UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 2010
OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
Commission file number: 1-16239
ATMI, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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06-1481060
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(State or other jurisdiction of
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(I.R.S. Employer Identification No.)
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incorporation or organization)
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7 Commerce Drive, Danbury, CT
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06810
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(Address of principal executive offices)
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(Zip Code)
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203-794-1100
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes
þ
No
o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). Yes
o
No
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the
Exchange Act (Check one):
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Large accelerated filer
o
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Accelerated filer
þ
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Non-accelerated filer
o
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Smaller reporting company
o
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act).
Yes
o
No
þ
The number of shares outstanding of the registrants common stock as of March 31, 2010 was
31,489,909.
ATMI, INC.
Quarterly Report on Form 10-Q
For the Quarter Ended March 31, 2010
TABLE OF CONTENTS
2
PART I FINANCIAL INFORMATION
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Item 1.
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Financial Statements
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ATMI, Inc.
Consolidated Balance Sheets
(in thousands, except per share data)
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March 31,
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December 31,
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2010
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2009
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(unaudited)
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Assets
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Current assets:
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Cash and cash equivalents
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$
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48,840
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$
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64,738
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Marketable securities, current portion
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57,846
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32,650
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Accounts receivable, net of allowances of $2,269 and $2,287, respectively
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42,511
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44,184
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Inventories, net
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56,102
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53,761
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Income taxes receivable
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10,844
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10,844
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Deferred income taxes
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7,880
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8,027
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Prepaid expenses and other current assets
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22,154
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19,383
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Total current assets
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246,177
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233,587
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Property, plant, and equipment, net
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120,393
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124,609
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Goodwill
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33,410
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33,394
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Other intangibles, net
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21,814
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23,202
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Marketable securities, non-current
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16,881
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10,590
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Deferred income taxes, non-current
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2,593
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2,707
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Other non-current assets
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30,179
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31,487
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Total assets
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$
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471,447
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$
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459,576
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Liabilities and stockholders equity
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Current liabilities:
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Accounts payable
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$
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16,191
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$
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14,788
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Accrued liabilities
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4,209
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4,804
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Accrued salaries and related benefits
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5,093
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4,480
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Income taxes payable
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4,286
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1,800
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Loans and notes payable, current
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483
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Other current liabilities
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3,937
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3,328
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Total current liabilities
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33,716
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29,683
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Deferred income taxes, non-current
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6,335
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6,916
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Other non-current liabilities
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10,964
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11,487
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Commitments and contingencies (Note 8)
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Stockholders equity:
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Preferred stock, par value $.01 per share: 2,000 shares authorized; none
issued
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Common stock, par value $.01 per share: 100,000 shares authorized;
39,491 and 39,354 issued and 31,490 and 31,388 outstanding in 2010
and 2009, respectively
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394
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393
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Additional paid-in capital
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428,962
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426,436
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Treasury stock at cost (8,001 and 7,966 shares in 2010 and 2009,
respectively)
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(228,312
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)
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(227,670
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)
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Retained earnings
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217,593
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208,927
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Accumulated other comprehensive income
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1,795
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3,404
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Total stockholders equity
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420,432
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411,490
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Total liabilities and stockholders equity
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$
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471,447
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$
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459,576
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See accompanying notes.
3
ATMI, Inc.
Consolidated Statements of Operations
(unaudited)
(in thousands, except per share data)
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Three Months Ended
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March 31,
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2010
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2009
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Revenues
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$
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85,311
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$
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37,362
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Cost of revenues
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43,622
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30,431
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Gross profit
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41,689
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6,931
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Operating expenses:
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Research and development
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9,723
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11,651
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Selling, general and administrative
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19,972
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22,240
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Total operating expenses
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29,695
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33,891
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Operating income (loss)
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11,994
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(26,960
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)
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Interest income
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206
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465
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Impairment of investments
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(2,486
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)
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Other income (expense), net
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34
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(125
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)
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Income (loss) before income taxes
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12,234
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(29,106
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)
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Provision (benefit) for income taxes
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3,568
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(10,682
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)
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Net income (loss)
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$
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8,666
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$
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(18,424
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)
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Earnings (loss) per common share basic
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$
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0.27
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$
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(0.59
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)
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Weighted average shares outstanding basic
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31,513
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31,376
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Earnings (loss) per common share diluted
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$
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0.27
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$
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(0.59
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)
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Weighted average shares outstanding diluted
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32,024
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31,376
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See accompanying notes.
4
ATMI, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
(unaudited)
(in thousands)
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Accumulated
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Additional
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Other
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Common
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Paid-in
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Treasury
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Retained
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Comprehensive
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Stock
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Capital
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Stock
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Earnings
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Income
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Total
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Balance at December 31, 2009
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$
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393
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$
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426,436
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$
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(227,670
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)
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$
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208,927
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$
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3,404
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$
|
411,490
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Purchase of 35 treasury shares
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(642
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)
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(642
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)
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Equity based compensation
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2,422
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|
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|
|
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2,422
|
|
Income tax benefit from equity-based
compensation
|
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|
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|
105
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
105
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|
Other
|
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|
1
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|
|
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(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Net income
|
|
|
|
|
|
|
|
|
|
|
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8,666
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|
|
|
|
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8,666
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Reclassification adjustment related to
marketable securities sold in net unrealized
gain position, net of $280 tax provision
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|
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|
|
|
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|
|
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|
|
|
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(476
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)
|
|
|
(476
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)
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Change in fair value on available-for-sale
securities, net of deferred income tax of $14
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23
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23
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Cumulative translation adjustment
|
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|
|
|
|
|
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|
|
|
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(1,156
|
)
|
|
|
(1,156
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)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,057
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Balance at March 31, 2010
|
|
$
|
394
|
|
|
$
|
428,962
|
|
|
$
|
(228,312
|
)
|
|
$
|
217,593
|
|
|
$
|
1,795
|
|
|
$
|
420,432
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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See accompanying notes.
5
ATMI, Inc.
