##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
    Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2006oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
    SECURITIES EXCHANGE ACT OF 1934   Commission file number: 0-19032
  ATMEL CORPORATION
 (Exact name of registrant as
    specified in its charter)
  Delaware

77-0051991(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)   2325 Orchard Parkway, San Jose, California 95131
 (Address of principal executive offices)
  Registrants telephone number, including area code:
 (408) 441-0311
    Securities registered pursuant to Section 12(b) of the
    Act:
   Title of Each Class

Name of Exchange on Which RegisteredCommon Stock, par value
    $0.001 per share
    Preferred Share Right (currently attached to and trading only
    with the Common Stock)

The NASDAQ Stock Market LLC
    (NASDAQ Global Select Market)   Securities registered pursuant to Section 12(g) of the
    Act: None
    o þ
  o þ
  o þ
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  þ o o
  Rule 12b-2 o þ
      DOCUMENTS INCORPORATED BY REFERENCE
  Form 10-K




---



##### 



TABLE
    OF CONTENTS
  EXPLANATORY
    NOTE REGARDING RESTATEMENTS


3PART IITEM 1.

BUSINESS


6ITEM 1A.

RISK
    FACTORS


16ITEM 1B.

UNRESOLVED STAFF
    COMMENTS


30ITEM 2.

PROPERTIES


31ITEM 3.

LEGAL
    PROCEEDINGS


31ITEM 4.

SUBMISSION OF
    MATTERS TO A VOTE OF SECURITY HOLDERS


34PART IIITEM 5.

MARKET FOR
    REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
    ISSUER PURCHASES OF EQUITY SECURITIES


35ITEM 6.

SELECTED FINANCIAL
    DATA


37ITEM 7.

MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS


41ITEM 7A.

QUANTITATIVE AND
    QUALITATIVE DISCLOSURES ABOUT MARKET RISK


74ITEM 8.

FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA


77ITEM 9.

CHANGES IN AND
    DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
    DISCLOSURE


159ITEM 9A.

CONTROLS AND
    PROCEDURES


159ITEM 9B.

OTHER
    INFORMATION


161PART IIIITEM 10.

DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE


161ITEM 11.

EXECUTIVE
    COMPENSATION


162ITEM 12.

SECURITY OWNERSHIP
    OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
    STOCKHOLDER MATTERS


162ITEM 13.

CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
    INDEPENDENCE


162ITEM 14.

PRINCIPAL
    ACCOUNTING FEES AND SERVICES


162PART IVITEM 15.

EXHIBITS, FINANCIAL
    STATEMENT SCHEDULES


163SIGNATURES


165EXHIBIT INDEXEXHIBIT 21.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2   2




---



##### Table of Contents



EXPLANATORY
    NOTE REGARDING RESTATEMENTS  Form 10-K Form 10-K, Form 10-K, Form 10-K.
  Form 10-K, Form 10-Q Form 8-K Form 10-Q Form 8-K
  Audit
    Committee Investigation of Historical Stock Option
    Practices
    Form 10-K Form 10-Q Form 10-Q
  Results
    of Audit Committee Investigation
         3




---



##### Table of Contents



30-day
           4




---



##### Table of Contents



Adjustment toIncome TaxExpense


Adjustment to(Benefit) Relating


Stock-BasedAdjustment to


Adjustment to


to Stock-Based


Compensation


Other


TotalStock-Based


Payroll Tax


Compensation and


Expense, Net of


adjustments,


RestatementFiscal

Compensation


Expense


Payroll Tax


Payroll and


Net of Income


ExpenseYear

Expense


(Benefit)


Expense


Income taxes


Taxes


(Benefit)1993

$
268


$
1


$
(110
)

$
1591994


556



151



(293
)


4141995


1,944



688



(799
)


1,8331996


3,056



1,735



(1,449
)


3,3421997


5,520



1,968



(2,516
)


4,9721998


18,695



671



(6,147
)


13,2191999


18,834



1,832



(6,955
)


13,7112000


27,379



7,209



(11,576
)


23,0122001


19,053



1,655



(5,988
)


14,7202002


5,555



1,603



23,477



30,6352003


12,416



(1,980
)






10,436Cumulative through
    December 31, 2003


113,276



15,533



(12,356
)


116,453


$
(13,638
)

$
102,8152004


1,405



(10,395
)






(8,990
)


184



(8,806
)2005


1,561



(3,190
)






(1,629
)


2,082



453Total

$
116,242


$
1,948


$
(12,356
)

$
105,834


$
(11,372
)

$
94,462    5




---



##### Table of Contents



PART I  ITEM 1.
    BUSINESS  FORWARD
    LOOKING STATEMENTS
  You should read the following discussion in conjunction with
    our Consolidated Financial Statements and the related
    Notes to Consolidated Financial Statements, and
    Financial Statements and Supplementary Data included
    in this Annual Report on
    Form 10-K.
    This discussion contains forward-looking statements within the
    meaning of Section 21E of the Securities Exchange Act of
    1934, particularly statements regarding our outlook for 2007,
    our expectations regarding the effects of exchange rates, our
    strategic plans, restructuring and other initiatives, and
    statements regarding our future prospects. Our actual results
    could differ materially from those projected in the
    forward-looking statements as a result of a number of factors,
    risks and uncertainties, including the risk factors set forth in
    this discussion and in Item 1A  Risk Factors,
    and elsewhere in this
    Form 10-K.
    Generally, the words may, will,
    could, would, anticipate,
    expect, intend, believe,
    seek, estimate, plan,
    view, continue, the plural of such
    terms, the negatives of such terms, or other comparable
    terminology and similar expressions identify forward-looking
    statements. The information included in this
    Form 10-K
    is provided as of the filing date with the Securities and
    Exchange Commission and future events or circumstances could
    differ significantly from the forward-looking statements
    included herein. Accordingly, we caution readers not to place
    undue reliance on such statements. Atmel undertakes no
    obligation to update any forward-looking statements in this
    Form 10-K.
  BUSINESS
  General
    system-on-a-chip
  Form 10-K.
 6




---



##### Table of Contents



(408) 441-0311. Form 10-K, Form 10-Q, Form 8-K,
  Products
      
    Application specific integrated circuit (ASIC)segment includes custom application specific integrated
    circuits designed to meet specialized single-customer
    requirements for their high performance devices in a broad
    variety of applications. This segment also encompasses a range
    of products which provide security for digital data, including
    smart cards for mobile phones, set top boxes, banking and
    national identity cards. We also develop customer specific
    ASICs, some of which have military applications.
    Microcontrollerssegment includes a variety of
    proprietary and standard microcontrollers, the majority of which
    contain embedded nonvolatile memory and integrated analog
    peripherals. This segment also includes products with military
    and aerospace applications.
    Nonvolatile Memoriessegment consists predominantly of
    serial interface electrically erasable programmable read-only
    memory (SEEPROM) and serial interface Flash memory
    products. This segment also includes parallel interface Flash
    memories as well as mature parallel interface EEPROM and EPROM
    devices. This segment also includes products with military and
    aerospace applications.
    Radio Frequency (RF) and Automotivesegment
    includes products designed for the automotive industry. This
    segment produces and sells wireless and wired devices for
    industrial, consumer and automotive applications and it also
    provides foundry services which produce radio frequency products
    for the mobile telecommunications market.    ASIC
  Custom ASICs. time-to-market
    Security and Smart Cards.
 7




---



##### Table of Contents



tm ® tm
    ® ® tm .
  Multimedia Products. System-on-a-Chip
    FPGAs. ®
  PLDs.
  Microcontrollers
    computer-on-a-chip
 8




---



##### Table of Contents



Nonvolatile
    Memories
  Serial Interface Products
  DataFlash ® ®
      Flash Memory Products.
    Parallel-Interface EEPROMs.
 9




---



##### Table of Contents



EPROMs.
  RF and
    Automotive
          Technology
    state-of-the-art
 10




---



##### Table of Contents



Principal
    Markets and Customers
  Communications. ,
    Consumer Electronics.
  Computing, Storage and Printing.
  Security.
 11




---



##### Table of Contents



Automotive.
  Military and Aerospace. latch-up
  Manufacturing
            Irving,
    Texas, Facility
   12




---



##### Table of Contents



North
    Tyneside, United Kingdom, and Heilbronn, Germany,
    Facilities
  held-for-sale
    held-for-sale
  Grenoble,
    France, Facility
    Environmental
    Compliance
     13




---



##### Table of Contents



Marketing
    and Sales
        non-U.S. based
  Research
    and Development
      Competition
   14




---



##### Table of Contents




    our success in designing and manufacturing new products that
    implement new technologies and processes
    our ability to offer integrated solutions using our advanced
    nonvolatile memory process with other technologies
    the rate at which customers incorporate our products into their
    systems
    product introductions by our competitors
    the number and nature of our competitors in a given market
    the incumbency of our competitors products, and
    general market and economic conditions.    Patents
    and Licenses
       15




---



##### Table of Contents



Employees
    Backlog
    Geographic
    Areas
    ITEM 1A.
    RISK
    FACTORS  Form 10-K
  THE RESULTS
    OF OUR AUDIT COMMITTEE INVESTIGATION INTO OUR HISTORICAL STOCK
    OPTION PRACTICES AND RESULTING RESTATEMENTS MAY CONTINUE TO HAVE
    ADVERSE EFFECTS ON OUR FINANCIAL RESULTS.
  Form 10-K
 16




---



##### Table of Contents



JUDGMENT AND
    ESTIMATES UTILIZED BY US IN DETERMINING STOCK OPTION GRANT DATES
    AND RELATED ADJUSTMENTS MAY BE SUBJECT TO CHANGE DUE TO
    SUBSEQUENT SEC GUIDANCE OR OTHER DISCLOSURE REQUIREMENTS.
    OUR REVENUES
    AND OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY DUE TO A
    VARIETY OF FACTORS, WHICH MAY RESULT IN VOLATILITY OR A DECLINE
    IN OUR STOCK PRICE.
    
    the cyclical nature of both the semiconductor industry and the
    markets addressed by our products;
    our transition to a fab-lite strategy;
    our increased dependence on outside foundries and their ability
    to meet our volume, quality, and delivery objectives,
    particularly during times of increasing demand;
    inventory excesses or shortages due to reliance on third party
    manufacturers;
    our compliance with U.S. trade and export laws and
    regulations;
    fluctuations in currency exchange rates;
    ability of independent assembly contractors to meet our volume,
    quality, and delivery objectives;
    success with disposal or restructuring activities, including
    disposition of our North Tyneside and Heilbronn facilities;
    fluctuations in manufacturing yields;
    possible delisting from NASDAQ Global Select Market;
    third party intellectual property infringement claims;
    the highly competitive nature of our markets;
    the pace of technological change;
    political and economic risks;
    natural disasters or terrorist acts;
    assessment of internal controls over financial reporting; 17




---



##### Table of Contents




    ability to meet our debt obligations;
    availability of additional financing;
    our ability to maintain good relationships with our customers;
    integration of new businesses or products;
    our compliance with international, federal and state export,
    environmental, privacy and other regulations;
    personnel changes;
    business interruptions;
    system integration disruptions; and
    changes in accounting rules, such as recording expenses for
    employee stock option grants.        THE CYCLICAL
    NATURE OF THE SEMICONDUCTOR INDUSTRY CREATES FLUCTUATIONS IN OUR
    OPERATING RESULTS.
     18




---



##### Table of Contents



WE COULD
    EXPERIENCE DISRUPTION OF OUR BUSINESS AS WE TRANSITION TO A
    FAB-LITE
    STRATEGY.
      
    reduced control over delivery schedules and product costs;
    manufacturing costs that are higher than anticipated;
    inability of our manufacturing subcontractors to develop
    manufacturing methods appropriate for our products and their
    unwillingness to devote adequate capacity to produce our
    products;
    possible abandonment of fabrication processes by our
    manufacturing subcontractors for products that are strategically
    important to us;
    decline in product quality and reliability;
    inability to maintain continuing relationships with our
    suppliers;
    restricted ability to meet customer demand when faced with
    product shortages; and
    increased opportunities for potential misappropriation of our
    intellectual property.    AS WE
    INCREASE DEPENDENCE ON OUTSIDE FOUNDRIES, SUCH FOUNDRIES MAY NOT
    HAVE ADEQUATE CAPACITY TO FULFILL OUR NEEDS AND MAY NOT MEET OUR
    QUALITY AND DELIVERY OBJECTIVES OR MAY ABANDON FABRICATION
    PROCESSES THAT WE REQUIRE.
   19




---



##### Table of Contents



INCREASING
    DEPENDENCE ON THIRD PARTY MANUFACTURERS COULD HARM OUR BUSINESS
    IN TIMES OF INCREASING DEMAND IN OUR INDUSTRY.
      AS A RESULT
    OF INCREASED DEPENDENCE ON THIRD PARTY MANUFACTURERS, WE MAY
    INCUR INVENTORY EXCESSES OR SHORTAGES
  time-to-time time-to-time
    OUR
    INTERNATIONAL SALES AND OPERATIONS ARE SUBJECT TO APPLICABLE
    LAWS RELATING TO TRADE AND EXPORT CONTROLS, THE VIOLATION OF
    WHICH COULD ADVERSELY AFFECT OUR OPERATIONS.
   20




---



##### Table of Contents



WE ARE
    EXPOSED TO FLUCTUATIONS IN CURRENCY EXCHANGE RATES THAT COULD
    NEGATIVELY IMPACT OUR FINANCIAL RESULTS AND CASH FLOWS.
      REVENUES AND
    COSTS DENOMINATED IN FOREIGN CURRENCIES COULD ADVERSELY IMPACT
    OUR OPERATING RESULTS WITH CHANGES IN THESE FOREIGN CURRENCIES
    AGAINST THE DOLLAR.
        WE DEPEND ON
    INDEPENDENT ASSEMBLY CONTRACTORS WHICH MAY NOT HAVE ADEQUATE
    CAPACITY TO FULFILL OUR NEEDS AND WHICH MAY NOT MEET OUR QUALITY
    AND DELIVERY OBJECTIVES.
   21




---



##### Table of Contents



WE FACE
    RISKS ASSOCIATED WITH DISPOSAL OR RESTRUCTURING ACTIVITIES.
      IF WE ARE
    UNABLE TO IMPLEMENT NEW MANUFACTURING TECHNOLOGIES OR FAIL TO
    ACHIEVE ACCEPTABLE MANUFACTURING YIELDS, OUR BUSINESS WOULD BE
    HARMED.
        WE HAVE NOT
    BEEN IN COMPLIANCE WITH SEC REPORTING REQUIREMENTS AND NASDAQ
    LISTING REQUIREMENTS. IF WE ARE UNABLE TO ATTAIN COMPLIANCE
    WITH, OR THEREAFTER REMAIN IN COMPLIANCE WITH SEC REPORTING
    REQUIREMENTS AND NASDAQ LISTING
 22




---



##### Table of Contents



Form 10-K Form 10-Q Form 10-K
  Form 10-Q Form 10-K, Form S-3 Form S-1
  WE MAY FACE
    THIRD PARTY INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS THAT COULD
    BE COSTLY TO DEFEND AND RESULT IN LOSS OF SIGNIFICANT RIGHTS.
        OUR MARKETS
    ARE HIGHLY COMPETITIVE, AND IF WE DO NOT COMPETE EFFECTIVELY, WE
    MAY SUFFER PRICE REDUCTIONS, REDUCED REVENUES, REDUCED GROSS
    MARGINS, AND LOSS OF MARKET SHARE.
   23




---



##### Table of Contents




    our success in designing and manufacturing new products that
    implement new technologies and processes;
    our ability to offer integrated solutions using our advanced
    nonvolatile memory process with other technologies;
    the rate at which customers incorporate our products into their
    systems;
    product introductions by our competitors;
    the number and nature of our competitors in a given market;
    the incumbency of our competitors at potential new customers;
    our ability to minimize production costs by outsourcing our
    manufacturing, assembly and testing functions; and
    general market and economic conditions.    WE MAY BE
    SUBJECT TO ADVERSE FINDINGS FROM ADDITIONAL AUDIT COMMITTEE
    INVESTIGATIONS INTO IMPROPER BUSINESS PRACTICES.
   24




---



##### Table of Contents



WE FACE
    VARIOUS RISKS ASSOCIATED WITH A POTENTIAL CHANGE OF CONTROL OF
    OUR BOARD OF DIRECTORS.
        WE MUST KEEP
    PACE WITH TECHNOLOGICAL CHANGE TO REMAIN COMPETITIVE.
        OUR
    OPERATING RESULTS ARE HIGHLY DEPENDENT ON OUR INTERNATIONAL
    SALES AND OPERATIONS, WHICH EXPOSES US TO VARIOUS POLITICAL AND
    ECONOMIC RISKS.
    
    greater difficulty in protecting intellectual property; 25




---



##### Table of Contents




    reduced flexibility and increased cost of staffing adjustments,
    particularly in France and Germany;
    longer collection cycles;
    potential unexpected changes in regulatory practices, including
    export license requirements, trade barriers, tariffs and tax
    laws, environmental and privacy regulations; and
    general economic and political conditions in these foreign
    markets.      OUR
    OPERATIONS AND FINANCIAL RESULTS COULD BE HARMED BY NATURAL
    DISASTERS OR TERRORIST ACTS.
    A LACK OF
    EFFECTIVE INTERNAL CONTROL OVER FINANCIAL REPORTING COULD RESULT
    IN AN INABILITY TO ACCURATELY REPORT OUR FINANCIAL RESULTS,
    WHICH COULD LEAD TO A LOSS OF INVESTOR CONFIDENCE IN OUR
    FINANCIAL REPORTS AND HAVE AN ADVERSE EFFECT ON OUR STOCK PRICE.
      OUR DEBT
    LEVELS COULD HARM OUR ABILITY TO OBTAIN ADDITIONAL
    FINANCING, AND OUR ABILITY TO MEET OUR DEBT OBLIGATIONS WILL BE
    DEPENDENT UPON OUR FUTURE PERFORMANCE.
   26




---



##### Table of Contents



debt-to-equity
      WE MAY NEED
    TO RAISE ADDITIONAL CAPITAL THAT MAY NOT BE AVAILABLE.
    PROBLEMS
    THAT WE EXPERIENCE WITH KEY CUSTOMERS OR DISTRIBUTORS MAY HARM
    OUR BUSINESS.
     27




---



##### Table of Contents



WE ARE NOT
    PROTECTED BY LONG-TERM CONTRACTS WITH OUR CUSTOMERS.
    OUR FAILURE
    TO SUCCESSFULLY INTEGRATE BUSINESSES OR PRODUCTS WE HAVE
    ACQUIRED COULD DISRUPT OR HARM OUR ONGOING BUSINESS.
    day-to-day
  WE ARE
    SUBJECT TO ENVIRONMENTAL REGULATIONS, WHICH COULD IMPOSE
    UNANTICIPATED REQUIREMENTS ON OUR BUSINESS IN THE FUTURE. ANY
    FAILURE TO COMPLY WITH CURRENT OR FUTURE ENVIRONMENTAL
    REGULATIONS MAY SUBJECT US TO LIABILITY OR SUSPENSION OF OUR
    MANUFACTURING OPERATIONS.
     28




---



##### Table of Contents



WE DEPEND ON
    CERTAIN KEY PERSONNEL, AND THE LOSS OF ANY KEY PERSONNEL MAY
    SERIOUSLY HARM OUR BUSINESS.
    BUSINESS
    INTERRUPTIONS COULD HARM OUR BUSINESS.
    SYSTEM
    INTEGRATION DISRUPTIONS COULD HARM OUR BUSINESS.
    PROVISIONS
    IN OUR RESTATED CERTIFICATE OF INCORPORATION, BYLAWS AND
    PREFERRED SHARES RIGHTS AGREEMENT MAY HAVE ANTI-TAKEOVER
    EFFECTS.
      OUR STOCK
    PRICE HAS FLUCTUATED IN THE PAST AND MAY CONTINUE TO FLUCTUATE
    IN THE FUTURE.
   29




