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, 2002 |
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
| Delaware (State or other jurisdiction of incorporation or organization) |
77-0051991 (I.R.S. Employer Identification Number) |
2325 Orchard Parkway
San Jose, California 95131
(Address of principal executive offices)
(408) 441-0311
Registrant’s telephone number
Indicate by 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 August 7, 2002, Registrant had outstanding 466,976,943 shares of Common Stock.
ATMEL CORPORATION
FORM 10-Q
QUARTER ENDED JUNE 30, 2002
INDEX
| Page | ||||||
Part I: |
Financial Information |
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Item 1.
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Financial Statements |
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Condensed Consolidated Balance Sheets at June 30,
2002 and December 31, 2001
|
1 |
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Condensed Consolidated Statements of Operations for
the three and six months ended June 30, 2002 and June
30, 2001
|
2 |
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Condensed Consolidated Statements of Cash Flows for
the six months ended June 30, 2002 and June 30, 2001
|
3 |
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Condensed Consolidated Statements of Comprehensive
Income for the three and six months ended June 30,
2002 and June 30, 2001
|
4 |
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Notes to Condensed Consolidated Financial Statements
|
5 |
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Item 2.
|
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
|
11 |
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Item 3.
|
Quantitative and Qualitative Disclosures About Market
Risk
|
31 |
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Part II: |
Other Information |
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Item 1.
|
Legal Proceedings
|
33 |
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Item 2.
|
Changes in Securities and Use of Proceeds
|
33 |
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Item 3.
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Defaults Upon Senior Securities
|
33 |
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Item 4.
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Submission of Matters to a Vote of Securities Holders
|
33 |
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Item 5.
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Other Information
|
33 |
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Item 6.
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Exhibits and Reports on Form 8-K
|
34 |
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Signatures |
35 |
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Exhibits |
99.1
|
Certification Pursuant to 18 U.S.C. Section 1350 — CEO
|
36 |
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99.2
|
Certification Pursuant to 18 U.S.C. Section 1350 — CFO
|
37 |
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PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Atmel Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
| June 30, 2002 | December 31, 2001 | |||||||||
Current assets |
||||||||||
Cash and cash equivalents |
$ | 291,620 | $ | 333,131 | ||||||
Short term investments |
153,002 | 259,877 | ||||||||
Accounts receivable, net |
220,636 | 186,558 | ||||||||
Inventories |
299,030 | 301,591 | ||||||||
Other current assets |
118,844 | 107,966 | ||||||||
Total current assets |
1,083,132 | 1,189,123 | ||||||||
Fixed assets, net |
1,309,895 | 1,651,475 | ||||||||
Other assets |
35,050 | 183,599 | ||||||||
Total assets |
$ | 2,428,077 | $ | 3,024,197 | ||||||
Current liabilities |
||||||||||
Current portion of long-term debt |
$ | 189,316 | $ | 255,742 | ||||||
Trade accounts payable |
108,716 | 147,315 | ||||||||
Accrued liabilities and other |
322,658 | 307,400 | ||||||||
Deferred income on shipments to distributors |
20,864 | 24,296 | ||||||||
Total current liabilities |
641,554 | 734,753 | ||||||||
Convertible notes |
354,660 | 345,918 | ||||||||
Long-term debt less current portion |
282,547 | 347,294 | ||||||||
Other long term liabilities |
105,478 | 109,705 | ||||||||