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
|
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|
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Three Months Ended
|
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|
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March 31,
|
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|
|
2010
|
|
|
2009
|
|
Operating activities
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
8,666
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|
|
$
|
(18,424
|
)
|
Adjustments to reconcile net income (loss) to cash provided by operating activities:
|
|
|
|
|
|
|
|
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Depreciation and amortization
|
|
|
6,756
|
|
|
|
6,849
|
|
Provision for bad debt
|
|
|
|
|
|
|
1,500
|
|
Provision for inventory obsolescence
|
|
|
25
|
|
|
|
1,060
|
|
Deferred income taxes
|
|
|
(328
|
)
|
|
|
(3,629
|
)
|
Income tax benefit (provision) from share-based payment arrangements
|
|
|
386
|
|
|
|
(428
|
)
|
Equity-based compensation expense
|
|
|
2,422
|
|
|
|
2,027
|
|
Long-lived asset impairments
|
|
|
296
|
|
|
|
6,227
|
|
Loss from equity-method investments
|
|
|
346
|
|
|
|
232
|
|
Impairment on investments
|
|
|
|
|
|
|
2,486
|
|
Other
|
|
|
|
|
|
|
7
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
1,500
|
|
|
|
15,641
|
|
Inventories
|
|
|
(2,611
|
)
|
|
|
262
|
|
Other assets
|
|
|
(2,098
|
)
|
|
|
(1,023
|
)
|
Accounts payable
|
|
|
1,510
|
|
|
|
(729
|
)
|
Accrued expenses
|
|
|
95
|
|
|
|
(760
|
)
|
Income taxes
|
|
|
2,468
|
|
|
|
(4,263
|
)
|
Other liabilities
|
|
|
112
|
|
|
|
432
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
19,545
|
|
|
|
7,467
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(2,169
|
)
|
|
|
(2,524
|
)
|
Proceeds from the sale of property, plant & equipment
|
|
|
|
|
|
|
28
|
|
Purchases of marketable securities
|
|
|
(39,283
|
)
|
|
|
(14,548
|
)
|
Proceeds from sales or maturities of marketable securities
|
|
|
7,083
|
|
|
|
18,598
|
|
Other
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used for) provided by investing activities
|
|
|
(34,374
|
)
|
|
|
1,554
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
Purchases of treasury stock
|
|
|
(642
|
)
|
|
|
(511
|
)
|
Credit line borrowings
|
|
|
1,724
|
|
|
|
3,872
|
|
Credit line repayments
|
|
|
(2,207
|
)
|
|
|
(4,802
|
)
|
Other
|
|
|
(17
|
)
|
|
|
(16
|
)
|
|
|
|
|
|
|
|
Net cash used for financing activities
|
|
|
(1,142
|
)
|
|
|
(1,457
|
)
|
|
|
|
|
|
|
|
Effects of exchange rate changes on cash and cash equivalents
|
|
|
73
|
|
|
|
347
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(15,898
|
)
|
|
|
7,911
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
64,738
|
|
|
|
54,626
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
48,840
|
|
|
$
|
62,537
|
|
|
|
|
|
|
|
|
See accompanying notes.
6
Notes To Consolidated Interim Financial Statements
(unaudited)
1. Description of Business
We believe we are among the leading suppliers of high performance materials, materials packaging
and materials delivery systems used worldwide in the manufacture of microelectronics devices. Our
products consist of front-end semiconductor performance materials, sub-atmospheric pressure gas
delivery systems for safe handling and delivery of toxic and hazardous gases to semiconductor
process equipment, high-purity materials packaging and dispensing systems that allow for the
reliable introduction of low volatility liquids and solids to microelectronics and
biopharmaceutical processes. ATMI targets both semiconductor and flat-panel display manufacturers,
whose products form the foundation of microelectronics technology rapidly proliferating through the
consumer products, information technology, automotive, healthcare, and communications industries.
The market for microelectronics devices is continually changing, which drives demand for new
products and technologies at lower cost. ATMIs customers include many of the leading semiconductor
and flat-panel display manufacturers in the world who target leading edge technologies. ATMI also
addresses an increasing number of critical materials handling needs for the life sciences markets.
Our proprietary containment, mixing, and bioreactor technologies are sold to the biotechnology and
laboratory markets, which we believe offer significant growth potential. ATMIs objective is to
meet the demands of our microelectronics and life sciences customers with solutions that maximize
the efficiency of their manufacturing processes, reduce capital costs, and minimize the time to
develop new products and integrate them into their processes.
2. Significant Accounting Policies and Other Information
Basis of Presentation
The accompanying consolidated interim financial statements of ATMI, Inc. for the quarters ended
March 31, 2010 and 2009 are unaudited, but in the opinion of management include all adjustments
necessary for a fair presentation of the results for the interim periods. These unaudited
consolidated interim financial statements included herein should be read in conjunction with the
December 31, 2009 audited consolidated financial statements and notes thereto included in the
Companys Annual Report on Form 10-K for the year ended December 31, 2009. The Companys quarterly
results are subject to fluctuation and, thus, the operating results for any quarter are not
necessarily indicative of results to be expected for any future fiscal period.
The Consolidated Balance Sheet at December 31, 2009 has been derived from the audited financial
statements at that date, but does not include all of the financial information and disclosures
required by GAAP for complete financial statements.
7
Earnings (Loss) Per Share
This table shows the computation of basic and diluted earnings (loss) per share (in thousands,
except per share data):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
8,666
|
|
|
$
|
(18,424
|
)
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic earnings (loss) per share weighted average shares
|
|
|
31,513
|
|
|
|
31,376
|
|
Dilutive effect of employee stock options
|
|
|
38
|
|
|
|
|
|
Dilutive effect of restricted stock
|
|
|
473
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for diluted earnings (loss) per common share weighted average shares
|
|
|
32,024
|
|
|
|
31,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share-basic
|
|
$
|
0.27
|
|
|
$
|
(0.59
|
)
|
Earnings (loss) per share-diluted
|
|
$
|
0.27
|
|
|
$
|
(0.59
|
)
|
This table shows the potential common shares excluded from the calculation of weighted-average
shares outstanding because their effect was considered to be antidilutive (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
Antidilutive shares
|
|
|
1,724
|
|
|
|
2,003
|
|
8
Inventories
Inventories include (in thousands):
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
Raw materials
|
|
$
|
13,716
|
|
|
$
|
14,985
|
|
Work in process
|
|
|
3,070
|
|
|
|
2,446
|
|
Finished goods
|
|
|
41,846
|
|
|
|
38,924
|
|
|
|
|
|
|
|
|
|
|
|
58,632
|
|
|
|
56,355
|
|
Excess and obsolescence reserve
|
|
|
(2,530
|
)
|
|
|
(2,594
|
)
|
|
|
|
|
|
|
|
Inventories, net
|
|
$
|
56,102
|
|
|
$
|
53,761
|
|
|
|
|
|
|
|
|
Non-marketable Equity Securities
We selectively invest in non-marketable equity securities of private companies, which range from
early-stage companies that are often still defining their strategic direction to more mature
companies whose products or technologies may directly support an ATMI product or initiative. At
March 31, 2010, the carrying value of our portfolio of strategic investments in non-marketable
equity securities totaled $21.6 million ($22.1 million at December 31, 2009), of which $13.9
million are accounted for at cost ($14.0 million at December 31, 2009), and $7.7 million are
accounted for using the equity method of accounting ($8.1 million at December 31, 2009).
Non-marketable equity securities are included in the consolidated balance sheets under the caption
Other non-current assets. ATMIs share of the income or losses of all equity-method investees,
using the most current financial information available, which is one month behind ATMIs normal
closing date, is included in our results of operations from the investment date forward.
Income Taxes
We have not provided for U.S. federal income and foreign withholding taxes on approximately
$54.4 million of undistributed earnings from non-U.S. operations as of March 31, 2010, because such
earnings are intended to be reinvested indefinitely outside of the United States. These earnings
could become subject to additional tax if they are remitted as dividends, loaned to ATMI, or upon
sale of subsidiary stock. It is not practicable to estimate the amount or timing of the additional
tax, if any, that eventually might be paid on the foreign earnings.