---



##### Table of Contents



ACCOUNTING
    FOR EMPLOYEE STOCK OPTIONS USING THE FAIR VALUE METHOD COULD
    SIGNIFICANTLY REDUCE OUR NET INCOME OR INCREASE OUR NET LOSS.
            OUR FOREIGN
    PENSION PLANS ARE UNFUNDED, AND ANY REQUIREMENT TO
    FUND THESE PLANS IN THE FUTURE COULD NEGATIVELY IMPACT OUR
    CASH POSITION AND OPERATING CAPITAL.
    ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS   30




---



##### Table of Contents



ITEM 2.
    PROPERTIES    Number ofBuildings


Location

Total Square Feet

Use1


San Jose, California

291,000

Headquarters offices, research and
    development, sales and marketing, product design, final product
    testing6


Colorado Springs, Colorado

603,000

Wafer fabrication, research and
    development, marketing, product design, final product testing1 (a
)(b)

Irving, Texas

650,000

Wafer fabrication, research and
    development facility (Unoccupied)5


Rousset, France

815,000

Wafer fabrication, research and
    development, marketing, product design, final product testing4


Heilbronn, Germany

778,000

Wafer fabrication, research and
    development, marketing, product design, final product testing
    (74% of square footage is leased to other companies)9 (b
)

North Tyneside, United Kingdom

753,000

Wafer fabrication, research and
    development2


Calamba City, Philippines

338,000

Final product testing     (a)
    
    On May 1, 2007, we announced the sale of our Irving, Texas,
    wafer fabrication facility for approximately $37 million in
    cash. The sale of the facility includes approximately
    39 acres of land, the fabrication facility building, and
    related offices, and remaining equipment. An additional
    17 acres was retained by the Company. We do not expect to
    record a material gain or loss on the sale, following the
    impairment charge recorded in the fourth quarter of 2006.(b)
    
    We reclassified the assets of the North Tyneside, United
    Kingdom, and the Irving, Texas, facilities as assets held for
    sale in the consolidated balance sheet as of December 31,
    2006. See Notes 16 and 22 in Notes to Consolidated
    Financial Statements for further discussion.      ITEM 3.
    LEGAL
    PROCEEDINGS     31




---



##### Table of Contents



32




---



##### Table of Contents



33




---



##### Table of Contents



Indemnification Obligations.
  ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS  .
  Executive
    Officers of the Registrant
    Name

Age

PositionSteven Laub


48


President and Chief Executive
    Officer and DirectorTsung-Ching Wu


56


Executive Vice President, Office
    of the President and DirectorRobert Avery


58


Vice President Finance and Chief
    Financial OfficerRobert McConnell


62


Vice President and General
    Manager, RF and Automotive SegmentBernard Pruniaux


65


Vice President and General
    Manager, ASIC SegmentSteve Schumann


47


Vice President and General
    Manager, Non-Volatile Memory SegmentGraham Turner


47


Vice President and General
    Manager, Microcontroller Segment    34




---



##### Table of Contents



PART II  ITEM 5.
    MARKET
    FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
    MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES   35




---



##### Table of Contents



High


LowYear ended December 31,
    2005:First Quarter

$
4.03


$
2.85Second Quarter

$
3.09


$
2.05Third Quarter

$
2.85


$
1.97Fourth Quarter

$
3.59


$
1.99Year ended December 31,
    2006:First Quarter

$
5.10


$
3.06Second Quarter

$
5.71


$
4.22Third Quarter

$
6.43


$
3.71Fourth Quarter

$
6.38


$
4.79      36




---



##### Table of Contents



ITEM 6.
    SELECTED
    FINANCIAL DATA  Form 10-K.
  Year Ended December 31,2006


2005


2004


2003


2002As previously


As previously


As previously


As previouslyreported


reported


reported


reported(In thousands, except per share data)Net revenues

$
1,670,887


$
1,561,107


$
1,552,440


$
1,237,095


$
1,102,454Income (loss) from continuing
    operations before income taxes

$
(73,702
)

$
(63,358
)

$
13,804


$
(116,263
)

$
(566,024
)Loss from continuing operations

$
(98,651
)

$
(49,174
)

$
(13,207
)

$
(125,521
)

$
(653,065
)Income from discontinued
    operations, net of taxes


12,969



16,276



10,773



7,525



11,269Gain on sale of discontinued
    operations, net of taxes


100,332















Net income (loss)

$
14,650


$
(32,898
)

$
(2,434
)

$
(117,996
)

$
(641,796
)Basic and diluted income
    (loss) per common share:Loss from continuing operations

$
(0.20
)

$
(0.10
)

$
(0.03
)

$
(0.27
)

$
(1.40
)Income from discontinued
    operations, net of taxes


0.02



0.03



0.02



0.02



0.03Gain on sale of discontinued
    operations, net of taxes


0.21















Net income (loss) per common
    share  basic and diluted

$
0.03


$
(0.07
)

$
(0.01
)

$
(0.25
)

$
(1.37
)Weighted-average shares used in
    computing basic and diluted net income (loss) per share


487,413



481,534



476,063



469,869



466,949   37




---



##### Table of Contents



Year Ended December 31,2006


2005


2004


2003


2002Adjustments(1)


Adjustments(1)


Adjustments(1)


Adjustments(1)(In thousands, except per share data)Net revenues(1)

$



$



$



$
(800
)

$
(1,900
)Income (loss) from continuing
    operations before income taxes(1)

$



$
668


$
5,038


$
(10,532
)

$
(13,257
)Income (loss) from continuing
    operations(1)

$



$
(453
)

$
7,705


$
(2,487
)

$
(36,486
)Income from discontinued
    operations, net of taxes(1)










1,101



(100
)


(900
)Gain on sale of discontinued
    operations, net of taxes


















Net income (loss)(1)

$



$
(453
)

$
8,806


$
(2,587
)

$
(37,386
)Basic and diluted income
    (loss) per common share:Loss from continuing operations

$



$
(0.00
)

$
0.02


$
(0.00
)

$
(0.08
)Income from discontinued
    operations, net of taxes










0.00



(0.00
)


(0.00
)Gain on sale of discontinued
    operations, net of taxes


















Net income (loss) per common
    share  basic and diluted

$



$
(0.00
)

$
0.02


$
(0.00
)

$
(0.08
)Weighted-average shares used in
    computing basic and diluted net income (loss) per share


487,413



481,534



476,063



469,869



466,949   38




---



##### Table of Contents



Year Ended December 31,2006


2005


2004


2003


2002As restated


As restated


As restated


As restated(In thousands, except per share data)Net revenues

$
1,670,887


$
1,561,107


$
1,552,440


$
1,236,295


$
1,100,554Income (loss) from continuing
    operations before income taxes(2)(6)

$
(73,702
)

$
(62,690
)

$
18,842


$
(126,795
)

$
(579,281
)Loss from continuing operations

$
(98,651
)

$
(49,627
)

$
(5,502
)

$
(128,008
)

$
(689,551
)Income from discontinued
    operations, net of taxes(2)


12,969



16,276



11,874



7,425



10,369Gain on sale of discontinued
    operations, net of taxes(3)


100,332















Net income (loss)

$
14,650


$
(33,351
)

$
6,372


$
(120,583
)

$
(679,182
)Basic and diluted net income
    (loss) per common share:Loss from continuing operations

$
(0.20
)

$
(0.10
)

$
(0.01
)

$
(0.27
)

$
(1.48
)Income from discontinued
    operations, net of taxes


0.02



0.03



0.02



0.01



0.03Gain on sale of discontinued
    operations, net of taxes


0.21















Net income (loss) per common
    share  basic and diluted

$
0.03


$
(0.07
)

$
0.01


$
(0.26
)

$
(1.45
)Weighted-average shares used in
    computing basic and diluted net income (loss) per share


487,413



481,534



476,063



469,869



466,949   As of December 31,2006


2005


2004


2003


2002As previously


As previously


As previously


As previouslyreported


reported


reported


reportedCash and cash equivalents

$
410,480


$
300,323


$
346,350


$
385,887


$
346,371Cash and cash equivalents plus
    short-term
    investments


466,744



348,255



405,208



431,054



445,802Fixed assets, net


514,349



874,618



1,185,727



1,101,400



1,031,666Total assets


1,818,539



1,927,345



2,329,006



2,154,690



2,302,559Long-term debt less current portion


60,020



133,479



323,950



357,796



447,774Stockholders equity


953,894



940,291



1,111,596



1,018,117



969,143   39




---



##### Table of Contents



As of December 31,2006


2005


2004


2003


2002Adjustments


Adjustments


Adjustments


AdjustmentsCash and cash equivalents

$



$



$



$



$
Cash and cash equivalents plus
    short -term investments


















Fixed assets, net


















Total assets






6,591



2,230



4,127



(200
)Long-term debt less current portion


















Stockholders equity






(2,920
)


(4,028
)


(14,353
)


(24,512
)   As of December 31,2006


2005


2004


2003


2002As restated


As restated


As restated


As restatedCash and cash equivalents

$
410,480


$
300,323


$
346,350


$
385,887


$
346,371Cash and cash equivalents plus
    short-term
    investments


466,744



348,255



405,208



431,054



445,802Fixed assets, net(4)


514,349



874,618



1,185,727



1,101,400



1,031,666Total assets


1,818,539



1,933,936



2,331,236



2,158,817



2,302,359Long-term debt less current
    portion(5)


60,020



133,479



323,950



357,796



447,774Stockholders equity(1)


953,894



937,371



1,107,568



1,003,764



944,631     (1)
    
    We recorded stock-based compensation expense (benefit) of
    $(2) million, $(9) million, $10 million and
    $31 million in 2005, 2004, 2003 and 2002, respectively, as
    a result of improper measurement dates, repricing errors,
    modifications and related payroll and tax impact. As part of the
    restatement, for the years ended December 31, 2005, 2004,
    2003 and 2002, we recorded additional non-cash adjustments that
    were previously identified and considered not to be material to
    our consolidated financial statements, relating primarily to the
    timing of revenue recognition and related reserves, recognition
    of grant benefits, accruals for litigation and other expenses,
    reversal of income tax expense related to unrealized foreign
    exchange translation gain and asset impairment charges. These
    adjustments reduced (increased) net loss by $(2) million,
    $8 million and $(7) million in 2005, 2003 and 2002.(2)
    
    We recorded impairment charges of $83 million,
    $13 million, $27 million and $341 million in
    2006, 2005, 2003 and 2002, respectively, and restructuring and
    other charges of $39 million, $18 million and
    $42 million in 2006, 2005 and 2002, respectively, related
    to employee termination costs, as well as industry changes and
    the related realignment of our businesses in response to those
    changes.(3)
    
    On July 31, 2006, we sold our Grenoble, France, subsidiary
    to e2v technologies plc, a British corporation, for
    approximately $140 million. We recorded a gain on the sale
    of approximately $100 million, net of assets transferred,
    working capital adjustments and accrued income taxes.(4)
    
    Includes adjustments of $16 million, $19 million,
    $20 million and $17 million in 2005, 2004, 2003 and
    2002, respectively, to reflect the divestiture of our Grenoble,
    France, subsidiary as Discontinued Operations. Fixed assets, net
    was also reduced for the respective periods by the impairments
    discussed in (2) above. We reclassified $123 million
    in fixed assets to assets held for sale as of December 31,
    2006, relating to our North Tyneside, United Kingdom, and
    Irving, Texas, facilities.(5)
    
    On May 23, 2006, substantially all of the convertible notes
    outstanding were redeemed for approximately $144 million.
    The remaining balance of approximately $1 million was
    called by the Company in June 2006. Debt obligations of
    $23 million have been reclassified and included within
    liabilities related to assets held for sale at December 31,
    2006.(6)
    
    On January 1, 2006, we adopted SFAS No. 123R
    Share-Based Payment. It requires us to measure all
    employee stock-based compensation awards using a fair value
    method and record such expense in our consolidated financial
    statements. As a result, we recorded pre-tax, stock-based
    compensation expense of $9 million for the year ended
    December 31, 2006 under SFAS No. 123R. 40




---



##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  You should read the following discussion of our financial
    condition and results of operations in conjunction with our
    Consolidated Financial Statements and the related Notes to
    Consolidated Financial Statements, and Financial
    Statement Schedules and Supplementary Financial
    Data included in this Annual Report on
    Form 10-K.
    This discussion contains forward-looking statements within the
    meaning of Section 21E of the Securities Exchange Act of
    1934, particularly statements regarding our outlook for 2007
    (including intended cost reduction efforts and the impact
    associated with the adoption of new accounting standards) and
    our expectations regarding the effects of exchange rates. Our
    actual results could differ materially from those projected in
    the forward-looking statements as a result of a number of
    factors, risks and uncertainties, including the risk factors set
    forth in this discussion, and under the caption
    ITEM 1A RISK FACTORS, and elsewhere in this
    Form 10-K.
    Generally, the words may, will,
    could, would, anticipate,
    expect, intend, believe,
    seek, estimate, plan,
    view, continue, the plural of such
    terms, the negatives of such terms, or other comparable
    terminology and similar expressions identify forward-looking
    statements. The information included in this
    Form 10-K
    is provided as of the filing date with the SEC and future events
    or circumstances could differ significantly from the
    forward-looking statements included herein. Accordingly, we
    caution readers not to place undue reliance on such statements.
    Atmel undertakes no obligation to update any forward-looking
    statements in this
    Form 10-K.
  Restatements
    of Consolidated Financial Statements
  Form 10-K
  Form 10-K, Form 10-Q Form 8-K Form 10-Q Form 8-K
  Audit
    Committee Investigation of Historical Stock Option
    Practices
    Form 10-K Form 10-Q
 41




---



##### Table of Contents



Form 10-Q
  Results
    of Audit Committee Investigation
                30-day
         42




---



##### Table of Contents



Improper Measurement Dates for Stock Option
    Grants
  change-of-status
  Stock Option Repricing Programs.
   43




---



##### Table of Contents



Modifications to Stock Options for Terminated Employees
    and Other Related Issues
  
    Stock option cancellation dates that were changed to allow
    employees to exercise stock options beyond the standard
    30-day
    period following termination of employment from the Company,
    Severance agreements offered to certain employees that allowed
    for continued vesting and rights to exercise stock options
    beyond the standard terms of the Companys stock option
    plans,
    Additional vesting and ability to exercise stock options for
    certain employees not terminated from the Companys Equity
    Edge database in a timely manner following their departure from
    the Company, due to administrative errors,
    Stock options awarded to certain employees after their date of
    termination, primarily due to administrative delays in
    processing stock option requests and the lack of systems to
    monitor employee status,
    Exercises of stock options after expiration of the
    10-year term
    of the options. 44




---



##### Table of Contents



Evaluation
    of the Conduct of Management and the Board of
    Directors:
    
    The evidence did not give rise to concern about the integrity of
    any current or former outside director,
    The evidence did not give rise to concern about the integrity of
    any current officer, and
    The individuals who were primarily responsible for directing the
    backdating of stock options were George Perlegos, our former
    Chief Executive Officer, and Mike Ross, our former General
    Counsel.       45




---



##### Table of Contents



Grant
    Date Determination Methodology
         46




---



##### Table of Contents



Use of
    Judgment
    Costs of
    Restatement and Legal Activities
      Restatement
    and Impact on Consolidated Financial Statements
       47




---



##### Table of Contents



48




---



##### Table of Contents



Adjustment to


Adjustment toIncome Tax Expense


Stock-BasedAdjustment to





(Benefit) Relating


CompensationStock-Based


Adjustment to


to Stock-Based


Expense, Net of


Other Adjustments,Fiscal

Compensation


Payroll Tax


Compensation and


Payroll and Income


Net of Income


Total RestatementYear

Expense


Expense (Benefit)


Payroll Tax Expense


Taxes


Taxes


Expense (Benefit)1993

$
268


$
1


$
(110
)

$
1591994


556



151



(293
)


4141995


1,944



688



(799
)


1,8331996


3,056



1,735



(1,449
)


3,3421997


5,520



1,968



(2,516
)


4,9721998


18,695



671



(6,147
)


13,2191999


18,834



1,832



(6,955
)


13,7112000


27,379



7,209



(11,576
)


23,0122001


19,053



1,655



(5,988
)


14,7202002


5,555



1,603



23,477



30,6352003


12,416



(1,980
)






10,436Cumulative through
    December 31, 2003


113,276



15,533



(12,356
)


116,453


$
(13,638
)

$
102,8152004


1,405



(10,395
)






(8,990
)


184



(8,806
)2005


1,561



(3,190
)






(1,629
)


2,082



453Total

$
116,242


$
1,948


$
(12,356
)

$
105,834


$
(11,372
)

$
94,462    49




---



##### Table of Contents



Total








TotalCumulative








CumulativeAdjustments








Adjustmentsthrough








throughDecember 31,








December 31,2005


2005


2004


2003


2003


2002Net loss as previously
    reported





$
(32,898
)

$
(2,434
)





$
(117,996
)

$
(641,796
)Total additional stock-based
    compensation expense (benefit) resulting from:Improper measurement dates for
    stock options

$
72,326



1,778



2,110


$
68,438



3,368



10,032Stock option repricing errors


37,109



(472
)


(773
)


38,354



8,539



(5,154
)Other modifications to stock
    options


6,807



255



68



6,484



509



677Payroll tax expense (benefit)


1,948



(3,190
)


(10,395
)


15,533



(1,980
)


1,603Total pre-tax stock option related
    adjustments


118,190



(1,629
)


(8,990
)


128,809



10,436



7,158Income tax impact of stock option
    related adjustments


(12,356
)










(12,356
)






23,477Total stock option related
    adjustments, net of income taxes


105,834



(1,629
)


(8,990
)


116,453



10,436



30,635Other adjustments, net of income
    taxes


(11,372
)


2,082



184



(13,638
)


(7,849
)


6,751Total expense (benefit)

$
94,462



453



(8,806
)

$
102,815



2,587



37,386Net income (loss), as
    restated





$
(33,351
)

$
6,372






$
(120,583
)

$
(679,182
)  50




---



##### Table of Contents



Years Ended December 31,2001


2000


1999


1998


1997Total additional stock-based
    compensation expense resulting from:Improper measurement dates for
    stock options

$
12,249


$
14,574


$
12,622


$
5,275


$
4,494Stock option repricing errors


6,547



10,423



4,829



13,170



Other modifications to stock
    options


257



2,382



1,383



250



1,026Payroll tax expense


1,655



7,209



1,832



671



1,968Total pre-tax stock option related
    adjustments


20,708



34,588



20,666



19,366



7,488Income tax benefit


(5,988
)


(11,576
)


(6,955
)


(6,147
)


(2,516
)Total stock option related
    adjustments, net of income taxes

$
14,720


$
23,012


$
13,711


$
13,219


$
4,972   Years Ended December 31,1996


1995


1994


1993Total additional stock-based
    compensation expense resulting from:Improper measurement dates for
    stock options

$
3,056


$
1,944


$
556


$
268Stock option repricing errors














Other modifications to stock
    options














Payroll tax expense


1,735



688



151



1Total pre-tax stock option related
    adjustments


4,791



2,632



707



269Income tax benefit


(1,449
)


(799
)


(293
)


(110
)Total stock option related
    adjustments, net of income taxes

$
3,342


$
1,833


$
414


$
159   Government
    Inquiries Relating to Historical Stock Option
    Practices
    Late SEC
    Filings and NASDAQ Delisting Proceedings
  Form 10-K Form 10-Q
 51




---



##### Table of Contents



Form 10-Q Form 10-Q
  Form 10-K Form 10-Q Form 10-Q,
  Shareholder
    Litigation Relating to Historical Stock Option
    Practices
      Other
    Investigations
   52




---



##### Table of Contents



Overview
    of Fiscal 2006 Company Initiatives and Significant
    Transactions
  Form 10-K.
  Impairment
    and Restructuring Actions
    
