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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, 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, 2008oro

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(State or other jurisdiction
    of
    incorporation or organization)

77-0051991(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

The NASDAQ Stock Market LLC
    (NASDAQ Global Select Market)   Securities registered pursuant to Section 12(g) of the
    Act:
 Preferred Share Right (currently attached to and trading with
    the Common Stock)
      þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  12b-2
  Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K




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##### 





TABLE OF
    CONTENTS
  PART IITEM 1.

BUSINESS


1ITEM 1A.

RISK FACTORS


11ITEM 1B.

UNRESOLVED STAFF COMMENTS


28ITEM 2.

PROPERTIES


28ITEM 3.

LEGAL PROCEEDINGS


28ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY
    HOLDERS


30PART IIITEM 5.

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


31ITEM 6.

SELECTED FINANCIAL DATA


32ITEM 7.

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


33ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK


60ITEM 8.

CONSOLIDATED FINANCIAL STATEMENTS AND
    SUPPLEMENTARY DATA


63ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
    ACCOUNTING AND FINANCIAL DISCLOSURE


120ITEM 9A.

CONTROLS AND PROCEDURES


120ITEM 9B.

OTHER INFORMATION


121PART IIIITEM 10.

DIRECTORS, EXECUTIVE OFFICERS OF THE REGISTRANT
    AND CORPORATE GOVERNANCE MATTERS


121ITEM 11.

EXECUTIVE COMPENSATION


122ITEM 12.

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


122ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    AND DIRECTOR INDEPENDENCE


122ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES


123PART IVITEM 15.

EXHIBITS AND FINANCIAL STATEMENT
    SCHEDULES


123SIGNATURES


124EXHIBIT INDEX


126EXHIBIT 10.10EXHIBIT 10.11EXHIBIT 10.13EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2




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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 2009,
    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
  (408) 441-0311. Form 10-K, Form 10-Q, Form 8-K,
  Products
     1




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
    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. In March 2008, we acquired Quantum
    Research Group Ltd. (Quantum), a supplier of
    capacitive sensing IP solutions. Results from the acquired
    operations are considered complementary to sales of
    microcontroller products and are included in this segment. Our
    Microcontroller segment comprised 33% of net revenues in the
    year ended December 31, 2008.
    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 electrically
    erasable programmable read-only memory (EEPROM) and
    erasable programmable read-only memory (EPROM)
    devices. This segment also includes products with military and
    aerospace applications. Our Nonvolatile Memories segment
    comprised 22% of net revenues in the year ended
    December 31, 2008.
    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. Our RF and Automotive
    segment comprised 16% of net revenues in the year ended
    December 31, 2008.
    Application Specific Integrated Circuit (ASIC)segment includes customer and application specific
    integrated circuits designed to meet specialized single-customer
    requirements for their high performance devices in a broad
    variety of specific applications. This segment also encompasses
    a range of products which provide security for digital data
    transactions, including smart cards for mobile phones, set top
    boxes, banking and national identity cards. We also develop
    application specific standard products (ASSP) for
    high reliability space applications, power management and secure
    crypto memory products. As a further step in our
    transformational plan to focus on our core Microcontroller
    segment, we recently announced that we are pursuing strategic
    alternatives for our ASIC and related manufacturing assets,
    including a potential sale. Our ASIC segment comprised 29% of
    net revenues in the year ended December 31, 2008.    Microcontrollers
    computer-on-a-chip
  AVR. ® ® tm tm ®
 2




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Q Touch.
    tm tm tm
  ARM.
  8051.
    Nonvolatile
    Memories
  Serial Interface Products. 512-Kbits 1-Kbits 64-Mbits.
  Serial EEPROMs.
 3




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DataFlash ® ®
    SPI Flash. easier-to-implement
  Parallel Flash Memory Products.
    Parallel EEPROMs.
  EEPROMs.
  RF and
    Automotive
  Automotive RF.
 4




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High Voltage.
  RF.
  DVD.
  Mixed Signal.
  ASIC
  Custom ASICs. time-to-market
    CAP tm system-on-chip
  Secure Microcontrollers.
 5




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® tm
  ® ® tm
    FPGAs. ® FPGA-to-gate
    Technology
    state-of-the-art
  Principal
    Markets and Customers
  Communications. ,
    Consumer Electronics.
 6




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Computing, Storage and Printing.
  Security.
  Automotive.
  Military and Aerospace. latch-up
  Manufacturing
     7




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Heilbronn,
    Germany
    Environmental
    Compliance
      Marketing
    and Sales
   8




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Research
    and Development
      Competition
   9




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Patents
    and Licenses
          Employees
    Backlog
   10




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Geographic
    Areas
      Seasonality
  quarter-to-quarter period-to-period
  ITEM 1A.
    RISK
    FACTORS  Form 10-K, Form 10-K
  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 nature of both the semiconductor industry and the markets
    addressed by our products;
    our transition to a fab-lite strategy;
    our dependence on selling through distributors;
    our increased dependence on outside foundries and their ability
    to meet our volume, quality and delivery objectives,
    particularly during times of increasing demand along with
    inventory excesses or shortages due to reliance on third party
    manufacturers;
    global economic and political conditions;
    compliance with U.S. and international trade and export
    laws and regulations by us and our distributors;
    fluctuations in currency exchange rates and revenues and costs
    denominated in foreign currencies;
    ability of independent assembly contractors to meet our volume,
    quality and delivery objectives;
    success with disposal or restructuring activities, including
    disposition of our Heilbronn facility;
    fluctuations in manufacturing yields; 11




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
    the average margin of the mix of products we sell;
    third party intellectual property infringement claims;
    the highly competitive nature of our markets;
    the pace of technological change;
    natural disasters or terrorist acts;
    assessment of internal controls over financial reporting;
    ability to meet our debt obligations;
    availability of additional financing;
    potential impairment and liquidity of auction-rate securities;
    our ability to maintain good relationships with our customers;
    long-term contracts with our customers;
    integration of new businesses or products;
    our compliance with international, federal and state,
    environmental, privacy and other regulations;
    personnel changes;
    business interruptions;
    system integration disruptions;
    anti-takeover effects in our certificate of incorporation,
    bylaws and preferred shares rights agreement;
    the unfunded nature of our foreign pension plans and that any
    requirement to fund these plans could negatively impact our cash
    position;
    the effects of our acquisition strategy, such as unanticipated
    accounting charges, which may adversely affect our results of
    operations;
    utilization of our manufacturing capacity;
    disruptions to the availability of raw materials which could
    disrupt our ability to supply products to our customers;
    costs associated with, and the outcome of, any litigation to
    which we are, or may become, a party;
    product liability claims that may arise, which could result in
    significant costs and damage to reputation;
    audits of our income tax returns, both in the U.S. and in
    foreign jurisdictions; and
    compliance with economic incentive terms in certain government
    grants.     12




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THE
    CYCLICAL NATURE OF THE SEMICONDUCTOR INDUSTRY CREATES
    FLUCTUATIONS IN OUR OPERATING RESULTS.
      quarter-to-quarter period-to-period
  THE
    EFFECTS OF THE CURRENT GLOBAL RECESSIONARY MACROECONOMIC
    ENVIRONMENT MAY IMPACT OUR BUSINESS, OPERATING RESULTS OR
    FINANCIAL CONDITION.
    WE
    COULD EXPERIENCE DISRUPTION OF OUR BUSINESS AS WE TRANSITION TO
    A FAB-LITE
    STRATEGY AND INCREASE DEPENDENCE ON OUTSIDE FOUNDRIES, WHERE
    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.
   13




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
    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.          OUR
    REVENUES ARE DEPENDENT ON SELLING THROUGH
    DISTRIBUTORS.
   14




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WE
    BUILD SEMICONDUCTORS BASED ON FORECASTED DEMAND, AND AS A
    RESULT, CHANGES TO FORECASTS FROM ACTUAL DEMAND MAY RESULT IN
    EXCESS INVENTORY OR OUR INABILITY TO FILL CUSTOMER ORDERS ON A
    TIMELY BASIS WHICH MAY HARM OUR BUSINESS.
   15




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OUR
    INTERNATIONAL SALES AND OPERATIONS ARE SUBJECT TO APPLICABLE
    LAWS RELATING TO TRADE AND EXPORT CONTROLS, AND A VIOLATION OF,
    OR CHANGE IN, THESE LAWS COULD ADVERSELY AFFECT OUR
    OPERATIONS.
      WE ARE
    EXPOSED TO FLUCTUATIONS IN CURRENCY EXCHANGE RATES THAT COULD
    NEGATIVELY IMPACT OUR FINANCIAL RESULTS AND CASH FLOWS, AND
    REVENUES AND COSTS DENOMINATED IN FOREIGN CURRENCIES COULD
    ADVERSELY IMPACT OUR OPERATING RESULTS WITH CHANGES IN THESE
    FOREIGN CURRENCIES AGAINST THE DOLLAR.
   16




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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.
    WE
    FACE RISKS ASSOCIATED WITH DISPOSAL OR RESTRUCTURING
    ACTIVITIES.
   17




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IF WE
    ARE UNABLE TO IMPLEMENT NEW MANUFACTURING TECHNOLOGIES OR FAIL
    TO ACHIEVE ACCEPTABLE MANUFACTURING YIELDS, OUR BUSINESS WOULD
    BE HARMED.
        WE MAY
    FACE THIRD PARTY INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS THAT
    COULD BE COSTLY TO DEFEND AND RESULT IN LOSS OF SIGNIFICANT
    RIGHTS.
     18




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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.
      