We had an effective income tax rate of 29.2% for the three months ended March 31, 2010. In the
first quarter of 2010, we reduced the income tax provision by a net $0.3 million (including
interest) resulting from the reversal of previously established reserves (including interest)
related to a favorable settlement of a foreign subsidiarys income tax audit partially offset by a
charge due to equity-based compensation. Without these items our effective income tax rate would
have been 31.2%. In addition to the impact from these adjustments, the effective income tax rate
for the first quarter of 2010 differs from the U.S. federal statutory income tax rate of 35.0
percent primarily due to the mix of income attributable to the various countries in which we
conduct business. Our effective income tax rate is calculated based on full-year assumptions, and
does
not include the benefit of the U.S. research and development (R&D) credit, due to its expiration
at December 31, 2009. If the U.S. R&D credit is reinstated retroactively to January 1, 2010, we
anticipate a reduction to our effective income tax rate of at least one hundred basis points.
9
At March 31, 2010, the Company had recorded $5.9 million of unrecognized tax benefits. If any
portion of this $5.9 million is subsequently recognized, the Company will then include that portion in the
computation of its effective tax rate. On the Consolidated Balance Sheet, $5.7 million of this
amount is included in the caption Other non-current liabilities, together with $0.8 million of
accrued interest (net) on tax reserves and $0 accrued for penalties, while the balance of $0.2
million is included in the caption Other current liabilities, together with $0.1 million of
accrued interest (net) of tax reserves and $0 accrued for penalties.
It is reasonably possible that in the next 12 months, because of changes in facts and
circumstances, the unrecognized tax benefits for tax positions taken related to previously filed
tax returns may decrease. The range of possible decrease is $0.2 million to $1.5 million
(excluding interest). The Company has been audited in the United States by the Internal Revenue
Service through tax year 2007.
Goodwill and Other Intangible Assets
Goodwill and Other intangibles balances at March 31, 2010 and December 31, 2009 were (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patents &
|
|
|
|
|
|
|
Total Other
|
|
|
|
Goodwill
|
|
|
Trademarks
|
|
|
Other
|
|
|
Intangibles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount as of December 31, 2009
|
|
$
|
33,394
|
|
|
$
|
40,490
|
|
|
$
|
7,003
|
|
|
$
|
47,493
|
|
Accumulated Amortization
|
|
|
|
|
|
|
(18,730
|
)
|
|
|
(5,561
|
)
|
|
|
(24,291
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
$
|
33,394
|
|
|
$
|
21,760
|
|
|
$
|
1,442
|
|
|
$
|
23,202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount as of March 31, 2010
|
|
$
|
33,410
|
|
|
$
|
40,182
|
|
|
$
|
6,997
|
|
|
$
|
47,179
|
|
Accumulated Amortization
|
|
|
|
|
|
|
(19,653
|
)
|
|
|
(5,712
|
)
|
|
|
(25,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2010
|
|
$
|
33,410
|
|
|
$
|
20,529
|
|
|
$
|
1,285
|
|
|
$
|
21,814
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
Changes in carrying amounts of Goodwill and Other Intangibles for the three months ended March
31, 2010 were (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patents &
|
|
|
|
|
|
|
Total Other
|
|
|
|
Goodwill
|
|
|
Trademarks
|
|
|
Other
|
|
|
Intangibles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
$
|
33,394
|
|
|
$
|
21,760
|
|
|
$
|
1,442
|
|
|
$
|
23,202
|
|
Amortization expense
|
|
|
|
|
|
|
(882
|
)
|
|
|
(240
|
)
|
|
|
(1,122
|
)
|
Other, including foreign
currency translation
|
|
|
16
|
|
|
|
(349
|
)
|
|
|
83
|
|
|
|
(266
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2010
|
|
$
|
33,410
|
|
|
$
|
20,529
|
|
|
$
|
1,285
|
|
|
$
|
21,814
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable Interest Entity
In July 2005, ATMI purchased 30 percent of the outstanding common stock of Anji Microelectronics
Co., Ltd. (Anji), an entity in the development stage of researching and developing advanced
semiconductor materials, with primary operations in Shanghai, China. We have determined that Anji
is a variable interest entity. However, we have determined that we are not the primary beneficiary
of Anji because we do not have the power, through voting or similar rights, to direct the
activities of Anji that most significantly impact the entitys economic performance, and we are
also not expected to absorb significant losses or gains from Anji. ATMI accounts for this
investment using the equity method of accounting. The carrying value of ATMIs investment in Anji
exceeds ATMIs share of Anjis net assets by approximately $5.2 million. The carrying value of our
investment in Anji represents the cash paid, less our share of the cumulative losses, and pursuant
to an independent valuation obtained, the excess purchase price over the underlying net assets is
deemed to be goodwill. At March 31, 2010, the fair value of a guarantee ATMI provided on behalf of
Anji was $0.2 million (see Note 8) and our maximum exposure to loss is $9.7 million, which consists
of $6.0 million of our carrying value in this investment, plus $3.7 million associated with Anjis
bank line of credit, which is guaranteed by ATMI.
Recently Issued Accounting Pronouncements
In October 2009, the FASB issued ASU 2009-13, Revenue Recognition (Topic 605). This Update
provides amendments to the criteria in Subtopic 605-24 for separating consideration in
multiple-deliverable revenue arrangements. It establishes a hierarchy of selling prices to
determine the selling price of each specific deliverable which includes vendor-specific objective
evidence (if available), third-party evidence (if vendor-specific evidence is not available), or
estimated selling price if neither of the first two are available. This Update also eliminates the
residual method for allocating revenue between the elements of an arrangement and requires that
arrangement consideration be allocated at the inception of the arrangement. Finally, this Update
expands the disclosure requirements regarding a vendors multiple-deliverable revenue arrangements.
This Update is effective for fiscal years beginning on or after June 15, 2010. We do not anticipate
any material impact from this Update.
11
In February 2010, the FASB issued ASU 2010-09, Subsequent Events (Topic 855). This Update
provides amendments to Subtopic 855-10-50-4 and related guidance within U.S. GAAP
to clarify that an SEC Registrant is not required to disclose the date through which subsequent
events have been evaluated. This change alleviates potential conflicts between Subtopic 855-10 and
the SECs requirements and is effective for interim or annual periods ending after June 15, 2010.
We do not anticipate any material impact from this Update.
Recently Adopted Accounting Standards
In June 2009, the FASB issued Accounting Standards Update (ASU) 2009-17, Improvement to
Financial Reporting by Enterprises Involved with Variable Interest Entities. This Statement amends
previous guidance to require us to perform an analysis of our existing investments to determine
whether our variable interest or interests give us a controlling financial interest in a variable
interest entity. We adopted this new standard effective January 1, 2010 and it had no impact.