    Redeployment of resources to accelerate the design and
    development of leading-edge products that target expanding
    markets, including ending development on lesser, unprofitable,
    non-core products. As a result of ending development efforts on
    certain non-core products, we will close several small research
    offices in 2007.
    Our intention to sell our wafer fabrication facilities in North
    Tyneside, United Kingdom and Heilbronn, Germany, in order to
    increase utilization of remaining wafer fabrication facilities
    and reducing future capital expenditure requirements.
    The adoption of a fab-lite strategy, expanding our wafer foundry
    relationships and better utilizing our remaining wafer fabs.
    A reduction in our non-manufacturing workforce of approximately
    300 employees, through a combination of voluntary
    resignations, attrition and other actions.    Sale of
    Grenoble Business
    Repayment
    of Convertible Debt
   53




---



##### Table of Contents



2006
    Operating Results
               54




---



##### Table of Contents



RESULTS
    OF CONTINUING OPERATIONS
  2006


2005


2004As restated


As restated(Amounts in millions and as a percent of net revenues)Net revenues

$
1,670.9



100.0
%

$
1,561.1



100.0
%

$
1,552.4



100.0
%Gross profit


562.1



33.6
%


395.8



25.4
%


438.9



28.3
%Research and development expenses


289.1



17.3
%


268.2



17.2
%


229.7



14.8
%Selling, general and
    administrative expenses


213.6



12.8
%


184.9



11.8
%


169.1



10.9
%Asset impairment charges


82.6



4.9
%


12.7



0.8
%






Restructuring and other charges
    and loss on sale


38.8



2.3
%


17.7



1.1
%






Income (loss) from operations

$
(62.0
)


(3.7
)%

$
(87.7
)


(5.6
)%

$
40.1



2.6
%   Net
    Revenues
    Net
    Revenues by Operating Segment
    % of Net


Change


% ChangeSegment

2006


Revenues


from 2005


from 2005ASIC

$
490,234



29
%

$
(5,322
)


(1
)%Microcontroller


419,858



26
%


104,384



33
%Nonvolatile Memory


375,319



22
%


(17,717
)


(5
)%RF and Automotive


385,476



23
%


28,435



8
%Net revenues

$
1,670,887



100
%

$
109,780



7
%   2005


% of Net


Change


% ChangeSegment

As Restated


Revenues


from 2004


from 2004ASIC

$
495,556



32
%

$
3,635



1
%Microcontroller


315,474



20
%


(21,614
)


(6
)%Nonvolatile Memory


393,036



25
%


(52,468
)


(12
)%RF and Automotive


357,041



23
%


79,114



28
%Net revenues

$
1,561,107



100
%

$
8,667



1
%   2004


% of NetSegment

As Restated


RevenuesASIC

$
491,921



32
%Microcontroller


337,088



22
%Nonvolatile Memory


445,504



28
%RF and Automotive


277,927



18
%Net revenues

$
1,552,440



100
%    55




---



##### Table of Contents



ASIC
        Microcontroller
    end-of-life
  Nonvolatile
    Memory
   56




---



##### Table of Contents



RF and
    Automotive
      Net
    Revenues by Geographic Area
    Change


% Change





Change


% ChangeRegion

2006


from 2005


from 2005


2005


from 2004


from 2004


2004(In thousands)United States

$
241,379


$
30,980



15
%

$
210,399


$
(48,800
)


(19
)%

$
259,199Europe


541,254



85,704



19
%


455,550



(13,967
)


(3
)%


469,517Asia


874,226



(2,638
)


(1
)%


876,864



75,956



9
%


800,908Other*


14,028



(4,266
)


(23
)%


18,294



(4,522
)


(20
)%


22,816Total net revenues

$
1,670,887


$
109,780



7
%

$
1,561,107


$
8,667



1
%

$
1,552,440     *
    
    Primarily includes the Philippines, South Africa, and Central
    and South America             57




---



##### Table of Contents



Revenues
    and Costs  Impact from Changes to Foreign Exchange
    Rates
          Cost of
    Revenues and Gross Margin
      lower-than-expected
 58




---



##### Table of Contents



lower-of-cost
    Research
    and Development
            Selling,
    General and Administrative
   59




---



##### Table of Contents



Assets
    Held for Sale and Impairment Charges
  held-and-used held-for-sale
  held-for-sale
 60




---



##### Table of Contents



(in thousands)
  Held for
    Sale at December 31, 2006:
  NorthTyneside


Irving


TotalNon-current assetsFixed assets, net

$
87,941


$
35,040


$
122,981Intangible and other assets


816







816Total non-current assets held
    for sale

$
88,757


$
35,040


$
123,797Current liabilitiesCurrent portion of long-term debt

$
70,340


$



$
70,340Trade accounts payable


17,329







17,329Accrued liabilities and other


46,224







46,224Total current liabilities
    related to assets held for sale


133,893







133,893Long-term debt and capital lease
    obligations less current portion


313







313Total non-current liabilities
    related to assets held for sale


313







313Total liabilities related to
    assets held for sale

$
134,206


$



$
134,206   Irving,
    Texas, Facility
      North
    Tyneside, United Kingdom, and Heilbronn, Germany,
    Facilities
   61




---



##### Table of Contents



Colorado
    Springs, Colorado,
    Construction-In-Progress
    Restructuring
    and Other Charges and Loss on Sale
    
    Redeployment of resources to accelerate the design and
    development of leading-edge products that target expanding
    markets, including ending development on lesser, unprofitable,
    non-core products.
    Our intention to sell our wafer fabrication facilities in North
    Tyneside, United Kingdom and Heilbronn, Germany, in order to
    increase utilization of remaining wafer fabrication facilities
    and reducing future capital expenditure requirements.
    The adoption of a fab-lite strategy, expanding our wafer foundry
    relationships and better utilizing our remaining wafer fabs.
    A reduction in our non-manufacturing workforce of approximately
    300 employees, through a combination of voluntary
    resignations, attrition and other actions.      
    one-time involuntary termination severance benefit costs related
    to the termination of approximately 193 employees primarily in
    manufacturing, research and development, and administration, 62




---



##### Table of Contents




    the write-down to zero of building improvements removed from
    operations to zero following the relocation of certain
    manufacturing activities to Asia, and
    a loss incurred as a result of the sale of our Nantes
    fabrication facility, including the cost of transferring
    approximately 319 employees to XbyBus SAS, a French corporation
    (XbyBus SAS)        Legal
    Awards and Settlements
    Interest
    and Other Expenses, Net
      Provision
    for Income Taxes
     63




---



##### Table of Contents



non-U.S. subsidiaries
      non-U.S. jurisdictions
           64




---



##### Table of Contents



Stock-Based
    Compensation
      Defined
    Benefit Pension Plans
    Adoption
    of SFAS No. 158
    Discontinued
    Operations
  Form 10-K
       65




---



##### Table of Contents



(in thousands)
  Proceeds, net of working capital
    adjustments

$
122,610Costs of disposition


(2,537
)Net proceeds from the sale


120,073Less: book value of net assets sold


(14,866
)Cumulative translation adjustment


4,631Gain on sale of discontinued
    operations, before income taxes


109,838Provision for income taxes


(9,506
)Gain on sale of discontinued
    operations, net of income taxes

$
100,332   (in thousands, except
    per share data)
  Years Ended December 31,2006


2005


2004Net revenues

$
79,871


$
114,608


$
97,282Operating costs and expenses


57,509



91,838



84,288Income from discontinued
    operations, before income taxes


22,362



22,770



12,994Gain on sale of discontinued
    operations, before income taxes


109,838







Income from and gain on sale of
    discontinued operations


132,200



22,770



12,994Less: provision for income taxes


(18,899
)


(6,494
)


(1,120
)Income from and gain on sale of
    discontinued operations, net of income taxes

$
113,301


$
16,276


$
11,874Income from and gain on sale of
    discontinued operations, net of income taxes, per common share:Basic and diluted

$
0.23


$
0.03


$
0.02Weighted-average shares used in
    basic and diluted per share calculations


487,413



481,534



476,063   Liquidity
    and Capital Resources
   66




---



##### Table of Contents



Operating Activities:
    work-in-process
          Investing Activities:
 67




---



##### Table of Contents



Financing Activities:
        non-U.S. trade non-U.S. trade
 68




---



##### Table of Contents



Contractual
    Obligations
    Payments Due by PeriodContractual Obligations:

Up to 1 Year


2-3 Years


4-5 Years


After 5 Years


Total(In thousands)Notes payable

$
74,923


$
3,749


$



$
1,878


$
80,550Capital leases


33,728



18,992



9,643



1,071



63,434Line of credit






25,000











25,000Total debt obligations


108,651



47,741



9,643



2,949



168,984Capital purchase commitments


11,159















11,159Long-term supply agreement
    obligation(a)


23,989



11,940











35,929Termination payments on supply
    contract(b)


1,021



2,268



2,608



2,999



8,896Long-term gas supply agreement


1,667



3,542



3,801



10,954



19,964Operating leases


25,863



25,297



5,575



3,592



60,327Other long-term obligations(c)


13,518



23,808



20,000



31,117



88,443Total other commitments


77,217



66,855



31,984



48,662



224,718Add: interest


9,167



7,735



1,256



238



18,396Total

$
195,035


$
122,331


$
42,883


$
51,849


$
412,098Summary of contractual
    obligations relating to:Assets held for sale

$
73,951


$
3,888


$
3,801


$
10,954


$
92,594Continuing operations


121,084



118,443



39,082



40,895



319,504Total

$
195,035


$
122,331


$
42,883


$
51,849


$
412,098     (a)
    
    On December 6, 2005, Atmel sold its Nantes, France
    fabrication facility, and the related foundry activities, to
    XbyBus SAS. The facility was owned by the Company since 1998 and
    was comprised of five buildings totaling 131,000 square
    feet, manufacturing BiCMOS, CMOS and non-volatile technologies.
    The facility employed a total of 603 persons, of which 284
    employees were retained by the Company and the remaining 319
    manufacturing employees were transferred to XbyBus SAS.
    Concurrent with the sale, the Company entered into a three-year
    supply agreement with a subsidiary of XbyBus SAS, whereby the
    Company is required to purchase a minimum volume of wafers
    through 2008. The supply agreement requires a minimum purchase
    of approximately $59 million, of which approximately
    $36 million is still required over the term of the
    agreement (see Note 17 of Notes to Consolidated Financial
    Statements for further discussion).(b)
    
    As a result of our restructuring actions in 2002, we incurred a
    charge relating to our Irving, Texas, wafer fabrication facility
    of approximately $12 million for terminating a contract
    with a supplier. The obligation was estimated using the present
    value of the future payments which totaled approximately
    $9 million as of December 31, 2006 (see Note 17
    of Notes to Consolidated Financial Statements for further
    discussion). On May 1, 2007, we announced the sale of our
    Irving, Texas, fab for approximately $37 million in cash.(c)
    
    Other long-term obligations consist principally of future
    repayments of approximately $75 million of advances from
    customers, of which approximately $10 million is due within
    1 year, and have been classified as current liabilities
    (see Note 3 of Notes to Consolidated Financial Statements
    for further discussion).   69




---



##### Table of Contents



Off-Balance
    Sheet Arrangements (Including Guarantees)
      Recent
    Accounting Pronouncements
     70




---



##### Table of Contents



Critical
    Accounting Policies and Estimates
      Revenue
    recognition
      non-U.S. based
 71




---



##### Table of Contents



Allowance
    for Doubtful Accounts and Sales Returns
        Accounting
    for income taxes
        Valuation
    of inventory
  first-in,
 72




---



##### Table of Contents



Fixed
    Assets
  and/or
        Stock-Based
    Compensation
   73




---



##### Table of Contents



Litigation
    ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Interest
    Rate Risk
   74




---



##### Table of Contents



TotalVariable-RateDebtOutstanding atPayments Due by Year


December 31,2007


2008


2009


Thereafter


200630 day USD LIBOR
    weighted-average interest rate basis(1)  Capital
    Leases

$
3,056


$



$



$



$
3,056Total of 30 day USD LIBOR
    rate debt

$
3,056


$



$



$



$
3,05690 day USD LIBOR
    weighted-average interest rate basis(1)  Revolving
    Line of Credit Due 2008

$



$
25,000


$



$



$
25,000Senior Secured Term Loan Due
    2009


8,635



8,333



4,167







21,135Total of 90 day USD LIBOR
    rate debt

$
8,635


$
33,333


$
4,167


$



$
46,13590 day USD LIBOR
    weighted-average interest rate basis(1)  Capital
    Leases

$
22,881


$
9,063


$
4,284


$
9,640


$
45,868Total of 90 day USD LIBOR
    rate debt

$
22,881


$
9,063


$
4,284


$
9,640


$
45,868360 day USD LIBOR
    weighted-average interest rate basis(1)  Senior
    Secured Term Loan Due 2008

$
5,000


$
3,750


$



$



$
8,750Total of 360 day USD LIBOR
    rate debt

$
5,000


$
3,750


$



$



$
8,75030/60/90 day
    EURIBOR interest rate basis(1)  Senior Secured Term
    Loan Due 2007

$
6,670


$



$



$



$
6,670Total of
    30/60/90 day
    EURIBOR debt rate

$
6,670


$



$



$



$
6,670Total variable-rate debt

$
46,242


$
46,146


$
8,451


$
9,640


$
110,479     (1)
    
    Actual interest rates include a spread over the basis amount.   75




---



##### Table of Contents



InterestExpense withInterest Expense Given an Interest RateDecreaseby X Basis Points


no Change in


Interest Expense Given an Interest RateIncreaseby X Basis Points150 BPS


100 BPS


50 BPS


Interest Rate


50 BPS


100 BPS


150 BPSInterest expense

$
4,119


$
4,671


$
5,223


$
5,776


$
6,328


$
6,880


$
7,433   Foreign
    Currency Risk
       76




---



##### Table of Contents



ITEM 8.
    CONSOLIDATED
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  PageConsolidated Financial
    Statements of Atmel CorporationConsolidated
    Statements of Operations for the Years Ended December 31,
    2006, 2005 and 2004


78Consolidated
    Balance Sheets as of December 31, 2006 and 2005


79Consolidated
    Statements of Cash Flows for the Years Ended December 31,
    2006, 2005 and 2004


80Consolidated
    Statements of Stockholders Equity and Comprehensive Income
    (Loss) for the Years Ended December 31, 2006, 2005 and
    2004


81Notes to
    Consolidated Financial Statements


82Report of
    Independent Registered Public Accounting Firm


144Financial Statement
    SchedulesThe following Financial Statement
    Schedules for the years ended December 31, 2006, 2005 and
    2004 should be read in conjunction with the Consolidated
    Financial Statements, and related notes thereto:Schedule II
    Valuation and Qualifying Accounts


146Schedules not listed above have
    been omitted because they are not applicable or are not required
    or the information required to be set forth therein is included
    in the Consolidated Financial Statements or notes thereto.Supplementary Financial
    DataSelected Quarterly
    Financial Data (unaudited) for the Years Ended December 31,
    2006 and 2005


147  77




---



##### Table of Contents



Atmel
    Corporation



CONSOLIDATED
    STATEMENTS OF OPERATIONS  Years Ended December 31,(In thousands, except per share data)

2006


2005


2004As restated(1)


As restated(1)Net revenues

$
1,670,887


$
1,561,107


$
1,552,440Operating expensesCost of revenues


1,108,769



1,165,338



1,113,473Research and development


289,108



268,164



229,722Selling, general and administrative


213,641



184,876



169,109Asset impairment charges


82,582



12,757



Restructuring and other charges
    and loss on sale


38,763



17,682



Total operating
    expenses


1,732,863



1,648,817



1,512,304Income (loss) from
    operations


(61,976
)


(87,710
)


40,136Legal awards and settlements






44,369



Interest and other expenses, net


(11,726
)


(19,349
)


(21,294
)Income (loss) from continuing
    operations before income taxes


(73,702
)


(62,690
)


18,842Benefit from (provision for)
    income taxes relating to continuing operations


(24,949
)


13,063



(24,344
)Loss from continuing operations


(98,651
)


(49,627
)


(5,502
)Income from discontinued
    operations, net of provision for income taxes of $9,393 in 2006,
    $6,494 in 2005 and $1,120 in 2004


12,969



16,276



11,874Gain on sale of discontinued
    operations, net of provision for income taxes of $9,506 in 2006


100,332







Net income (loss)

$
14,650


$
(33,351
)

$
6,372Basic and diluted net income
    (loss) per common share:Loss from continuing operations

$
(0.20
)

$
(0.10
)

$
(0.01
)Income from discontinued
    operations, net of income taxes


0.02



0.03



0.02Gain on sale of discontinued
    operations, net of income taxes


0.21







Net income (loss)

$
0.03


$
(0.07
)

$
0.01Weighted-average shares used in
    basic and diluted net income (loss) per share calculations


487,413



481,534



476,063     (1)
    
    See Note 2 Restatements of Consolidated Financial
    Statements, to Consolidated Financial Statements  The accompanying notes are an integral part of these
    Consolidated Financial Statements.
 78




---



##### Table of Contents



Atmel
    Corporation



CONSOLIDATED
    BALANCE SHEETS  December 31,2006


2005As restated(1)(In thousands, except per share data)ASSETSCurrent assetsCash and cash equivalents

$
410,480


$
300,323Short-term investments


56,264



47,932Accounts receivable, net of
    allowance for doubtful accounts of $3,605 in 2006 and $3,944 in
    2005


227,031



235,129Inventories


339,799



288,220Current assets of discontinued
    operations






28,800Other current assets


118,965



100,129Total current assets


1,152,539



1,000,533Fixed assets, net


514,349



874,618Non-current assets held for sale


123,797



Non-current assets of discontinued
    operations






16,330Intangible and other assets


27,854



42,455Total assets

$
1,818,539


$
1,933,936LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt

$
38,311


$
112,107Convertible notes






142,401Trade accounts payable


145,079



125,724Accrued and other liabilities


231,237



187,365Liabilities related to assets held
    for sale


133,893



Liabilities of discontinued
    operations






37,838Deferred income on shipments to
    distributors


18,856



18,345Total current
    liabilities


567,376



623,780Long-term debt less current portion


60,020



133,184Convertible notes less current
    portion






295Non-current liabilities related to
    assets held for sale


313



Non-current liabilities of
    discontinued operations






4,493Other long-term liabilities


236,936



234,813Total liabilities


864,645



996,565Commitments and contingencies
    (Note 11)Stockholders
    equityCommon stock; par value $0.001;
    Authorized: 1,600,000 shares; Shares issued and
    outstanding: 488,844 at December 31, 2006 and 483,366 at
    December 31, 2005


489



483Additional paid-in capital


1,418,004



1,400,261Unearned stock-based compensation






(2,942
)Accumulated other comprehensive
    income


107,237



126,055Accumulated deficit


(571,836
)


(586,486
)Total stockholders
    equity


953,894



937,371Total liabilities and
    stockholders equity

$
1,818,539


$
1,933,936     (1)
    
    See Note 2 Restatements of Consolidated Financial
    Statements, to Consolidated Financial Statements  The accompanying notes are an integral part of these
    Consolidated Financial Statements.
 79




---



##### Table of Contents



Atmel
    Corporation



CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Years Ended December 31,2006


2005


2004As restated(1)


As restated(1)(In thousands)Cash flows from operating
    activitiesNet income (loss)

$
14,650


$
(33,351
)

$
6,372Adjustments to reconcile net income
    (loss) to net cash provided by operating activitiesDepreciation and amortization


225,006



290,748



298,426Asset impairment charges


82,582



12,757



Non-cash restructuring charges and
    loss on sale






4,068



Deferred taxes


6,121



2,691



(18,837
)Gain on sale of discontinued
    operations


(109,838
)






Gain on sale of fixed assets


(2,624
)


(2,405
)