    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
    MUST KEEP PACE WITH TECHNOLOGICAL CHANGE TO REMAIN
    COMPETITIVE.
   19




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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;
    reduced flexibility and increased cost of staffing adjustments,
    particularly in France;
    longer collection cycles;
    potential unexpected changes in regulatory practices, including
    export license requirements, trade barriers, tariffs and tax
    laws, and environmental and privacy regulations; and
    general economic and political conditions in these foreign
    markets.       20




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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.
  debt-to-equity debt-to-equity
     21




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WE MAY
    NEED TO RAISE ADDITIONAL CAPITAL THAT MAY NOT BE
    AVAILABLE.
    A
    PORTION OF OUR INVESTMENT PORTFOLIO IS INVESTED IN AUCTION-RATE
    SECURITIES. FAILURES IN THESE AUCTIONS MAY AFFECT OUR LIQUIDITY,
    WHILE RATING DOWNGRADES OF THE SECURITY ISSUER AND/OR THE
    THIRD-PARTIES INSURING SUCH INVESTMENTS MAY REQUIRE US TO ADJUST
    THE CARRYING VALUE OF THESE INVESTMENTS THROUGH AN IMPAIRMENT
    CHARGE.
      PROBLEMS
    THAT WE EXPERIENCE WITH KEY CUSTOMERS OR DISTRIBUTORS MAY HARM
    OUR BUSINESS.
       22




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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.
   23




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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.
     24




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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.
    OUR
    ACQUISITION STRATEGY MAY RESULT IN UNANTICIPATED ACCOUNTING
    CHARGES OR OTHERWISE ADVERSELY AFFECT OUR RESULTS OF OPERATIONS
    AND RESULT IN DIFFICULTIES IN ASSIMILATING AND INTEGRATING THE
    OPERATIONS, PERSONNEL, TECHNOLOGIES, PRODUCTS AND INFORMATION
    SYSTEMS OF ACQUIRED COMPANIES OR BUSINESSES, OR BE DILUTIVE TO
    EXISTING STOCKHOLDERS.
         25




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WE MAY
    NOT BE ABLE TO EFFECTIVELY UTILIZE ALL OF OUR MANUFACTURING
    CAPACITY, WHICH MAY NEGATIVELY IMPACT OUR
    BUSINESS.
      DISRUPTIONS
    TO THE AVAILABILITY OF RAW MATERIALS CAN DISRUPT OUR ABILITY TO
    SUPPLY PRODUCTS TO OUR CUSTOMERS, WHICH COULD SERIOUSLY HARM OUR
    BUSINESS.
    WE
    COULD FACE PRODUCT LIABILITY CLAIMS THAT RESULT IN SIGNIFICANT
    COSTS AND DAMAGE TO REPUTATION WITH CUSTOMERS, WHICH WOULD
    NEGATIVELY IMPACT OUR OPERATING RESULTS.
   26




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THE
    OUTCOME OF CURRENTLY ONGOING AND FUTURE AUDITS OF OUR INCOME TAX
    RETURNS, BOTH IN THE U.S. AND IN FOREIGN JURISDICTIONS, COULD
    HAVE AN ADVERSE EFFECT ON OUR NET (LOSS) INCOME AND FINANCIAL
    CONDITION.
    IF WE
    ARE UNABLE TO COMPLY WITH ECONOMIC INCENTIVE TERMS IN CERTAIN
    GOVERNMENT GRANTS, WE MAY NOT BE ABLE TO RECEIVE OR RECOGNIZE
    GRANT BENEFITS OR WE MAY BE REQUIRED TO REPAY GRANT BENEFITS
    PREVIOUSLY PAID TO US AND RECOGNIZE RELATED CHARGES, WHICH WOULD
    ADVERSELY AFFECT OUR OPERATING RESULTS AND FINANCIAL
    POSITION.
    CURRENT
    AND FUTURE LITIGATION AGAINST US COULD BE COSTLY AND TIME
    CONSUMING TO DEFEND.
     27




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ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    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 testing5


Rousset, France


815,000


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


Heilbronn, Germany


778,000


Research and development, marketing and product design,
    primarily leased to other semiconductor companies.2


Calamba City, Philippines


338,000


Final product testing             ITEM 3.
    LEGAL
    PROCEEDINGS   28




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and/or
   29




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Kuhn v. Atmel Corp., Gebhardt v. Atmel Corp Louisiana Municipal Employees
    Retirement System v. Laub. Louisiana Municipal Employees Louisiana Municipal Employees Louisiana Municipal Employees Zucker v. Laub, Zucker Zucker Zucker
        ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   30




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


LowYear ended December 31, 2007:First Quarter

$
6.30


$
4.96Second Quarter

$
5.86


$
5.00Third Quarter

$
5.99


$
4.55Fourth Quarter

$
5.65


$
4.31Year ended December 31, 2008:First Quarter

$
4.32


$
2.96Second Quarter

$
4.47


$
3.21Third Quarter

$
4.34


$
3.19Fourth Quarter

$
4.55


$
2.54        31




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##### Table of Contents



ITEM 6.
    SELECTED
    FINANCIAL DATA  Form 10-K.
  Years Ended December 31,2008


2007


2006


2005


2004(In thousands, except per share data)Net revenues

$
1,566,763


$
1,639,237


$
1,670,887


$
1,561,107


$
1,552,440(Loss) income from continuing operations before income
    taxes(1)(5)(6)


(20,243
)


55,709



(73,702
)


(62,690
)


18,842(Loss) income from continuing operations


(27,209
)


47,885



(98,651
)


(49,627
)


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










12,969



16,276



11,874Gain on sale of discontinued operations, net of provision for
    income taxes(2)










100,332







Net (loss) income

$
(27,209
)

$
47,885


$
14,650


$
(33,351
)

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

$
(0.06
)

$
0.10


$
(0.20
)

$
(0.10
)

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










0.02



0.03



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










0.21







Net (loss) income

$
(0.06
)

$
0.10


$
0.03


$
(0.07
)

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


446,504



477,213



487,413



481,534



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

$
(0.06
)

$
0.10


$
(0.20
)

$
(0.10
)

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










0.02



0.03



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










0.21







Net (loss) income

$
(0.06
)

$
0.10


$
0.03


$
(0.07
)

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


446,504



481,737



487,413



481,534



476,063   As of December 31,2008


2007


2006


2005


2004Cash and cash equivalents

$
408,926


$
374,130


$
410,480


$
300,323


$
346,350Cash and cash equivalents and short-term investments


440,633



429,947



466,744



348,255



405,208Fixed assets, net(3)


383,107



579,566



602,290



874,618



1,185,727Total assets


1,530,654



1,702,753



1,818,539



1,933,936



2,331,236Long-term debt and capital leases less current portion(4)


13,909



20,408



60,333



133,479



323,950Stockholders equity


802,084



823,479



953,894



937,371



1,107,568  32




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(1)
    
    We recorded asset impairment charges (recovery) of
    $8 million, $(1) million, $83 million and
    $13 million in the years ended December 31, 2008,
    2007, 2006 and 2005, respectively, and restructuring charges of
    $71 million, $13 million, $9 million, and
    $4 million in the years ended December 31, 2008, 2007,
    2006 and 2005, respectively, related to employee termination
    costs, as well as industry changes and the related realignment
    of our businesses in response to those changes. We recorded a
    gain on sale of assets of $33 million in the year ended
    December 31, 2008 and a loss on sale of assets of
    $13 million in the year ended December 31, 2005. We
    also recorded $1 million, $1 million and
    $30 million in charges for grant repayments in the years
    ended December 31, 2008, 2007 and 2006, respectively.(2)
    
    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 in the year
    ended December 31, 2006.(3)
    
    Fixed assets, net was reduced (increased) for the respective
    periods as a result of the impairment charges (recovery)
    discussed in (1) above. Additionally, we reclassified
    $35 million in fixed assets to assets held for sale as of
    December 31, 2006, relating to our Irving, Texas,
    facilities.(4)
    
    On May 23, 2006, substantially all of the convertible notes
    outstanding at the time were redeemed for approximately
    $144 million. The remaining balance of approximately
    $1 million was called by Atmel in June 2006.(5)
    
    On January 1, 2006, we adopted SFAS No. 123R
    Share-Based Payment. It required 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 $29 million, $17 million and
    $9 million in the years ended December 31, 2008, 2007
    and 2006, respectively, under SFAS No. 123R.(6)
    
    On March 6, 2008, we acquired Quantum Research Group Ltd.
    (Quantum) for $96 million. We recorded
    $24 million in acquisition-related charges in the year
    ended December 31, 2008.  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 2009,
    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 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.
  Overview
    of 2008 Operating Results
   33




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34




---



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
    Two week wafer manufacturing shutdown worldwide in the first
    quarter of 2009;
    One week leave for non-manufacturing employees in the first
    quarter of 2009 and one week in the second quarter of 2009;
    10% salary cut for our Chief Executive Officer and 7% for the
    remaining executive team;
    Salary freeze for the rest of our workforce; and
    Suspension of our
    401-K match
    program.  RESULTS
    OF CONTINUING OPERATIONS
  Years EndedDecember 31, 2008


December 31, 2007


December 31, 2006(In thousands, except percentage of net revenuesNet revenues

$
1,566,763



100.0
%

$
1,639,237



100.0
%

$
1,670,887



100.0
%Gross profit


590,540



37.7
%


580,231



35.4
%


562,118



33.6
%Research and development


260,310



16.6
%


272,041



16.6
%


289,108



17.3
%Selling, general and administrative


273,196



17.4
%


242,811



14.8
%


213,641



12.8
%Acquisition-related charges


23,614



1.5
%














Charges for grant repayments


718







1,464



0.1
%


30,034



1.8
%Restructuring charges


71,324



4.6
%


13,239



0.8
%


8,729



0.5
%Asset impairment charges (recovery)


7,969



0.5
%


(1,057
)


(0.1
)%


82,582



4.9
%Gain on sale of assets


(32,654
)


(2.1
)%














(Loss) income from operations

$
(13,937
)


(0.9
)%

$
51,733



3.2
%

$
(61,976
)


(3.7
)%  35




---



##### Table of Contents



Net
    Revenues
        Net
    Revenues  By Operating Segment
    % of Net


Change


% ChangeSegment

2008


Revenues


from 2007


from 2007(In thousands, except percentage of net revenues)Microcontroller

$
522,635



33
%

$
64,407



14
%Nonvolatile Memory


339,239



22
%


(37,436
)


(10
)%RF and Automotive


250,219



16
%


(58,300
)


(19
)%ASIC


454,670



29
%


(41,145
)


(8
)%Net revenues

$
1,566,763



100
%

$
(72,474
)


(4
)%   36




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##### Table of Contents



% of Net


Change


% ChangeSegment

2007


Revenues


from 2006


from 2006Microcontroller

$
458,228



28
%

$
49,834



12
%Nonvolatile Memory


376,675



23
%


1,356



0
%RF and Automotive


308,519



19
%


(76,957
)


(20
)%ASIC


495,815



30
%


(5,883
)


(1
)%Net revenues

$
1,639,237



100
%

$
(31,650
)


(2
)%   % of NetSegment

2006


RevenuesMicrocontroller


408,394



24
%Nonvolatile Memory


375,319



22
%RF and Automotive


385,476



23
%ASIC


501,698



30
%Net revenues

$
1,670,887



100
%     Microcontroller
         37




---



##### Table of Contents



Nonvolatile
    Memory
      RF and
    Automotive
   38




---



##### Table of Contents



ASIC
      Net
    Revenues by Geographic Area
    Change


% Change





Change


% ChangeRegion

2008


from 2007


from 2007


2007


from 2006


from 2006


2006(In thousands, except percentages)Asia

$
754,123


$
(73,295
)


(9
)%

$
827,418


$
(46,808
)


(5
)%

$
874,226Europe


568,671



(2,805
)


0
%


571,476



30,222



6
%


541,254United States


221,351



1,810



1
%


219,541



(21,838
)


(9
)%


241,379Other*


22,618



1,816



9
%


20,802



6,774



48
%


14,028Total net revenues

$
1,566,763


$
(72,474
)


(4
)%

$
1,639,237


$
(31,650
)


(2
)%

$
1,670,887     *
    
    Primarily includes South Africa, and Central and South America     39




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Revenues
    and Costs  Impact from Changes to Foreign Exchange
    Rates
         40




---



##### Table of Contents



Cost of
    Revenues and Gross Margin
          Research
    and Development
     41