In January 2010, the FASB issued ASU 2010-02, Accounting and Reporting for Decreases in Ownership
of a Subsidiary a Scope Clarification. This Update provides amendments to Subtopic 810-10 and
related guidance within U.S. GAAP to clarify that the scope of the decrease in ownership provisions
applies to (1) a subsidiary or group of assets that is a business or nonprofit activity, (2) a
subsidiary that is a business or nonprofit activity that is transferred to an equity method
investee or joint venture, and (3) an exchange of a group of assets that constitutes a business or
nonprofit activity for a noncontrolling interest in an entity (including an equity method investee
or joint venture). We adopted this new standard effective January 1, 2010 and it had no
impact.
In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic
820). This Update provides amendments to Subtopic 820-10 and related guidance within U.S. GAAP to
require disclosure of the transfers in and out of Levels 1 and 2 and a schedule for Level 3 that
separately identifies purchases, sales, issuances and settlements and requires more detailed
disclosures regarding valuation techniques and inputs. We adopted this new standard effective
January 1, 2010see Note 6 for disclosures associated with the adoption of this standard.
12
3. Equity-Based Compensation
Summary of Plans
This table shows the number of shares approved by stockholders for each plan and the number of
shares that remain available for equity awards at March 31, 2010 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
# of
|
|
|
|
# of Shares
|
|
|
Shares
|
|
Stock Plan
|
|
Approved
|
|
|
Available
|
|
|
|
|
|
|
|
|
|
|
2000 Stock Plan (1)
|
|
|
2,000
|
|
|
|
|
|
2003 Stock Plan (1)
|
|
|
3,000
|
|
|
|
387
|
|
Employee Stock Purchase Plan (2)
|
|
|
1,000
|
|
|
|
270
|
|
|
|
|
|
|
|
|
Totals
|
|
|
6,000
|
|
|
|
657
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Exercise prices for ISOs and non-qualified stock options granted under this plan may not be less than
100 percent of the fair market value for the Companys common stock on the date of grant.
|
|
(2)
|
|
Employees may purchase shares at 95 percent of the closing price on the day previous to the last day of each
six-month offering period. This plan is not considered to be compensatory under existing accounting rules.
|
The Company did not issue any shares of common stock as a result of exercises by employees
under its employee stock option plans during the first quarter of 2010. Such amount was 550 shares
of common stock during the fiscal year ended December 31, 2009. The Company issued 287,392 shares
of restricted stock that include solely a time-based vesting requirement in the first quarter of
2010, and such amount was 516,096 during the fiscal year ended December 31, 2009. The Company
issued 102,514 shares of restricted stock to its executive officers that include both
performance-based and time-based vesting requirements in the first quarter of 2010, and such amount
was 120,839 during the fiscal year ended December 31, 2009. In the first quarter of 2010, 120,839
of the 2009 performance-based restricted stock awards were forfeited as a result of the failure to
achieve the operating income growth targets established by the Board of Directors.
Our 2010 Definitive Proxy statement, filed April 9, 2010, includes a proposal, subject to
shareholder approval, for a new 3 million share 2010 Stock Plan to assure that sufficient shares
are available to provide long-term, equity-based incentives to those employees, directors, officers
and consultants of the Company and any subsidiaries who will be responsible for the Companys
future growth and continued success.
13
4. Marketable Securities
Marketable securities include at March 31, 2010 and December 31, 2009 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
|
|
|
|
|
Unrealized
|
|
|
Estimated
|
|
|
|
|
|
|
Unrealized
|
|
|
Estimated
|
|
|
|
Cost
|
|
|
Gain (Loss)
|
|
|
Fair Value
|
|
|
Cost
|
|
|
Gain (Loss)
|
|
|
Fair Value
|
|
Securities in unrealized gain
position:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
$
|
251
|
|
|
$
|
1,358
|
|
|
$
|
1,609
|
|
|
$
|
343
|
|
|
$
|
2,029
|
|
|
$
|
2,372
|
|
Government debt
obligations (1)
|
|
|
6,606
|
|
|
|
36
|
|
|
|
6,642
|
|
|
|
7,321
|
|
|
|
51
|
|
|
|
7,372
|
|
GS (2) debt obligations
|
|
|
27,080
|
|
|
|
22
|
|
|
|
27,102
|
|
|
|
16,974
|
|
|
|
20
|
|
|
|
16,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
33,937
|
|
|
|
1,416
|
|
|
|
35,353
|
|
|
|
24,638
|
|
|
|
2,100
|
|
|
|
26,738
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities in unrealized loss
position:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government debt
obligations (1)
|
|
|
14,707
|
|
|
|
(44
|
)
|
|
|
14,663
|
|
|
|
909
|
|
|
|
(1
|
)
|
|
|
908
|
|
GS (2) debt obligations
|
|
|
19,127
|
|
|
|
(17
|
)
|
|
|
19,110
|
|
|
|
13,022
|
|
|
|
(29
|
)
|
|
|
12,993
|
|
Auction-rate security (3)
|
|
|
4,676
|
|
|
|
(2,075
|
)
|
|
|
2,601
|
|
|
|
4,672
|
|
|
|
(2,071
|
)
|
|
|
2,601
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
38,510
|
|
|
|
(2,136
|
)
|
|
|
36,374
|
|
|
|
18,603
|
|
|
|
(2,101
|
)
|
|
|
16,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities at amortized cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GS (2) debt obligations
|
|
|
3,000
|
|
|
|
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
3,000
|
|
|
|
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total marketable securities
|
|
$
|
75,447
|
|
|
$
|
(720
|
)
|
|
$
|
74,727
|
|
|
$
|
43,241
|
|
|
$
|
(1
|
)
|
|
$
|
43,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
State and municipal government debt obligations
|
|
(2)
|
|
U.S. Government Sponsored
|
|
(3)
|
|
Massachusetts Educational Financing Authority (MEFA) auction rate security Par Value $5,000,000 less unaccreted
non-cash credit loss of $324,000
|
14
The amortized cost and estimated fair value of available-for-sale securities, by contractual
maturity, as of March 31, 2010 are shown below; expected maturities may differ from contractual
maturities because the issuers of the securities may exercise the right to prepay obligations
without prepayment penalties.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
|
Cost
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
Due in one year or less
|
|
$
|
45,075
|
|
|
$
|
45,080
|
|
Due between one and three years
|
|
|
25,445
|
|
|
|
25,437
|
|
Auction-rate security (due in 2038)
|
|
|
4,676
|
|
|
|
2,601
|
|
|
|
|
|
|
|
|
|
|
|
75,196
|
|
|
|
73,118
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
251
|
|
|
|
1,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
75,447
|
|
|
$
|
74,727
|
|
|
|
|
|
|
|
|
This table shows the Companys marketable securities that were in an unrealized loss position
at March 31, 2010, and also shows the duration of time the security has been in an unrealized loss
position:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Than 12 Months
|
|
|
12 Months or Greater
|
|
|
Total
|
|
|
|
|
|
|
|
Unrealized
|
|
|
|
|
|
|
Unrealized
|
|
|
|
|
|
|
Unrealized
|
|
|
|
Fair Value
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government debt
obligations
|
|
|
14,663
|
|
|
|
(44
|
)
|
|
|
|
|
|
|
|
|
|
|
14,663
|
|
|
|
(44
|
)
|
GS (1) debt
obligations
|
|
|
19,110
|
|
|
|
(17
|
)
|
|
|
|
|
|
|
|
|
|
|
19,110
|
|
|
|
(17
|
)
|
Auction-rate security
|
|
|
|
|
|
|
|
|
|
|
2,601
|
|
|
|
(2,075
|
)
|
|
|
2,601
|
|
|
|
(2,075
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
33,773
|
|
|
$
|
(61
|
)
|
|
$
|
2,601
|
|
|
$
|
(2,075
|
)
|
|
$
|
36,374
|
|
|
$
|
(2,136
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
U.S. Government Sponsored
|
See Note 6 for further discussion.
