Atmel Corp (NASDAQ:ATML) Q4 2014 Earnings Conference Call - Final Transcript

Feb 04, 2015 • 05:00 pm ET


Atmel Corp (NASDAQ:ATML) Q4 2014 Earnings Conference Call - Final Transcript


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Good afternoon. My name is Chanel, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fourth Quarter 2014 Earnings Conference Call. (Operator Instructions) Thank you.

Mr. Peter Schuman, Senior Director of Investor Relations, you may begin your conference.

Peter Schuman

Thank you, Chanel. Good afternoon, and thank you for joining us for Atmel's Fourth Quarter 2014 Earnings Conference Call. A copy of the press release issued today is available on our Investor Relations Web site. A replay of this call will be available after 5:00 p.m. Pacific today and will be archived for 48 hours. The webcast will be archived in the company's Web site for one year. Access information is provided in today's press release.

Joining us for the call today are Steve Laub, Atmel's President and CEO; and Steve Skaggs, Senior Vice President and Chief Financial Officer. Steve Skaggs will begin the call with a review of our fourth quarter financial results, and Steve Laub will then provide additional information on the business. At the conclusion of Steve Laub's remarks, Steve Skaggs will discuss our financial guidance for the first quarter of 2015 and then open the call for questions.

During the course of this conference call, we may make forward-looking statements about Atmel's business outlook, including statements regarding our expectations for market growth, revenue, target gross and operating margins, operating expenses, product introductions, and cost savings for 2015 and beyond.

(Forward Looking Cautionary Statements)

I would now

Peter Schuman

like to turn the call over to Steve Skaggs for a discussion of our fourth quarter financial results. Thank you. Steve?

Steve Skaggs

Thanks, Peter. Fourth quarter revenue of $346 million was up to midpoint of our guidance range, and decreased 8% from the prior quarter as a result of lower revenue across all business segments, with the exception of automotive. For the full year 2014, revenue was 1.41 billion, and increased 2% compared to the $1.39 billion for 2013.Fourth quarter 2014 non-GAAP gross margin was 49.0%, at the midpoint of our guidance range and 200 basis points higher on a sequential basis. This substantial increase reflects strong execution on our previously articulated gross margin improvement plan.

For the full year, we are pleased to have increased gross margin for the seventh consecutive quarter, and to meet our goals established approximately two years ago. For the full year 2014, non-GAAP gross margin was 46.3% compared to 42.5% for 2013.

On a GAAP basis, fourth quarter gross margin was 40.6%, and includes a $26.6 million impairment charge for manufacturing assets related to the XSense business. We recently completed a strategic review and reached a decision to exit this business, and are working with our customers to achieve an orderly transition during 2015.

Non-GAAP operating expenses for the fourth quarter 2014 were $120.6 million, slightly below the midpoint of our guidance as expenses decreased by approximately $500,000 on a sequential basis.

During the quarter, we incurred a bad debt expense of approximately $4 million related to the