---



##### Table of Contents



Selling,
    General and Administrative
        Stock-Based
    Compensation
   42




---



##### Table of Contents



Charges
    for Grant Repayments
      Asset
    Impairment Charges (Recovery) and Gain on Sale of
    Assets
      Years EndedDecember 31,


December 31,


December 31,2008


2007


2006(In thousands)Heilbronn, Germany

$
7,969


$



$
North Tyneside, United Kingdom






(1,057
)


72,277Irving, Texas










10,305Total asset impairment charges (recovery)

$
7,969


$
(1,057
)

$
82,582  43




---



##### Table of Contents



Year EndedDecember 31,2008(In thousands)Heilbronn, Germany

$
(2,706
)North Tyneside, United Kingdom


(29,948
)Total gain on sale of assets

$
(32,654
)     Heilbronn,
    Germany
    (In thousands)Assets and liabilities disposed of:Pension and other employee-related liabilities

$
(20,113
)Fixed assets


7,142Inventories


9,480Total


(3,491
)Income from technology process license


2,545Loss from transition service agreement


(1,036
)Payable to TSI


(724
)Total gain on sale of assets

$
(2,706
)     North
    Tyneside, United Kingdom
   44




---



##### Table of Contents



Irving,
    Texas
    Acquisition-Related
    Charges
          Restructuring
    Charges
    January 1,








Currency


December 31,2008


Charges/





Translation


2008Accrual


(Credits)


Payments


Adjustment


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

$
1,592


$



$



$



$
1,592Fourth quarter of 2006Employee termination costs


1,324



(224
)


(1,172
)


72



Fourth quarter of 2007Employee termination costs


12,759



1,431



(14,749
)


559



Termination of contract with supplier






12,206



(13,019
)


813



Other restructuring charges






20,778



(21,465
)


905



218Second quarter of 2008Employee termination costs






2,990



(2,534
)


(221
)


235Third quarter of 2008Employee termination costs






28,852



(8,921
)


(2,356
)


17,575Fouth quarter of 2008Employee termination costs






5,291



(1,879
)


26



3,438Total 2008 activity

$
15,675


$
71,324


$
(63,739
)

$
(202
)

$
23,058  45




---



##### Table of Contents



January 1,








Currency


December 31,2007


Charges/





Translation


2007Accrual


(Credits)


Payments


Adjustment


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

$
8,896


$
(3,071
)

$
(4,233
)

$



$
1,592Fouth quarter of 2006Employee termination costs


7,490



3,305



(9,959
)


488



1,324Fouth quarter of 2007Employee termination costs






12,441







318



12,759Other exit related costs






564



(564
)






Total 2007 activity

$
16,386


$
13,239


$
(14,756
)

$
806


$
15,675   January 1,








December 31,2006








2006Accrual


Charges


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 2005Employee termination costs


1,223







(1,223
)


First quarter of 2006Employee termination costs






151



(151
)


Fourth quarter of 2006Employee termination costs






8,578



(1,088
)


7,490Total 2006 activity

$
12,302


$
8,729


$
(4,645
)

$
16,386   2008
    Restructuring Activities
      
    Net charges of $38 million related to severance costs
    resulting from involuntary termination of employees. Employee
    severance costs were recorded in accordance with
    SFAS No. 146, Accounting for Costs Associated
    with Exit of Disposal Activities
    (SFAS 146).
    Charges of $21 million related to equipment removal and
    facility closure costs. After production activity ceased, we
    utilized employees as well as outside services to disconnect
    fabrication equipment, fulfill equipment performance testing
    requirements of the buyer, and perform facility decontamination
    and other facility closure-related activity. Included in these
    costs are labor costs, facility related costs, outside service
    provider costs, and legal and other fees. Equipment removal,
    building decontamination and closure related cost activities
    were completed as of June 30, 2008. 46




---



##### Table of Contents




    Charges of $12 million related to contract termination
    charges, primarily associated with a long-term gas supply
    contract for nitrogen gas utilized in semiconductor
    manufacturing. We are required to pay an early termination
    penalty including de-contamination and removal costs. Other
    contract termination costs related to semiconductor equipment
    support services with minimum payment clauses extending beyond
    the current period.
    Net charges of $1 million related to changes in estimates
    of termination benefits originally recorded in accordance with
    SFAS No. 112, Employers Accounting for
    Pension Employment Benefits (SFAS No. 112).        2007
    Restructuring Activities
    
    Charges of $11 million related to one-time severance costs
    for involuntary termination of employees. These employee
    severance costs were recorded in accordance with
    SFAS No. 146.
    Charges of $1 million related to on-going severance costs
    for involuntary termination of employees. These employee
    severance costs were recorded in accordance with
    SFAS No. 112.
    Charges of $1 million related to other exit related costs,
    which were recorded in accordance with SFAS No. 146.    
    Charges of $2 million related to severance costs for
    involuntary termination of employees. These employee severance
    costs were recorded in accordance with SFAS No. 146.
    Charges of $1 million related to one-time minimum statutory
    termination benefits, including changes in estimates, recorded
    in accordance with SFAS No. 112.
    A credit of $3 million related to the settlement of a
    long-term gas supply contract for which the accrual was
    $12 million, originally recorded in the third quarter of
    2002. On May 1, 2007, in connection with the sale of the
    Irving, Texas facility, we paid $6 million to terminate
    this contract, of which $2 million was reimbursed by the
    buyer of the facility. The remaining balance of $2 million
    is expected to be paid in 2009.    2006
    Restructuring Activities
     47




---



##### Table of Contents




    $7 million in one-time minimum statutory termination
    benefits recorded in accordance with SFAS No. 112.
    These costs related to the termination of employees in Europe.
    $2 million 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.    Interest
    and Other (Expenses) Income, Net
        Provision
    for Income Taxes
         48




---



##### Table of Contents



non-U.S. jurisdictions
                 49




---



##### Table of Contents



Discontinued
    Operations
  Grenoble,
    France Subsidiary Sale
            (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 disposed of


(14,866
)Cumulative translation adjustment effect


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  50




---



##### Table of Contents



Year EndedDecember 31,2006(In thousands, exceptper share data)Net revenues

$
79,871Operating costs and expenses


57,509Income from discontinued operations, before income taxes


22,362Gain on sale of discontinued operations, before income taxes


109,838Income from and gain on sale of discontinued operations


132,200Less: provision for income taxes


(18,899
)Income from and gain on sale of discontinued operations, net of
    income taxes

$
113,301Income from and gain on sale of discontinued operations, net of
    income taxes, per share:Basic and diluted

$
0.23Weighted-average shares used in basic and diluted income per
    share calculations


487,413   Liquidity
    and Capital Resources
      Operating
    Activities
   51




---



##### Table of Contents



work-in-process
    Investing
    Activities
      Financing
    Activities
   52




---



##### Table of Contents



non-U.S. trade non-U.S. trade non-U.S. trade
   53




---



##### 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

$



$



$



$
2,835


$
2,835Capital leases


6,132



9,963



1,111







17,206Lines of credit


125,000















125,000Total debt obligations


131,132



9,963



1,111



2,835



145,041Capital purchase commitments


647















647Long-term supply agreement obligation(a)


695















695Long-term supply agreement obligation(b)


43,561



71,332











114,893Estimated pension plan benefit payments


765



839



1,066



6,909



9,579Grants to be repaid


13,303















13,303Restructuring(e)


23,058















23,058Operating leases


11,310



16,565



6,957



156



34,988Acquisition-related payable(c)


18,411















18,411Other long-term obligations(d)


18,277



28,000



14,000



25,452



85,729Total other commitments


130,027



116,736



22,023



32,517



301,303Add: interest


1,701



641



13







2,355Total

$
262,860


$
127,340


$
23,147


$
35,352


$
448,699     (a)
    
    On December 6, 2005, we sold our Nantes, France fabrication
    facility, and the related foundry activities, to XbyBus SAS.
    Concurrent with the sale, we entered into a three-year supply
    agreement with a subsidiary of XbyBus SAS, whereby we are
    required to purchase a minimum volume of wafers through 2009. As
    of December 31, 2008, less than $1 million remains to
    be purchased under the original term of the agreement (see
    Note 18 of Notes to Consolidated Financial Statements for
    further discussion).(b)
    
    This amount relates to the contractual obligation on a supply
    agreement that we entered into with the buyer of our
    manufacturing operations in Heilbronn, Germany facility. The
    wafers are purchased at cost in Euros, which represents the fair
    value at the time of purchase. The commitment is equivalent to
    approximately 82 million Euros.(c)
    
    We have an obligation to pay certain former Quantum employees
    $18 million (see Note 3 of Notes to Consolidated
    Financial Statements for further discussion).(d)
    
    Other long-term obligations consist principally of future
    repayments of approximately $55 million of advances from
    customers, and $20 million of technology license payments.
    Long-term advances from customers includes approximately
    $10 million that is due within 1 year, and has been
    classified within current liabilities (see Note 2 of Notes
    to Consolidated Financial Statements for further discussion).
    The balance is due in annual installments of $10 million
    per year, until repaid in full.(e)
    
    Contains all restructuring liabilities as of December 31,
    2008.The contractual obligation table excludes our FIN 48
    liabilities of $105 million because we cannot make a
    reliable estimate of the timing of cash payments. See
    Note 12 of the Notes to the Consolidated Financial
    Statements for further discussion.   54




---



##### Table of Contents



Defined
    Benefit Pension Plans
    Off-Balance
    Sheet Arrangements (Including Guarantees)
      Recent
    Accounting Pronouncements
  No. 157-2, No. 157-2), No. 157-2
 55




---



##### Table of Contents



No. 157-3, No. 157-3), No. 157-3 No. 157-3
    FAS No. 142-3, FAS No. 142-3 SFAS No. 142-3
        Critical
    Accounting Policies and Estimates
   56




---



##### Table of Contents



Revenue
    Recognition
      non-U.S. based
    Allowance
    for Doubtful Accounts and Sales Returns
     57




---



##### Table of Contents



Accounting
    for Income Taxes
        Valuation
    of Inventory
  first-in,
      Fixed
    Assets
  and/or
 58




---



##### Table of Contents



Valuation
    of Goodwill and Intangible Assets
    Stock-Based
    Compensation
     59




---



##### Table of Contents



Restructuring
    Charges
    Litigation
    Valuation
    of Marketable Securities
    ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Interest
    Rate Risk
   60




---



##### Table of Contents



TotalVariable-RateDebtPayments by Due Year


Outstanding at2009


2010


2011


2012


2013


Thereafter


December 31, 2008(In thousands)30 day USD LIBOR weighted-average interest rate
    basis(1)  Revolving line of credit due 2008

$
25,000


$



$



$



$



$



$
25,000Total of 30 day USD LIBOR rate debt

$
25,000


$



$



$



$



$



$
25,00060 day USD LIBOR weighted-average interest rate
    basis(1)  Revolving line of credit