(664
)Other non-cash losses (gains)


8,726



(4,120
)


(1,567
)Provision for (recovery of)
    doubtful accounts receivable


106



(5,575
)


(4,889
)Accrued interest on zero coupon
    convertible debt


2,819



9,893



9,800Accrued interest on other long-term
    debt


1,880



2,415



2,094Stock-based compensation expense


9,118



1,850



1,405Changes in operating assets and
    liabilities, net of acquisitionsAccounts receivable


8,054



1,737



(11,149
)Inventories


(48,848
)


25,984



(70,456
)Current and other assets


(27,608
)


(15,922
)


(32,657
)Trade accounts payable


26,440



(61,538
)


39,241Accrued and other liabilities


82,855



(2,249
)


1,510Income tax payable


16,526



(24,131
)


7,840Deferred income on shipments to
    distributors


520



(2,779
)


1,967Net cash provided by operating
    activities


296,485



200,073



228,436Cash flows from investing
    activitiesAcquisitions of fixed assets


(83,330
)


(169,126
)


(241,428
)Proceeds from the sale of fixed
    assets


4,466



2,238



4,558Net proceeds from sale of
    discontinued operations


120,073







Proceeds from the sale of interest
    in privately held companies and other


1,799



6,746



Acquisitions of intangible assets


(549
)


(7,821
)


(8,150
)Decrease in restricted cash










26,835Purchases of short-term investments


(22,290
)


(16,110
)


(53,834
)Sales or maturities of short-term
    investments


15,535



26,790



41,283Net cash provided by (used in)
    investing activities


35,704



(157,283
)


(230,736
)Cash flows from financing
    activitiesProceeds from equipment financing
    and other debt


25,000



146,242



70,000Principal payments on capital
    leases and other debt


(122,032
)


(139,308
)


(140,751
)Repurchase of convertible notes


(145,515
)


(80,846
)


Issuance of common stock


11,206



11,901



12,168Net cash used in financing
    activities


(231,341
)


(62,011
)


(58,583
)Effect of exchange rate changes on
    cash and cash equivalents


9,309



(26,806
)


21,346Net increase (decrease) in cash and
    cash equivalents


110,157



(46,027
)


(39,537
)Cash and cash equivalents at
    beginning of year


300,323



346,350



385,887Cash and cash equivalents at end
    of year

$
410,480


$
300,323


$
346,350Supplemental cash flow
    disclosures:Interest paid

$
14,080


$
15,434


$
17,273Income taxes paid, net


15,077



11,851



39,210Increases (decreases) in accounts
    payable related to fixed asset purchases


5,616



(75,748
)


81,918Fixed assets acquired under capital
    leases


3,925



112,815



7,073     (1)
    
    See Note 2 Restatements of Consolidated Financial
    Statements, to Consolidated Financial Statements  The accompanying notes are an integral part of these
    Consolidated Financial Statements.
 80




---



##### Table of Contents



Atmel
    Corporation



CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
    AND COMPREHENSIVE INCOME (LOSS)  AccumulatedCommon Stock


Additional


Unearned





OtherPar


Paid-In


Stock-Based


Accumulated


ComprehensiveShares


Value


Capital


Compensation


Deficit


Income (Loss)


TotalAs restated


As restated


As restated


As restated


As restated(1)


(1)


(1)


(1)


(1)(In thousands)Balances, December 31,
    2003, as previously reported


473,047


$
473


$
1,269,071


$



$
(456,692
)

$
205,265


$
1,018,117Cumulative effect of
    restatements










108,265



(7,331
)


(102,815
)


(12,472
)


(14,353
)Balances, December 31,
    2003, as restated(1)


473,047


$
473


$
1,377,336


$
(7,331
)

$
(559,507
)

$
192,793


$
1,003,764Comprehensive income:Net income


















6,372







6,372Unrealized gains on derivative
    instruments, net of tax






















3,918



3,918Unrealized losses on investments,
    net of tax






















(9
)


(9
)Foreign currency translation
    adjustments






















79,950



79,950Total comprehensive income


























90,231Amortization of unearned
    stock-based compensation














2,110











2,110Non-employee stock-based
    compensation expense










68















68Credit to stock compensation due to
    variable accounting










(773
)














(773
)Reversal of unearned stock-based
    compensation expense due to employee terminations










(143
)


143











Sales of common stock:Exercise of options


1,973



2



4,193















4,195Employee stock purchase plan


2,906



3



7,970















7,973Balances, December 31,
    2004, as
    restated(1)


477,926


$
478


$
1,388,651


$
(5,078
)

$
(553,135
)

$
276,652


$
1,107,568Comprehensive loss:Net loss


















(33,351
)






(33,351
)Minimum pension liability
    adjustments






















(2,647
)


(2,647
)Realization of gains on derivative
    instruments, net of tax






















(3,918
)


(3,918
)Unrealized gains on investments,
    net of tax






















335



335Foreign currency translation
    adjustments






















(144,367
)


(144,367
)Total comprehensive loss


























(183,948
)Amortization of unearned
    stock-based compensation














1,779











1,779Non-employee stock-based
    compensation expense










543















543Credit to stock compensation due to
    variable accounting










(472
)














(472
)Reversal of unearned stock-based
    compensation expense due to employee terminations










(357
)


357











Sales of common stock:Exercise of options


1,758



3



3,507















3,510Employee stock purchase plan


3,682



2



8,389















8,391Balances, December 31,
    2005, as
    restated(1)


483,366


$
483


$
1,400,261


$
(2,942
)

$
(586,486
)

$
126,055


$
937,371Comprehensive loss:Net income


















14,650







14,650Minimum pension liability
    adjustments






















561



561Unrealized gains on investments,
    net of tax






















1,315



1,315Foreign currency translation
    adjustments






















80,631



80,631Foreign currency translation gains
    credited to asset impairment charges (see Note 16)






















(97,725
)


(97,725
)Total comprehensive loss


























(568
)Cumulative effect adjustment on
    adoption of SFAS No. 158, net of income taxes






















(3,600
)


(3,600
)Stock-based compensation expense










9,485















9,485Sales of common stock:Exercise of options


3,406



4



7,382















7,386Employee stock purchase plan


2,072



2



3,818















3,820Elimination of unearned stock-based
    compensation upon adoption of SFAS No. 123R










(2,942
)


2,942











Balances, December 31,
    2006


488,844


$
489


$
1,418,004


$



$
(571,836
)

$
107,237


$
953,894     (1)
    
    See Note 2 Restatements of Consolidated Financial
    Statements, to Consolidated Financial Statements  The accompanying notes are an integral part of these
    Consolidated Financial Statements.
 81




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (In
    thousands, except per share data, employee data, and where
    otherwise indicated)
  Note 1  SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES
  Nature of
    Operations
  non-U.S. original
    Principles
    of Consolidation
    Reclassifications
    Use of
    Estimates
    Fair
    Value of Financial Instruments
  and/or
 82




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Cash and
    Cash Equivalents
      Short-Term
    Investments
  available-for-sale. Available-for-sale available-for-sale
  other-than-temporary.
  Accounts
    Receivable
    Inventories
  first-in,
  Fixed
    Assets
    Buildings and improvements


10 to 20 yearsMachinery, equipment and software


2 to 5 yearsFurniture and fixtures


5 years     Investments
    in Privately-Held Companies
   83




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   other-than-temporary.
  Revenue
    Recognition
    non-U.S. based
  Royalty
    Expense Recognition
    Grant
    Recognition
    Years Ended December 31,

2006


2005


2004Cost of revenues

$
9,654


$
11,109


$
7,989Research and development expenses


14,573



25,538



14,629Total

$
24,227


$
36,647


$
22,618  84




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Advertising
    Costs
    Foreign
    Currency Translation
    Stock-Based
    Compensation
           85




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Certain
    Risks and Concentrations
    period-to-period
    Income
    Taxes
  non-U.S. subsidiaries,
   86




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Long-Lived
    Assets
      Derivative
    Instruments
       87




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       Balance
    Sheet Hedges
    Cash Flow
    Hedges
    Net
    Income (Loss) Per Share
   88




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Product
    Warranties
    Research
    and Development and Software Development Costs
    Recent
    Accounting Pronouncements
         89




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 2  RESTATEMENTS
    OF CONSOLIDATED FINANCIAL STATEMENTS
  Audit
    Committee Investigation of Historical Stock Option
    Practices
    Form 10-K Form 10-Q Form 10-Q
  Results
    of Audit Committee Investigation
                30-day
   90




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              91




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Improper Measurement Dates for Stock Option
    Grants
  change-of-status
  Stock Option Repricing Programs.
         92




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Modifications to Stock Options for Terminated Employees
    and Other Related Issues
  
    Stock option cancellation dates that were changed to allow
    employees to exercise stock options beyond the standard
    30-day
    period following termination of employment from the Company,
    Severance agreements offered to certain employees that allowed
    for continued vesting and rights to exercise stock options
    beyond the standard terms of the Companys stock option
    plans,
    Additional vesting and ability to exercise stock options for
    certain employees not terminated from the Companys Equity
    Edge database in a timely manner following their departure from
    the Company, due to administrative errors,
    Stock options awarded to certain employees after their date of
    termination, primarily due to administrative delays in
    processing stock option requests and the lack of systems to
    monitor employee status, and
    Exercises of stock options after expiration of the
    10-year term
    of the options.      Evaluation
    of the Conduct of Management and the Board of
    Directors:
    
    The evidence did not give rise to concern about the integrity of
    any current or former outside director,
    The evidence did not give rise to concern about the integrity of
    any current officer, and 93




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    The individuals who were primarily responsible for directing the
    backdating of stock options were George Perlegos, the
    Companys former Chief Executive Officer, and Mike Ross,
    the Companys former General Counsel.           94




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Grant
    Date Determination Methodology
             95




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Use of
    Judgment
    Costs of
    Restatement and Legal Activities
    Restatement
    and Impact on Consolidated Financial Statements
         96




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Adjustment toIncome Tax


Adjustment toExpense (Benefit)


Stock-BasedRelating to


CompensationAdjustment to


Adjustment to


Stock-Based


Expense,


Other


TotalStock-Based


Payroll Tax


Compensation


Net of


Adjustments,


RestatementFiscal

Compensation


Expense


and Payroll Tax


Payroll and


Net of Income


ExpenseYear

Expense


(Benefit)


Expense


Income Taxes


Taxes


(Benefit)1993

$
268


$
1


$
(110
)

$
1591994


556



151



(293
)


4141995


1,944



688



(799
)


1,8331996


3,056



1,735



(1,449
)


3,3421997


5,520



1,968



(2,516
)


4,9721998


18,695



671



(6,147
)


13,2191999


18,834



1,832



(6,955
)


13,7112000


27,379



7,209



(11,576
)


23,0122001


19,053



1,655



(5,988
)


14,7202002


5,555



1,603



23,477



30,6352003


12,416



(1,980
)






10,436Cumulative through
    December 31, 2003


113,276



15,533



(12,356
)


116,453


$
(13,638
)

$
102,8152004


1,405



(10,395
)






(8,990
)


184



(8,806
)2005


1,561



(3,190
)






(1,629
)


2,082



453Total

$
116,242


$
1,948


$
(12,356
)

$
105,834


$
(11,372
)

$
94,462  97




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Income TaxStock-Based








ExpenseCompensation


Stock-Based


Stock-Based


(Benefit) Relating


Stock-BasedExpense


Compensation


Compensation


to Stock-Based


CompensationFiscal

as Previously


Expense


Expense, as


Compensation


Expense, Net ofYear

Reported


Adjustments


Restated


Expense


Income Tax1993

$



$
268


$
268


$
(110
)

$
1581994






556



556



(230
)


3261995






1,944



1,944



(527
)


1,4171996






3,056



3,056



(780
)


2,2761997






5,520



5,520



(1,740
)


3,7801998






18,695



18,695



(5,889
)


12,8061999






18,834



18,834



(6,228
)


12,6062000






27,379



27,379



(8,770
)


18,6092001






19,053



19,053



(5,385
)


13,6682002






5,555



5,555



23,477



29,0322003


3,301



12,416



15,717







15,717Cumulative through
    December 31, 2003


3,301



113,276



116,577



(6,182
)


110,3952004






1,405



1,405







1,4052005


289



1,561



1,850







1,850Total

$
3,590


$
116,242


$
119,832


$
(6,182
)

$
113,650    98




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Total








TotalCumulative








CumulativeAdjustments








Adjustmentsthrough








throughDecember 31,








December 31,2005


2005


2004


2003Net loss as previously
    reported





$
(32,898
)

$
(2,434
)Total additional stock-based
    compensation expense (benefit) resulting from:Improper measurement dates for
    stock options

$
72,326



1,778



2,110


$
68,438Stock option repricing errors


37,109



(472
)


(773
)


38,354Other modifications to stock
    options


6,807



255



68



6,484Payroll tax expense (benefit)


1,948



(3,190
)


(10,395
)


15,533Total pre-tax stock option related
    adjustments


118,190



(1,629
)


(8,990
)


128,809Income tax impact of stock option
    related adjustments


(12,356
)










(12,356
)Total stock option related
    adjustments, net of income taxes


105,834



(1,629
)


(8,990
)


116,453Other adjustments, net of income
    taxes


(11,372
)


2,082



184



(13,638
)Total expense (benefit)

$
94,462



453



(8,806
)

$
102,815Net income (loss), as
    restated





$
(33,351
)

$
6,372  99




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended December 31,

2003


2002


2001


2000


1999


1998Total additional stock-based
    compensation expense resulting from:Improper measurement dates for
    stock options

$
3,368


$
10,032


$
12,249


$
14,574


$
12,622


$
5,275Stock option repricing errors


8,539



(5,154
)


6,547



10,423



4,829



13,170Other modifications to stock
    options


509



677



257



2,382



1,383



250Payroll tax expense (benefit)


(1,980
)


1,603



1,655



7,209



1,832



671Total pre-tax stock option related
    adjustments


10,436



7,158



20,708



34,588



20,666



19,366Income tax expense (benefit)






23,477



(5,988
)


(11,576
)


(6,955
)


(6,147
)Total stock option related
    adjustments, net of income taxes

$
10,436


$
30,635


$
14,720


$
23,012


$
13,711


$
13,219   Years Ended December 31,

1997


1996


1995


1994


1993Total additional stock-based
    compensation expense resulting from:Improper measurement dates for
    stock options

$
4,494


$
3,056


$
1,944


$
556


$
268Stock option repricing errors


















Other modifications to stock
    options


1,026















Payroll tax expense


1,968



1,735



688



151



1Total pre-tax stock option related
    adjustments


7,488



4,791



2,632



707



269Income tax benefit


(2,516
)


(1,449
)


(799
)


(293
)


(110
)Total stock option related
    adjustments, net of income taxes

$
4,972


$
3,342


$
1,833


$
414


$
159   Government
    Inquiries Relating to Historical Stock Option
    Practices
    Late SEC
    Filings and NASDAQ Delisting Proceedings
  Form 10-K Form 10-Q
 100




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Form 10-Q Form 10-Q
 101




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Consolidated
    Statement of Operations
  As Restated andDiscontinued


Adjusted forAs Previously


Restatement


As


Operations


DiscontinuedYear Ended December 31, 2005

Reported


Adjustments(2)


Restated


Adjustments(1)


Operations(In thousands, except per share data)Net revenues

$
1,675,715


$



$
1,675,715


$
(114,608
)

$
1,561,107Operating expensesCost of revenues*


1,241,970



344



1,242,314



(76,976
)


1,165,338Research and development*


276,608



(1,070
)


275,538



(7,374
)


268,164Selling, general and
    administrative*


192,327



257



192,584



(7,708
)


184,876Asset impairment charges


12,757







12,757







12,757Restructuring and other charges
    and los on sale


18,209



(189
)


18,020



(338
)


17,682Total operating
    expenses


1,741,871



(658
)


1,741,213



(92,396
)


1,648,817Income (loss) from
    operations


(66,156
)


658



(65,498
)


(22,212
)


(87,710
)Legal awards and settlements


44,369







44,369







44,369Interest and other expenses, net


(18,801
)


10



(18,791
)


(558
)


(19,349
)Income (loss) from continuing
    operations before income taxes


(40,588
)


668



(39,920
)


(22,770
)


(62,690
)Benefit from (provision for)
    income taxes


7,690



(1,121
)


6,569



6,494



13,063Income (loss) from continuing
    operations


(32,898
)


(453
)


(33,351
)


(16,276
)


(49,627
)Income from discontinued
    operations, net of income taxes














16,276



16,276Net income (loss)

$
(32,898
)

$
(453
)

$
(33,351
)

$



$
(33,351
)Basic net income (loss) per
    common share:Income (loss) from continuing
    operations

$
(0.07
)

$
(0.00
)

$
(0.07
)

$
(0.03
)

$
(0.10
)Income from discontinued
    operations, net of income taxes














0.03



0.03Net income (loss)

$
(0.07
)

$
(0.00
)

$
(0.07
)

$



$
(0.07
)Weighted-average shares used in
    basic net income (loss) per share calculations


481,534



481,534



481,534



481,534



481,534Diluted net income (loss) per
    common share:Income (loss) from continuing
    operations

$
(0.07
)

$
(0.00
)

$
(0.07
)

$
(0.03
)

$
(0.10
)Income from discontinued
    operations, net of income taxes














0.03



0.03Net income (loss)

$
(0.07
)

$
(0.00
)

$
(0.07
)

$



$
(0.07
)Weighted-average shares used in
    diluted net income (loss) per share calculations


481,534



481,534



481,534



481,534



481,534  102




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    *
    
    Includes the following amounts related to stock-based
    compensation expense (excluding payroll taxes):  AsPreviously


Restatement


AsReported


Adjustments


RestatedCost of revenues*

$



$
272


$
272Research and development*






373



373Selling, general and
    administrative*


289



916



1,205   (1)
    
    Amounts have been adjusted to reflect the divestiture of the
    Companys Grenoble, France, subsidiary. Results from the
    Grenoble subsidiary are classified as Discontinued Operations.
    See Note 18 for further discussion.(2)
    
    Restatement adjustments for stock-based compensation expenses,
    relating to improper measurement dates, repricing errors, other
    stock option modifications and related payroll and income tax
    expense (benefit) impacts.  Consolidated
    Statement of Operations
  As Restated andAs


Restatement





Discontinued


Adjusted forPreviously


Adjustments


As


Operations


DiscontinuedYear Ended December 31, 2004

Reported


(2)(3)


Restated


Adjustments(1)


Operations(In thousands, except per share data)Net revenues

$
1,649,722


$



$
1,649,722


$
(97,282
)

$
1,552,440Operating
    expensesCost of revenues*


1,181,746



734



1,182,480



(69,007
)


1,113,473Research and development*


247,447



(8,021
)


239,426



(9,704
)


229,722Selling, general and
    administrative*


174,598



2,249



176,847



(7,738
)


169,109Total operating
    expenses


1,603,791



(5,038
)


1,598,753



(86,449
)


1,512,304Income from
    operations


45,931



5,038



50,969



(10,833
)


40,136Interest and other expenses, net


(20,234
)






(20,234
)


(1,060
)


(21,294
)Income from continuing
    operations before income taxes


25,697



5,038



30,735



(11,893
)


18,842Benefit from (provision for)
    income taxes


(28,131
)


2,667



(25,464
)


1,120



(24,344
)Income (loss) from continuing
    operations


(2,434
)


7,705



5,271



(10,773
)


(5,502
)Income from discontinued
    operations, net of income taxes






1,101



1,101



10,773



11,874Net income (loss)

$
(2,434
)

$
8,806


$
6,372


$



$
6,372Basic net income (loss) per
    common share:Income (loss) from continuing
    operations

$
(0.01
)

$
0.02


$
0.01


$
(0.02
)

$
(0.01
)Income from discontinued
    operations, net of income taxes






0.00



0.00



0.02



0.02Net income (loss)