15
5. Accumulated Other Comprehensive Income
The components of accumulated other comprehensive income are (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss)
|
|
|
|
|
|
|
Currency
|
|
|
on Available-
|
|
|
|
|
|
|
Translation
|
|
|
for-Sale
|
|
|
|
|
|
|
Adjustments
|
|
|
Securities
|
|
|
Total
|
|
Balance at December 31, 2008
|
|
$
|
865
|
|
|
$
|
(599
|
)
|
|
$
|
266
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative effect of adoption of new accounting standard
|
|
|
|
|
|
|
(1,287
|
)
|
|
|
(1,287
|
)
|
Reclassification adjustment related to marketable
securities in net unrealized gain position at prior period
end, net of $32 tax provision (1)
|
|
|
|
|
|
|
(55
|
)
|
|
|
(55
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of available-for-sale securities,
net of deferred income tax of $1,139
|
|
|
|
|
|
|
1,940
|
|
|
|
1,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative translation adjustment
|
|
|
2,540
|
|
|
|
|
|
|
|
2,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
$
|
3,405
|
|
|
$
|
(1
|
)
|
|
$
|
3,404
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification adjustment related to marketable
securities in net unrealized gain position at prior period
end, net of $280 tax provision (1)
|
|
|
|
|
|
|
(476
|
)
|
|
|
(476
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of available-for-sale securities,
net of deferred income tax of $14
|
|
|
|
|
|
|
23
|
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative translation adjustment
|
|
|
(1,156
|
)
|
|
|
|
|
|
|
(1,156
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2010
|
|
$
|
2,249
|
|
|
$
|
(454
|
)
|
|
$
|
1,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Determined based on the specific identification method
|
6. Fair Value Measurements
The Company measures financial assets and financial liabilities on a fair value basis using the
following three categories for classification and disclosure purposes:
Level 1
Quoted prices in active markets for identical assets and liabilities. Level 1
assets and liabilities consist of cash, money market fund deposits, certain of our marketable
equity instruments, and forward foreign currency exchange contracts that are traded in an active
market with sufficient volume and frequency of transactions.
Level 2
Observable inputs other than Level 1 prices such as quoted prices for similar assets
or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less
active markets); or model-derived valuations in which all significant inputs are observable or can
be derived principally from or corroborated by observable market data for substantially the full
term of the assets or liabilities. Level 2 assets include certain of our marketable debt
instruments with quoted market prices that are traded in less active markets or priced using a
quoted market price for similar instruments.
16
Level 3
Unobservable inputs to the valuation methodology that are significant to the
measurement of fair value of assets or liabilities. At March 31, 2010, our auction-rate security is
the only item included in this category.
In March 2010, the annual auction for the auction-rate security failed for the third time in three
years, as was expected, and the tax-exempt coupon rate of interest was reset to 0.68 percent from
its previous rate of 1.15 percent. We will not have access to these funds prior to maturity until
a future auction for this auction rate security is successful, the security has been called by the
issuer, or until we sell the security in a secondary market. Since we have no current intent to
sell this security and it is not more likely than not that we will be required to sell this
security before anticipated recovery of its remaining amortized cost, in 2009 we recorded a
temporary impairment charge of $2.1 million within the caption Accumulated other comprehensive
income on the Consolidated Balance Sheets based upon an independent third-party valuation we
received for this auction-rate security. The valuation of this security incorporated assumptions
about the anticipated term and the yield that a market participant would require to purchase such a
security in the current market environment.
At March 31, 2010 and December 31, 2009, we have included the fair value of this security under the
caption Marketable securities, non-current in the Consolidated Balance Sheets.
Assets / Liabilities Measured at Fair Value on a Recurring Basis
This table summarizes the Companys assets and liabilities measured at fair value on a recurring
basis at March 31, 2010 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measured Using
|
|
|
|
|
|
|
|
Quoted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prices in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Active
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
|
Markets for
|
|
|
Other
|
|
|
Significant
|
|
|
|
|
|
|
|
Identical
|
|
|
Observable
|
|
|
Unobservable
|
|
|
|
|
|
|
|
Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
Total
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Cash & cash equivalents
|
|
$
|
48,840
|
|
|
$
|
48,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale marketable securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
$
|
1,609
|
|
|
$
|
1,609
|
|
|
|
|
|
|
|
|
|
Government debt
obligations
|
|
$
|
21,305
|
|
|
|
|
|
|
$
|
21,305
|
|
|
|
|
|
GS (1) debt obligations
|
|
$
|
49,212
|
|
|
|
|
|
|
$
|
49,212
|
|
|
|
|
|
Auction Rate Security
|
|
$
|
2,601
|
|
|
|
|
|
|
|
|
|
|
$
|
2,601
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency exchange contract asset
|
|
$
|
110
|
|
|
$
|
110
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
U.S. Government Sponsored
|
17
There were no transfers of assets or liabilities between level 1 and level 2 during the first
quarter of 2010.
This table presents a reconciliation for all assets and liabilities measured at fair value on a
recurring basis using significant unobservable inputs (Level 3) for the three months ended March
31, 2010 (in thousands).
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using Significant
|
|
|
|
Unobservable Inputs (Level 3)
|
|
|
|
Available-For-
|
|
|
|
|
|
|
Sale Marketable
|
|
|
|
|
|
|
Securities
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
$
|
2,601
|
|
|
$
|
2,601
|
|
Total gains (losses), realized and unrealized:
|
|
|
|
|
|
|
|
|
Included in net income
|
|
|
|
|
|
|
|
|
Included in accumulated other comprehensive income
|
|
|
|
|
|
|
|
|
Purchases, issuances, and settlements, net
|
|
|
|
|
|
|
|
|
Transfers into (out of) Level 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2010
|
|
$
|
2,601
|
|
|
$
|
2,601
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Note 4 for further discussion.
|
|
|
|
|
|
|
|
|
Assets / Liabilities Measured at Fair Value on a Nonrecurring Basis
All assets and liabilities measured at fair value on a nonrecurring basis are categorized as Level
3, requiring significant management judgment due to the absence of quoted market prices or
observable inputs for assets of a similar nature.
In the first quarter of 2009, long-lived assets held and used with a carrying amount of
$6.9 million were written down to their estimated fair values of $0.7 million, resulting in an
impairment charge of $6.2 million of which $2.9 million was included in cost of revenues,
$1.5 million was included in research and development expense, and $1.8 million was included in
selling, general and administrative expense.
