OPERATING AND GEOGRAPHICAL SEGMENTS

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

OPERATING AND GEOGRAPHICAL SEGMENTS

OPERATING AND GEOGRAPHICAL SEGMENTS

The Company designs, develops, manufactures and sells semiconductor integrated circuit products. The Company’s operating 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.

During the first quarter of 2014, the Company realigned its business segments to better allocate resources and to focus more effectively on core markets.  As a result, the Company created a new reportable segment entitled "Multi-Market and Other" and eliminated the former Application Specific Integrated Circuit (“ASIC”) segment. A summary of each reportable segment follows:

• Microcontroller. This segment includes Atmel's general purpose microcontroller and microprocessor families, AVR^® 8-bit and 32-bit products, Atmel^®| SMART^TM ARM^® based products, Atmel's 8051 8-bit products, designated commercial wireless products, including low power radio and SOC products that meet Bluetooth, Bluetooth Low Energy, Zigbee and Wi-Fi specifications, Atmel's maXTouch capacitive touch product families and optimized products for smart energy, touch button, and mobile sensor hub and LED lighting applications.

• Nonvolatile Memory. This segment includes electrically erasable programmable read-only ("EEPROM"), erasable programmable read-only memory (“EPROM”) devices and secure cryptographic products.

• Automotive. This segment includes devices for automotive electronics, including products using radio frequency technology.

• Multi-Market and Other. This segment includes application specific and standard products for aerospace applications and legacy products. On February 4, 2015, the Company announced its decision to exit the XSense business.

Prior period operating segment presentations have been revised to conform to the Company's revised segment reporting.

The Company continually evaluates operating segment performance based on revenue and income or loss from operations excluding share-based compensation and other non-recurring items. Because the Company’s operating 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. Operating 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.

Operating segments are defined by the products they design and sell. They do not sell to each other. The Company’s net revenue and segment income (loss) from operations for each reportable segment is as follows:

Information about Reportable Segments

	Micro- Controllers		Nonvolatile Memory		Automotive			Multi-market and Other		Total
	(in thousands)
Year ended December 31, 2014
Net revenue from external customers	$	994,069	$	166,768	$	153,221		$	99,276	$	1,413,334
Segment income from operations	116,417		35,868		23,096			3,260		178,641
Year ended December 31, 2013
Net revenue from external customers	$	958,471	$	153,363	$	159,774		$	114,839	$	1,386,447
Segment income from operations	67,847		24,383		13,685			17,441		123,356
Year ended December 31, 2012
Net revenue from external customers	$	959,742	$	208,434	$	147,222		$	116,712	$	1,432,110
Segment income (loss) from operations	103,280		32,475		(2,897		)	24,755		157,613

The Company's primary products are semiconductor integrated circuits, which it has concluded constitutes a group of similar products. Therefore, it is impracticable to differentiate the revenue from external customers for each product sold. 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 Consolidated Statements of Operations

	Years Ended
	December 31, 2014			December 31, 2013			December 31, 2012
	(in thousands)
Total segment income from operations	$	178,641		$	123,356		$	157,613
Unallocated amounts:
Stock-based compensation expense	(59,679		)	(43,124		)	(72,442		)
Loss from manufacturing facility damage and shutdown	(3,485		)	(2,205		)	—
Acquisition-related charges	(13,767		)	(5,534		)	(7,388		)
French building underutilization and other	(2,957		)	(945		)	—
Restructuring charges	(13,882		)	(50,026		)	(23,986		)
Gain (loss) related to foundry arrangements	2,583			(7,424		)	(10,628		)
Recovery (impairment) of receivables due from foundry supplier	485			600			(6,495		)
Fair value adjustments to inventory from businesses acquired	(2,322		)	—			—
Impairment of XSense assets	(26,624		)	—			—
Writeoff of uncollectible receivable	(4,126		)	—			—
Settlement charges	—			(21,600		)	—
Credit from reserved grant income	—			—			10,689
Gain on sale of assets	4,364			4,430			—
Consolidated income (loss) from operations	$	59,231		$	(2,472	)	$	47,363

Geographic sources of revenue were as follows:

	Years Ended
	December 31, 2014		December 31, 2013		December 31, 2012
	(in thousands)
China, including Hong Kong	$	435,958	$	417,617	$	451,642
United States	211,532		192,878		189,699
Germany	204,257		199,298		175,930
South Korea	119,886		142,476		178,547
Rest of Asia-Pacific	102,643		120,290		72,128
Rest of Europe	139,458		128,841		149,104
Taiwan	60,632		51,830		67,806
Singapore	55,536		44,957		41,637
Japan	37,066		41,533		51,141
France	15,499		26,270		28,343
Rest of the World	30,867		20,457		26,133
Total net revenue	$	1,413,334	$	1,386,447	$	1,432,110

Net revenue is attributed to regions based on ship-to locations.

The Company had two distributors that accounted for 16% and 10%, respectively, of net revenue in the year ended December 31, 2014. The Company had one distributor and one customer that accounted for 14% and 12%, respectively, of net revenue in the year ended December 31, 2013. The Company had one distributor and one customer that accounted for 12% and 10%, respectively, of net revenue in the year ended December 31, 2012. Two distributors accounted for 17% and 11%, respectively, of accounts receivable at December 31, 2014 and no customer accounted for 10% or more of accounts receivable at December 31, 2014. One distributor accounted for 20% of accounts receivable at December 31, 2013 and no customer accounted for 10% or more of accounts receivable at December 31, 2013.

Physical locations of tangible long-lived assets were as follows:

	December 31, 2014		December 31, 2013
	(in thousands)
United States	$	92,466	$	104,912
Philippines	56,094		50,472
Germany	17,920		24,244
France	13,714		17,249
Rest of Asia-Pacific	20,237		23,815
Rest of Europe	5,854		7,026
Total	$	206,285	$	227,718

Excluded from the table above are auction-rate securities of $1.1 million at December 31, 2014 and 2013, which are included in other assets on the consolidated balance sheets. Also excluded from the table above as of December 31, 2014 and 2013 are goodwill of $191.1 million and $108.2 million, respectively, intangible assets, net of $50.3 million and $28.1 million, respectively, and deferred income tax assets of $117.3 million and $134.4 million, respectively.