Business News
Atmel Reports First Quarter 2008 Financial Results
Thursday 01. May 2008 - Record Microcontroller Revenues Rise 8% Sequentially and 21% Compared to the Year-Ago Quarter
Atmel(R) Corporation (NASDAQ:ATML) today announced financial results for the quarter ended March 31, 2008.
Revenues for the first quarter of 2008 were $411.2 million, a 3.4% decrease compared to $425.6 million for the fourth quarter of 2007 and a 5.1% increase compared to $391.3 million for the first quarter ended March 31, 2007. Microcontrollers, a core business, continued solid revenue growth and rose 8% sequentially and 21% compared to the year-ago quarter, primarily driven by the Company’s proprietary AVR(R) and standard ARM(R) products.
Net income for the first quarter of 2008 totaled $6.8 million or $0.02 per diluted share. This compares to net income of $1.7 million or $0.00 per diluted share for the fourth quarter of 2007 and net income of $28.9 million or $0.06 per diluted share for the year-ago quarter. Non-GAAP net income for the first quarter of 2008 totaled $13.3 million or $0.03 per diluted share compared to $20.0 million or $0.04 per diluted share for the fourth quarter of 2007 and $33.7 million or $0.07 per diluted share for the year-ago quarter. Non-GAAP net income excludes charges (credits) related to stock-based compensation, acquisitions, grant repayments, and restructuring activities, as well as the gain on sale of assets and the income tax effect of these excluded items. A reconciliation of GAAP results to non-GAAP results is included following the financial statements below.
“We are pleased to have achieved the upper end of our revenue guidance and record microcontroller revenues,” said Steven Laub, Atmel’s President and Chief Executive Officer. “These results reflect the strength of our product offering and the benefits we are realizing from refocusing Atmel’s business operations on areas that offer the best opportunity for profitable growth. As we move forward, I have confidence that our product innovation and technology leadership, further strengthened by our recent acquisition of Quantum Research Group, positions Atmel for continued success.”
Gross profit, as a percent of revenue, was 35.5% for the first quarter of 2008. This compares to gross profit of 35.2% for the fourth quarter of 2007 and 35.8% for the year-ago quarter. Gross profit for the first quarter of 2008 was negatively impacted by underutilization as production activity ended at our manufacturing facility in North Tyneside, United Kingdom and by the continuing weakness of the dollar against the euro.
Operating profit was $15.4 million for the first quarter of 2008, or 3.7% of revenue, which includes net non-recurring charges of $0.9 million related to the sale of the North Tyneside assets as well as charges resulting from the Quantum Research Group acquisition completed during the quarter. This compares to an operating profit of $6.4 million for the fourth quarter of 2007 and $12.8 million for the first quarter of 2007. Included in the 2007 operating results were non-recurring charges of $13.0 million for the fourth quarter related to North Tyneside restructuring charges and $1.8 million for the first quarter of 2007 related to restructuring charges for employee severances at other locations. Stock-based compensation expense was $6.3 million for the first quarter of 2008, compared to $5.1 million for the fourth quarter of 2007 and $3.3 million for the year-ago quarter.
Income tax provision was $3.2 million for the first quarter of 2008. This compares to an income tax provision of $5.8 million for the fourth quarter of 2007 and a net income tax benefit of $15.2 million for the first quarter of 2007. The Company recognized a tax benefit of approximately $3.2 million and $20.0 million from the receipt of French R&D tax credits in the first quarters of 2008 and 2007, respectively.
Combined cash balances (cash and cash equivalents plus short-term investments) totaled $336.8 million at the end of the first quarter of 2008, a decrease of $93.1 million from the end of the prior quarter and a $141.9 million decrease from $478.7 million at March 31, 2007. During the first quarter of 2008, the Company used approximately $89.0 million for the purchase of Quantum Research Group. Cash used in operations totaled approximately $41.0 million for the first quarter of 2008 compared to cash provided from operations of $90.4 million for the fourth quarter of 2007 and $59.2 million for the first quarter of 2007. Cash used in operations in the first quarter of 2008 included approximately $54.0 million of cash used for repayment of grants and other restructuring charges related to the closure of North Tyneside. Separately, the Company received approximately $82.0 million of proceeds from the sale of North Tyneside fabrication equipment classified as proceeds from investing activities.
The Company’s effective average exchange rate in the first quarter of 2008 was approximately $1.47 to the euro, compared to $1.43 to the euro in the fourth quarter of 2007 and $1.32 to the euro in the year-ago period. A $0.01 increase in the dollar/euro exchange rate reduced operating income by approximately $0.6 million during the first quarter of 2008.
First Quarter 2008 and Recent Highlights
— Completed Acquisition of Quantum Research Group Ltd.
— Completed Sale and Transfer of North Tyneside Land and Property
— AVR32 Recognized as a Top 100 Hot Product of 2007 by EDN and Number One
Product by Germany’s Elektronik Magazine and Chosen as Most Innovative
Architecture by Embedded World Nuremburg
— Introduced AVR XMEGA Family of High Performance and Ultra Low Power AVR
Microcontrollers
— Introduced AVR Microcontrollers for Automotive Motor Control
Applications
— CAP Customizable Microcontroller Named 2007 Product of the Year by EPC
Magazine
— Announced Appointment of Charles Carinalli and Dr. Edward Ross as new
Independent Directors
Business Outlook
Consistent with business seasonality and general market trends, the Company anticipates second quarter 2008 revenues will be up 0% to 3% on a sequential basis.