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This excerpt taken from the ATML 10-Q filed May 11, 2009. OUR
REVENUES ARE DEPENDENT ON SELLING THROUGH
DISTRIBUTORS.
Sales through distributors accounted for 47% of our net revenues
in each of the three months ended March 31, 2009 and 2008.
We market and sell our products through third-party distributors
pursuant to agreements that can generally be terminated for
convenience by either party upon relatively short notice to the
other party. These agreements are non-exclusive and also permit
our distributors to offer our competitors’ products.
During the six months ended June 30, 2008, our sales
agreements with independent distributors in Europe were
accounted for using a “sell-in” revenue recognition
model. Sales to these distributors before July 1, 2008 were
made under arrangements where pricing was fixed at the time of
shipment. In addition, the arrangements did not provide these
distributors with allowances such as price protection or rights
of return upon termination of the arrangement. As a result, our
policy was to recognize revenue upon shipment to these
distributors.
Effective July 1, 2008, we entered into revised 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 for shipments to these distributors, we
consider that the sale prices are not “fixed or
determinable” at the time of shipment to these
distributors. Revenues and related costs will be deferred until
the products are sold by the distributor to their end customers.
The objective of this conversion is to enable us to better
manage end-customer pricing, track design registrations for
proprietary products, and improve our visibility into
distribution inventory and sales levels. We expect that this
conversion will result in improved operating results for us and
our distribution partners in the future.
Our revenue reporting is highly dependent on receiving
pertinent, accurate and timely data from our distributors.
Distributors provide us periodic data regarding the product,
price, quantity, and end customer when products are resold as
well as the quantities of our products they still have in stock.
Because the data set is large and complex and because there may
be errors in the reported data, we must use estimates and apply
judgments to reconcile distributors’ reported inventories
to their activities. Actual results could vary from those
estimates.
Table of Contents
We are dependent on our distributors to supplement our direct
marketing and sales efforts. If any significant distributor or a
substantial number of our distributors terminated their
relationship with us, decided to market our competitors’
products over our products, were unable to sell our products or
were unable to pay us for products sold for any reason, our
ability to bring our products to market would be negatively
impacted, we may have difficulty in collecting outstanding
receivable balances, and we may incur other charges or
adjustments resulting in a material adverse impact to our
revenues and operating results. For example, in the three months
ended December 31, 2008, we recorded a one time bad debt
charge of $12 million related to an Asian distributor whose
business was extraordinarily impacted following their addition
to the U.S. Department of Commerce Entity List, which
prohibits us from shipping products to the distributor.
Additionally, distributors typically maintain an inventory of
our products. For certain distributors, we have signed
agreements which protect the value of their inventory of our
products against price reductions, as well as provide for rights
of return under specific conditions. In addition, certain
agreements with our distributors also contain standard stock
rotation provisions permitting limited levels of product
returns. We defer the gross margins on our sales to these
distributors until the applicable products are re-sold by the
distributors. However, in the event of an unexpected significant
decline in the price of our products or significant return of
unsold inventory, we may experience inventory write-downs,
charges to reimburse costs incurred by distributors, or other
charges or adjustments which could harm our revenues and
operating results.
These excerpts taken from the ATML 10-K filed Mar 2, 2009. OUR
REVENUES ARE DEPENDENT ON SELLING THROUGH
DISTRIBUTORS.
Sales through distributors accounted for 48%, 44% and 41% of our
net revenues for the years ended December 31, 2008, 2007
and 2006, respectively. We market and sell our products through
third-party distributors pursuant to agreements that can
generally be terminated for convenience by either party upon
relatively short notice to the other party. These agreements are
non-exclusive and also permit our distributors to offer our
competitors’ products.
Table of Contents
During the six months ended June 30, 2008, our sales
agreements with independent distributors in Europe were
accounted for using a “sell-in” revenue recognition
model. Sales to these distributors before July 1, 2008 were
made under arrangements where pricing was fixed at the time of
shipment. In addition, the arrangements did not provide these
distributors with allowances such as price protection or rights
of return upon termination of the arrangement. As a result, our
policy was to recognize revenue upon shipment to these
distributors.