$
100,000


$



$



$



$



$



$
100,000Total of 60 day USD LIBOR rate debt

$
100,000


$



$



$



$



$



$
100,00090 day EURIBOR weighted-average interest rate
    basis(1)  Capital leases

$
4,507


$
4,507


$
4,507


$
1,110


$



$



$
14,631Total of 90 day EURIBOR rate debt

$
4,507


$
4,507


$
4,507


$
1,110


$



$



$
14,631Total variable-rate debt

$
129,507


$
4,507


$
4,507


$
1,110


$



$



$
139,631     (1)
    
    Actual interest rates include a spread over the basis amount.      Interest ExpenseInterest Expense Given an Interest


with No Change in


Interest Expense Given an InterestRate Decrease by X Basis Points


Interest Rate


Rate Increase by X Basis Points150 BPS


100 BPS


50 BPS





50 BPS


100 BPS


150 BPS(In thousands)Interest expense

$
10,037


$
10,765


$
11,492


$
12,340


$
12,948


$
13,676


$
14,403   Foreign
    Currency Risk
   61




---



##### Table of Contents



Liquidity
    and Valuation Risk
   62




---



##### 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, 2008, 2007 and 2006


64Consolidated Balance Sheets as of
    December 31, 2008 and 2007


65Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2008, 2007 and 2006


66Consolidated Statements of Stockholders
    Equity and Comprehensive (Loss) Income for the Years Ended
    December 31, 2008 2007 and 2006


67Notes to Consolidated Financial Statements


68Report of Independent Registered Public
    Accounting Firm


116Financial Statement SchedulesThe following Financial Statement Schedules for
    the years ended December 31, 2008, 2007, and 2006 should be
    read in conjunction with the Consolidated Financial Statements,
    and related notes thereto Schedule II Valuation and
    Qualifying Accounts


117Schedules 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 theretoSupplementary Financial DataSelected Quarterly Financial Data (unaudited) for
    the Years Ended December 31, 2008 and 2007


118  63




---



##### Table of Contents



Atmel
    Corporation



Consolidated Statements of Operations  Years EndedDecember 31,


December 31,


December 31,2008


2007


2006(In thousands, except per share data)Net revenues

$
1,566,763


$
1,639,237


$
1,670,887Operating expensesCost of revenues


976,223



1,059,006



1,108,769Research and development


260,310



272,041



289,108Selling, general and administrative


273,196



242,811



213,641Acquistion-related charges


23,614







Charges for grant repayments


718



1,464



30,034Restructuring charges


71,324



13,239



8,729Asset impairment charges (recovery)


7,969



(1,057
)


82,582Gain on sale of assets


(32,654
)






Total operating expenses


1,580,700



1,587,504



1,732,863(Loss) income from operations


(13,937
)


51,733



(61,976
)Interest and other (expenses) income, net


(6,306
)


3,976



(11,726
)(Loss) income from continuing operations before income
    taxes


(20,243
)


55,709



(73,702
)Provision for income taxes


(6,966
)


(7,824
)


(24,949
)(Loss) income from continuing operations


(27,209
)


47,885



(98,651
)Income from discontinued operations, net of provision for income
    taxes of $9,393










12,969Gain on sale of discontinued operations, net of provision for
    income taxes of $9,506










100,332Net (loss) income

$
(27,209
)

$
47,885


$
14,650Basic net (loss) income per share:(Loss) income from continuing operations

$
(0.06
)

$
0.10


$
(0.20
)Income from discontinued operations, net of provision for income
    taxes










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










0.21Net (loss) income

$
(0.06
)

$
0.10


$
0.03Weighted-average shares used in basic net (loss) income per
    share calculations


446,504



477,213



487,413Diluted net (loss) income per share:(Loss) income from continuing operations

$
(0.06
)

$
0.10


$
(0.20
)Income from discontinued operations, net of provision for income
    taxes










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










0.21Net (loss) income

$
(0.06
)

$
0.10


$
0.03Weighted-average shares used in diluted net (loss) income per
    share calculations


446,504



481,737



487,413    64




---



##### Table of Contents



Atmel
    Corporation



Consolidated Balance Sheets  December 31,


December 31,2008


2007(In thousands, except par value)ASSETSCurrent assetsCash and cash equivalents

$
408,926


$
374,130Short-term investments


31,707



55,817Accounts receivable, net of allowance for doubtful accounts of
    $14,996 and $3,111, respectively


184,698



209,189Inventories


324,016



357,301Prepaids and other current assets


77,542



88,781Total current assets


1,026,889



1,085,218Fixed assets, net


383,107



579,566Goodwill


51,010



Intangible assets, net


34,121



19,552Other assets


35,527



18,417Total assets

$
1,530,654


$
1,702,753LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt and capital lease obligations

$
131,132


$
142,471Trade accounts payable


116,392



191,856Accrued and other liabilities


207,017



266,987Deferred income on shipments to distributors


41,512



19,708Total current liabilities


496,053



621,022Long-term debt and capital lease obligations, less current
    portion


13,909



20,408Other long-term liabilities


218,608



237,844Total liabilities


728,570



879,274Commitments and contingencies (Note 11)Stockholders equityCommon stock; par value $0.001; Authorized:
    1,600,000 shares; Shares issued and outstanding: 448,872 at
    December 31, 2008 and 443,837 at December 31, 2007


449



444Additional paid-in capital


1,238,796



1,193,846Accumulated other comprehensive income


113,999



153,140Accumulated deficit


(551,160
)


(523,951
)Total stockholders equity


802,084



823,479Total liabilities and stockholders equity

$
1,530,654


$
1,702,753    65




---



##### Table of Contents



Atmel
    Corporation



Consolidated Statements of Cash Flows  Years EndedDecember 31,


December 31,


December 31,2008


2007


2006(In thousands)Cash flows from operating activitiesNet (loss) income

$
(27,209
)

$
47,885


$
14,650Adjustments to reconcile net (loss) income to net cash provided
    by operating activitiesDepreciation and amortization


134,796



128,773



225,006Gain on sale of discontinued operations










(109,838
)Gain on sale or disposal of fixed assets and other non-cash
    charges


(35,671
)


(1,102
)


(2,624
)Non-cash asset impairment charges (recovery)


3,025



(1,057
)


82,582Deferred taxes


1,130



3,039



6,121Other non-cash (gains) losses, net


(813
)


404



8,726Provision for (recovery of) doubtful accounts receivable


12,330



(212
)


106Accretion of interest on long-term debt


1,468



912



4,699In-process research and development charges


1,047







Stock-based compensation expense


35,437



16,652



9,118Changes in operating assets and liabilities, net of acquisitionAccounts receivable


15,625



17,719



8,054Inventories


19,843



(14,682
)


(48,848
)Current and other assets


36,266



35,994



(27,608
)Trade accounts payable


(102,852
)


15,689



26,440Accrued and other liabilities


(10,215
)


(46,728
)


82,855Income taxes payable


5,074



(8,261
)


16,526Deferred income on shipments to distributors


21,804



852



520Net cash provided by operating activities


111,085



195,877



296,485Cash flows from investing activitiesAcquisitions of fixed assets


(44,365
)


(69,730
)


(83,330
)Proceeds from the sale of North Tyneside assets and other
    assets, net of selling costs


79,543



3,000



4,466Proceeds from sale of discontinued operations, net










120,073Proceeds from sale of manufacturing facilities, net of selling
    costs






34,714



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










1,799Acquisition of Quantum Research Group, net of cash acquired


(98,585
)






Acquisition of intangible assets


(1,250
)


(900
)


(549
)Purchases of marketable securities


(27,120
)


(12,865
)


(22,290
)Sales or maturities of marketable securities


37,823



14,420



15,535Net cash (used in) provided by investing activities


(53,954
)


(31,361
)


35,704Cash flows from financing activitiesPrincipal payments on capital leases and other debt


(18,086
)


(108,840
)


(122,032
)Proceeds from capital leases and other debt






100,000



25,000Repurchase of convertible notes










(145,515
)Repurchase of common stock






(250,151
)


Proceeds from issuance of common stock


10,520



9,160



11,206Tax payments related to shares withheld for vested restricted
    stock units


(1,764
)






Proceeds from financing related to sale of manufacturing
    facilities






42,951



Net cash used in financing activities


(9,330
)


(206,880
)


(231,341
)Effect of exchange rate changes on cash and cash equivalents


(13,005
)


6,014



9,309Net increase (decrease) in cash and cash equivalents


34,796



(36,350
)


110,157Cash and cash equivalents at beginning of the year


374,130



410,480



300,323Cash and cash equivalents at end of year

$
408,926


$
374,130


$
410,480Supplemental cash flow disclosures:Interest paid

$
9,137


$
8,176


$
14,080Income taxes paid, net


3,939



15,219



15,077Supplemental non-cash investing and financing activities
    disclosures:(Decreases) increases in accounts payable related to fixed asset
    purchases


(6,611
)


(9,544
)


5,616(Decreases) increases in liabilities related to intangible
    assets purchases


(930
)


17,778



Fixed assets acquired under capital leases










3,925    66




---



##### Table of Contents



Atmel
    Corporation



CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY

AND
    COMPREHENSIVE (LOSS) INCOME  AccumulatedCommon Stock


Additional


Unearned


OtherPar


Paid-In


Stock-Based


Comprehensive


AccumulatedShares


Value


Capital


Compensation


Income


Deficit


Total(In thousands)Balances, December 31, 2005


483,366


$
483


$
1,400,261


$
(2,942
)

$
126,055


$
(586,486
)

$
937,371Comprehensive loss:Net income






















14,650



14,650Actuarial gain related to defined benefit pension plans


















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


















(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















9,485Exercise of stock options


3,406



4



7,382















7,386Issuance of common stock under employee 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







107,237



(571,836
)


953,894Comprehensive income:Net income






















47,885



47,885Actuarial gain related to defined benefit pension plans


















6,861







6,861Unrealized gains on investments, net of tax


















681







681Foreign currency translation adjustments


















38,361







38,361Total comprehensive income


























93,788Stock-based compensation expense










16,788















16,788Exercise of stock options


3,604



4



9,156















9,160Vested restricted stock units


312























Repurchase of common stock


(48,923
)


(49
)


(250,102
)














(250,151
)Balances, December 31, 2007


443,837


$
444


$
1,193,846


$



$
153,140


$
(523,951
)

$
823,479Comprehensive loss:Net loss






















(27,209
)


(27,209
)Actuarial gain related to defined benefit pension plans


















4,079







4,079Pension adjustment for sale of Heilbronn manufacturing
    operations (see Note 16)


















(2,970
)






(2,970
)Unrealized losses on investments, net of tax


















(1,231
)






(1,231
)Foreign currency translation adjustments


















(39,019
)






(39,019
)Total comprehensive loss


























(66,350
)Stock-based compensation expense










35,793















35,793Issuance of common stock for the acquisition of Quantum Research
    Group


126







405















405Exercise of stock options


1,376



1



3,187















3,188Issuance of common stock under employee stock purchase plan


2,431



3



7,329















7,332Vested restricted stock units


1,558



1



















1Shares withheld for employee taxes related to vested restricted
    stock units


(456
)