Total liabilities |
1,384,239 | 1,537,670 | ||||||||
Stockholders’ equity |
||||||||||
Common stock |
468 | 466 | ||||||||
Additional paid in capital |
1,252,128 | 1,245,399 | ||||||||
Accumulated other comprehensive income (loss) |
11,406 | (62,438 | ) | |||||||
Retained earnings/accumulated (deficit) |
(220,164 | ) | 303,100 | |||||||
Total stockholders’ equity |
1,043,838 | 1,486,527 | ||||||||
Total liabilities and stockholders’ equity |
$ | 2,428,077 | $ | 3,024,197 | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
Atmel Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2002 | 2001 | 2002 | 2001 | |||||||||||||
Net revenues |
$ | 314,753 | $ | 366,996 | $ | 590,526 | $ | 892,940 | ||||||||
Expenses |
||||||||||||||||
Cost of revenues |
244,980 | 249,942 | 468,449 | 564,692 | ||||||||||||
Research and development |
62,458 | 69,274 | 125,632 | 138,469 | ||||||||||||
Selling, general and administrative |
34,832 | 45,293 | 65,137 | 100,442 | ||||||||||||
Asset impairment charge |
341,383 | — | 341,383 | — | ||||||||||||
Total expenses |
683,653 | 364,509 | 1,000,601 | 803,603 | ||||||||||||
Operating income (loss) |
(368,900 | ) | 2,487 | (410,075 | ) | 89,337 | ||||||||||
Interest and other expenses, net |
(11,248 | ) | (2,536 | ) | (19,332 | ) | (1,864 | ) | ||||||||
Income (loss) before taxes |
(380,148 | ) | (49 | ) | (429,407 | ) | 87,473 | |||||||||
Income tax (provision) benefit |
(98,783 | ) | 18 | (93,857 | ) | (31,490 | ) | |||||||||
Net income (loss) |
$ | (478,931 | ) | $ | (31 | ) | $ | (523,264 | ) | $ | 55,983 | |||||
Basic net income (loss) per share |
$ | (1.02 | ) | $ | 0.00 | $ | (1.12 | ) | $ | 0.12 | ||||||
Diluted net income (loss) per share |
$ | (1.02 | ) | $ | 0.00 | $ | (1.12 | ) | $ | 0.12 | ||||||
Shares used in basic net income
per share calculations |
467,618 | 464,121 | 467,200 | 463,761 | ||||||||||||
Shares used in diluted net income
per share calculations |
467,618 | 464,121 | 467,200 | 474,875 | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
Atmel Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Six Months Ended June 30, | ||||||||||
| 2002 | 2001 | |||||||||
Cash from operating activities |
||||||||||
Net income (loss) |
$ | (523,264 | ) | $ | 55,983 | |||||
Items not requiring the use of cash |
||||||||||
Depreciation and amortization |
116,222 | 149,345 | ||||||||
Provision for doubtful accounts receivable |
(462 | ) | 4,333 | |||||||
Asset impairment charge |
341,383 | — | ||||||||
Accrued interest on zero coupon convertible debt |
8,742 | 4,679 | ||||||||
Loss on sales of fixed assets |
208 | 5,121 | ||||||||
Deferred income taxes |
85,857 | — | ||||||||
Other |
507 | (2,503 | ) | |||||||
Changes in operating assets and liabilities |
||||||||||
Accounts receivable |
(20,162 | ) | 106,641 | |||||||
Inventories |
9,393 | (45,750 | ) | |||||||
Prepaid taxes and other assets |
36,223 | (21,325 | ) | |||||||
Trade accounts payable and other accrued liabilities |
2,557 | (73,756 | ) | |||||||
Federal, state, local and foreign taxes |
8,686 | (30,755 | ) | |||||||
Deferred income on shipments to distributors |
(3,517 | ) | (1,762 | ) | ||||||
Net cash provided by operating activities |
62,373 | 150,251 | ||||||||
Cash from investing activities |
||||||||||
Acquisition of fixed assets |
(73,150 | ) | (606,524 | ) | ||||||
Sales of fixed assets |
419 | 1,430 | ||||||||
Purchase of investments |
(27,944 | ) | (93,661 | ) | ||||||
Sale or maturity of investments |
131,868 | 311,335 | ||||||||
Net cash provided by (used in) investing activities |
31,193 | (387,420 | ) | |||||||
Cash from financing activities |
||||||||||
Proceeds from issuance of convertible notes |
— | 200,027 | ||||||||
Proceeds from capital leases and notes |
5,264 | 95,281 | ||||||||
Principal payments on capital leases and notes |
(168,607 | ) | (123,075 | ) | ||||||
Issuance of common stock |
6,731 | 8,729 | ||||||||
Net cash provided by (used in) financing activities |
(156,612 | ) | 180,962 | |||||||
Effect of foreign currency translation adjustment |
21,535 | 11,524 | ||||||||
Net decrease in cash |
(41,511 | ) | (44,683 | ) | ||||||
Cash and cash equivalents at beginning of period |
333,131 | 448,281 | ||||||||
Cash and cash equivalents at end of period |