Effective July 1, 2008, we entered into revised 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 for shipments to these distributors, we
consider that the sale prices are not “fixed or
determinable” at the time of shipment to these
distributors. Revenues and related costs will be deferred until
the products are sold by the distributor to their end customers.
The objective of this conversion is to enable us to better
manage end-customer pricing, track design registrations for
proprietary products, and improve our visibility into
distribution inventory and sales levels. We expect that this
conversion will result in improved operating results for us and
our distribution partners in the future.
Our revenue reporting is highly dependent on receiving
pertinent, accurate and timely data from our distributors.
Distributors provide us periodic data regarding the product,
price, quantity, and end customer when products are resold as
well as the quantities of our products they still have in stock.
Because the data set is large and complex and because there may
be errors in the reported data, we must use estimates and apply
judgments to reconcile distributors’ reported inventories
to their activities. Actual results could vary from those
estimates.
We are dependent on our distributors to supplement our direct
marketing and sales efforts. If any significant distributor or a
substantial number of our distributors terminated their
relationship with us decided to market our competitors’
products over our products, were unable to sell our products or
were unable to pay us for products sold for any reason, our
ability to bring our products to market would be negatively
impacted, we may have difficulty in collecting outstanding
receivable balances, and we may incur other charges or
adjustments resulting in a material adverse impact to our
revenues and operating results. For example, in the three months
ended December 31, 2008, we recorded a one time bad debt
charge of $12 million related to an Asian distributor whose
business was extraordinarily impacted following their addition
to the U.S. Department of Commerce Entity List, which
prohibits us from shipping products to the distributor.
Additionally, distributors typically maintain an inventory of
our products. For certain distributors, we have signed
agreements which protect the value of their inventory of our
products against price reductions, as well as provide for rights
of return under specific conditions. In addition, certain
agreements with our distributors also contain standard stock
rotation provisions permitting limited levels of product
returns. We defer the gross margins on our sales to these
distributors, until the applicable products are re-sold by the
distributors. However, in the event of an unexpected significant
decline in the price of our products or significant return of
unsold inventory, we may experience inventory write-downs,
charges to reimburse costs incurred by distributors, or other
charges or adjustments which could harm our revenues and
operating results.
OUR REVENUES ARE DEPENDENT ON SELLING THROUGH DISTRIBUTORS. Sales through distributors accounted for 48%, 44% and 41% of our net revenues for the years ended December 31, 2008, 2007 and 2006, respectively. We market and sell our products through third-party distributors pursuant to agreements that can generally be terminated for convenience by either party upon relatively short notice to the other party. These agreements are non-exclusive and also permit our distributors to offer our competitors’ products.
Table of ContentsDuring the six months ended June 30, 2008, our sales agreements with independent distributors in Europe were accounted for using a “sell-in” revenue recognition model. Sales to these distributors before July 1, 2008 were made under arrangements where pricing was fixed at the time of shipment. In addition, the arrangements did not provide these distributors with allowances such as price protection or rights of return upon termination of the arrangement. As a result, our policy was to recognize revenue upon shipment to these distributors. Effective July 1, 2008, we entered into revised 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 for shipments to these distributors, we consider that the sale prices are not “fixed or determinable” at the time of shipment to these distributors. Revenues and related costs will be deferred until the products are sold by the distributor to their end customers. The objective of this conversion is to enable us to better manage end-customer pricing, track design registrations for proprietary products, and improve our visibility into distribution inventory and sales levels. We expect that this conversion will result in improved operating results for us and our distribution partners in the future. Our revenue reporting is highly dependent on receiving pertinent, accurate and timely data from our distributors. Distributors provide us periodic data regarding the product, price, quantity, and end customer when products are resold as well as the quantities of our products they still have in stock. Because the data set is large and complex and because there may be errors in the reported data, we must use estimates and apply judgments to reconcile distributors’ reported inventories to their activities. Actual results could vary from those estimates. We are dependent on our distributors to supplement our direct marketing and sales efforts. If any significant distributor or a