled in cash at Atmel's option. The maximum potential repurchase obligation of $73,099 has been reclassified from shareholders' equity to put warrants as of June 30, 1996. There was no impact on earnings per share in the six months ended June 30, 1996 and no warrants were exercised during that period. 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 dates as the put warrants and may be settled in cash at Atmel's option. No call warrant was exercised during the six months ended June 30, 1996. 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 Conditions and Results of Operation contains certain trend analysis and other forward-looking statements that involve risks and uncertainties. Actual events and results may differ materially due to the effect of changing economic conditions, conditions in the overall semiconductor market (including the historic cyclicality of the industry), product demand and market acceptance risks, the impact of competitive products and pricing, product development and technological risks and other risk factors identified from time to time in the Company's Security and Exchange Commission filings. Results of Operations The following table sets forth for the periods indicated certain operating data as a percentage of total revenues:
Three Months Ended Six Months Ended June 30, June 30, 1996 1995 1996 1995 ---- ---- ---- ---- Net revenues 100.0% 100.0% 100.0% 100.0% Expenses Cost of sales 50.2 51.3 50.2 51.4 Research and development 10.4 11.5 10.2 11.7 Selling, general and administrative 11.0 12.5 11.2 12.2 ------ ------ ------ ------ Total expenses 71.6 75.3 71.6 75.3 Operating income 28.4 24.7 28.4 24.7 Interest income, net 0.4 0.8 0.4 0.7 ------ ------ ------ ------ Income before taxes 28.8 25.5 28.8 25.4 Taxes on income 10.1 8.7 10.1 8.6 ------ ------ ------ ------ Net income 18.7% 16.8% 18.7% 16.8% ====== ====== ====== ======
Net revenues increased 84.2 percent to $268.7 million in the quarter ended June 30, 1996 from $145.9 million in the corresponding quarter of 1995. The majority of this growth was from increases in unit -5- volume of Flash and EPROM products sold to the computer peripheral, telecommunication and consumer markets, particularly in Asia and Japan. Net revenues for the first six months ended June 30, 1996 grew 91.9 percent to $508.8 million over the same period last year from $265.2 million. Similar to the quarter ended June 30, 1996, the majority of this growth was from increases in unit volume of Flash and EPROM products sold as well as from the inclusion of revenues from Atmel ES2, the Company's subsidiary acquired in April 1995. Cost of sales as a percentage of net revenues declined to 50.2 percent in the second quarter of 1996, from 51.3 percent in the corresponding period of 1995 and for the first six months to 50.2 percent from 51.4 percent. The decrease in cost of sales as a percentage of net revenues was primarily due to increased unit output from the Company's new fabrication facility in Colorado Springs, Colorado, resulting in lower fixed costs attributed to each product. Cost of sales could be negatively impacted if the Company is unable to utilize the additional capacity from its Colorado Springs facility or the facility that is under construction in Rousset, France. As a percentage of revenues, research and development decreased to 10.4 percent in the second quarter of 1996, from 11.5 percent in the corresponding quarter of 1995 and for the first six months to 10.2 percent from 11.7 percent. In 1995, a large portion of the cost associated with the new fabrication facility in Colorado Springs, Colorado was allocated to research and development expense due to the early phase of manufacturing ramp up. Research and development expense increased 67.3 percent from $16.7 million in the second quarter of 1995 to $28.0 million in the second quarter of 1996. Research and development expense for the first six months of 1996 increased 66.8 percent to $51.9 million from $31.1 million in the corresponding period of 1995. The increase was primarily due to the Company's ongoing program to reduce the size of its integrated circuits, currently from 0.6 micron to 0.35 micron line widths; enhancement of mature products; development of new products and advanced CMOS and BiCMOS process technology. The Company believes that continued investment in process technology and product development are essential for it to remain competitive in the markets it serves. Selling, general and administrative expense increased 61.4 percent to $29.4 million in the second quarter of 1996 from $18.2 million in the second quarter of 1995, while declining as a percentage of revenues from 12.5 percent in 1995 to 11.0 percent in 1996. Selling, general and administrative expense for the first six months of 1996 increased 76.2 percent to $57.0 million from $32.4 million in the corresponding period of 1995. The increase in expenditures is due to the addition of sales and administrative personnel to meet the growth of the Company's business as well as expenses incurred with the move of the Company's offices in San Jose, California, during April 1996. Interest income, net of interest expense on capital lease financing and other borrowings and net of foreign exchange gain/loss from the movements of the