$
(0.01
)

$
0.02


$
0.01


$



$
0.01Weighted-average shares used in
    basic net income (loss) per share calculations


476,063



476,063



476,063



476,063



476,063Diluted net income (loss) per
    common share:Income (loss) from continuing
    operations

$
(0.01
)

$
0.02


$
0.01


$
(0.02
)

$
(0.01
)Income from discontinued
    operations, net of income taxes






0.00



0.00



0.02



0.02 103




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  As Restated andAs


Restatement





Discontinued


Adjusted forPreviously


Adjustments


As


Operations


DiscontinuedYear Ended December 31, 2004

Reported


(2)(3)


Restated


Adjustments(1)


Operations(In thousands, except per share data)Net income (loss)

$
(0.01
)

$
0.02


$
0.01


$



$
0.01Weighted-average shares used in
    diluted net income (loss) per share calculations


476,063



476,063



476,063



476,063



476,063     *
    
    Includes the following amounts related to stock-based
    compensation expense (benefit) (excluding payroll taxes):  AsPreviously


Restatement


AsReported


Adjustments


RestatedCost of revenues*

$



$
325


$
325Research and development*






(746
)


(746
)Selling, general and
    administrative*






1,826



1,826   (1)
    
    Amounts have been adjusted to reflect the divestiture of the
    Companys Grenoble, France, subsidiary. Results from the
    Grenoble subsidiary are classified as Discontinued Operations.
    See Note 18 for further discussion.(2)
    
    Restatement adjustments for stock-based compensation expenses,
    relating to improper measurement dates, repricing errors, other
    stock option modifications and related payroll and income tax
    expense (benefit) impacts.(3)
    
    As part of the restatement, in the year ended December 31,
    2004, the Company recorded additional non-cash adjustments that
    were previously identified and considered not to be material to
    our consolidated financial statements, relating primarily to the
    timing of grant benefits, accruals for litigation and other
    expenses, and income tax adjustments. 104




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Consolidated
    Balance Sheet
  As Restated andDiscontinued


Adjusted forAs Previously


Restatement


As


Operations


DiscontinuedDecember 31, 2005

Reported


Adjustments(2)


Restated


Adjustments(1)


Operations(In thousands, except per share data)ASSETSCurrent assetsCash and cash equivalents

$
300,323


$



$
300,323


$



$
300,323Short-term investments


47,932







47,932







47,932Accounts receivable, net of
    allowance for doubtful accounts of $3,976


235,341







235,341



(212
)


235,129Inventories


309,702







309,702



(21,482
)


288,220Current assets of discontinued
    operations














28,800



28,800Other current assets


105,407



1,828



107,235



(7,106
)


100,129Total current assets


998,705



1,828



1,000,533







1,000,533Fixed assets, net


890,948







890,948



(16,330
)


874,618Non-current assets of discontinued
    operations














16,330



16,330Intangible and other assets


37,692



4,763



42,455







42,455Total assets

$
1,927,345


$
6,591


$
1,933,936


$



$
1,933,936LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt

$
112,107


$



$
112,107


$



$
112,107Convertible notes


142,401







142,401







142,401Trade accounts payable


140,717







140,717



(14,993
)


125,724Accrued and other liabilities


201,398



8,812



210,210



(22,845
)


187,365Current liabilities of discontinued
    operations














37,838



37,838Deferred income on shipments to
    distributors


18,345







18,345







18,345Total current
    liabilities


614,968



8,812



623,780







623,780Long-term debt less current portion


133,184







133,184







133,184Convertible notes less current
    portion


295







295







295Non-current liabilities of
    discontinued operations














4,493



4,493Other long-term liabilities


238,607



699



239,306



(4,493
)


234,813Total liabilities


987,054



9,511



996,565







996,565Commitments and contingencies
    (Note 11)Stockholders
    equityCommon stock; par value $0.001;
    Authorized: 1,600,000 shares; Shares issued and
    outstanding: 483,366 at December 31, 2005


483







483







483Additional paid-in capital


1,293,420



106,841



1,400,261







1,400,261Unearned stock-based compensation






(2,942
)


(2,942
)






(2,942
)Accumulated other comprehensive
    income


138,412



(12,357
)


126,055







126,055Accumulated deficit


(492,024
)


(94,462
)


(586,486
)






(586,486
)Total stockholders
    equity


940,291



(2,920
)


937,371







937,371Total liabilities and
    stockholders equity

$
1,927,345


$
6,591


$
1,933,936


$



$
1,933,936     (1)
    
    Amounts have been adjusted to reflect the divestiture of the
    Companys Grenoble, France, subsidiary. Assets and
    liabilities of the Grenoble subsidiary are reclassified as
    assets and liabilities of discontinued operations. See
    Note 18 for further discussion.(2)
    
    Restatement adjustments for stock-based compensation expenses,
    relating to improper measurement dates, repricing errors, other
    stock option modifications and related payroll and income tax
    expense (benefit) impacts. 105




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Consolidated
    Statements of Cash Flows
  Year Ended December 31, 2005


Year Ended December 31, 2004As Previously


Adjustments


As


As Previously


Adjustments


AsReported


(1)


Restated


Reported


(1)(2)


Restated(In thousands)Cash flows from operating
    activitiesNet income (loss)

$
(32,898
)

$
(453
)

$
(33,351
)

$
(2,434
)

$
8,806


$
6,372Adjustments to reconcile net loss
    to net cash provided by operating activitiesDepreciation and amortization


290,748







290,748



298,426







298,426Asset impairment charges


12,757







12,757











Non-cash restructuring charges


4,068







4,068











Deferred taxes


2,711



(20
)


2,691



(21,891
)


3,054



(18,837
)Gain on sales of fixed assets


(2,405
)






(2,405
)


(664
)






(664
)Other non-cash losses (gains)


(4,120
)






(4,120
)


(1,567
)






(1,567
)Recovery of doubtful accounts
    receivable


(5,575
)






(5,575
)


(4,889
)






(4,889
)Accrued interest on zero coupon
    convertible debt


9,893







9,893



9,800







9,800Accrued interest on other long-term
    debt


2,415







2,415



2,094







2,094Stock-based compensation expense


289



1,561



1,850







1,405



1,405Changes in operating assets and
    liabilitiesAccounts receivable


1,737







1,737



(11,149
)






(11,149
)Inventories


25,984







25,984



(70,456
)






(70,456
)Current and other assets


(15,942
)


20



(15,922
)


(29,603
)


(3,054
)


(32,657
)Trade accounts payable


(61,538
)






(61,538
)


39,241







39,241Accrued and other liabilities


(3,210
)


961



(2,249
)


6,354



(4,844
)


1,510Income tax payable


(22,062
)


(2,069
)


(24,131
)


13,207



(5,367
)


7,840Deferred income on shipments to
    distributors


(2,779
)






(2,779
)


1,967







1,967Net cash provided by operating
    activities


200,073







200,073



228,436







228,436Cash flows from investing
    activitiesAcquisitions of fixed assets


(169,126
)






(169,126
)


(241,428
)






(241,428
)Proceeds from the sale of fixed
    assets


2,238







2,238



4,558







4,558Proceeds from the sale of interest
    in privately held companies


6,746







6,746











Acquisitions of intangible assets


(7,821
)






(7,821
)


(8,150
)






(8,150
)Decrease in restricted cash














26,835







26,835Purchase of short-term investments


(16,110
)






(16,110
)


(53,834
)






(53,834
)Sale or maturity of short-term
    investments


26,790







26,790



41,283







41,283Net cash used in investing
    activities


(157,283
)






(157,283
)


(230,736
)






(230,736
)Cash flows from financing
    activitiesProceeds from equipment financing
    and other debt


146,242







146,242



70,000







70,000Principal payments on capital
    leases and other debt


(139,308
)






(139,308
)


(140,716
)


(35
)


(140,751
)Repurchase of convertible notes


(80,846
)






(80,846
)










Issuance of common stock


11,901







11,901



12,133



35



12,168Net cash used in financing
    activities


(62,011
)






(62,011
)


(58,583
)






(58,583
)Effect of exchange rate changes on
    cash and cash equivalents


(26,806
)






(26,806
)


21,346







21,346Net decrease in cash and cash
    equivalents


(46,027
)






(46,027
)


(39,537
)






(39,537
)Cash and cash equivalents at
    beginning of year


346,350







346,350



385,887







385,887Cash and cash equivalents at end
    of year

$
300,323


$



$
300,323


$
346,350


$



$
346,350     (1)
    
    Restatement adjustments for stock-based compensation expenses,
    relating to improper measurement dates, repricing errors, other
    stock option modifications and related payroll and income tax
    expense (benefit) impacts.(2)
    
    As part of the restatement, in the year ended December 31,
    2004, the Company recorded additional non-cash adjustments that
    were previously identified and considered not to be material to
    our consolidated financial 106




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  statements, relating primarily to the timing of grant benefits,
    accruals for litigation and other expenses, and income tax
    adjustments.  Note 3  BALANCE
    SHEET DETAIL
      December 31,

2006


2005Raw materials and purchased parts

$
13,434


$
11,972Work-in-progress


245,760



207,084Finished goods


80,605



69,164$
339,799


$
288,220       December 31,

2006


2005As restatedValue-added tax receivable

$
50,235


$
54,275Deferred income tax assets


6,649



2,976Grants receivable


6,540



12,755Prepaid assets


7,005



5,413Other


48,536



24,710$
118,965


$
100,129     December 31,

2006


2005As restatedIntangible assets, net

$
6,024


$
11,770Investment in privately-held
    companies


6,122



5,817Deferred income tax assets, net of
    current portion


7,965



19,109Other


7,743



5,759$
27,854


$
42,455  107




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,

2006


2005As restatedAdvance payments from customers

$
10,000


$
10,000Income taxes payable


24,447



6,024Deferred income tax liability,
    current portion


569



4,535Value-added tax payable


10,738



4,565Accrued salaries and benefits


72,918



66,437Deferred grants


11,278



21,128Warranty reserves and accrued
    returns, royalties and licenses


19,223



19,226Accrual for restructuring and
    other charges


12,185



4,716Other


69,879



50,734$
231,237


$
187,365     December 31,

2006


2005As restatedAdvance payments from customers

$
64,668


$
74,668Income taxes payable


95,691



83,890Accrued pension liability


51,970



43,831Long-term technology license
    payable


3,808



7,325Accrual for restructuring and
    other charges


7,875



8,896Other


12,924



16,203$
236,936


$
234,813          108




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 4  SHORT-TERM
    INVESTMENTS
    available-for-sale
  December 31, 2006


December 31, 2005Book Value


Market Value


Book Value


Market ValueU.S. Government debt
    securities

$
1,400


$
1,396


$
884


$
880State and municipal debt securities


3,450



3,450



4,950



4,950Corporate equity securities


87



892







Corporate debt securities and
    other obligations


49,170



50,526



41,256



42,10254,107



56,264



47,090



47,932Unrealized gains


2,176







871



Unrealized losses


(19
)






(29
)


Net unrealized gains


2,157







842



Total

$
56,264


$
56,264


$
47,932


$
47,932   available-for-sale
  Due within one year

$
7,832Due in 1-5 years


4,417Due in 5-10 years


3,646Due after 10 years


38,212Total

$
54,107       Less than 12 Months


Greater than 12 MonthsFair


Unrealized


Fair


UnrealizedValue


Losses


Value


LossesU.S. government and agency
    securities

$
3,876


$
(4
)

$



$
Corporate and municipal debt
    securities


6,999



(14
)


700



(1
)$
10,875


$
(18
)

$
700


$
(1
)  109




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 5  FIXED
    ASSETS
  December 31,

2006


2005Land

$
35,067


$
55,739Buildings and improvements


628,709



725,754Machinery and equipment


1,393,190



1,665,898Furniture and fixtures


151,498



143,771Construction-in-progress


10,658



6,6262,219,122



2,597,788Less: accumulated depreciation and
    amortization


(1,704,773
)


(1,723,170
)Fixed assets, net

$
514,349


$
874,618         Note 6  INTANGIBLE
    ASSETS
    Gross


Accumulated


NetBalances as of December 31, 2006

Assets


Amortization


AssetsCore/licensed technology

$
89,581


$
(83,557
)

$
6,024Non-compete agreement


306



(306
)


Patents


1,377



(1,377
)


Total intangible assets

$
91,264


$
(85,240
)

$
6,024  110




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Gross


Accumulated


NetBalances as of December 31, 2005

Assets


Amortization


AssetsCore/licensed technology

$
87,679


$
(76,318
)

$
11,361Non-compete agreement


306



(306
)


Patents


1,377



(968
)


409Total intangible assets

$
89,362


$
(77,592
)

$
11,770     December 31,Years Ended

2006


2005


2004Core/licensed technology

$
6,050


$
11,818


$
11,450Non-compete agreement






142



138Patents


409



459



452Total amortization expense on
    intangible assets

$
6,459


$
12,419


$
12,040     Years Ending December 31:2007

$
4,6232008


1,2032009


1492010


452011


4Total future amortization

$
6,024    111




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 7  BORROWING
    ARRANGEMENTS
    December 31,

2006


2005Various interest-bearing notes

$
80,550


$
97,070Bank lines of credit


25,000



40,000Convertible notes






142,696Capital lease obligations


63,434



108,221Total


168,984



387,987Less: current portion of long-term
    debt


(38,311
)


(112,107
)Less: debt obligations included in
    current liabilities related to assets held for sale


(70,340
)


Less: convertible notes






(142,401
)Long-term debt and capital lease
    obligations due after one year

$
60,333


$
133,479     December 31,

2006


2005Long-term debt less current portion

$
60,020


$
133,184Debt obligations included in
    non-current liabilities related to assets held for sale


313



Convertible notes less current
    portion






295Long-term debt and capital lease
    obligations due after one year

$
60,333


$
133,479     Year Ending December 31,2007

$
116,7572008


46,4062009


7,9122010


5,6832011


4,603Thereafter


2,962184,323Less: amount representing interest


(15,339
)Total

$
168,984    112




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   3-year
  non-U.S. trade non-U.S. trade
  90-day
       113




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
           114




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 8  STOCK-BASED
    COMPENSATION
  Prior
    Period Pro Forma Presentation
    Year Ended December 31, 2005


Year Ended December 31, 2004As Previously





As


As Previously





AsReported


Adjustments


Restated


Reported


Adjustments


Restated(In thousands, except per share data)Net income (loss)  as
    reported(1)

$
(32,898
)

$
(453
)

$
(33,351
)

$
(2,434
)

$
8,806


$
6,372Add: employee stock-based
    compensation expense included in net loss-as reported, net of tax


289



1,018



1,307







1,337



1,337Deduct: employee stock-based
    compensation expense based on fair value, net of tax


(16,347
)


(267
)


(16,614
)


(20,383
)


(378
)


(20,761
)Net loss  pro forma

$
(48,956
)

$
298


$
(48,658
)

$
(22,817
)

$
9,765


$
(13,052
)Net income (loss) per
    share  basic and diluted:As reported

$
(0.07
)

$
0.00


$
(0.07
)

$
(0.01
)

$
0.02


$
0.01Pro forma

$
(0.10
)

$
0.00


$
(0.10
)

$
(0.05
)

$
0.02


$
(0.03
)Weighted-average shares used in
    basic and diluted per share calculations


481,534



481,534



481,534



476,063



476,063



476,063     (1)
    
    Net income (loss) and net income (loss) per share for the years
    ended December 31, 2005 and 2004 did not include
    stock-based compensation expense for employee stock options and
    employee stock purchases under SFAS No. 123 because
    the Company did not adopt the recognition provisions of
    SFAS No. 123.    Years Ended December 31,

2006


2005*


2004*Risk-free interest


4.70
%


3.86
%


3.43
%Expected life (years)


5.57



5.16



4.47Expected volatility


68
%


92
%


92
%Expected dividend yield


0.0
%


0.0
%


0.0
%     *
    
    The weighted average assumptions for the years ended
    December 31, 2005 and 2004 were determined in accordance
    with SFAS No. 123.     115




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
             Years Ended December 31,

2005


2004Risk-free interest


3.54
%


2.55
%Expected life (years)


0.5



0.5Expected volatility


66
%


54
%Expected dividend yield


0.0
%


0.0
%     Impact
    of adoption of SFAS No. 123R
        Year Ended December 31,

2006Employee stock options

$
9,063Employee stock purchase plan


302Non-employee stock option
    modifications


120Less: amounts capitalized in
    inventory


(367
)$
9,118    116




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Year Ended December 31,

2006Cost of revenues

$
2,084Research and development


2,102Selling, general and administrative


4,932Total stock-based compensation
    expense, before income taxes


9,118Tax benefit


Total stock-based compensation
    expense, net of income taxes

$
9,118       Note 9  STOCKHOLDER
    RIGHTS PLAN
    Note 10  ACCUMULATED
    OTHER COMPREHENSIVE INCOME
     117




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     As of December 31,2006


2005As restatedForeign currency translation

$
110,766


$
127,860Minimum pension liability
    adjustments






(2,647
)Defined benefit pension plans


(5,686
)


Net unrealized gains on investments


2,157



842Total accumulated other
    comprehensive income

$
107,237


$
126,055   Note 11  COMMITMENTS
    AND CONTINGENCIES
  Commitments
  Leases
        Operating


CapitalYear Ending December 31

Leases, Net


Leases2007

$
25,863


$
36,1392008


20,024



13,9482009


5,273



6,8792010


3,119



5,6832011


2,456



4,602Thereafter


3,592



1,084$
60,327



68,335Less: amount representing interest






(4,901
)Total capital lease obligations






63,434Less: current portion






(33,739
)Capital lease obligations due
    after one year





$
29,695   Employment
    Agreements
   118




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Indemnifications
      Purchase
    Commitments
    Year Ending December 312007

$
1,6672008


1,7412009


1,8012010


1,8702011


1,931Thereafter


10,954Total

$
19,964  119




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Contingencies
  Litigation
             120




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          121




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
                 Other
    Investigations
   122




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Other
    Contingencies
    Income
    Tax Contingencies
             123




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Product
    Warranties
      2006


2005


2004Balance at January 1

$
6,184


$
7,514


$
5,600Accrual for warranties during the
    period (including foreign exchange rate impact)


5,800



4,998



6,552Change in accrual relating to
    preexisting warranties (including change in estimates)


(1,577
)


(991
)


561Settlements made (in cash or in
    kind) during the period


(5,634
)


(5,337
)


(5,199
)Balance at
    December 31

$
4,773


$
6,184


$
7,514   Guarantees
    Note 12  INCOME
    TAXES
    Years Ended December 31,

2006


2005


2004As restated


As restatedU.S.