(1,764
)














(1,764
)Balances, December 31, 2008


448,872


$
449


$
1,238,796


$



$
113,999


$
(551,160
)

$
802,084    67




---



##### 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
 68




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Cash
    and Cash Equivalents
      Investments
      Accounts
    Receivable
    Inventories
  first-in,
 69




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fixed
    Assets
    Building and improvements


10 to 20 yearsMachinery, equipment and software


2 to 5 yearsFurniture and fixtures


5 years     Investments
    in Privately-Held Companies
      Revenue
    Recognition
    non-U.S. based
   70




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Royalty
    Expense Recognition
    Grant
    Recognition
    Years EndedDecember 31,


December 31,


December 31,2008


2007


2006(In thousands)Cost of revenues

$
1,688


$
1,685


$
9,654Research and development expenses


21,603



18,038



14,573Total

$
23,291


$
19,723


$
24,227     Advertising
    Costs
    Foreign
    Currency Translation
   71




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Stock-Based
    Compensation
      Valuation
    of Goodwill and Intangible Assets
    Certain
    Risks and Concentrations
     72




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Income
    Taxes
  non-U.S. subsidiaries,
    Long-Lived
    Assets
     73




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Net
    (Loss) Income Per Share
    Product
    Warranties
    Research
    and Development
    Recent
    Accounting Pronouncements
  No. 157-2, No. 157-2), No. 157-2
  No. 157-3, No. 157-3), No. 157-3 No. 157-3
    FAS No. 142-3, FAS No. 142-3 SFAS No. 142-3
 74




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Note 2
    BALANCE
    SHEET DETAIL    December 31,


December 31,2008


2007(In thousands)Raw materials and purchased parts

$
14,959


$
22,996Work-in-progress


206,126



249,863Finished goods


102,931



84,442$
324,016


$
357,301     December 31,


December 31,2008


2007(In thousands)Value-added tax receivable

$
22,190


$
35,667Deferred income tax assets


12,658



5,726Grants receivable


5,645



5,463Income tax receivable


7,735



3,593Prepaid income taxes


4,759



7,274Other


24,555



31,058$
77,542


$
88,781  75




---



##### Table of Contents



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


December 31,2008


2007(In thousands)Investments in privately-held companies

$
8,282


$
7,978Deferred income tax assets, net of current portion


3,921



5,006Long-term investments (including auction-rate securities)


12,871



Other


10,453



5,433$
35,527


$
18,417     December 31,


December 31,2008


2007(In thousands)Advance payments from customer

$
10,000


$
10,120Income taxes payable


4,689



10,788Deferred income tax liability, current portion


2,731



2,783Accrued salaries and benefits


77,014



91,972Deferred grants


8,066



12,968Grants to be repaid(1)


13,303



10,793Warranty accruals and accrued returns, royalties and licenses


15,248



21,573Accrued restructuring


23,058



15,675Acquisition-related payable (See Note 3)


14,072



Financing liability related to sale of manufacturing facilities






44,137Other


38,836



46,178$
207,017


$
266,987     (1)
    
    The balance at December 31, 2007 excluded $39,519 of grants
    repaid in the year ended December 31, 2008, which was
    included in accounts payable at December 31, 2007.    December 31,


December 31,2008


2007(In thousands)Advance payments from customer

$
44,668


$
54,668Income taxes payable


104,996



98,269Accrued pension liability


26,043



50,915Long-term technology license payable


13,850



16,107Deferred income tax liability, non-current portion


11,630



4,891Other


17,421



12,994$
218,608


$
237,844    76




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Note 3
    BUSINESS
    COMBINATION      (In thousands)Cash

$
88,106Fair value of common stock issued


405Direct transaction costs


7,345Original purchase price


95,856Adjustments for contingent consideration subsequently earned


8,684Total estimated purchase price

$
104,540          77




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    March 6,2008(In thousands)Goodwill

$
59,215Other intangible assets


31,002Tangible assets acquired and liabilities assumed:Cash and cash equivalents


2,188Accounts receivable


3,070Inventory


966Prepaids and other current assets


149Fixed assets


455Trade accounts payable


(1,013
)Accrued liabilities


(1,223
)In-process research and development


1,047$
95,856     Additional

CumulativeMarch 6,

Consideration

Translation

December 31,2008

Earned

Adjustments

2008(In thousands)Goodwill

$
59,215


$
8,684


$
(16,889
)

$
51,010         CumulativeMarch 6,


Translation


December 31,2008


Adjustments


2008(In thousands)Other intangible assets:Customer relationships

$
21,482


$
(5,694
)

$
15,788Developed technology


6,880



(1,816
)


5,064Tradename


1,180



(311
)


869Non-compete agreement


990



(261
)


729Backlog


470



(124
)


346$
31,002


$
(8,206
)

$
22,796    78




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    CumulativeTranslationAdjustments onAccumulated


Accumulated





EstimatedGross Value


Amortization


Amortization


Net Value


Useful Life(In thousands, except for years)Customer relationships

$
15,788


$
(3,382
)

$
750


$
13,156



5 yearsDeveloped technology


5,064



(1,085
)


241



4,220



5 yearsTradename


869



(311
)


69



627



3 yearsNon-compete agreement


729



(156
)


35



608



5 yearsBacklog


346



(465
)


119







< 1 year$
22,796


$
(5,399
)

$
1,214


$
18,611       December 31, 2008(In thousands)Amortization of intangible assets

$
5,556In-process research and development


1,047Compensation-related expense  cash


10,710Compensation-related expense  stock


6,301$
23,614      79




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Pro
    Forma Results
    Note 4
    INVESTMENTS      December 31, 2008


December 31, 2007Adjusted Cost


Fair Value


Adjusted Cost


Fair Value(In thousands)Corporate equity securities

$
87


$
165


$
87


$
1,542Auction-rate securities


8,795



8,795
*


29,075



29,075Corporate debt securities and other obligations


34,089



35,618



23,817



25,200$
42,971


$
44,578


$
52,979


$
55,817Unrealized gains


1,721







2,900Unrealized losses


(114
)






(62
)Net unrealized gains


1,607







2,838Fair value

$
44,578






$
55,817Amount included in short-term investments





$
31,707






$
55,817Amount included in other assets






12,871







$
44,578






$
55,817    80




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (In thousands)Due within one year

$
23,820Due in 1-5 years


10,269Due in 5-10 years


Due after 10 years


2,220Total

$
36,309     *
    
    Includes the fair value of the Put Option of $323, related to
    the offer from UBS to purchase auction-rate securities of $6,575.    Note 5
    FIXED
    ASSETS  December 31,


December 31,2008


2007(In thousands)Land

$
27,475


$
38,568Buildings and improvements


604,608



681,581Machinery and equipment


1,371,793



1,799,765Furniture and fixtures


159,146



164,005Construction-in-progress


1,682



2,767$
2,164,704


$
2,686,686Less: Accumulated depreciation and amortization


(1,781,597
)


(2,107,120
)$
383,107


$
579,566      81




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Note 6
    INTANGIBLE
    ASSETS, NET    December 31,


December 31,2008


2007(In thousands)Core/licensed technology

$
84,718


$
102,906Accumulated amortization


(69,208
)


(83,354
)Total technology licenses


15,510



19,552Acquisition-related intangible assets


22,796



Accumulated amortization


(4,185
)


Total acquisition-related intangible assets


18,611



Total intangible assets, net

$
34,121


$
19,552       Technology


Acquisition-RelatedYears Ending December 31:

Licenses


Intangible Assets


Total(In thousands)2009

$
4,277


$
4,606


$
8,8832010


3,952



4,606



8,5582011


3,254



4,364



7,6182012


3,221



4,316



7,5372013


806



719



1,525Total future amortization

$
15,510


$
18,611


$
34,121  82




---



##### Table of Contents



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


December 31,2008


2007(In thousands)Various interest-bearing notes and term loans

$
2,835


$
6,221Bank lines of credit


125,000



125,000Capital lease obligations


17,206



31,658Total

$
145,041


$
162,879Less: current portion of long-term debt and capital lease
    obligations


(131,132
)


(142,471
)Long-term debt and capital lease obligations due after one year

$
13,909


$
20,408     Years Ending December 31:(In thousands)2009

$
132,8332010


5,8152011


4,7892012


1,1242013


Thereafter


2,835147,396Less: amount representing interest


(2,355
)Total

$
145,041   non-U.S. trade non-U.S. trade non-U.S. trade
   83




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Note 8
    STOCK-BASED
    COMPENSATION  Option
    and Employee Stock Purchase Plans
      Outstanding Options


Weighted-Exercise


AverageAvailable


Number of


Price


Exercise Pricefor Grant


Options


per Share


per Share(In thousands, except per share data)Balances, December 31, 2005


17,865



30,226


$
1.00-$24.44


$
5.44Options granted


(9,559
)


9,559


$
3.68-$6.28



5.65Options cancelled/expired/forfeited


4,994



(5,059
)

$
1.00-$24.44



5.87Options exercised






(3,406
)

$
1.68-$5.13



2.17Balances, December 31, 2006


13,300



31,320


$
1.68-$24.44


$
5.79Restricted stock units issued


(4,130
)










Options granted


(7,195
)


7,195


$
4.35-$6.05



4.99Options cancelled/expired/forfeited


4,129



(4,129
)

$
1.68-$24.44



7.24Options exercised






(3,604
)

$
1.68-$5.75



2.54Balances, December 31, 2007


6,104



30,782


$
1.68-$24.44


$
5.81Authorized additional shares available for grant


58,000











Restricted stock units issued


(8,098
)










Performance-based restricted stock units issued


(9,914
)










Adjustment for restricted stock units issued


(14,049
)










Options granted


(5,150
)


5,150


$
3.24-$4.37



3.70Options cancelled/expired/forfeited


3,293



(3,293
)

$
1.98-$24.44



6.52Options exercised






(1,376
)

$
1.68-$4.19



2.32Balances, December 31, 2008


30,186



31,263


$
1.68-$24.44


$
5.54  84




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Restricted
    Stock Units
    Weighted-AverageNumber of


Fair ValueShares


Per Share(In thousands, exceptper share data)Restricted stock units issued


4,280


$
5.28Restricted stock units vested


(312
)


4.72Balance, December 31, 2007


3,968



5.32Restricted stock units issued


8,098



4.27Performance-based restricted stock units issued


9,914



3.94Restricted stock units vested


(1,558
)


4.12Balance, December 31, 2008


20,422



4.33        85




---



##### 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


IntrinsicPrice


Outstanding


Term (Years)


Price


Value


Exercisable


Term (Years)


