<PAGE> 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 MARCH 31, 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
incorporation or organization) Identification Number)
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 MARCH 31, 1997, REGISTRANT HAD OUTSTANDING 99,259,282 SHARES OF COMMON STOCK.
<PAGE> 2
ATMEL CORPORATION
FORM 10-Q
QUARTER ENDED MARCH 31, 1997
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I: FINANCIAL INFORMATION
Item 1 Financial Statements
Condensed Consolidated Balance Sheets at March 31, 1997 and December 31, 1996 1
Condensed Consolidated Income Statements for the three months ended March 31, 1997
and March 31, 1996 2
Consolidated Statements of Cash Flows for the three months ended March 31, 1997 and
March 31, 1996 3
Notes to Consolidated Financial Statements 4
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 4
PART II: OTHER INFORMATION 8
Item 6 Exhibits and Reports on Form 8-K 10
SIGNATURES
</TABLE>
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<PAGE> 3
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ATMEL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---------- -----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 110,012 $ 104,113
Short-term investments 46,241 53,165
Accounts receivable 193,082 174,515
Inventories 84,519 70,320
Prepaid taxes and other current assets 64,336 57,910
---------- ----------
TOTAL CURRENT ASSETS 498,190 460,023
Other assets 26,789 23,849
Long-term investments 108,924 104,619
Fixed assets, net 937,516 867,423
---------- ----------
TOTAL ASSETS $1,571,419 $1,455,914
========== ==========
CURRENT LIABILITIES
Current portion of long-term debt $ 69,184 $ 71,615
Trade accounts payable and other accrued liabilities 252,313 236,852
Income taxes payable 20,859 0
Deferred income on shipments to distributors 29,751 27,935
---------- ----------
TOTAL CURRENT LIABILITIES 372,107 336,402
Long-term debt less current portion 318,607 278,576
Deferred income taxes 22,935 22,935
Put warrants 0 28,250
SHAREHOLDERS' EQUITY
Common stock 368,702 339,421
Retained earnings 489,068 450,330
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 857,770 789,751
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,571,419 $1,455,914
========== ==========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE> 4
ATMEL CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENTS
(In thousands, except per-share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
--------- ---------
<S> <C> <C>
NET REVENUES $ 252,946 $ 240,096
EXPENSES
Cost of sales 136,377 120,643
Research and development 29,171 23,856
Selling, general and administrative 25,943 27,609
--------- ---------
TOTAL EXPENSES 191,491 172,108
--------- ---------
OPERATING INCOME 61,455 67,988
Interest income (expense), net (1,858) 1,102
--------- ---------
INCOME BEFORE TAXES 59,597 69,090
Taxes on income 20,859 24,181
--------- ---------
NET INCOME $ 38,738 $ 44,909
========= =========
EARNINGS PER SHARE $ 0.38 $ 0.45
========= =========
COMMON SHARES AND EQUIVALENTS 101,844 100,371
========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE> 5
ATMEL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
--------- ---------
<S> <C> <C>
CASH FROM OPERATING ACTIVITIES
Net income $ 38,738 $ 44,909
Items not requiring the use of cash
Depreciation and amortization 34,176 20,432
Other 4,775 0
Changes in operating assets and liabilities
Accounts receivable (19,588) (11,984)
Inventories (14,199) (6,483)
Prepaid taxes and other assets (6,426) (11,144)
Trade accounts payable and other accrued liabilities (3,743) 54,415
Income taxes payable 20,859 15,324
Deferred income on shipments to distributors 1,816 6,199
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 56,408 111,668
--------- ---------
CASH FROM INVESTING ACTIVITIES
Acquisition of fixed assets (100,863) (127,236)
Sale (acquisition) of other assets (1,072) 326
Purchase of investments (16,265) (22,304)
Sale or maturity of investments 18,884 20,649
--------- ---------
NET CASH USED BY INVESTING ACTIVITIES (99,316) (128,565)
--------- ---------
CASH FROM FINANCING ACTIVITIES
Proceeds from capital leases and notes 69,329 30,121
Principal payments on notes (1,172) (2,019)
Principal payments on capital leases (20,566) (11,434)
Proceeds from settlement of warrants 4,425 0
Issuance of common stock 3,601 3,895
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 55,617 20,563
--------- ---------
EFFECT OF FOREIGN CURRENCY TRANSLATION ADJUSTMENT (6,810) (2,041)
--------- ---------
NET CASH PROVIDED 5,899 1,625
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 104,113 105,534
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 110,012 $ 107,159
========= =========
INTEREST PAID $ 6,303 $ 2,337
INCOME TAXES PAID $ 2,115 $ 9,491
FIXED ASSET PURCHASES IN ACCOUNTS PAYABLE $ 70,907 $ 11,625
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE> 6
ATMEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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 March 31, 1997 and the results of
operations and cash flows for the three month periods ended March 31, 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 and
comprise the following:
<TABLE>
<CAPTION>
MARCH 31, 1997 DECEMBER 31, 1996
-------------- -----------------
<S> <C> <C>
Materials and purchased parts $12,502 $11,123
Work in progress 72,017 59,197
------- -------
TOTAL $84,519 $70,320
======= =======
</TABLE>
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
Company plans to adopt the provisions of SFAS 128 in its financial statements
for the year ending December 31, 1997.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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 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.