$
(106,758
)

$
(138,183
)

$
(153,109
)Foreign


33,056



75,493



171,951Income (loss) from continuing
    operations before income taxes

$
(73,702
)

$
(62,690
)

$
18,842     Years Ended December 31,



2006


2005


2004As restated


As restatedFederal

Current

$
5,871


$
4,184


$
20,150Deferred


350



1,407



1,383State

Current


28







Deferred










Foreign

Current


12,929



(19,938
)


23,031Deferred


5,771



1,284



(20,220
)Total income tax (benefit)
    provision



$
24,949


$
(13,063
)

$
24,344  124




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,

2006


2005As restatedDeferred income tax assets:Fixed assets

$
178,731


$
151,438Intangible assets


4,362



18,415Unrealized foreign exchange
    translation losses


22,307



13,962Deferred income on shipments to
    distributors


9,831



4,626Stock-based compensation


13,210



17,124Accrued liabilities


42,860



16,482Net operating losses


299,028



276,740Research and development and other
    tax credits


68,145



58,813Total deferred income tax assets


638,474



557,600Deferred income tax liabilities:Unrealized foreign exchange loss






(81
)Other


(485
)


(1,136
)Total deferred tax liabilities


(485
)


(1,217
)Less valuation allowance


(629,004
)


(542,287
)Net deferred income tax asset

$
8,985


$
14,096   non-U.S. subsidiaries,
    Years Ended December 31,

2006


2005


2004As restated


As restatedU.S. Federal statutory income
    tax rate


(35.00
)%


(35.00
)%


35.00
%Difference between U.S. and
    foreign tax rates


(15.87
)


3.14



(127.96
)Tax credits


(5.32
)


(3.59
)


Net operating loss and future
    deductions not currently benefited


79.57



46.44



173.37Reversal of taxes previously
    accrued on foreign earnings expected to be repatriated










(57.52
)Provision for tax settlements and
    withholding taxes


9.38



8.35



106.94Release of income taxes previously
    accrued






(39.21
)


Other


1.09



(0.97
)


(0.64
)Effective tax rate


33.85
%


(20.84
)%


129.19
%  125




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        non-U.S. subsidiaries
      non-U.S. jurisdictions
         126




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Note 13  EMPLOYEE
    OPTION AND STOCK PURCHASE PLANS
      Outstanding OptionsWeighted-Exercise


Aggregate


AverageAvailable


Number of


Price


Exercise


Exercise Pricefor Grant


Options


per Share


Price


per ShareBalances, December 31,
    2003


22,565



30,425


$
1.00-24.44


$
166,994


$
5.49Options granted


(1,566
)


1,566



3.18 - 7.38



8,883



5.67Options forfeited


507



(561
)


1.68 - 24.44



(4,302
)


7.67Options exercised






(1,973
)


1.68 - 5.13



(4,195
)


2.13Balances, December 31,
    2004


21,506



29,457


$
1.00 - 24.44


$
167,380


$
5.68Options granted


(5,172
)


5,172



2.06 - 3.29



15,656



3.03Options forfeited


1,531



(2,645
)


1.68 - 21.47



(15,009
)


5.68Options exercised






(1,758
)


1.68 - 2.62



(3,510
)


2.00Balances, December 31,
    2005


17,865



30,226


$
1.00 - 24.44


$
164,517


$
5.44Options granted


(9,559
)


9,559



3.68 - 6.28



54,031



5.65Options forfeited


4,994



(5,059
)


1.00 - 24.44



(29,682
)


5.87Options exercised






(3,406
)


1.68 - 5.13



(7,386
)


2.17Balances, December 31,
    2006


13,300



31,320


$
1.68-24.44


$
181,480


$
5.79    127




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Options Outstanding


Options ExercisableWeighted-











Weighted-Average


Weighted-








Average


Weighted-Range of





Remaining


Average


Aggregate





Remaining


Average


AggregateExercise


Number


Contractual


Exercise


Intrinsic


Number


Contractual


Exercise


IntrinsicPrices


Outstanding


Term (Years)


Price


Value


Exercisable


Term (Years)


Price


Value$
1.68 - 1.98



2,455



1.92


$
1.97


$
10,016



2,429



1.87


$
1.98


$
9,8862.06 - 2.11



3,525



6.04



2.11



13,889



2,533



5.93



2.11



9,9802.13 - 3.26



1,744



8.20



2.73



5,790



629



7.82



2.73



2,0883.29 - 3.29



2,187



8.14



3.29



6,036



572



8.14



3.29



1,5793.33 - 5.62



4,666



8.15



4.73



6,159



1,212



4.57



4.27



2,1575.73 - 5.91



6,010



7.79



5.75



1,803



2,491



6.58



5.76



7236.09 - 7.76



5,896



8.29



6.56







1,713



4.84



7.08



7.83 - 24.44



4,837



3.55



12.82







4,659



3.49



12.97



$
1.68 - 24.44



31,320



6.67


$
5.79


$
43,693



16,238



4.66


$
6.52


$
26,413     ESPP
    Note 14  RETIREMENT
    PLANS
     128




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Years Ended December 31,

2006


2005


2004Service costs-benefits earned
    during the period

$
3,013


$
2,380


$
2,045Interest cost on projected benefit
    obligation


2,318



2,096



1,921Amortization of actuarial loss


589



115



426Net pension cost

$
5,920


$
4,591


$
4,392Summary of net pension
    costs:Continuing operations

$
5,597


$
4,088


$
3,422Discontinued operations


323



503



970Net pension cost

$
5,920


$
4,591


$
4,392     Years Ended December 31,

2006


2005(b)Projected benefit obligation at
    beginning of the year

$
52,993


$
42,692Service cost


2,831



2,084Interest cost


2,189



1,891Curtailment(a)






(1,338
)Actuarial (gains) losses


(5,923
)


9,423Benefits paid


(564
)


(404
)Foreign currency exchange rate
    changes


1,419



(1,355
)Projected benefit obligation at
    end of the year

$
52,945


$
52,993   December 31,

2006


2005Funded status of the plan

$
52,945


$
52,993Unrecognized net loss






(13,041
)Net amounts recognized

$
52,945


$
39,952     (a)
    
    Includes recognized actuarial losses due to curtailment in
    accordance with the guidance under SFAS No. 88,
    Employers Accounting for Settlements and
    Curtailments of Defined Benefit Pension Plans and for
    Termination Benefits, of Nantes fabrication facility
    retirement plan which occurred as a result of the sale of the
    facility to XbyBus SAS, a French corporation (XbyBus
    SAS) (see Note 17 for further discussion).(b)
    
    At December 31, 2005, projected benefit obligations related
    to the Grenoble, France, subsidiary classified as current and
    non-current liabilities of Discontinued Operations totaled
    $5,223. See Note 18 for further discussion of the
    divestiture of the Grenoble subsidiary in 2006.    Years Ended December 31,

2006


2005


2004Assumed discount rate


4.6
%


4.0  4.3
%


4.5  4.9%Assumed compensation rate of
    increase


2.0  4.0
%


2.0  4.0
%


2.0%  3.0%    129




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     2007

$
1,1302008


1,0302009


1,2772010


1,3482011


1,5642012 through 2016


10,842Total

$
17,191       Adoption
    of SFAS No. 158
    Pre SFAS No.





Post SFAS No. 158158 Adoption


Adjustments


AdoptionDeferred tax assets, long-term

$
7,716


$
249


$
7,965Total assets

$
1,818,290


$
249


$
1,818,539Accrued pension liabilities,
    current

$
477


$
653


$
1,130Accrued pension liabilities,
    long-term

$
48,843


$
3,127


$
51,970Deferred tax liability, long-term

$
416


$
69


$
485Accumulated other comprehensive
    Income (loss)

$
110,837


$
(3,600
)

$
107,237Total liabilities and
    stockholders equity

$
1,818,290


$
249


$
1,818,539  130




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Amounts
    recognized in accumulated other comprehensive income (loss)
    consist of:
  December 31,

2006


2005Net actuarial loss

$
5,680


$
Prior service cost


6



Additional minimum pension
    liability






2,647Total

$
5,686


$
2,647     Executive
    Deferred Compensation Plan
  No. 97-14, No. 97-14). No. 97-14,
    401(k)
    Tax Deferred Savings Plan
    Note 15  OPERATING
    AND GEOGRAPHICAL SEGMENTS
    
    Application specific integrated circuit (ASIC)segment includes custom application specific integrated
    circuits designed to meet specialized single-customer
    requirements for their high performance devices in a broad
    variety of applications. This segment also encompasses a range
    of products which provide security for digital data, including
    smart cards for mobile phones, set top boxes, banking and
    national identity cards. The Company also develops customer
    specific ASICs, some of which have military applications. 131




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    Microcontrollerssegment includes a variety of
    proprietary and standard microcontrollers, the majority of which
    contain embedded nonvolatile memory and integrated analog
    peripherals. This segment also includes products with military
    and aerospace applications.
    Nonvolatile Memoriessegment consists predominantly of
    serial interface electrically erasable programmable read-only
    memory (SEEPROM) and serial interface Flash memory
    products. This segment also includes parallel interface Flash
    memories as well as mature parallel interface EEPROM and EPROM
    devices. This segment also includes products with military and
    aerospace applications.
    Radio Frequency (RF) and Automotivesegment
    includes products designed for the automotive industry. This
    segment produces and sells wireless and wired devices for
    industrial, consumer and automotive applications and it also
    provides foundry services which produce radio frequency products
    for the mobile telecommunications market.      Information
    about Reportable Segments
  Micro-


Nonvolatile


RF andASIC


Controllers


Memories


Automotive


TotalYear ended December 31,
    2006:Net revenues from external
    customers

$
490,234


$
419,858


$
375,319


$
385,476


$
1,670,887Segment income (loss) from
    operations


(70,932
)


79,681



31,450



19,170



59,369Year ended December 31,
    2005 as restated:Net revenues from external
    customers

$
495,556


$
315,474


$
393,036


$
357,041


$
1,561,107Segment income (loss) from
    operations


(93,804
)


49,038



(13,762
)


1,257



(57,271
)Year ended December 31,
    2004 as restated:Net revenues from external
    customers

$
491,921


$
337,088


$
445,504


$
277,927


$
1,552,440Segment income (loss) from
    operations


(65,291
)


81,503



589



23,335



40,136    132




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Reconciliation
    of segment information to Consolidated Statements of
    Operations
  2006


2005


2004As restated


As restatedTotal income (loss) from
    continuing operations for reportable segments

$
59,369


$
(57,271
)

$
40,136Unallocated amounts:Asset impairment charges


(82,582
)


(12,757
)


Restructuring and other charges
    and loss on sale


(38,763
)


(17,682
)


Consolidated income (loss) from
    operations

$
(61,976
)

$
(87,710
)

$
40,136     2005


20042006


As Restated


As RestatedNet


Long-lived


Net


Long-lived


NetRevenues


Assets


Revenues


Assets


RevenuesUnited States

$
241,379


$
159,998


$
210,399


$
240,188


$
259,199Germany


192,278



30,733



144,893



19,736



155,889France


168,047



285,469



138,960



307,832



123,814United Kingdom


29,042



19,753



24,594



294,381



28,965Japan


57,576



181



49,671



191



59,969China, including Hong Kong


352,437



716



356,868



709



358,140Singapore


257,312







271,616







152,163Rest of Asia-Pacific


206,901



19,018



198,709



11,708



230,636Rest of Europe


151,887



12,095



147,103



10,253



160,849Rest of the World


14,028







18,294







22,816Total

$
1,670,887


$
527,963


$
1,561,107


$
884,998


$
1,552,440       Note 16  ASSETS
    HELD FOR SALE AND IMPAIRMENT CHARGES
   133




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       Held
    for Sale at December 31, 2006:
  NorthTyneside


Irving


TotalNon-current
    assetsFixed assets, net

$
87,941


$
35,040


$
122,981Intangible and other assets


816







816Total non-current assets held
    for sale

$
88,757


$
35,040


$
123,797Current
    liabilitiesCurrent portion of long-term debt

$
70,340


$



$
70,340Trade accounts payable


17,329







17,329Accrued liabilities and other


46,224







46,224Total current liabilities
    related to assets held for sale


133,893







133,893Long-term debt and capital lease
    obligations less current portion


313







313Total non-current liabilities
    related to assets held for sale


313







313Total liabilities related to
    assets held for sale

$
134,206


$



$
134,206   Irving,
    Texas, Facility
      North
    Tyneside, United Kingdom, and Heilbronn, Germany,
    Facilities
   134




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  held-for-sale
    held-for-sale held-and-used.
  Colorado
    Springs, Colorado,
    Construction-In-Progress
  construction-in-progress
    2006


2005


2004North Tyneside, United Kingdom

$
72,277


$



$
Irving, Texas


10,305



3,980



Colorado Springs, Colorado






8,777



Total asset impairment charges

$
82,582


$
12,757


$
  135




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 17  RESTRUCTURING
    AND OTHER CHARGES AND LOSS ON SALE
    January 1,











December 31,2006





Non-Cash





2006Accrual


Charges


Utilization


Payments


Accrual(In thousands)Third quarter of 2002Termination of contract with
    supplier

$
9,833


$



$



$
(937
)

$
8,896Third quarter of 2005Employee termination costs


1,246











(1,246
)


Fourth quarter of 2005Nantes fabrication facility sale


1,310











(1,195
)


115Employee termination costs


1,223











(1,223
)


First quarter of 2006Employee termination costs






151







(151
)


Fourth quarter of 2006Employee termination costs






8,578







(1,088
)


7,490Grant contract termination costs






30,034











30,034Total 2006 activity

$
13,612


$
38,763


$



$
(5,840
)

$
46,535
(1)     (1)
    
    As a result of the expected timing of payments, $26,475 is
    recorded in current liabilities related to assets held for sale,
    $12,185 of this accrual is recorded in accrued and other
    liabilities, and $7,875 is recorded in other long-term
    liabilities.  January 1,











December 31,2005





Non-Cash





2005Accrual


Charges


Utilization


Payments


AccrualThird quarter of 2002Termination of contract with
    supplier

$
10,919


$



$



$
(1,086
)

$
9,833Third quarter of 2005Employee termination costs






2,452







(1,206
)


1,246Fourth quarter of 2005Nantes fabrication facility sale






10,585



(1,454
)


(7,821
)


1,310Employee termination costs






2,031







(808
)


1,223Asset disposals






2,614



(2,614
)






Total 2005 activity

$
10,919


$
17,682


$
(4,068
)

$
(10,921
)

$
13,612   136




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  January 1,











December 31,2004





Non-Cash





2004Accrual


Charges


Utilization


Payments


AccrualThird quarter of 2002Termination of contract with
    supplier

$
11,732


$



$



$
(813
)

$
10,919Total 2004 activity

$
11,732


$



$



$
(813
)

$
10,919   2006
    Restructuring Activities
      
    $6,897 in one-time minimum statutory termination benefits
    recorded in accordance with SFAS No. 112,
    Employers Accounting for Post Employment
    Benefits. These costs related to the termination of
    employees in Europe.
    $1,681 in one-time severance costs related to the involuntary
    termination of employees, primarily in manufacturing, research
    and development and administration. These benefits costs were
    recorded in accordance with SFAS No. 146,
    Accounting for Costs Associated with exit or Disposal
    Activities.    2005
    Restructuring Activities
    
    $4,483 in one-time involuntary termination severance benefits
    costs related to the termination of 193 employees primarily in
    manufacturing, research and development and administration.
    $2,614 of building and improvements were removed from operations
    and written down to zero following relocation of certain
    manufacturing activities to Asia.
    $10,585 associated with the loss on the sale of the
    Companys Nantes fabrication facility, including the cost
    of transferring 319 employees to the buyer.       137




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       Other
    Charges
    Nantes
    Fabrication Facility Sale
    clean-up
    Note 18  DISCONTINUED
    OPERATIONS
  Grenoble,
    France, Subsidiary Sale
     138




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
           (in thousands)
  Proceeds, net of working capital
    adjustments

$
122,610Costs of disposition


(2,537
)Net proceeds from the sale


120,073Less: book value of net assets sold


(14,866
)Cumulative translation adjustment


4,631Gain on sale of discontinued
    operations, before income taxes


109,838Provision for income taxes


(9,506
)Gain on sale of discontinued
    operations, net of income taxes

$
100,332  139




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (in thousands, except
    per share data)
  Years Ended December 31,2006


2005


2004Net revenues

$
79,871


$
114,608


$
97,282Operating costs and expenses


57,509



91,838



84,288Income from discontinued
    operations, before income taxes


22,362



22,770



12,994Gain on sale of discontinued
    operations, before income taxes


109,838







Income from and gain on sale of
    discontinued operations


132,200



22,770



12,994Less: provision for income taxes


(18,899
)


(6,494
)


(1,120
)Income from and gain on sale of
    discontinued operations, net of income taxes

$
113,301


$
16,276


$
11,874Income from and gain on sale of
    discontinued operations, net of income taxes, per common share:Basic and diluted

$
0.23


$
0.03


$
0.02Weighted-average shares used in
    basic and diluted per share calculations


487,413



481,534



476,063     ASSETSCurrent assetsAccounts receivable

$
212Inventories


21,482Other current assets


7,106Total current assets of
    discontinued operations


28,800Fixed assets, net


16,330Total assets of discontinued
    operations

$
45,130LIABILITIESCurrent liabilitiesTrade accounts payable

$
14,993Accrued and other liabilities


22,845Total current liabilities of
    discontinued operations


37,838Other long-term liabilities


4,493Total liabilities of
    discontinued operations

$
42,331    140




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 19  NET
    INCOME (LOSS) PER SHARE
      Years Ended December 31,

2006


2005


2004As restated


As restatedLoss from continuing operations

$
(98,651
)

$
(49,627
)

$
(5,502
)Income from discontinued
    operations, net of income taxes


12,969



16,276



11,874Gain on sale of discontinued
    operations, net of income taxes


100,332







Net income (loss)

$
14,650


$
(33,351
)

$
6,372Weighted-average common
    shares  basic and diluted


487,413



481,534



476,063Basic and diluted net income
    (loss) per common share:Loss from continuing operations

$
(0.20
)

$
(0.10
)

$
(0.01
)Income from discontinued
    operations, net of income taxes


0.02



0.03



0.02Gain on sale of discontinued
    operations, net of income taxes


0.21







Net income (loss)

$
0.03


$
(0.07
)

$
0.01     Years Ended December 31,

2006


2005


2004As restated


As restatedEmployee stock options outstanding


29,079



30,653



30,031Common stock equivalent shares
    associated with:Convertible notes due 2018


8



16



15Convertible notes due 2021


1,310



4,875



4,800Total shares excluded from per
    share calculation


30,397



35,544



34,846      141




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 20  LEGAL
    AWARDS AND SETTLEMENTS
      Note 21  INTEREST
    AND OTHER EXPENSES, NET
    Years Ended December 31,

2006


2005


2004As restated


As restatedInterest and other income

$
17,677


$
11,551


$
7,813Interest expense


(20,039
)


(29,594
)


(26,979
)Foreign exchange transaction losses


(9,364
)


(1,306
)


(2,128
)Total

$
(11,726
)

$
(19,349
)

$
(21,294
)     Note 22  SUBSEQUENT
    EVENTS
       142




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   143




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm       Consolidated
    financial statements and financial statement schedule
          Internal
    control over financial reporting
  Internal Control  Integrated Framework Internal Control 
    Integrated Framework
 144




---



##### Table of Contents



145




---



##### Table of Contents



Schedule II
 ATMEL
    CORPORATION
    VALUATION AND QUALIFYING ACCOUNTS

For the years ended December 31, 2006, 2005 and
    2004 ChargedBalance at


(Credited)


Deductions -


Balance atDescription

Beginning of Year


to Expense


Write-offs


End of Year(In thousands)Allowance for doubtful accounts
    receivable:Year ended December 31, 2006

$
3,944


$
106


$
(445
)

$
3,605Year ended December 31, 2005,
    as restated


10,011



(5,575
)


(492
)


3,944Year ended December 31, 2004,
    as restated


16,411



(4,921
)


(1,479
)


10,011  146




---



##### Table of Contents



UNAUDITED
    QUARTERLY FINANCIAL INFORMATION    First


Second


Third


FourthYear Ended December 31, 2006(2)

Quarter


Quarter


Quarter


Quarter(3)(In thousands, except per share data)

As restated(1)Net revenues

$
400,784


$
429,488


$
431,734


$
408,881Gross profit


126,382



139,029



151,557



145,150Income (loss) from continuing
    operations


(1,154
)


2,851



22,260



(122,608
)Income from discontinued
    operations, net of income taxes


5,862



5,428



1,679



Gain on sale of discontinued
    operations, net of income taxes










100,332



Net income (loss)

$
4,708


$
8,279


$
124,271


$
(122,608
)Basic net income (loss) per
    common share:Income (loss) from continuing
    operations

$
(0.00
)

$
0.01


$
0.04


$
(0.25
)Income from discontinued
    operations, net of income taxes


0.01



0.01



0.00



Gain on sale of discontinued
    operations, net of income taxes










0.21



Net income (loss) per common
    share  basic

$
0.01


$
0.02


$
0.25


$
(0.25
)Diluted net income (loss)
    per common share:Income (loss) from continuing
    operations