$ | 291,620 | $ | 403,598 | ||||||
Supplemental cash flow disclosures |
||||||||||
Interest paid |
$ | 15,731 | $ | 14,503 | ||||||
Income taxes paid (refunded) |
$ | (28,552 | ) | $ | 46,927 | |||||
Fixed asset purchases in accounts payable |
$ | 27,530 | $ | 179,060 | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Atmel Corporation
Condensed Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||||
| 2002 | 2001 | 2002 | 2001 | ||||||||||||||
Net income (loss) |
$ | (478,931 | ) | $ | (31 | ) | $ | (523,264 | ) | $ | 55,983 | ||||||
Other comprehensive income (loss), net of tax: |
|||||||||||||||||
Foreign currency translation adjustments |
96,132 | (20,617 | ) | 76,420 | (44,013 | ) | |||||||||||
Unrealized gain (loss) on securities |
(728 | ) | 354 | (2,576 | ) | 3,330 | |||||||||||
Other comprehensive income (loss) |
95,404 | (20,263 | ) | 73,844 | (40,683 | ) | |||||||||||
Comprehensive income (loss) |
$ | (383,527 | ) | $ | (20,294 | ) | $ | (449,420 | ) | $ | 15,300 | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Atmel Corporation
Notes to Condensed Consolidated Financial Statements
June 30, 2002
(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, 2002, and the results of operations, comprehensive income and cash flows for the three and six month periods ended June 30, 2002 and 2001. All material intercompany balances have been eliminated. 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 accompanying notes in our Annual Report to Shareholders filed on Form 10-K for the year ended December 31, 2001. The December 31, 2001 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 statements of operations for the periods presented are not necessarily indicative of results to be expected for any future period, nor for the entire year. Prior year amounts have been reclassified to conform with current presentation.
2. Inventories
Inventories are stated at the lower of cost (first-in, first-out for raw materials and purchased parts; and average cost for work in progress) or market, and comprise the following:
| (In thousands) | June 30, 2002 | December 31, 2001 | ||||||
Raw materials and purchased parts |
$ | 17,607 | $ | 19,692 | ||||
Finished goods |
77,717 | 93,873 | ||||||
Work in progress |
203,706 | 188,026 | ||||||
Total |
$ | 299,030 | $ | 301,591 | ||||
3. Short Term Investments
Short term investments at June 30, 2002 and December 31, 2001 comprise debt securities consisting primarily of US government and municipal agency securities, US and foreign corporate debt securities, commercial paper, and guaranteed variable annuities.
All marketable securities are deemed by management to be available for sale and are reported at fair value with net unrealized gains or losses reported within stockholders’ equity.
4. Income Taxes
The Company’s tax expense for the six months ended June 30, 2002 of $93.9 million can be primarily attributed to the valuation allowance recorded against the Company’s net deferred tax assets during the period. In view of the cumulative losses incurred during the past four quarters, and based on the Company’s revised projections for future periods, it was determined that it was
5
more likely than not that these net deferred tax assets would not be realized. The provision for income taxes for the six months ended June 30, 2002 also includes estimated foreign taxes due to profits in certain of the Company’s foreign subsidiaries.
5. Net Income (Loss) Per share
A reconciliation of the numerator and denominator of basic and diluted net income per share is provided in the following table.
| Three Months Ended June 30 |
Six Months Ended June 30 |
||||||||||||||||
| (In thousands, except per share data) | 2002 | 2001 | 2002 | 2001 | |||||||||||||
Basic net income (loss) [numerator] |
$ | (478,931 | ) | $ | (31 | ) | $ | (523,264 | ) | $ | 55,983 | ||||||
Diluted net income (loss) [numerator] |
$ | (478,931 | ) | $ | (31 | ) | $ | (523,264 | ) | $ | 55,983 | ||||||
Shares used in basic net income (loss) per
share calculations [denominator]: |
|||||||||||||||||
Weighted average shares of
common stock outstanding (basic) |
467,618 | 464,121 | 467,200 | 463,761 | |||||||||||||
Dilutive effect of stock options |
— | — | — | ||||||||||||||