The following table sets forth for the periods indicated certain operating data
as a percentage of net revenues:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1997 1996
----- ----
<S> <C> <C>
NET REVENUES 100.0% 100.0%
----- -----
EXPENSES
Cost of sales 53.9 50.2
Research and development 11.5 10.0
Selling, general and administrative 10.3 11.5
----- -----
TOTAL EXPENSES 75.7 71.7
OPERATING INCOME 24.3 28.3
Interest income (expense), net (0.7) 0.5
----- -----
INCOME BEFORE TAXES 23.6 28.8
Taxes on income 8.2 10.1
----- -----
NET INCOME 15.4% 18.7%
===== =====
</TABLE>
Net revenues increased 5.4 percent to $252.9 million in the quarter ended March
31, 1997 from $240.1 million in the corresponding quarter of 1996. This moderate
growth was attributable to increased demand for microcontroller and
serial-interface electronically erasable programmable read-only memories
(EEPROMs) products in the telecommunications and consumer markets.
-5-
<PAGE> 8
Cost of sales as a percentage of net revenues increased to 53.9 percent in the
first quarter of 1997, from 50.2 percent in the corresponding period of 1996.
The increase in cost of sales as a percentage of net revenues was primarily due
to the capital and operating costs associated with the expansion of our existing
fabrication facilities in Colorado Springs, Colorado and Rousset, France as well
as the abnormal decline in average selling price related to 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 1997 to increase its wafer fabrication capacity in its
existing facilities and also for installation of equipment at its new facility
in Rousset, France. As a result of the increase in fixed costs and 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 cost increased to 11.5
percent in the first quarter of 1997, from 10.0 percent in the corresponding
quarter of 1996. Research and development expense increased 22.3 percent from
$23.9 million in the first quarter of 1996 to $29.2 million in the first quarter
of 1997. The increase was primarily due to the Company's continued investment in
the shrinking of the die size of its integrated circuits from 0.65-micron to
0.5-micron line widths, 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
$25.9 million in the first quarter of 1997 from $27.6 million in the first
quarter of 1996, and declined as a percentage of net revenues from 11.5 percent
in 1996 to 10.3 percent in 1997. The decrease was primarily due to the fact that
the Company's selling, general and administrative expense in the first quarter
of 1996 included provisions for bad debts and legal expenses.
The Company reported $1.9 million of net interest expense for the first quarter
of 1997, compared to $1.1 million of net interest income for 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 our fabrication facilities in Colorado Springs,
and Rousset, respectively, and realized foreign exchange losses on our
receivables due to the strengthening of the U.S. dollar.
The Company's effective tax rate remained at 35.0 percent for the first quarter
of 1997.
Net income of $38.7 million for the first quarter of 1997 decreased by 13.7
percent from $44.9 million in the corresponding period of the prior year.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company had $156.3 million in cash and short-term
investments, a decrease of $1.0 million from December 31, 1996, and $126.1
million in net working capital, an increase of $2.5 million from December 31,
1996. At March 31, 1997, the Company also had long-term investments of $108.9
million, an increase of $4.3 million from December 31, 1996. These investments
consisted of state and municipal securities and United States government
obligations.
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<PAGE> 9
During the three months ended March 31, 1997, the Company generated net cash
flows from operations of $56.4 million and spent $100.9 million on fixed assets,
principally for expanding fabrication capacities at Colorado Springs and
Rousset. The Company plans to spend an additional $300.0 million through 1997 to
continue the expansion of its wafer fabrication facilities.
The Company believes that its existing sources of liquidity, together with cash
flows from operations, leasing 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.
-7-
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits:
11.1 Statement of Computation of Earnings Per Share.
27.1 Financial Data Schedule.
(B) Reports on Form 8-K:
There were no reports filed on Form 8-K during the quarter
ended March 31, 1997.
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<PAGE> 11
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)
MAY 5, 1997 /S/ GEORGE PERLEGOS
--------------------------------------------
GEORGE PERLEGOS
President, Chief Executive Officer
(Principal Executive Officer)
MAY 5, 1997 /S/ KRIS CHELLAM
KRIS CHELLAM
--------------------------------------------
Vice President, Finance and Administration
(Principal Financial and Accounting Officer)
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<PAGE> 12
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
11.1 Statement of Computation of Earnings Per Share.
27.1 Financial Data Schedule.
<PAGE> 1
EXHIBIT 11.1
ATMEL CORPORATION
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
(In thousands, except per-share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1997 1996
-------- --------
<S> <C> <C>
WEIGHTED AVERAGE SHARES OUTSTANDING FOR THE PERIOD
Common stock 99,038 97,520
Dilutive employee stock options and warrants 2,806 2,851
-------- --------
TOTAL COMMON AND COMMON EQUIVALENT SHARES 101,844 100,371
======== ========
NET INCOME $ 38,738 $ 44,909
======== ========
EARNINGS PER SHARE $ 0.38 $ 0.45
======== ========
</TABLE>
Fully diluted earnings per share does not differ significantly from primary
earnings per share.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 110,012
<SECURITIES> 46,241
<RECEIVABLES> 193,082
<ALLOWANCES> 0
<INVENTORY> 84,519
<CURRENT-ASSETS> 498,190
<PP&E> 937,560
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,571,419
<CURRENT-LIABILITIES> 372,107
<BONDS> 0
0
0
<COMMON> 368,702
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,571,419
<SALES> 252,946
<TOTAL-REVENUES> 252,946
<CGS> 136,377
<TOTAL-COSTS> 191,491
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,303
<INCOME-PRETAX> 59,597
<INCOME-TAX> 20,859
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,738
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.38
</TABLE>