Price


Value(In thousands, except per share prices and life data)$
1.68- 3.24



3,638



5.62


$
2.48


$
2,474



2,651



4.43


$
2.24


$
2,3763.26- 3.32



3,670



7.80



3.30







1,353



6.97



3.30



3.41- 4.70



3,257



8.18



4.19







892



4.79



4.12



4.74- 4.89



4,509



8.26



4.79







1,830



8.08



4.81



4.92- 5.32



3,179



7.95



5.02







1,165



7.31



5.05



5.55- 5.75



4,387



6.31



5.73







3,081



5.40



5.74



5.85- 6.27



814



6.04



6.02







568



5.18



6.02



6.28- 6.28



3,254



7.96



6.28







1,506



7.96



6.28



6.47-12.13



3,196



2.70



8.60







3,185



2.68



8.61



12.47-24.44



1,359



1.38



16.79







1,360



1.38



16.79



31,263



6.63


$
5.54


$
2,474



17,591



5.16


$
6.23


$
2,376         Years EndedDecember 31,


December 31,


December 31,2008


2007


2006Risk-free interest rate


3.00
%


4.26
%


4.70
%Expected life (years)


5.58



5.68



5.57Expected volatility


55
%


59
%


68
%Expected dividend yield










        86




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Employee
    Stock Purchase Plan
      Years EndedDecember 31,


December 31,2008


2007Risk-free interest rate


2.08
%


4.09
%Expected life (years)


0.50



0.50Expected volatility


39
%


34
%Expected dividend yield






       Years EndedDecember 31,


December 31,


December 31,2008


2007


2006(In thousands)Employee stock options

$
15,126


$
12,844


$
9,063Employee stock purchase plan


1,721



613



302Non-employee stock option modifications










120Restricted stock units


12,645



3,331



Amounts capitalized in inventory


(356
)


(136
)


(367
)$
29,136


$
16,652


$
9,118  87




---



##### Table of Contents



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


December 31,


December 31,2008


2007


2006(In thousands)Cost of revenues

$
4,259


$
1,966


$
2,084Research and development


11,746



4,601



2,102Selling, general and administrative


13,131



10,085



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


29,136



16,652



9,118Tax benefit










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

$
29,136


$
16,652


$
9,118           Tender
    Offer
   88




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 9
    STOCKHOLDER
    RIGHTS PLAN      Note 10
    ACCUMULATED
    OTHER COMPREHENSIVE INCOME      December 31,


December 31,2008


2007(In thousands)Foreign currency translation

$
110,108


$
149,127Actuarial gains related to defined benefit pension plans


2,284



1,175Net unrealized gains on investments


1,607



2,838Total accumulated other comprehensive income

$
113,999


$
153,140    89




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 11
    COMMITMENTS
    AND CONTINGENCIES  Commitments
  Leases
        Operating


CapitalYears Ending December 31:

Leases, Net


Leases(In thousands)2009

$
11,310


$
6,8592010


9,702



5,8152011


6,863



4,7892012


4,991



1,1242013


1,966



Thereafter


156



$
34,988



18,587Less: amount representing interest






(1,381
)Total capital lease and other long term obligations






17,206Less: current portion






(6,132
)Capital lease and other long term obligations due after one year





$
11,074   Indemnifications
     90




---



##### Table of Contents



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




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Kuhn v. Atmel Corp., Gebhardt v. Atmel Corp Louisiana Municipal Employees
    Retirement System v. Laub. Louisiana Municipal Employees Louisiana Municipal Employees Louisiana Municipal Employees Zucker v. Laub, Zucker Zucker
 92




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Zucker
        Other
    Contingencies
     93




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Income
    Tax Contingencies
              Product
    Warranties
   94




---



##### Table of Contents



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


December 31,


December 31,2008


2007


2006(In thousands)Balance at beginning of period

$
6,789


$
4,773


$
6,184Accrual for warranties during the period, net of change in
    estimates


4,936



8,919



4,223Actual costs incurred


(6,146
)


(6,903
)


(5,634
)Balance at end of period

$
5,579


$
6,789


$
4,773     Guarantees
    Note 12
    INCOME
    TAXES    Years EndedDecember 31,


December 31,


December 31,2008


2007


2006(In thousands)U.S.

$
(116,340
)

$
(149,491
)

$
(106,758
)Foreign


96,097



205,200



33,056(Loss) income from continuing operations before income taxes

$
(20,243
)

$
55,709


$
(73,702
)     Years EndedDecember 31,


December 31,


December 31,2008


2007


2006(In thousands)Federal

Current

$
7,385


$
7,042


$
5,871Deferred






574



350State

Current


36



29



28Deferred










Foreign

Current


(1,585
)


(2,286
)


12,929Deferred


1,130



2,465



5,771Provision for income taxes



$
6,966


$
7,824


$
24,949  95




---



##### Table of Contents



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


December 31,2008


2007(In thousands)Deferred income tax assets:Fixed assets

$
96,018


$
130,559Intangible assets


126



8,136Unrealized foreign exchange translation losses


17,358



26,589Deferred income on shipments to distributors


12,315



21,184Stock-based compensation


15,011



11,257Accrued liabilities


26,070



32,624Net operating losses


244,660



234,284Research and development and other tax credits


63,349



55,932Other


600



780Total deferred income tax assets, net of deferred tax liabilities


475,507



521,345Less valuation allowance


(473,289
)


(518,287
)Net deferred income tax assets

$
2,218


$
3,058Reported as:Current deferred tax assets(1)

$
12,658


$
5,726Current deferred tax liabilities(2)


(2,731
)


(2,783
)Non-current deferred tax assets(3)


3,921



5,006Non-current deferred tax liabilities(4)


(11,630
)


(4,891
)Net deferred tax assets

$
2,218


$
3,058     (1)
    
    Included within Prepaids and other current assets on the
    consolidated balance sheets.(2)
    
    Included within Accrued and other liabilities on the
    consolidated balance sheets.(3)
    
    Included within Other assets on the consolidated balance sheets.(4)
    
    Included within Other long-term liabilities on the consolidated
    balance sheets.  non-U.S. subsidiaries,
 96




---



##### Table of Contents



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


December 31,


December 31,2008


2007


2006U.S. Federal statutory income tax rate


35.00
%


35.00
%


35.00
%Effect of foreign operations


18.58



(45.46
)


15.87Recognition of tax credits


175.23



(46.59
)


5.32Net operating loss and future deductions not currently benefited


(182.03
)


40.95



(79.57
)Provision for tax settlements and withholding taxes


(77.71
)


26.10



(9.38
)Other


(3.49
)


4.04



(1.09
)Effective tax provision rate


(34.42
)%


14.04
%


(33.85
)%       non-U.S. jurisdictions
         97




---



##### Table of Contents



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


December 31,2008


2007(In thousands)Balance at January 1

$
166,180


$
176,309Tax Positions Related to Current Year:Additions


13,517



13,141Tax Positions Related to Prior Years:Additions


18,363



Reductions


(7,561
)


(21,017
)Lapse of Statute of Limitation


(714
)


Settlements






(2,253
)Balance at December 31

$
189,785


$
166,180              98




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     and/or and/or
  Note 13
    PENSION
    PLANS        Years EndedDecember 31,


December 31,


December 31,2008


2007


2006(In thousands)Service costs-benefits earned during the period

$
2,107


$
2,622


$
3,013Interest cost on projected benefit obligation


2,944



2,530



2,318Amortization of actuarial loss


85



123



589Curtailment and other related gains


(4,513
)






Net pension expenses

$
623


$
5,275


$
5,920Distribution of pension costs:Continuing operations

$
623


$
5,275


$
5,597Discontinued operations










323Net pension expenses

$
623


$
5,275


$
5,920    99




---



##### Table of Contents



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


December 31,2008


2007(In thousands)Projected benefit of obligation at beginning of the year

$
52,579


$
52,945Service cost


2,107



2,622Interest cost


2,944



2,530Transfer related to Heilbronn, Germany sale


(20,817
)


Curtailment and other related gains


(4,513
)


Actuarial gains


332



(10,223
)Benefits paid


(1,027
)


(716
)Foreign currency exchange rate changes


(4,797
)


5,421Projected benefit obligation at end of the year

$
26,808


$
52,579Accumulated benefit obligation at end of the year

$
19,561


$
44,884       Years EndedDecember 31,

December 31,

December 31,2008

2007

2006Assumed discount rate


5.8-6.3
%


5.5-5.7
%


4.6
%Assumed compensation rate of increase


3.0-4.0
%


2.0-4.0
%


2.0-4.0
%       Years Ending December 31:(In thousands)2009

$
7652010


2972011


5422012


5132013


5532014 through 2018


6,909$
9,579    100




---



##### Table of Contents



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


December 31,2008


2007(In thousands)Net actuarial gain

$
(2,284
)

$
(1,180
)Prior service cost






5$
(2,284
)

$
(1,175
)     Executive
    Deferred Compensation Plan
  No. 97-14, No. 97-14). No. 97-14,
    401(k)
    Tax Deferred Savings Plan
   101




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 14
    OPERATING
    AND GEOGRAPHICAL SEGMENTS    
    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. In the year ended December 31,
    2008, the Company acquired Quantum. Results from the acquired
    operations are considered complementary to sales of
    microcontroller products and are included in this segment.
    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 electrically
    erasable programmable read-only memory (EEPROM) and
    erasable programmable ready-only memory (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.
    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 specific applications. This segment also encompasses
    a range of products which provide security for digital data
    transaction, including smart cards for mobile phones, set top
    boxes, banking and national identity cards. The Company also
    develops application specific standard products
    (ASSP) for high reliability space applications,
    power management and secure crypto memory products.     102




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Information
    about Reportable Segments
  Micro-

Nonvolatile

RF andControllers

Memories

Automotive

ASIC

Total(In thousands)Year ended December 31, 2008Net revenues from external customers

$
522,635


$
339,239


$
250,219


$
454,670


$
1,566,763Segment (loss) income from operations


34,419



29,362



4,983



(11,730
)


57,034Year ended December 31, 2007Net revenues from external customers

$
458,228


$
376,675


$
308,519


$
495,815


$
1,639,237Segment (loss) income from operations


27,718



40,015



18,778



(21,132
)


65,379Year ended December 31, 2006Net revenues from external customers

$
408,394


$
375,319


$
385,476


$
501,698


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


59,008



32,062



19,775



(51,476
)


59,369     Reconciliation
    of Segment Information to Consolidated Statements of
    Operations
  Years EndedDecember 31,


December 31,


December 31,2008


2007


2006(In thousands)Total segment income from operations

$
57,034


$
65,379


$
59,369Unallocated amounts:Acquisition-related charges


(23,614
)






Charges for grant repayments


(718
)


(1,464
)


(30,034
)Restructuring charges


(71,324
)


(13,239
)


(8,729
)Asset impairment recovery (charges)


(7,969
)


1,057



(82,582
)Gain on sale of assets


32,654







Consolidated (loss) income from operations

$
(13,937
)