substantial number of our distributors terminated their relationship with us decided to market our competitors’ products over our products, were unable to sell our products or were unable to pay us for products sold for any reason, our ability to bring our products to market would be negatively impacted, we may have difficulty in collecting outstanding receivable balances, and we may incur other charges or adjustments resulting in a material adverse impact to our revenues and operating results. For example, in the three months ended December 31, 2008, we recorded a one time bad debt charge of $12 million related to an Asian distributor whose business was extraordinarily impacted following their addition to the U.S. Department of Commerce Entity List, which prohibits us from shipping products to the distributor. Additionally, distributors typically maintain an inventory of our products. For certain distributors, we have signed agreements which protect the value of their inventory of our products against price reductions, as well as provide for rights of return under specific conditions. In addition, certain agreements with our distributors also contain standard stock rotation provisions permitting limited levels of product returns. We defer the gross margins on our sales to these distributors, until the applicable products are re-sold by the distributors. However, in the event of an unexpected significant decline in the price of our products or significant return of unsold inventory, we may experience inventory write-downs, charges to reimburse costs incurred by distributors, or other charges or adjustments which could harm our revenues and operating results. These excerpts taken from the ATML 10-K filed Feb 29, 2008. OUR
REVENUES ARE DEPENDENT ON SELLING THROUGH
DISTRIBUTORS.
Sales through distributors accounted for 44%, 41% and 40% of our
net revenues in 2007, 2006 and 2005. We market and sell our
products through third-party distributors pursuant to agreements
that can generally be terminated for convenience by either party
upon relatively short notice to the other party. These
agreements are non-exclusive and also permit our distributors to
offer our competitors’ products. We are dependent on our
distributors to supplement our direct marketing and sales
efforts. If any significant distributor or a substantial number
of our distributors terminated their relationship with us or
decided to market our competitors’ products over our
products, our ability to bring our products to market would be
negatively impacted, we may have difficulty in collecting
outstanding receivable balances, and incur other charges or
adjustments resulting in material adverse impact to our revenues
and operating results.
Additionally, distributors typically maintain an inventory of
our products. For certain distributors, we have signed
agreements which protect the value of their inventory of our
products against price reductions, as well as provide for rights
of return under specific conditions. In addition, certain
agreements with our distributors also contain standard stock
rotation provisions permitting limited levels of product
returns. We defer the gross margins on our sales to these
distributors, until the applicable products are re-sold by the
distributors. However, in the event of an unexpected significant
decline in the price of our products or significant return of
unsold inventory, we may experience inventory write-downs,
charges to reimburse costs incurred by distributors, or other
charges or adjustments which could harm our revenues and
operating results.
Table of Contents
OUR REVENUES ARE DEPENDENT ON SELLING THROUGH DISTRIBUTORS. Sales through distributors accounted for 44%, 41% and 40% of our net revenues in 2007, 2006 and 2005. We market and sell our products through third-party distributors pursuant to agreements that can generally be terminated for convenience by either party upon relatively short notice to the other party. These agreements are non-exclusive and also permit our distributors to offer our competitors’ products. We are dependent on our distributors to supplement our direct marketing and sales efforts. If any significant distributor or a substantial number of our distributors terminated their relationship with us or decided to market our competitors’ products over our products, our ability to bring our products to market would be negatively impacted, we may have difficulty in collecting outstanding receivable balances, and incur other charges or adjustments resulting in material adverse impact to our revenues and operating results. Additionally, distributors typically maintain an inventory of our products. For certain distributors, we have signed agreements which protect the value of their inventory of our products against price reductions, as well as provide for rights of return under specific conditions. In addition, certain agreements with our distributors also contain standard stock rotation provisions permitting limited levels of product returns. We defer the gross margins on our sales to these distributors, until the applicable products are re-sold by the distributors. However, in the event of an unexpected significant decline in the price of our products or significant return of unsold inventory, we may experience inventory write-downs, charges to reimburse costs incurred by distributors, or other charges or adjustments which could harm our revenues and operating results.
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