Due to their nature, the carrying value of cash, receivables, and payables approximates fair value.
18
7. Foreign Currency Exchange Contracts
We use forward foreign currency exchange contracts to hedge specific or anticipated exposures
relating to intercompany payments (primarily U.S. export sales to subsidiaries at pre-established
U.S. dollar prices), intercompany loans and other specific and identified exposures. The terms of
the forward foreign currency exchange contracts are matched to the underlying transaction being
hedged, and are typically under one year. Because such contracts are directly associated with
identified transactions, they are an effective hedge against fluctuations in the value of the
foreign currency underlying the transaction.
Changes in the fair value of economic hedges are recognized in earnings as an offset
to the change in the fair value of the underlying exposures being hedged. The changes in fair
value of derivatives that are designated as cash-flow hedges are deferred in accumulated other
comprehensive income (loss) and are recognized in earnings as the underlying hedged transaction
occurs. Any hedge ineffectiveness is recognized in earnings immediately. We do not enter into derivative
instruments for trading or speculative purposes and all of our derivatives were highly effective
throughout the periods reported. At March 31, 2010, we did not have any cash flow hedges
outstanding.
Counterparties to forward foreign currency exchange contracts are major banking institutions with
credit ratings of investment grade or better and no collateral is required. There are no
significant risk concentrations. We believe the risk of incurring losses on derivative contracts
related to credit risk is remote.
At March 31, 2010, we held foreign currency exchange contracts that are economic hedges with notional
amounts totaling $9.1 million, of which $5.6 million will be settled in Euros, $1.8 million will be
settled in Taiwan Dollars and $1.7 million will be settled in Japanese Yen. The fair market value
(gain or loss) on these contracts was not significant as of March 31, 2010.
At December 31, 2009, we held foreign currency exchange contracts that were economic hedges with
notional amounts totaling $2.9 million, of which $1.6 million were settled, or will be settled in
Taiwan Dollars and $1.3 million were settled or will be settled in Japanese Yen. The fair market
value (gain or loss) on these contracts was not significant as of December 31, 2009.
The Company recorded gains of $0.1 million and $0.4 million for the three months ended March 31,
2010 and 2009, respectively under the caption Other income (loss), net in the consolidated
statements of operations related to changes in the fair value of its financial instruments for
forward foreign currency exchange contracts.
8. Commitments and Contingencies
ATMI is, from time to time, subject to legal actions, governmental audits, and proceedings relating
to various matters incidental to its business including contract disputes, intellectual property
disputes, product liability claims, employment matters, export and trade matters, and environmental
claims. While the outcome of such matters cannot be predicted with certainty, in the opinion of
management, after reviewing such matters and consulting with ATMIs counsel
and considering any applicable insurance or indemnifications, any liability which may ultimately be
incurred is not expected to materially affect ATMIs consolidated financial position, cash flows or
results of operations.
19
ATMI has entered into a pledge agreement with Anji Microelectronics Co., Ltd. (Anji) for the
issuance of a financial guarantee in order to assist Anji in retaining its bank financing, which
currently expires on June 30, 2010. ATMIs guarantee continues to be secured by Anjis assets and
additional equity interests in Anjis operating subsidiaries. We believe that, based on
independent credit rating agency research, and our knowledge of their business, Anji continues to
be an acceptable credit risk. The fair value of the financial guarantee is $0.2 million at March
31, 2010.
9. Segments
ATMI is organized along functional lines of responsibility, whereby each member of the Companys
executive team has global responsibility for each respective functional area, such as supply chain
operations, sales, marketing, and research and development. The executive team is the chief
operating decision maker of ATMI. Discrete financial information is only prepared at the
product-line level for revenues and certain direct costs. Functional results are reviewed at the
consolidated level. ATMIs operations comprise one operating segment.
ATMI derives virtually all its revenues from providing materials and packaging products and related
integrated process solutions to microelectronics and life sciences manufacturers. ATMIs products
are consumed or used in the front-end manufacturing process. They span many different technology
applications at various stages of maturity and in many cases are inter-related in their application
to a customers process.
Revenues from external customers, by product type, were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
Microelectronics
|
|
$
|
76,713
|
|
|
$
|
31,685
|
|
Life sciences
|
|
|
8,598
|
|
|
|
5,677
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
85,311
|
|
|
$
|
37,362
|
|
|
|
|
|
|
|
|
20
10. Subsequent Events
The Company has evaluated all subsequent events through April 21, 2010, which represents the filing
date of this Form 10-Q with the Securities and Exchange Commission, to ensure that this Form 10-Q
includes appropriate disclosure of events both recognized in the financial statements as of March
31, 2010, and events which occurred subsequent to March 31, 2010 but were not recognized in the
financial statements.
During April 2010, ATMI entered into a loan arrangement with an equity-method investee to provide
approximately $2.7 million in funds to the investee for working capital needs.
As of April 21, 2010, except for the above described loan arrangement, there were no other
subsequent events which required recognition or disclosure.
21
|
|
|
Item 2.
|
|
Managements Discussion and Analysis of Financial Condition and Results of
Operations
|
Three Months Ended March 31, 2010 as Compared to 2009
Cautionary Statements Under the Private Securities Litigation Reform Act of 1995
Disclosures included in this Form 10-Q contain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Forward-looking statements may be identified by words such as
anticipate, plan, believe, seek, estimate, expect, could, and words of similar
meanings and include, without limitation, statements about the expected future business and
financial performance of ATMI such as financial projections, expectations for demand and sales of
new and existing products, customer and supplier relationships, research and development programs,
market and technology opportunities, international trends, business strategies, business
opportunities, objectives of management for future operations, microelectronics industry (including
wafer start) growth, and trends in the markets in which the Company participates. Forward-looking
statements are based on managements current expectations and assumptions, which are inherently
subject to uncertainties, risks and changes in circumstances that are difficult to predict. Actual
outcomes and results may differ materially from these expectations and assumptions because of
changes in political, economic, business, competitive, market, regulatory, and other factors.