$
51,733


$
(61,976
)  103




---



##### Table of Contents



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


December 31,


December 31,2008


2007


2006(In thousands)United States

$
221,351


$
219,541


$
241,379Germany


253,325



227,311



192,278France


134,502



154,866



168,047United Kingdom


17,580



33,844



29,042Japan


76,625



90,767



57,576China, including Hong Kong


363,206



375,544



352,437Singapore


95,517



153,102



257,312Rest of Asia-Pacific


218,775



208,005



206,901Rest of Europe


163,264



155,455



151,887Rest of the World


22,618



20,802



14,028Total net revenues

$
1,566,763


$
1,639,237


$
1,670,887         December 31,


December 31,2008


2007(In thousands)United States

$
126,959


$
137,334Germany


23,377



34,337France


200,799



268,358United Kingdom


6,978



106,651Asia-Pacific


34,049



28,541Rest of Europe


13,756



17,756Total

$
405,918


$
592,977     Note 15
    CHARGES
    FOR GRANT REPAYMENTS   104




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    ResearchCost of


and DevelopmentRevenues


Expenses


Total(In thousands)2006

$
6,607


$
302


$
6,9092005


6,483



940



7,4232004


4,181



409



4,5902003






2,143



2,1432002






2,086



2,0862001






543



543$
17,271


$
6,423


$
23,694     Years EndedDecember 31,


December 31,


December 31,2008


2007


2006(In thousands)Grant benefits previously recognized

$



$



$
23,694Accrued interest


718



1,464



1,908Impact of foreign exchange










4,432Total charges for grant repayments

$
718


$
1,464


$
30,034     Note 16
    ASSET
    IMPAIRMENT CHARGES AND GAIN ON SALE OF ASSETS   105




---



##### Table of Contents



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


December 31,


December 31,2008


2007


2006(In thousands)Heilbronn, Germany

$
7,969


$



$
North Tyneside, United Kingdom






(1,057
)


72,277Irving, Texas










10,305Total asset impairment charges (recovery)

$
7,969


$
(1,057
)

$
82,582     Year EndedDecember 31,2008(In thousands)Heilbronn, Germany

$
(2,706
)North Tyneside, United Kingdom


(29,948
)Total gain on sale of assets

$
(32,654
)     Heilbronn,
    Germany
   106




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (In thousands)Assets and liabilities disposed of:Pension and other employee-related liabilities

$
(20,113
)Fixed assets


7,142Inventories


9,480Total


(3,491
)Income from technology process license


2,545Loss from transition service agreement


(1,036
)Payable to TSI


(724
)Total gain on sale of assets

$
(2,706
)     North
    Tyneside, United Kingdom
    Irving,
    Texas
   107




---



##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 17
    RESTRUCTURING
    CHARGES    January 1,








Currency


December 31,2008


Charges/





Translation


2008Accrual


(Credits)


Payments


Adjustment


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

$
1,592


$



$



$



$
1,592
(2)Fourth quarter of 2006Employee termination costs


1,324



(224
)


(1,172
)


72



Fourth quarter of 2007Employee termination costs


12,759



1,431



(14,749
)


559



Termination of contract with supplier






12,206



(13,019
)


813



Other restructuring charges






20,778



(21,465
)


905



218Second quarter of 2008Employee termination costs






2,990



(2,534
)


(221
)


235Third quarter of 2008Employee termination costs






28,852



(8,921
)


(2,356
)


17,575Fouth quarter of 2008Employee termination costs






5,291



(1,879
)


26



3,438Total 2008 activity

$
15,675


$
71,324


$
(63,739
)

$
(202
)

$
23,058
(1)     (1)
    
    Included in accrued and other liabilities on the consolidated
    balance sheets and is expected to be paid in 2009.(2)
    
    Relates to contractual obligation subject to litigation.  January 1,








Currency


December 31,2007


Charges/





Translation


2007Accrual


(Credits)


Payments


Adjustment


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

$
8,896


$
(3,071
)

$
(4,233
)

$



$
1,592Fouth quarter of 2006Employee termination costs


7,490



3,305



(9,959
)


488



1,324
(1)Fouth quarter of 2007Employee termination costs






12,441







318



12,759
(1)Other exit related costs






564



(564
)






Total 2007 activity

$
16,386


$
13,239


$
(14,756
)

$
806


$
15,675     (1)
    
    Included in accrued and other liabilities on the consolidated
    balance sheets and was paid in the year ended December 31,
    2008.  108




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








December 31,2006








2006Accrual


Charges


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 2005Employee termination costs


1,223







(1,223
)


First quarter of 2006Employee termination costs






151



(151
)


Fourth quarter of 2006Employee termination costs






8,578



(1,088
)


7,490Total 2006 activity

$
12,302


$
8,729


$
(4,645
)

$
16,386   2008
    Restructuring Activities
      
    Net charges of $37,657 related to severance costs resulting from
    involuntary termination of employees. Employee severance costs
    were recorded in accordance with SFAS No. 146,
    Accounting for Costs Associated with Exit of Disposal
    Activities (SFAS 146).
    Charges of $20,778 related to equipment removal and facility
    closure costs. After production activity ceased, the Company
    utilized employees as well as outside services to disconnect
    fabrication equipment, fulfill equipment performance testing
    requirements of the buyer, and perform facility decontamination
    and other facility closure-related activity, Included in these
    costs are labor costs, facility related costs, outside service
    provider costs, and legal and other fees. Equipment removal,
    building decontamination and closure related cost activities
    were completed as of June 30, 2008.
    Charges of $12,206 related to contract termination charges,
    primarily associated with a long-term gas supply contract for
    nitrogen gas utilized in semiconductor manufacturing. The
    Company is required to pay an early termination penalty
    including de-contamination and removal costs. Other contract
    termination costs related to semiconductor equipment support
    services with minimum payment clauses extending beyond the
    current period.
    Net charges of $683 related to changes in estimates of
    termination benefits originally recorded in accordance with
    SFAS No. 112, Employers Accounting for
    Pension Employment Benefits (SFAS No. 112).   109




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Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   2007
    Restructuring Activities
    
    Charges of $11,084 related to one-time severance costs for
    involuntary termination of employees. These employee severance
    costs were recorded in accordance with SFAS No. 146.
    Charges of $1,357 related to on-going severance costs for
    involuntary termination of employees. These employee severance
    costs were recorded in accordance with SFAS No. 112.
    Charges of $564 related to other exit related costs, which were
    recorded in accordance with SFAS No. 146.    
    Charges of $2,050 related to severance costs for involuntary
    termination of employees. These employee severance costs were
    recorded in accordance with SFAS No. 146.
    Charges of $1,255 related to one-time minimum statutory
    termination benefits, including changes in estimates, recorded
    in accordance with SFAS No. 112.
    A credit of $3,071 related to the settlement of a long-term gas
    supply contract for which the accrual was $12,437, originally
    recorded in the third quarter of 2002. On May 1, 2007, in
    connection with the sale of the Irving, Texas facility, the
    Company paid $5,600 to terminate this contract, of which $1,700
    was reimbursed by the buyer of the facility. The remaining
    balance of $1,592 is expected to be paid in 2009.    2006
    Restructuring Activities
      
    $6,897 in one-time minimum statutory termination benefits
    recorded in accordance with SFAS No. 112. 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.    Note 18
    DISCONTINUED
    OPERATIONS  Grenoble,
    France, Subsidiary Sale
     110




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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 disposed of


(14,866
)Cumulative translation adjustment effect


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     Year EndedDecember 31,2006(In thousands, exceptper share data)Net revenues

$
79,871Operating costs and expenses


57,509Income from discontinued operations, before income taxes


22,362Gain on sale of discontinued operations, before income taxes


109,838Income from and gain on sale of discontinued operations


132,200Less: provision for income taxes


(18,899
)Income from and gain on sale of discontinued operations, net of
    income taxes

$
113,301Income from and gain on sale of discontinued operations, net of
    income taxes, per share:Basic and diluted

$
0.23Weighted-average shares used in basic and diluted income per
    share calculations


487,413  111




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##### Table of Contents



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


December 31,


December 31,2008


2007


2006(In thousands, except per share data)(Loss) income from continuing operations

$
(27,209
)

$
47,885


$
(98,651
)Income from discontinued operations, net of provision for income
    taxes










12,969Gain on sale of discontinued operations, net of provision for
    income taxes










100,332Net (loss) income

$
(27,209
)

$
47,885


$
14,650Weighted-average shares  basic


446,504



477,213



487,413Incremental shares and share equivalents






4,524



Weighted-average shares  diluted


446,504



481,737



487,413Net (loss) income per share:Basic(Loss) income from continuing operations

$
(0.06
)

$
0.10


$
(0.20
)Income from discontinued operations, net of provision for income
    taxes










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










0.21Net (loss) income per share  basic

$
(0.06
)

$
0.10


$
0.03Diluted(Loss) income from continuing operations

$
(0.06
)

$
0.10


$
(0.20
)Income from discontinued operations, net of income taxes










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










0.21Net (loss) income per share  diluted

$
(0.06
)

$
0.10


$
0.03  112




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##### Table of Contents



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


December 31,


December 31,2008


2007


2006(In thousands)Employee stock options and restricted stock units outstanding


47,690



32,668



29,079Incremental shares and share equivalents






(4,524
)


Incremental shares and share equivalents excluded from per share
    calculation


47,690



28,144



29,079Common stock equivalent shares associated with:Convertible notes due 2018










8Convertible notes due 2021










1,310Total weighted-average potential shares excluded from per share
    calculation


47,690



28,144



30,397     Note 20
    INTEREST
    AND OTHER (EXPENSES) INCOME, NET    Years EndedDecember 31,


December 31,


December 31,2008


2007


2006(In thousands)Interest and other income

$
10,973


$
16,716


$
17,677Interest expense


(12,340
)


(12,351
)


(20,039
)Foreign exchange transaction losses


(4,939
)


(389
)


(9,364
)Total

$
(6,306
)

$
3,976


$
(11,726
)     Note 21
    ACCELERATED
    SHARE REPURCHASE PROGRAM   113




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##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Note 22  FAIR
    VALUES OF ASSETS AND LIABILITIES
    Fair
    Value Hierarchy
    
    Level 1  Valuation is based upon quoted
    prices for identical instruments traded in active markets.
    Level 2  Valuation is based upon quoted
    prices for similar instruments in active markets, quoted prices
    for identical or similar instruments in markets that are not
    active, and model-based valuation techniques for which all
    significant assumptions are observable in the market.
    Level 3  Valuation is generated from
    model-based techniques that use significant assumptions not
    observable in the market. These unobservable assumptions reflect
    our own estimates of assumptions that market participants would
    use in pricing the asset or liability. Valuation techniques
    include use of option pricing models, discounted cash flows
    models and similar techniques.    December 31, 2008Total


Level 1


Level 2


Level 3(In thousands)AssetsCorporate equity securities

$
165


$
165


$



$
Auction-rate securities


8,795











8,795Corporate debt securities and other obligations


35,618







35,618



Total

$
44,578


$
165


$
35,618


$
8,795  114




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##### Table of Contents



Atmel
    Corporation
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Balance at





Sales and


Balance atJanuary 1,


Total Realized


Other


December 31,2008


Losses


Settlements


2008(In thousands)Auction-rate securities

$
29,057


$
(530
)