$
(0.00
)

$
0.01


$
0.05


$
(0.25
)Income from discontinued
    operations, net of income taxes


0.01



0.01



0.00



Gain on sale of discontinued
    operations, net of income taxes










0.20



Net income (loss) per common
    share  diluted

$
0.01


$
0.02


$
0.25


$
(0.25
)Weighted-average shares used in
    basic income (loss) per share calculations


485,576



486,928



488,303



488,844Weighted-average shares used in
    diluted income (loss) per share calculations


485,576



493,045



494,066



488,844   147




---



##### Table of Contents



As


As


As


AsYear Ended December 31, 2005(2)

Restated(1)


Restated(1)


Restated(1)(3)


Restated(1)(3)(In thousands, except per share data)Net revenues

$
392,397


$
382,445


$
392,032


$
394,233Gross profit


80,474



82,325



107,209



125,761Income (loss) from continuing
    operations


(44,416
)


(44,491
)


(3,729
)


43,009Income from discontinued
    operations, net of income taxes


1,329



5,268



4,629



5,050Net income (loss)

$
(43,087
)

$
(39,223
)

$
900


$
48,059Basic net income (loss) per
    common share:Income (loss) from continuing
    operations

$
(0.09
)

$
(0.09
)

$
(0.01
)

$
0.09Income from discontinued
    operations, net of income taxes


0.00



0.01



0.01



0.01Net income (loss) per common
    share  basic

$
(0.09
)

$
(0.08
)

$
0.00


$
0.10Diluted net income (loss)
    per common share:Income (loss) from continuing
    operations

$
(0.09
)

$
(0.09
)

$
(0.01
)

$
0.09Income from discontinued
    operations, net of income taxes


0.00



0.01



0.01



0.01Net income (loss) per common
    share  diluted

$
(0.09
)

$
(0.08
)

$
0.00


$
0.10Weighted-average shares used in
    basic income (loss) per share calculations


479,609



480,793



482,440



483,297Weighted-average shares used in
    diluted income (loss) per share calculations


479,609



480,793



482,440



484,967     (1)
    
    See the Explanatory Note immediately preceding
    Part I, Item 1 and Note 2, Restatements of
    Consolidated Financial Statements, to Consolidated
    Financial Statements of this
    Form 10-K.(2)
    
    Amounts have been adjusted to reflect the divestiture of the
    Companys Grenoble, France, subsidiary. Results from the
    Grenoble subsidiary are reclassified as Results from
    Discontinued Operations. See Note 18 to Notes to
    Consolidated Financial Statements for further discussion.(3)
    
    The Company recorded restructuring and other charges of
    $39 million, $15 million and $3 million in the
    quarters ended December 31, 2006, December 31, 2005
    and September 30, 2005, respectively. The Company recorded
    impairment charges of $83 million and $13 million in
    the quarters ended December 31, 2006 and 2005, respectively. 148




---



##### Table of Contents



Consolidated
    Statement of Operations
  As Restated andAs








Discontinued


Adjusted forPreviously


Restatement


As


Operations


DiscontinuedQuarter Ended March 31, 2006

Reported


Adjustments(2)


Restated


Adjustments(1)


Operations(In thousands, except per share data)Net revenues

$
436,784


$



$
436,784


$
(36,000
)

$
400,784Operating
    expensesCost of revenues*


295,103



54



295,157



(20,755
)


274,402Research and development*


70,698



(336
)


70,362



(2,211
)


68,151Selling, general and
    administrative*


47,166



(111
)


47,055



(1,644
)


45,411Restructuring charges


202



(51
)


151







151Total operating
    expenses


413,169



(444
)


412,725



(24,610
)


388,115Income from
    operations


23,615



444



24,059



(11,390
)


12,669Interest and other expenses, net


(6,375
)






(6,375
)


(244
)


(6,619
)Income from continuing
    operations before income taxes


17,240



444



17,684



(11,634
)


6,050Benefit from (provision for)
    income taxes


(7,606
)


(5,370
)


(12,976
)


5,772



(7,204
)Income (loss) from continuing
    operations


9,634



(4,926
)


4,708



(5,862
)


(1,154
)Income from discontinued
    operations, net of income taxes














5,862



5,862Net income (loss)

$
9,634


$
(4,926
)

$
4,708


$



$
4,708Basic and diluted net income
    (loss) per common share:Income (loss) from continuing
    operations

$
0.02


$
(0.01
)

$
0.01


$
(0.01
)

$
(0.00
)Income from discontinued
    operations, net of income taxes














0.01



0.01Net income (loss)

$
0.02


$
(0.01
)

$
0.01


$



$
0.01Weighted-average shares used in
    basic net and diluted income (loss) per share calculations


485,576



485,576



485,576



485,576



485,576     *
    
    Includes the following amounts related to stock-based
    compensation expense (benefit) (excluding payroll taxes):  AsPreviously


Restatement


AsReported


Adjustments


RestatedCost of revenues*

$
259


$
(346
)

$
(87
)Research and development*


1,095



(336
)


759Selling, general and
    administrative*


1,604



(163
)


1,441   (1)
    
    Amounts have been adjusted to reflect the divestiture of the
    Companys Grenoble, France, subsidiary. Results from the
    Grenoble subsidiary are classified as Discontinued Operations.
    See Note 18 of Notes to Consolidated Financial Statements
    for further discussion.(2)
    
    Restatement adjustments for stock-based compensation expense
    (benefit), relating to improper measurement dates, repricing
    errors, other stock option modifications and related payroll and
    income tax expense (benefit) impacts. 149




---



##### Table of Contents



Consolidated
    Statement of Operations
  As Restated andAs








Discontinued


Adjusted forPreviously


Restatement


As


Operations


DiscontinuedQuarter Ended March 31, 2005

Reported


Adjustments(2)


Restated


Adjustments(1)


Operations(In thousands, except per share data)Net revenues

$
419,777


$



$
419,777


$
(27,380
)

$
392,397Operating expensesCost of revenues*


332,775



218



332,993



(21,070
)


311,923Research and development*


68,721



(477
)


68,244



(2,400
)


65,844Selling, general and
    administrative*


52,316



(117
)


52,199



(2,145
)


50,054Total operating
    expenses


453,812



(376
)


453,436



(25,615
)


427,821Income (loss) from
    operations


(34,035
)


376



(33,659
)


(1,765
)


(35,424
)Interest and other expenses, net


(3,923
)






(3,923
)


(95
)


(4,018
)Income (loss) from continuing
    operations before income taxes


(37,958
)


376



(37,582
)


(1,860
)


(39,442
)Benefit from (provision for)
    income taxes


(5,063
)


(442
)


(5,505
)


531



(4,974
)Income (loss) from continuing
    operations


(43,021
)


(66
)


(43,087
)


(1,329
)


(44,416
)Income from discontinued
    operations, net of income taxes














1,329



1,329Net income (loss)

$
(43,021
)

$
(66
)

$
(43,087
)

$



$
(43,087
)Basic and diluted net income
    (loss) per common share:Income (loss) from continuing
    operations

$
(0.09
)

$
0.00


$
(0.09
)

$
(0.00
)

$
(0.09
)Income from discontinued
    operations, net of income taxes














0.00



0.00Net income (loss)

$
(0.09
)

$
0.00


$
(0.09
)

$



$
(0.09
)Weighted-average shares used in
    basic and diluted net income (loss) per share calculations


479,609



479,609



479,609



479,609



479,609     *
    
    Includes the following amounts related to stock-based
    compensation (benefit) (excluding payroll taxes):  As Previously


Restatement


AsReported


Adjustments


RestatedCost of revenues*

$



$
(38
)

$
(38
)Research and development*






(493
)


(493
)Selling, general and
    administrative*






(146
)


(146
)   (1)
    
    Amounts have been adjusted to reflect the divestiture of the
    Companys Grenoble, France, subsidiary. Results from the
    Grenoble subsidiary are classified as Discontinued Operations.
    See Note 18 of Notes to Consolidated Financial Statements
    for further discussion.(2)
    
    Restatement adjustments for stock-based compensation expense
    (benefit), relating to improper measurement dates, repricing
    errors, other stock option modifications and related payroll and
    income tax expense (benefit) impacts. 150




---



##### Table of Contents



Consolidated
    Statement of Operations
  As Restated andAs








Discontinued


Adjusted forPreviously


Restatement


As


Operations


DiscontinuedQuarter Ended June 30, 2005

Reported


Adjustments(2)


Restated


Adjustments(1)


Operations(In thousands, except per share data)Net revenues

$
412,200


$



$
412,200


$
(29,755
)

$
382,445Operating expensesCost of revenues*


319,420



(631
)


318,789



(18,669
)


300,120Research and development*


71,561



(1,716
)


69,845



(1,675
)


68,170Selling, general and
    administrative*


53,312



(956
)


52,356



(2,135
)


50,221Total operating
    expenses


444,293



(3,303
)


440,990



(22,479
)


418,511Income (loss) from
    operations


(32,093
)


3,303



(28,790
)


(7,276
)


(36,066
)Legal awards and settlements


1,250







1,250







1,250Interest and other expenses, net


(10,300
)






(10,300
)


(94
)


(10,394
)Income (loss) from continuing
    operations before income taxes


(41,143
)


3,303



(37,840
)


(7,370
)


(45,210
)Benefit from (provision for)
    income taxes


(1,437
)


54



(1,383
)


2,102



719Income (loss) from continuing
    operations


(42,580
)


3,357



(39,223
)


(5,268
)


(44,491
)Income from discontinued
    operations, net of income taxes














5,268



5,268Net income (loss)

$
(42,580
)

$
3,357


$
(39,223
)

$



$
(39,223
)Basic and diluted net income
    (loss) per common share:Income (loss) from continuing
    operations

$
(0.09
)

$
0.01


$
(0.08
)

$
(0.01
)

$
(0.09
)Income from discontinued
    operations, net of income taxes














0.01



0.01Net income (loss)

$
(0.09
)

$
0.01


$
(0.08
)

$



$
(0.08
)Weighted-average shares used in
    basic and diluted net income (loss) per share calculations


480,793



480,793



480,793



480,793



480,793     *
    
    Includes the following amounts related to stock-based
    compensation expense (benefit) (excluding payroll taxes):  As Previously


Restatement


AsReported


Adjustments


RestatedCost of revenues*

$



$
65


$
65Research and development*






(250
)


(250
)Selling, general and
    administrative*






(42
)


(42
)   (1)
    
    Amounts have been adjusted to reflect the divestiture of the
    Companys Grenoble, France, subsidiary. Results from the
    Grenoble subsidiary are classified as Discontinued Operations.
    See Note 18 of Notes to Consolidated Financial Statements
    for further discussion.(2)
    
    Restatement adjustments for stock-based compensation expense
    (benefit), relating to improper measurement dates, repricing
    errors, other stock option modifications and related payroll and
    income tax expense (benefit) impacts. 151




---



##### Table of Contents



Consolidated
    Statement of Operations
  As Restated andAs








Discontinued


Adjusted forPreviously


Restatement


As


Operations


DiscontinuedQuarter Ended September 30, 2005

Reported


Adjustments(2)


Restated


Adjustments(1)


Operations(In thousands, except per share data)Net revenues

$
418,550


$



$
418,550


$
(26,518
)

$
392,032Operating expensesCost of revenues*


301,759



237



301,996



(17,173
)


284,823Research and development*


69,655



61



69,716



(1,304
)


68,412Selling, general and
    administrative*


45,089



679



45,768



(1,539
)


44,229Restructuring charges


2,785



(189
)


2,596



(144
)


2,452Total operating
    expenses


419,288



788



420,076



(20,160
)


399,916Income (loss) from
    operations


(738
)


(788
)


(1,526
)


(6,358
)


(7,884
)Interest and other expenses, net


(7,012
)






(7,012
)


(119
)


(7,131
)Income (loss) from continuing
    operations before income taxes


(7,750
)


(788
)


(8,538
)


(6,477
)


(15,015
)Benefit from (provision for)
    income taxes


6,653



2,785



9,438



1,848



11,286Income (loss) from continuing
    operations


(1,097
)


1,997



900



(4,629
)


(3,729
)Income from discontinued
    operations, net of income taxes














4,629



4,629Net income (loss)

$
(1,097
)

$
1,997


$
900


$



$
900Basic and diluted net income
    (loss) per common share:Income (loss) from continuing
    operations

$
(0.00
)

$
0.00


$
0.00


$
(0.01
)

$
(0.01
)Income from discontinued
    operations, net of income taxes














0.01



0.01Net income (loss)

$
(0.00
)

$
0.00


$
0.00


$



$
0.00Weighted-average shares used in
    basic and diluted net income (loss) per share calculations


482,440



482,440



482,440



482,440



482,440     *
    
    Includes the following amounts related to stock-based
    compensation expense (benefit) (excluding payroll taxes):  As Previously


Restatement


AsReported


Adjustments


RestatedCost of revenues*

$



$
(10
)

$
(10
)Research and development*






54



54Selling, general and
    administrative*






476



476   (1)
    
    Amounts have been adjusted to reflect the divestiture of our
    Grenoble, France, subsidiary. Results from the Grenoble
    subsidiary are classified as Discontinued Operations. See
    Note 18 of Notes to Consolidated Financial Statements for
    further discussion. 152




---



##### Table of Contents



(2)
    
    Restatement adjustments for stock-based compensation expense
    (benefit), relating to improper measurement dates, repricing
    errors, other stock option modifications and related payroll and
    income tax expense (benefit) impacts.  Consolidated
    Statement of Operations
  As Restated andAs








Discontinued


Adjusted forPreviously


Restatement


As


Operations


DiscontinuedQuarter Ended December 31, 2005

Reported


Adjustments(2)


Restated


Adjustments(1)


Operations(In thousands, except per share data)Net revenues

$
425,188


$



$
425,188


$
(30,955
)

$
394,233Operating expenses.Cost of revenues*


288,016



520



288,536



(20,064
)


268,472Research and development*


66,671



1,062



67,733



(1,995
)


65,738Selling, general and administrative*


41,610



651



42,261



(1,889
)


40,372Asset impairment charges


12,757







12,757







12,757Restructuring and other charges and
    loss on sale


15,424







15,424



(194
)


15,230Total operating
    expenses


424,478



2,233



426,711



(24,142
)


402,569Income (loss) from
    operations


710



(2,233
)


(1,523
)


(6,813
)


(8,336
)Legal awards and settlements


43,119







43,119







43,119Interest and other expenses, net


2,434



10



2,444



(250
)


2,194Income (loss) from continuing
    operations before income taxes


46,263



(2,223
)


44,040



(7,063
)


36,977Benefit from (provision for) income
    taxes


7,537



(3,518
)


4,019



2,013



6,032Income (loss) from continuing
    operations


53,800



(5,741
)


48,059



(5,050
)


43,009Income from discontinued
    operations, net of income taxes














5,050



5,050Net income (loss)

$
53,800


$
(5,741
)

$
48,059


$



$
48,059Basic net income (loss) per
    common share:Income (loss) from continuing
    operations

$
0.11


$
(0.01
)

$
0.10


$
(0.01
)

$
0.09Income from discontinued
    operations, net of income taxes














0.01



0.01Net income (loss)

$
0.11


$
(0.01
)

$
0.10


$



$
0.10Weighted-average shares used in
    basic net income (loss) per share calculations


483,297



483,297



483,297



483,297



483,297Diluted net income (loss) per
    common share:Income (loss) from continuing
    operations

$
0.11


$
(0.01
)

$
0.10


$
(0.01
)

$
0.09Income from discontinued
    operations, net of income taxes














0.01



0.01Net income (loss)

$
0.11


$
(0.01
)

$
0.10


$



$
0.10Weighted-average shares used in
    diluted net income (loss) per share calculations


484,967



484,967



484,967



484,967



484,967     *
    
    Includes the following amounts related to stock-based
    compensation expense (benefit) (excluding payroll taxes):  As Previously


Restatement


AsReported


Adjustments


RestatedCost of revenues*

$



$
255


$
255Research and development*






1,062



1,062Selling, general and
    administrative*


289



628



917  153




---



##### Table of Contents



(1)
    
    Amounts have been adjusted to reflect the divestiture of our
    Grenoble, France, subsidiary. Results from the Grenoble
    subsidiary are classified as Discontinued Operations. See
    Note 18 of Notes to Consolidated Financial Statements for
    further discussion.(2)
    
    Restatement adjustments for stock-based compensation expense
    (benefit), relating to improper measurement dates, repricing
    errors, other stock option modifications and related payroll and
    income tax expense (benefit) impacts.  Consolidated
    Balance Sheet
  AsRestated andAs








Discontinued


Adjusted forPreviously


Restatement


As


Operations


DiscontinuedMarch 31, 2006

Reported


Adjustments(2)


Restated


Adjustments(1)


Operations(In thousands, except per share data)ASSETSCurrent assetsCash and cash equivalents

$
343,400


$



$
343,400


$



$
343,400Short-term investments


54,774







54,774







54,774Accounts receivable, net of
    allowance for doubtful accounts


253,261







253,261



(248
)


253,013Inventories


317,126



438



317,564



(24,010
)


293,554Current assets of discontinued
    operations














32,142



32,142Other current assets


93,654



1,828



95,482



(7,884
)


87,598Total current assets


1,062,215



2,266



1,064,481







1,064,481Fixed assets, net


862,427







862,427



(15,786
)


846,641Non-current assets of discontinued
    operations














15,786



15,786Intangible and other assets


36,533



4,763



41,296







41,296Total assets

$
1,961,175


$
7,029


$
1,968,204


$



$
1,968,204LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt

$
104,783


$



$
104,783


$



$
104,783Convertible notes


144,085







144,085







144,085Trade accounts payable


150,009







150,009



(17,247
)


132,762Accrued and other liabilities


207,512



14,671



222,183



(27,936
)


194,247Current liabilities of
    discontinued operations














45,183



45,183Deferred income on shipments to
    distributors


19,643







19,643







19,643Total current
    liabilities


626,032



14,671



640,703







640,703Long-term debt less current portion


116,873







116,873







116,873Convertible notes less current
    portion


299







299







299Non-current liabilities of
    discontinued operations














4,634



4,634Other long-term liabilities


236,838



700



237,538



(4,634
)


232,904Total liabilities


980,042



15,371



995,413







995,413Commitments and contingencies
    (Note 11)Stockholders
    equityCommon stock; par value $0.001;
    Authorized: 1,600,000 shares; Shares issued and outstanding:
    486,498 at March 31, 2006


486







486







486Additional paid-in capital


1,302,754



103,402



1,406,156







1,406,156Accumulated other comprehensive
    income


160,282



(12,355
)


147,927







147,927Accumulated deficit


(482,389
)


(99,389
)


(581,778
)






(581,778
)Total stockholders
    equity


981,133



(8,342
)


972,791







972,791Total liabilities and
    stockholders equity

$
1,961,175


$
7,029


$
1,968,204


$



$
1,968,204  154




---



##### Table of Contents



(1)
    
    Amounts have been adjusted to reflect the divestiture of our
    Grenoble, France, subsidiary. Assets and liabilities of the
    Grenoble subsidiary are reclassified as assets and liabilities
    of discontinued operations. See Note 18 of Notes to
    Consolidated Financial Statements for further discussion.(2)
    
    Restatement adjustments for stock-based compensation expenses,
    relating to improper measurement dates, repricing errors, other
    stock option modifications and related payroll and income tax
    expense (benefit) impacts.  Consolidated
    Balance Sheet
  AsRestatedAs








Discontinued


and AdjustedPreviously


Restatement


As


Operations


for DiscontinuedMarch 31, 2005

Reported


Adjustments(2)


Restated


Adjustments(1)


Operations(In thousands, except per share data)ASSETSCurrent assetsCash and cash equivalents