Certain factors that could cause such differences include:
|
|
disruptions in global credit and financial markets, including severely diminished liquidity
and credit availability, declines in consumer confidence, declines in economic growth,
increases in unemployment rates, inflationary or deflationary pressures, and uncertainty
about economic stability;
|
|
|
cyclicality in the markets in which we operate;
|
|
|
aggressive management of inventory levels by our customers and their customers;
|
|
|
variation in profit margin performance caused by decreases in shipment volume, reductions in,
or obsolescence of, inventory, inefficiencies in production facilities and shifts in product
mix;
|
|
|
availability of supply from a single or limited number of suppliers or from suppliers in a
single country;
|
|
|
highly competitive markets for our products;
|
|
|
changes in export controls, environmental and other laws or policies, as well as the general
political and economic conditions, exchange rate fluctuations, security risks, health
conditions and possible disruptions in transportation networks, of the various countries in
which we operate;
|
|
|
potential natural disasters in locations where we, our customers, or our suppliers operate;
|
|
|
loss, or significant curtailment, of purchases by one or more of our largest customers;
|
|
|
customer-driven pricing pressures adversely affecting our average selling prices;
|
|
|
inability to meet customer demand from quarter to quarter, causing us to incur expedited
shipping costs or hold excess or obsolete inventory;
|
|
|
taxation and audit by taxing authorities in the various countries in which we operate;
|
|
|
competition for highly skilled scientific, technical, managerial and marketing personnel;
|
22
|
|
inability to continue to anticipate rapidly changing technologies and market trends, to
enhance our existing products and processes, to develop and commercialize new products and
processes, and to expand through selected acquisitions of technologies or businesses or other
strategic alliances;
|
|
|
inability to protect our competitive position via our patents, patent applications, and
licensed technology in the United States and other countries; restrictions on our ability to
make and sell our products as a result of competitors patents; costly and time-consuming
patent litigation;
|
|
|
risk of product claims beyond existing insurance coverage levels resulting from the
manufacture and sale of our products, which include thin film and other toxic materials;
|
|
|
inability to realize the anticipated benefits of acquisitions due to difficulties integrating
acquired businesses with our current operations;
|
|
|
fluctuations in currency exchange rates;
|
|
|
governmental regulations related to the storage, use, and disposal of certain toxic or
otherwise hazardous chemicals in our manufacturing, processing and research and development
activities, as well as regulations applicable to both operators and owners of property where
releases of hazardous substances may have occurred (including releases by prior occupants);
and
|
|
|
uncertainty regarding compliance matters and higher costs resulting from changing laws,
regulations and standards relating to corporate governance and public disclosure, including
the Sarbanes-Oxley Act of 2002, and new regulations from the SEC.
|
These risks and uncertainties are described in more detail in our Annual Report on Form 10-K for
the fiscal year ended December 31, 2009, and our other subsequent filings with the Securities and
Exchange Commission (SEC) and in materials incorporated by reference in these filings. These
cautionary statements are not meant to be an exhaustive discussion of risks that apply to companies
like ATMI with broad international operations. The most recent downturn in the semiconductor
industry began during the second half of 2008, driven by broader macroeconomic deterioration, in
particular in the credit, housing and financial markets. The disruptions in these
markets led to diminished liquidity and credit availability, declines in consumer
confidence, declines in economic growth, increases in unemployment rates, and uncertainty about
economic stability. In response to these events and the uncertainty they caused, our customers
cautiously managed their inventories. In the second half of 2009, the industry began to recover,
driven by customers who had reduced their inventory levels in the face of the economic downturn and
government sponsored demand generation programs. As this recovery has gained momentum, our
quarterly sequential results have improved; however, until the general economy demonstrates marked
improvement, uncertainties will continue to affect businesses such as ours in a number of ways,
making it difficult to accurately forecast and plan our future business activities. In addition,
financial difficulties experienced by our suppliers or distributors could result in product delays,
increased accounts receivable defaults and inventory challenges. Similarly, the price of our
common stock is subject to volatility due to fluctuations in general market conditions, differences
in our results of operations from estimates and projections generated by the investment community,
and other factors beyond our control. ATMI undertakes no obligation to update publicly or review
any forward-looking statements, whether as a result of new information, future developments or
otherwise, except as required by law.
23
Company Overview
We believe we are among the leading suppliers of high performance materials, materials packaging
and materials delivery systems used worldwide in the manufacture of microelectronics devices. Our
products consist of front-end semiconductor performance materials, sub-atmospheric pressure gas
delivery systems for safe handling and delivery of toxic and hazardous gases to semiconductor
process equipment, high-purity materials packaging and dispensing systems that allow for the
reliable introduction of low volatility liquids and solids to microelectronics and
biopharmaceutical processes. ATMI targets both semiconductor and flat-panel display manufacturers,
whose products form the foundation of microelectronics technology rapidly proliferating through the
consumer products, information technology, automotive, healthcare, and communications industries.
The market for microelectronics devices is continually changing, which drives demand for new
products and technologies at lower cost. ATMIs customers include many of the leading semiconductor
and flat-panel display manufacturers in the world who target leading edge technologies. ATMI also
addresses an increasing number of critical materials handling needs for the life sciences markets.
Our proprietary containment, mixing, and bioreactor technologies are sold to the biotechnology and
laboratory markets, which we believe offer significant growth potential. ATMIs objective is to
meet the demands of our microelectronics and life sciences customers with solutions that maximize
the efficiency of their manufacturing processes, reduce capital costs, and minimize the time to
develop new products and integrate them into their processes.
Results of Operations
Executive Summary
In the first quarter of 2010, our revenues grew by 128.3 percent compared to the first quarter of
2009, primarily due to improved consumer electronics demand which drove higher wafer starts and
increased fab utilization during the first quarter of 2010. The growth in revenues which was seen
in all product lines was the most pronounced for our SDS products. In the first quarter of 2010,
our gross profit margin improved to 48.9 percent compared to 18.6 percent in the prior year
quarter, driven by stronger unit volumes, favorable product mix and lower asset impairment charges.
Primarily as a result of the revenue increases on improved demand, our net income increased to
$8.7 million ($0.27 per diluted share) in the first quarter of 2010 compared to a loss of $18.4
million ($0.59 per diluted share) in the first quarter of 2009. In 2010, we are planning for an $8
million to $10 million increase in research and development spending, inclusive of the $3.0 million
we deferred previously from 2009 to 2010.
Going forward, business and market uncertainties may continue to affect results. See Cautionary
Statements Under the Private Securities Litigation Reform Act of 1995 above and Managements
Discussion and Analysis in our Annual Report on
Form 10-K
for the fiscal year ended December 31,
2009 for a full discussion of the key factors which affect our business and operating results.
24
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
% Change
|
|
Quarter ended March 31,
|
|
$
|
85,311
|
|
|
$
|
37,362
|
|
|
|
128.3
|
%
|
Revenues grew in the first quarter of 2010 compared to the first quarter of 2009 across all of our
product lines and was primarily the result of higher customer demand driven by higher wafer starts
and fab utilization and increased demand in life sciences. This was a contrast from the March 2009
decline in revenues which occurred in both our microelectronics and life sciences product lines,
but was more pronounced in the microelectronics product lines, and was primarily the result of the
global economic downturn, and which was magnified by excess inventory in the SDS distribution
channel in the prior year. Revenues in our microelectronics product lines grew 142.1 percent to
$76.7 million in the first quarter of 2010 from $31.7 million in the first quarter of 2009.
Revenue growth in microelectronics was seen in all product lines and was consistent with overall market
growth associated with continued increased wafer starts and fab
utilization. First quarter 2010 revenues
also benefited from $3 million of customer inventory stocking of SDS products in anticipation of
planned import restrictions due to the upcoming World Expo in China.
The increase in consumer electronics
spending, the primary driver of wafer start growth and fab
utilization, which began in the second half of 2009, continued into
the first quarter of 2010. Revenues in our life sciences product lines increased 51.4
percent in the first quarter of 2010 to $8.6 million compared to $5.7 million in the first quarter
of 2009. The growth in life sciences revenues is primarily attributable to improved macroeconomic
conditions. We continue to experience typical pricing pressure in the marketplace; however, the
pricing pressure on certain of our more mature product lines has increased.