United States dollar, particularly against the Japanese Yen, has remained relatively constant for the periods under comparison as a larger average cash balance offset lower interest rates in 1996. The Company's effective tax rate for the first six months increased to 35.0 percent from 34.0 percent of the corresponding period of 1995. The increase was primarily due to the expiration of federal research and development credit. -6- Net income of $50.3 million for the second quarter of 1996 increased by 105.0 percent from $24.5 million in the corresponding period of the prior year. Net income for the first six months of 1996 increased 114.6 percent to $95.2 million from $44.4 million of the corresponding period of 1995. Liquidity and Capital Resources At June 30, 1996, the Company had $161.8 million in cash and short-term investments, a decrease of $18.1 million from December 31, 1995, and $74.9 million in net working capital, a decrease of $57.7 million from December 31, 1995. At June 30, 1996, the Company had long-term investments of $95.2 million, an increase of $23.6 million from December 31, 1995. In addition, Atmel ES2, the Company's subsidiary located in Rousset, France, has obtained approximately $65.0 million of long-term financing, plus an option to obtain an additional $80.0 million medium-term credit line from a consortium of banks and insurance companies. The Company is the guarantor of this financing. As of June 30, 1996, Atmel ES2 has drawn down $52.1 million from the foregoing financing arrangement. During the six months ended June 30, 1996, the Company obtained $66.9 million of lease financing for a period of four to eight years. The average annual interest rate on this lease financing is 6.5%. In April 1996, the Company also obtained approximately $25 million of long-term financing from a Japanese bank. This $25 million loan is denominated in Japanese Yen and matures in April 1999. The loan requires monthly interest only payment at an interest rate of 2.62% per annum. During the six months ended June 30, 1996, the Company generated net cash flows from operations of $170.1 million and made fixed assets additions of approximately $273.4 million, principally for expanding fabrication capacities at Colorado Springs, Colorado and Rousset, France. The Company currently plans to spend an additional $150.0 million through 1996 to continue the expansion of its wafer fabrication facilities. The Company believes that its existing sources of liquidity, together with cash flows from operations, should be sufficient to meet the Company's liquidity and capital requirements through 1996. 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. -7- 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 24, 1996, 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 ---------- -------------- George Perlegos 74,784,834 1,081,989 Gust Perlegos 74,768,822 1,098,001 Tsung-Ching Wu 74,742,453 1,124,370 Norm Hall 74,292,474 1,574,349 T. Peter Thomas 74,879,599 987,224 The following proposals were approved at the Company's Annual Meeting of Stockholders:
Affirmative Negative Votes Votes Abstained ----------- -------- --------- 1. Approval of the Company's 1996 Stock Plan and reservation of 4,000,000 shares of Common Stock for issuance thereunder 69,391,578 5,564,322 151,218 2. Ratify the appointment of Coopers & Lybrand LLP as independent auditors for the fiscal year ending December 31, 1996 75,523,881 56,506 85,136
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, 1996. -8- EX-11 2 STATEMENT OF COMPUTATION OF EARNINGS PER SHARE 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, 1996 1995 1996 1995 ---- ---- ---- ---- Weighted average shares outstanding for the period Common stock 97,872 92,750 97,696 92,064 Dilutive employee stock options and warrants 3,024 3,040 2,938 2,956 --------- --------- --------- --------- Total common and common equivalent shares 100,896 95,790 100,634 95,020 ========= ========= ========= ========= Net income $ 50,291 $ 24,533 $ 95,200 $ 44,360 ========= ========= ========= ========= Earnings per share $ 0.50 $ 0.26 $ 0.95 $ 0.47 ========= ========= ========= =========
Fully diluted earnings per share does not differ significantly from primary earnings per share. -9- 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 12, 1996 /s/ GEORGE PERLEGOS ------------------------------------------- George Perlegos President, Chief Executive Officer (Principal Executive Officer) August 12, 1996 /s/ KRIS CHELLAM ------------------------------------------- Kris Chellam Vice President, Finance and Administration (Principal Financial and Accounting Officer) -10- 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 , 1996 ------------------------------------------- George Perlegos President, Chief Executive Officer (Principal Executive Officer) August , 1996 ------------------------------------------- Kris Chellam Vice President, Finance and Administration (Principal Financial and Accounting Officer) EX-27 3 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1996 APR-01-1996 JUN-30-1996 98,177 63,672 129,743 0 65,165 404,476 700,730 0 1,217,814 329,592 0 270,593 0 0 0 1,217,814 508,844 508,844 255,602 364,500 0 0 0 146,462 51,262 0 0 0 0 95,200 0.95 0.95
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