$
322,847


$



$
322,847


$



$
322,847Short-term investments


48,298







48,298







48,298Accounts receivable, net of
    allowance for doubtful accounts


242,966







242,966



(32
)


242,934Inventories


334,155







334,155



(24,578
)


309,577Current assets of discontinued
    operations














30,914



30,914Other current assets


96,175



7,712



103,887



(6,304
)


97,583Total current assets


1,044,441



7,712



1,052,153







1,052,153Fixed assets, net


1,134,065







1,134,065



(17,345
)


1,116,720Non-current assets of discontinued
    operations














17,345



17,345Intangible and other assets


44,771







44,771







44,771Total assets

$
2,223,277


$
7,712


$
2,230,989


$



$
2,230,989LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt

$
136,937


$



$
136,937


$



$
136,937Trade accounts payable


198,976







198,976



(19,018
)


179,958Accrued and other liabilities


245,147



11,783



256,930



(20,215
)


236,715Current liabilities of
    discontinued operations














39,233



39,233Deferred income on shipments to
    distributors


16,850







16,850







16,850Total current
    liabilities


597,910



11,783



609,693







609,693Long-term debt less current portion


124,194







124,194







124,194Convertible notes less current
    portion


216,176







216,176







216,176Non-current liabilities of
    discontinued operations














4,755



4,755Other long-term liabilities


267,151



700



267,851



(4,755
)


263,096Total liabilities


1,205,431



12,483



1,217,914







1,217,914Commitments and contingencies
    (Note 11)Stockholders
    equityCommon stock; par value $0.001;
    Authorized: 1,600,000 shares; Shares issued and
    outstanding: 480,401 at March 31, 2005


480







480







480Additional paid-in capital


1,287,452



106,334



1,393,786







1,393,786Unearned stock-based compensation






(4,673
)


(4,673
)






(4,673
)Accumulated other comprehensive
    income


232,061



(12,357
)


219,704







219,704Accumulated deficit


(502,147
)


(94,075
)


(596,222
)






(596,222
)Total stockholders
    equity


1,017,846



(4,771
)


1,013,075







1,013,075Total liabilities and
    stockholders equity

$
2,223,277


$
7,712


$
2,230,989


$



$
2,230,989  155




---



##### Table of Contents



(1)
    
    Amounts have been adjusted to reflect the divestiture of our
    Grenoble, France, subsidiary. Assets and liabilities of the
    Grenoble subsidiary are reclassified as assets and liabilities
    of discontinued operations. See Note 18 of Notes to
    Consolidated Financial Statements for further discussion.(2)
    
    Restatement adjustments for stock-based compensation expenses,
    relating to improper measurement dates, repricing errors, other
    stock option modifications and related payroll and income tax
    expense (benefit) impacts.  Consolidated
    Balance Sheet
  As Restated andDiscontinued


Adjusted forAs Previously


Restatement


As


Operations


DiscontinuedJune 30, 2005

Reported


Adjustments(2)


Restated


Adjustments(1)


Operations(In thousands, except per share data)ASSETSCurrent assetsCash and cash equivalents

$
303,148


$



$
303,148


$



$
303,148Short-term investments


45,621







45,621







45,621Accounts receivable, net of
    allowance for doubtful accounts


231,737







231,737



(32
)


231,705Inventories


320,326







320,326



(21,617
)


298,709Current assets of discontinued
    operations














27,234



27,234Other current assets


81,603



7,712



89,315



(5,585
)


83,730Total current assets


982,435



7,712



990,147







990,147Fixed assets, net


1,025,342







1,025,342



(15,439
)


1,009,903Non-current assets of discontinued
    operations














15,439



15,439Intangible and other assets


43,509







43,509







43,509Total assets

$
2,051,286


$
7,712


$
2,058,998


$



$
2,058,998LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt

$
133,564


$



$
133,564


$



$
133,564Convertible notes


218,437







218,437







218,437Trade accounts payable


164,192







164,192



(14,532
)


149,660Accrued and other liabilities


216,913



8,651



225,564



(18,174
)


207,390Current liabilities of
    discontinued operations














32,706



32,706Deferred income on shipments to
    distributors


16,060







16,060







16,060Total current
    liabilities


749,166



8,651



757,817







757,817Long-term debt less current portion


159,517







159,517







159,517Convertible notes less current
    portion


287







287







287Non-current liabilities of
    discontinued operations














4,462



4,462Other long-term liabilities


255,687



700



256,387



(4,462
)


251,925Total liabilities


1,164,657



9,351



1,174,008







1,174,008Commitments and contingencies
    (Note 11)Stockholders
    equityCommon stock; par value $0.001;
    Authorized: 1,600,000 shares; Shares issued and outstanding:
    480,984 at June 30, 2005


480







480







480Additional paid-in capital


1,288,611



105,659



1,394,270







1,394,270Unearned stock-based compensation






(4,223
)


(4,223
)






(4,223
)Accumulated other comprehensive
    income


142,265



(12,357
)


129,908







129,908Accumulated deficit


(544,727
)


(90,718
)


(635,445
)






(635,445
)Total stockholders
    equity


886,629



(1,639
)


884,990







884,990Total liabilities and
    stockholders equity

$
2,051,286


$
7,712


$
2,058,998


$



$
2,058,998  156




---



##### Table of Contents



(1)
    
    Amounts have been adjusted to reflect the divestiture of our
    Grenoble, France, subsidiary. Assets and liabilities of the
    Grenoble subsidiary are reclassified as assets and liabilities
    of discontinued operations. See Note 18 of Notes to
    Consolidated Financial Statements for further discussion.(2)
    
    Restatement adjustments for stock-based compensation expenses,
    relating to improper measurement dates, repricing errors, other
    stock option modifications and related payroll and income tax
    expense (benefit) impacts.  Consolidated
    Balance Sheet
  AsRestated andDiscontinued


Adjusted forAs Previously


Restatement


As


Operations


DiscontinuedSeptember 30, 2005

Reported


Adjustments(2)


Restated


Adjustments(1)


Operations(In thousands, except per share data)ASSETSCurrent assetsCash and cash equivalents

$
282,388


$



$
282,388


$



$
282,388Short-term investments


52,569







52,569







52,569Accounts receivable, net of
    allowance for doubtful accounts


236,194







236,194



(365
)


235,829Inventories


313,087







313,087



(21,628
)


291,459Current assets of discontinued
    operations














27,691



27,691Other current assets


98,117



7,712



105,829



(5,698
)


100,131Total current assets


982,355



7,712



990,067







990,067Fixed assets, net


969,353







969,353



(17,641
)


951,712Non-current assets of discontinued
    operations














17,641



17,641Intangible and other assets


39,638







39,638







39,638Total assets

$
1,991,346


$
7,712


$
1,999,058


$



$
1,999,058LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt

$
126,679


$



$
126,679


$



$
126,679Convertible notes


221,021







221,021







221,021Trade accounts payable


127,930







127,930



(17,454
)


110,476Accrued and other liabilities


197,497



6,134



203,631



(20,236
)


183,395Current liabilities of
    discontinued operations














37,690



37,690Deferred income on shipments to
    distributors


15,655







15,655







15,655Total current
    liabilities


688,782



6,134



694,916







694,916Long-term debt less current portion


151,186







151,186







151,186Convertible notes less current
    portion


291







291







291Non-current liabilities of
    discontinued operations














4,503



4,503Other long-term liabilities


256,161



700



256,861



(4,503
)


252,358Total liabilities


1,096,420



6,834



1,103,254







1,103,254Commitments and contingencies
    (Note 11)Stockholders
    equityCommon stock; par value $0.001;
    Authorized: 1,600,000 shares; Shares issued and outstanding:
    483,189 at September 30, 2005


483







483







483Additional paid-in capital


1,292,762



105,720



1,398,482







1,398,482Unearned stock-based compensation






(3,764
)


(3,764
)






(3,764
)Accumulated other comprehensive
    income


147,505



(12,357
)


135,148







135,148Accumulated deficit


(545,824
)


(88,721
)


(634,545
)






(634,545
)Total stockholders
    equity


894,926



878



895,804







895,804Total liabilities and
    stockholders equity

$
1,991,346


$
7,712


$
1,999,058


$



$
1,999,058  157




---



##### Table of Contents



(1)
    
    Amounts have been adjusted to reflect the divestiture of our
    Grenoble, France, subsidiary. Assets and liabilities of the
    Grenoble subsidiary are reclassified as assets and liabilities
    of discontinued operations. See Note 18 of Notes to
    Consolidated Financial Statements for further discussion.(2)
    
    Restatement adjustments for stock-based compensation expenses,
    relating to improper measurement dates, repricing errors, other
    stock option modifications and related payroll and income tax
    expense (benefit) impacts. 158




---



##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Audit
    Committee Investigation of Historical Stock Option
    Practices
      Results
    of Audit Committee Investigation
              30-day
       159




---



##### Table of Contents



Restatement
    and Impact on Consolidated Financial Statements
    Evaluation
    of Effectiveness of Disclosure Controls and Procedures
  Form 10-K, Rule 13a-15(e) Rule 15d-15(e) Form 10-K
  Managements
    Report on Internal Control Over Financial Reporting
  Rules 13a-15(f) 15d-15(f)
  Internal Control  Integrated
    Framework Internal Control 
    Integrated Framework
  Form 10-K.
 160




---



##### Table of Contents



Managements
    Consideration of the Restatement
  Form 10-K.
  Limitations
    on the Effectiveness of Controls
    Changes
    in Internal Control over Financial Reporting
    ITEM 9B.
    OTHER
    INFORMATION   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS OF THE REGISTRANT AND CORPORATE GOVERNANCE
    MATTERS  Form 10-K
  Code of
    Ethics/Standards of Business Conduct
     161




---



##### Table of Contents



ITEM 11.
    EXECUTIVE
    COMPENSATION    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
    INDEPENDENCE    ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES  Accounting
    Fees
    2006


2005Audit fees(1)

$
8,993,000


$
5,437,000Audit-related fees






Tax fees(2)


62,500



104,000All other fees






Total

$
9,055,500


$
5,541,000     (1)
    
    Audit fees represent fees for professional services provided in
    connection with the audit of our financial statements and of our
    internal control over financial reporting and the review of our
    quarterly financial statements and audit services provided in
    connection with other statutory or regulatory filings. Audit
    fees for fiscal 2006 also include approximately
    $3.6 million of fees relating to the restatement of our
    historical financial statements as a result of the findings of
    the Audit Committee investigation of our historical stock option
    grant process as discussed in Note 2, Restatement of
    Consolidated Financial Statements to Consolidated
    Financial Statements in this
    Form 10-K.(2)
    
    Tax fees consisted of fees for international tax planning
    services and other tax compliance advice.  Audit
    Committee Pre-Approval Policy
   162




---



##### Table of Contents



PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  Form 10-K:
  Financial Statements. Form 10-K.
  Financial Statement
    Schedules. Form 10-K.
  Exhibits. Form 10-K:
  3
.1

Restated Certificate of
    Incorporation of Registrant (which is incorporated herein by
    reference to Exhibit 3.1 to the Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended June 30, 2003, Commission File No.
    0-19032).3
.2

Amended and Restated Bylaws of
    Registrant (which is incorporated herein by reference to
    Exhibit 3.1 to the Registrants Current Report on
    Form 8-K
    (Commission File No. 0-19032) filed on March 28, 2007).3
.3

Certificate of Determination of
    Rights, Preferences and Privileges of Series A Preferred
    Stock (which is incorporated herein by reference to
    Exhibit A of Exhibit 1 to the Registrants
    Registration Statement on
    Form 8-A/12G/A
    (File No. 000-19032) filed on December 6, 1999).4
.1

Amended and Restated Preferred
    Shares Rights Agreement dated as of October 18, 1999,
    between Atmel Corporation and BankBoston, N.A., a national
    banking association, including the Certificate of Determination,
    the form of Rights Certificate and the Summary of Rights (which
    is incorporated herein by reference to Exhibit 1 to the
    Registrants Registration Statement on
    Form 8-A/12G/A
    (File No. 000-19032) filed on December 6, 1999).10
.1+

1986 Incentive Stock Option Plan,
    as amended, and forms of stock option agreements thereunder
    (which is incorporated herein by reference to Exhibit 10.1
    to the Registrants Registration Statement on
    Form S-1
    (File No.
    33-38882)
    declared effective on March 19, 1991).10
.2+

1991 Employee Stock Purchase Plan,
    as amended (which is incorporated herein by reference to
    Exhibit 10.2 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2002, Commission File No.
    0-19032).10
.3+

Form of Indemnification Agreement
    between Registrant and its officers and directors (which is
    incorporated herein by reference to Exhibit 10.4 to the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 1999, Commission File No.
    0-19032).10
.4+

2005 Stock Plan and forms of
    agreements thereunder (which is incorporated herein by reference
    to Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    (Commission File No. 0-19032) filed on May 16, 2005).10
.5+

Employment Agreement dated as of
    August 6, 2006 between Registrant and Steven Laub (which is
    incorporated herein by reference to Exhibit 10.1 to the
    Registrants Current Report on
    Form 8-K
    (Commission File No. 0-19032) filed on March 19, 2007).10
.6+

Amendment to the Employment
    Agreement dated as of March 13, 2007 between Registrant and
    Steven Laub (which is incorporated herein by reference to
    Exhibit 10.2 to the Registrants Current Report on
    Form 8-K
    (Commission File No. 0-19032) filed on March 19, 2007). 163




---



##### Table of Contents



10
.7

Facility Agreement, dated as of
    March 15, 2006, by and among the Registrant, Atmel Sarl,
    Atmel Switzerland Sarl, the financial institutions listed
    therein, and Bank of America, N.A., as facility agent and
    security agent (which is incorporated herein by reference to
    Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    (Commission File No. 0-19032) filed on March 21, 2006).10
.8

Share Purchase Agreement, dated as
    of July 12, 2006, between e2v technologies SAS and Atmel
    Paris SAS (which is incorporated herein by reference to
    Exhibit 2.1 to the Registrants Current Report on
    Form 8-K
    (Commission File No. 0-19032) filed on July 13, 2006).10
.9+

Stock Option Fixed Exercise Date
    Form (which is incorporated by reference to Exhibit 10.1 to
    the Registrants Current Report on
    Form 8-K
    (Commission File No. 0-19032) filed on January 8, 2007).21
.1

Subsidiaries of Registrant.24
.1

Power of Attorney (included on the
    signature pages hereof).31
.1

Certification of Chief Executive
    Officer pursuant to Securities Exchange Act
    Rules 13a-14(a)
    and
    15d-14(a).31
.2

Certification of Chief Financial
    Officer pursuant to Securities Exchange Act
    Rules 13a-14(a)
    and
    15d-14(a).32
.1

Certification of Chief Executive
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32
.2

Certification of Chief Financial
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.     +
    
    Indicates management compensatory plan, contract or arrangement.(b)
    
    Exhibits. See Item 15(a)(3) above.(c)
    
    Financial Statement Schedules. See Item 15(a)(2) above. 164




---



##### Table of Contents



SIGNATURES  Form 10-K
    By:
    /s/  Steven
    Laub       POWER OF
    ATTORNEY
  attorneys-in-fact, Form 10-K attorneys-in-fact,
  Form 10-K
  Signature

Title/s/  (Steven
    Laub)(Steven
    Laub)

President, Chief Executive Officer
    and Director (principal executive officer)/s/  (Robert
    Avery)(Robert
    Avery)

Vice President Finance and Chief
    Financial Officer (principal financial and accounting officer)/s/  (Tsung-Ching
    Wu)(Tsung-Ching
    Wu)

Director/s/  (T.
    Peter Thomas)(T.
    Peter Thomas)

Director/s/  (Pierre
    Fougere)(Pierre
    Fougere)

Director/s/  (Dr.
    Chaiho Kim)(Dr.
    Chaiho Kim)

Director/s/  (David
    Sugishita)(David
    Sugishita)

Director  165




---



##### Table of Contents



EXHIBIT INDEX
  3
.1

Restated Certificate of
    Incorporation of Registrant (which is incorporated herein by
    reference to Exhibit 3.1 to the Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended June 30, 2003, Commission
    File No. 0-19032).3
.2

Amended and Restated Bylaws of
    Registrant (which is incorporated herein by reference to
    Exhibit 3.1 to the Registrants Current Report on
    Form 8-K
    (Commission File
    No. 0-19032)
    filed on March 28, 2007).3
.3

Certificate of Determination of
    Rights, Preferences and Privileges of Series A Preferred
    Stock (which is incorporated herein by reference to
    Exhibit A of Exhibit 1 to the Registrants
    Registration Statement on
    Form 8-A/12G/A
    (File
    No. 000-19032)
    filed on December 6, 1999).4
.1

Amended and Restated Preferred
    Shares Rights Agreement dated as of October 18, 1999,
    between Atmel Corporation and BankBoston, N.A., a national
    banking association, including the Certificate of Determination,
    the form of Rights Certificate and the Summary of Rights (which
    is incorporated herein by reference to Exhibit 1 to the
    Registrants Registration Statement on
    Form 8-A/12G/A
    (File No. 000-19032)
    filed on December 6, 1999).10
.1+

1986 Incentive Stock Option Plan,
    as amended, and forms of stock option agreements thereunder
    (which is incorporated herein by reference to Exhibit 10.1
    to the Registrants Registration Statement on
    Form S-1
    (File
    No. 33-38882)
    declared effective on March 19, 1991).10
.2+

1991 Employee Stock Purchase Plan,
    as amended (which is incorporated herein by reference to
    Exhibit 10.2 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2002, Commission
    File No. 0-19032).10
.3+

Form of Indemnification Agreement
    between Registrant and its officers and directors (which is
    incorporated herein by reference to Exhibit 10.4 to the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 1999, Commission File
    No. 0-19032).10
.4+

2005 Stock Plan and forms of
    agreements thereunder (which is incorporated herein by reference
    to Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    (Commission File
    No. 0-19032)
    filed on May 16, 2005).10
.5+

Employment Agreement dated as of
    August 6, 2006 between Registrant and Steven Laub (which is
    incorporated herein by reference to Exhibit 10.1 to the
    Registrants Current Report on
    Form 8-K
    (Commission File
    No. 0-19032)
    filed on March 19, 2007).10
.6+

Amendment to Employment Agreement
    dated as of March 13, 2007 between Registrant and Steven
    Laub (which is incorporated herein by reference to
    Exhibit 10.2 to the Registrants Current Report on
    Form 8-K
    (Commission File
    No. 0-19032)
    filed on March 19, 2007).10
.7

Facility Agreement, dated as of
    March 15, 2006, by and among the Registrant, Atmel Sarl,
    Atmel Switzerland Sarl, the financial institutions listed
    therein, and Bank of America, N.A., as facility agent and
    security agent (which is incorporated herein by reference to
    Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    (Commission File
    No. 0-19032)
    filed on March 21, 2006).10
.8

Share Purchase Agreement, dated as
    of July 12, 2006, between e2v technologies SAS and Atmel
    Paris SAS (which is incorporated herein by reference to
    Exhibit 2.1 to the Registrants Current Report on
    Form 8-K
    (Commission File
    No. 0-19032)
    filed on July 13, 2006).10
.9+

Stock Option Fixed Exercise Date
    Form (which is incorporated by reference to Exhibit 10.1 to
    the Registrants Current Report on
    Form 8-K
    (Commission File No. 0-19032) filed on January 8, 2007).21
.1

Subsidiaries of Registrant.24
.1

Power of Attorney (included on the
    signature pages hereof)31
.1

Certification of Chief Executive
    Officer pursuant to Securities Exchange Act
    Rules 13a-14(a)
    and
    15d-14(a).31
.2

Certification of Chief Financial
    Officer pursuant to Securities Exchange Act
    Rules 13a-14(a)
    and
    15d-14(a).32
.1

Certification of Chief Executive
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32
.2

Certification of Chief Financial
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.     +
    
    Indicates management compensatory plan, contract or arrangement.