$
(19,732
)

$
8,795Total

$
29,057


$
(530
)

$
(19,732
)

$
8,795   Note 23
    SUBSEQUENT
    EVENTS   115




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm    Internal Control 
    Integrated Framework
        PricewaterhouseCoopers
    LLP
    116




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##### Table of Contents



Schedule II
  ATMEL
    CORPORATION
  VALUATION
    AND QUALIFYING ACCOUNTS
 For the
    years ended December 31, 2008, 2007 and 2006
  Balance at

Charged



Balance atBeginning

(Credited)

Deductions 

Endof Year

to Expense

Write-offs

of Year(In thousands)Allowance for doubtful accounts receivable:Year ended December 31, 2008

$
3,111


$
12,330


$
(445
)


14,996Year ended December 31, 2007


3,605



(212
)


(282
)


3,111Year ended December 31, 2006


3,944



106



(445
)


3,605  117




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##### Table of Contents



UNAUDITED
    QUARTERLY FINANCIAL INFORMATION



The following tables set forth a summary of the Companys
    quarterly financial information for each of the four quarters in
    the years ended December 31, 2008 and 2007: First


Second


Third


FourthYear Ended December 31, 2008(1)

Quarter


Quarter


Quarter


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

$
411,237


$
420,908


$
400,008


$
334,610Gross profit


146,054



153,526



158,009



132,951Net income (loss)

$
6,788


$
(4,907
)

$
(4,738
)

$
(24,352
)Basic net income (loss) per share:Net income (loss)

$
0.02


$
(0.01
)

$
(0.01
)

$
(0.05
)Weighted-average shares used in basic net income (loss) per
    share calculations


444,670



445,793



447,013



448,524Diluted net income (loss) per share:Net income (loss)

$
0.02


$
(0.01
)

$
(0.01
)

$
(0.05
)Weighted-average shares used in diluted net income (loss) per
    share calculations


447,643



445,793



447,013



448,524   First


Second


Third


FourthYear Ended December 31, 2007(2)

Quarter


Quarter


Quarter


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

$
391,313


$
404,247


$
418,097


$
425,580Gross profit


139,937



141,642



149,034



149,618Net income

$
28,940


$
678


$
16,553


$
1,714Basic net income per share:Net income

$
0.06


$
0.00


$
0.03


$
0.00Weighted-average shares used in basic net income per share
    calculations


488,842



488,916



485,540



446,003Diluted net income per share:Net income

$
0.06


$
0.00


$
0.03


$
0.00Weighted-average shares used in diluted net income per share
    calculations


494,198



494,244



489,791



449,136     (1)
    
    The Company recorded charges (credit) for grant repayments of
    $0.3 million, $0.3 million, $0.3 million and
    $(0.2) million in the quarters ended December 31,
    2008, September 30, 2008, June 30, 2008 and
    March 31, 2008, respectively. The Company recorded
    restructuring charges of $8 million, $27 million,
    $9 million and $28 million in the quarters ended
    December 31, 2008, September 30, 2008, June 30,
    2008 and March 31, 2008, respectively. The Company recorded
    gain (loss) on sale of assets of $3 million,
    $(1) million and $31 million in the quarters ended
    December 31, 2008, June 30, 2008 and March 31,
    2008, respectively. The Company recorded acquisition-related
    charges of $7 million, $7 million, $7 million and
    $4 million in the quarters ended December 31, 2008,
    September 30, 2008, June 30, 2008 and March 31,
    2008, respectively. The Company recorded asset impairment
    charges of $8 million in the quarter ended
    September 30, 2008.Effective July 1, 2008, the Company entered into agreements
    with certain European distributors that allow additional rights,
    including future price concessions at the time of resale, price
    protection, and the right to return products upon termination of
    the distribution agreement. As a result of uncertainties over
    finalization of pricing 118




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##### Table of Contents



for shipments to these distributors, revenues and related costs
    will be deferred until the products are sold by the distributors
    to their end customers. The Company considers that the sale
    prices are not fixed or determinable at the time of
    shipment to these distributors.The objective of the conversion to a sell-through
    revenue recognition model is to enable the Company to better
    manage end-customer pricing, track design registrations for
    proprietary products, and improve our visibility into
    distribution inventory and sales levels. The Company expects
    that this conversion will result in improved operating results
    for the Company and its distribution partners in the future.
    Management estimates that the impact of this change lowered net
    revenues and cost of revenues by $20 million and
    $9 million, respectively, in the quarter ended
    September 30, 2008, and $6 million and
    $4 million, respectively, in the quarter ended
    December 31, 2008.(2)
    
    The Company recorded charges for grant repayments of
    $0.3 million and $1 million in the quarters ended
    December 31, 2007 and September 30, 2007,
    respectively. The Company recorded restructuring charges
    (credits) of $13 million, $1 million,
    $(3) million and $2 million in the quarters ended
    December 31, 2007, September 30, 2007, June 30,
    2007 and March 31, 2007, respectively. The Company recorded
    asset impairment recovery of $1 million in the quarter
    ended September 30, 2007. 119




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##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  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.
  Limitations
    on the Effectiveness of Controls
    Changes
    in Internal Control over Financial Reporting
   120




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##### Table of Contents



ITEM 9B.
    OTHER
    INFORMATION   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS OF THE REGISTRANT AND CORPORATE GOVERNANCE
    MATTERS  Executive
    Officers of the Registrant
    Name

Age

PositionSteven Laub


50


President and Chief Executive Officer and DirectorTsung-Ching Wu


58


Executive Vice President, Office of the President and DirectorWalter Lifsey


50


Executive Vice President, OperationsStephen Cumming


38


Vice President Finance and Chief  Financial OfficerPatrick Reutens


50


Senior Vice President, Chief Legal Officer and SecretaryJean Vaylet


61


Vice President and General Manager, ASIC SegmentRod Erin


60


Vice President, RFA and Non-Volatile Memory Segments          121




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##### 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   122




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##### Table of Contents



ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES   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 Form 10-K.
     123




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##### Table of Contents



SIGNATURES  Form 10-K
    By:
    /s/  STEVEN
    LAUB       POWER OF
    ATTORNEY
  Form 10-K
  Form 10-K
  Signature

Title/s/  Steven
    Laub
    Steven Laub

President, Chief Executive Officer and Director(principal executive officer)/s/  Stephen
    Cumming
    Stephen Cumming

Vice President Finance and Chief Financial Officer(principal financial officer)/s/  David
    McCaman
    David McCaman

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

Director/s/  Dr. Edward
    Ross
    Dr. Edward Ross

Director/s/  David
    Sugishita
    David Sugishita

Director 124




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##### Table of Contents



Signature

Title/s/  Papken
    Der Torossian
    Papken Der Torossian

Director/s/  Jack
    L. Saltich
    Jack L. Saltich

Director/s/  Charles
    Carinalli
    Charles Carinalli

Director  125




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##### 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
    Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2008, Commission File
    No. 0-19032).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).4
.2

Amendment to the Amended and Restated Preferred Share Rights
    Agreement, dated November 10, 2008, between Atmel
    Corporation and American Stock Transfer &
    Trust Company, LLC (which is incorporated herein by
    reference to Exhibit 4.2 to the Registrants
    Registration Statement on
    Form 8-A/A,
    filed on November 10, 2008).10
.1+

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
.2+

1991 Employee Stock Purchase Plan, as amended (which is
    incorporated herein by reference to Exhibit 10.6 to the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2008, Commission File
    No. 0-19032).10
.3+

2005 Stock Plan (as amended) (which is incorporated herein by
    reference to Exhibit 10.4 to the Registrants
    Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2008, Commission File
    No. 0-19032).10
.4+

2005 Stock Plan forms of agreements (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+

Description of Amendment of Certain Option Agreements (which is
    incorporated herein by reference to Item 5.02 to the
    Registrants Current Report on
    Form 8-K
    (Commission File
    No. 0-19032)
    filed on April 12, 2007).10
.6+

Description of Amendment of Certain Option Agreements (which is
    incorporated herein by reference to Item 5.02 to the
    Registrants Current Report on
    Form 8-K
    (Commission File
    No. 0-19032)
    filed on April 15, 2008).10
.7+

Stock Option Fixed Exercise Date Forms (which are 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 and Exhibit 10.1 to the
    Registrants Current Report on
    Form 8-K
    (Commission File
    No. 0-19032)
    filed on April 15, 2008).10
.8+

Amendment to Employment Agreement, dated as of December 30,
    2008, 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 January 6, 2009).10
.9+

Offer Letter, dated June 16, 2008, between Registrant and
    Stephen Cumming (which is incorporated herein by reference to
    Exhibit 10.1 to the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2008, Commission File
    No. 0-19032).10
.10+

Letter Agreement, dated October 17, 2008, between
    Registrant and Bernard Pruniaux.10
.11+

Separation Agreement and General Release, dated August 6,
    2008, between Registrant and Robert McConnell10
.12+

Description of Fiscal Year 2008 Executive Bonus Plan (which is
    incorporated herein by reference to Item 5.02 to the
    Registrants Current Report on
    Form 8-K
    (Commission File
    No. 0-19032)
    filed on May 20, 2008).10
.13+

Change of Control and Severance Plan. 126




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##### Table of Contents



10
.14

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
.15

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
.16

Agreement for the Sale and Purchase of Property, dated
    October 8, 2007, by and among Atmel North Tyneside Limited,
    Atmel Corporation, Highbridge Business Park Limited and
    Highbridge Properties Plc (which is incorporated herein by
    reference to Exhibit 10.14 to the Registrants Annual
    Report on
    Form 10-K
    for the year ended December 31, 2007, Commission File
    No. 0-19032).10
.17

Agreement for the Sale and Purchase of Certain Assets, dated
    October 8, 2007, by and among Atmel North Tyneside Limited,
    Atmel Corporation, and Taiwan Semiconductor Manufacturing
    Company Limited (which is incorporated herein by reference to
    Exhibit 10.15 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2007, Commission File
    No. 0-19032).10
.18

Agreement in Relation to the Removal of Equipment, dated
    October 8, 2007, by and among Atmel North Tyneside Limited,
    Atmel Corporation, Highbridge Business Park Limited, Highbridge
    Properties Plc., and Taiwan Semiconductor Manufacturing Company
    Limited (which is incorporated herein by reference to
    Exhibit 10.16 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2007, Commission File
    No. 0-19032).10
.19*

Share Purchase Agreement, dated February 6, 2008, by and
    among Atmel Corporation, Atmel UK Holdings Limited, QRG Limited
    and Mr. Harald Phillip (which is incorporated herein by
    reference to Exhibit 10.1 to the Registrants
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2008, Commission File
    No. 0-19032).21
.1

Subsidiaries of Registrant.23
.1

Consent of PricewaterhouseCoopers LLP, Independent Registered
    Public Accounting Firm.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.*
    
    Portions of this exhibit have been omitted pursuant to a request
    for confidential treatment granted by the Commission. 127