OPERATING AND GEOGRAPHICAL SEGMENTS

3 Months Ended

Mar. 31, 2012

OPERATING AND GEOGRAPHICAL SEGMENTS

OPERATING AND GEOGRAPHICAL SEGMENTS

Note 9 OPERATING AND GEOGRAPHICAL SEGMENTS

The Company designs, develops, manufactures and sells semiconductor integrated circuit products. The Company’s segments represent management’s view of the Company’s businesses and how it allocates Company resources and measures performance of its major components. Each segment consists of product families with similar requirements for design, development and marketing. Each segment requires different design, development and marketing resources to produce and sell products. Atmel’s four reportable segments are as follows:

·Microcontrollers.  This segment includes Atmel’s capacitive touch products, including maXTouch and QTouch, AVR 8-bit and 32-bit products, ARM-based products and Atmel’s 8051 8-bit products.

·Nonvolatile Memories.  This segment includes serial interface electrically erasable programmable read-only memory (“SEEPROM”), serial and parallel interface Flash memory, and electrically erasable programmable read-only memory (“EEPROM”) and erasable programmable ready-only memory (“EPROM”) devices. This segment also includes products with military and aerospace applications.

·Radio Frequency (“RF”) and Automotive.  This segment includes automotive electronics, wireless and wired devices for industrial, consumer and automotive applications and foundry services for radio frequency products designed for mobile telecommunications markets.

·Application Specific Integrated Circuit (“ASIC”).  This segment includes custom application specific integrated circuits designed to meet specialized single-customer requirements for their high performance devices in a broad variety of specific applications, including products that provide hardware security for embedded digital systems, products with military and aerospace applications and application specific standard products for space applications, power management and secure cryptographic memory products.

The Company evaluates segment performance based on revenue and income or loss from operations excluding acquisition-related charges, restructuring charges, credit from reserved grant income and gain on sale of assets. Interest and other (expenses) income, net, foreign exchange gains and losses and income taxes are not measured by operating segment. Because the Company’s segments reflect the manner in which management reviews its business, they necessarily involve subjective judgments that management believes are reasonable in light of the circumstances under which they are made. These judgments may change over time or may be modified to reflect new facts or circumstances. Segments may also be changed or modified to reflect products, technologies or applications that are newly created, or that change over time, or other business conditions that evolve, each of which may result in reassessing specific segments and the elements included within each of those segments. Recent events may affect the manner in which the Company presents segments in the future.

Segments are defined by the products they design and sell. They do not make sales to each other. The Company’s net revenue and segment income from operations for each reportable segment for the three months ended March 31, 2012 and 2011 are as follows:

Information about Reportable Segments

	Micro-		Nonvolatile		RF and
	Controllers		Memories		Automotive			ASIC		Total
	(in thousands)
Three months ended March 31, 2012
Net revenue from external customers	$	217,802	$	47,733	$	43,510		$	48,792	$	357,837
Segment income (loss) from operations	6,683		5,346		(1,937		)	6,131		16,223
Three months ended March 31, 2011
Net revenue from external customers	$	293,826	$	63,372	$	50,853		$	53,376	461,427
Segment income from operations	73,807		13,617		5,410			9,382		102,216

The Company does not allocate assets by segment, as management does not use asset information to measure or evaluate a segment’s performance.

Reconciliation of Segment Information to Condensed Consolidated Statements of Operations

	Three Months Ended
	March 31,			March 31,
	2012			2011
	(in thousands)
Total segment income from operations	$	16,223		$	102,216
Unallocated amounts:
Acquisition-related charges	(1,956		)	(1,031		)
Restructuring charges	—			(21,210		)
Credit from reserved grant income	10,689			—
Gain on sale of assets	—			1,882
Consolidated income from operations	$	24,956		$	81,857

Geographic sources of revenue were as follows:

	Three Months Ended
	March 31,		March 31,
	2012		2011
	(in thousands)
United States	$	48,190	$	69,527
Germany	50,925		60,230
France	9,717		8,995
Japan	9,673		14,856
China, including Hong Kong	84,099		127,142
Singapore	9,906		11,160
South Korea	62,141		51,215
Taiwan	19,871		41,659
Rest of Asia-Pacific	17,210		20,796
Rest of Europe	38,732		50,540
Rest of the World	7,373		5,307
Total net revenue	$	357,837	$	461,427

Net revenue is attributed to countries based on the locations to where the Company ships.

One customer accounted for 15% of net revenue in the three months ended March 31, 2012. No single customer accounted for more than 10% of net revenue in the three months ended March 31, 2011. Three distributors accounted for 15%, 11% and 11%, respectively, of accounts receivable at March 31, 2012. Two distributors accounted for 15% and 14%, respectively, of accounts receivable at December 31, 2011.

Locations of long-lived assets as of March 31, 2012 and December 31, 2011 were as follows:

	March 31,		December 31,
	2012		2011
	(in thousands)
United States	$	87,093	$	81,777
Philippines	66,193		71,332
Germany	20,311		20,681
France	27,948		30,277
Asia-Pacific	57,015		59,906
Rest of Europe	11,666		10,534
Total	$	270,226	$	274,507

Excluded from the table above are auction-rate securities of $2.3 million as of both March 31, 2012 and December 31, 2011, which are included in other assets on the condensed consolidated balance sheets. Also excluded from the table above as of March 31, 2012 and December 31, 2011 are goodwill of $67.4 million and $67.7 million, respectively, intangible assets, net of $18.3 million and $21.0 million, respectively and deferred income tax assets of $119.1 million and $121.4 million, respectively.