Gross Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
% of
|
|
|
|
|
|
|
% of
|
|
|
|
Amount
|
|
|
Revenues
|
|
|
Amount
|
|
|
Revenues
|
|
Quarter ended March 31,
|
|
$
|
41,689
|
|
|
|
48.9
|
%
|
|
$
|
6,931
|
|
|
|
18.6
|
%
|
Gross profit increased 501.5 percent to $41.7 million in the first quarter of 2010 from $6.9
million in the first quarter of 2009. Gross profit in our microelectronics product lines increased
640 percent to $37.6 million in the first quarter of 2010 from $5.1 million in the first quarter of
2009. Gross profit margins in our microelectronics product lines were approximately 49 percent in
the first quarter of 2010 compared to approximately 16 percent in the first quarter of 2009. The
increase in gross profit was driven by sales volume increases as a result of improved economic
conditions, favorable product mix and due to the effect of the charges recognized in the first
quarter of 2009 for asset impairments ($2.9 million) and an
increase in our reserves for excess and
obsolete inventories in the microelectronics product lines ($1.1 million). Gross profit in our
life sciences product lines increased 122 percent to $4.1 million in the first quarter of 2010
compared to $1.9 million in the first quarter of 2009. Gross profit margins in our life sciences
product lines were approximately 48 percent in the first quarter of 2010 up from approximately 33
percent in the first quarter of 2009, driven primarily by improved sales volume.
25
Research and Development Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
% of
|
|
|
|
|
|
|
% of
|
|
|
|
Amount
|
|
|
Revenues
|
|
|
Amount
|
|
|
Revenues
|
|
Quarter ended March 31,
|
|
$
|
9,723
|
|
|
|
11.4
|
%
|
|
$
|
11,651
|
|
|
|
31.2
|
%
|
Research and development (R&D) expense decreased 16.5 percent to $9.7 million in the first
quarter of 2010 from $11.7 million in the first quarter of 2009. The decrease in R&D
spending was primarily related to the $1.5 million
asset impairment charge recognized in the first quarter of 2009, and reduced High-Productivity
Development (HPD) licensing and maintenance contract costs ($0.9 million), partially offset by
higher employee incentives ($0.3 million) and increased employee travel ($0.2 million).
In 2010, we are planning for an $8 million to $10 million
increase in research and development spending related to our HPD
platform and activities, or approximately $3 million per quarter beginning in the second quarter of this year.
Selling, General and Administrative Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
% of
|
|
|
|
|
|
|
% of
|
|
|
|
Amount
|
|
|
Revenues
|
|
|
Amount
|
|
|
Revenues
|
|
Quarter ended March 31,
|
|
$
|
19,972
|
|
|
|
23.4
|
%
|
|
$
|
22,240
|
|
|
|
59.5
|
%
|
Selling, general and administrative expenses decreased 10.2 percent to $20.0 million in the first
quarter of 2010 from $22.2 million in the first quarter of 2009.
The decrease in the first quarter of
2010 is the result of significantly lower asset impairment charges
($1.6 million), reduced bad debt expense ($1.5 million) due to improving economic conditions, partially offset
by an increase of $1.1 million in employee-related costs which is primarily due to an increase in
current year employee incentives based on improved financial performance.
Operating Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
% of
|
|
|
|
|
|
|
% of
|
|
|
|
Amount
|
|
|
Revenues
|
|
|
Amount
|
|
|
Revenues
|
|
Quarter ended March 31,
|
|
$
|
11,994
|
|
|
|
14.1
|
%
|
|
$
|
(26,960
|
)
|
|
|
-72.2
|
%
|
We generated operating income of $12.0 million in the first quarter of 2010 compared to an
operating loss of $27.0 million in the first quarter of 2009. This change is from a variety of
factors, such as the significant improvement in revenues due to improved economic conditions, lower
asset impairment and other charges, and other items as noted above.
26
Interest Income
Interest income decreased to $0.2 million in the first quarter of 2010 from $0.5 million in the
first quarter of 2009 primarily caused by lower average yields.
Impairment of Investments
The first quarter of 2009 results included a $2.5 million impairment charge primarily related to a
write-down associated with our auction-rate security.
Other Income (Expense), Net
In the first quarter of 2010, we recognized losses of $0.3 million due to investments accounted for
by the equity method, partially offset by a $0.5 million gain from the sale of a marketable
equity security.
Provision (Benefit) for Income Taxes
|
|
|
|
|
|
|
|
|
|
|
Effective Rate
|
|
|
|
2010
|
|
|
2009
|
|
Quarter ended March 31,
|
|
|
29.2
|
%
|
|
|
(36.7
|
%)
|
We had an effective income tax rate of 29.2% for the three months ended March 31, 2010. In the
first quarter of 2010, we reduced the income tax provision by a net $0.3 million (including
interest) resulting from the reversal of previously established reserves (including interest)
related to a favorable settlement of a foreign subsidiarys income tax audit partially offset by a
charge due to equity-based compensation. Without these items our effective income tax rate would
have been 31.2%. In addition to the impact from these adjustments, the effective income tax rate
for the first quarter of 2010 differs from the U.S. federal statutory income tax rate of 35.0
percent primarily due to the mix of income attributable to the various countries in which we
conduct business. Our effective income tax rate is calculated based on full-year assumptions, and
does not include the benefit of the U.S. research and development (R&D) credit, due to its
expiration at December 31, 2009. If the U.S. R&D credit is reinstated retroactively to January 1,
2010, we anticipate a reduction to our effective income tax rate of at least one percentage point.
At March 31, 2010, the Company had recorded $5.9 million of unrecognized tax benefits. If any
portion of this $5.9 million is subsequently recognized, the Company will then include that portion in the
computation of its effective tax rate. On the Consolidated Balance Sheet, $5.7 million of this
amount is included in the caption Other non-current liabilities, together with $0.8 million of
accrued interest (net) on tax reserves and $0 accrued for penalties, while the balance of $0.2
million is included in the caption Other current liabilities, together with $0.1 million of
accrued interest (net) of tax reserves and $0 accrued for penalties.
It is reasonably possible that in the next 12 months, because of changes in facts and
circumstances, the unrecognized tax benefits for tax positions taken related to previously filed
tax returns may decrease. The range of possible decrease is $0.2 million to $1.5 million
(excluding interest). The Company has been audited in the United States by the Internal Revenue
Service through tax year 2007.
27
Liquidity and Capital Resources
We assess liquidity in terms of our ability to generate cash to fund our operating and investing
activities. Of particular importance to management are cash flows generated by operating activities
and cash used for capital expenditures.
Until required for use in the business, we invest our cash reserves in bank deposits, certificates
of deposit, money market securities, government and government-sponsored bond obligations, and
other interest bearing marketable debt instruments in accordance with our investment policy. We
have contracted with investment advisers to invest our funds consistent with our investment policy.
The value of our investments may be adversely affected by increases in interest rates, instability
in the global financial markets that reduces the liquidity of securities included in our portfolio,
and by other factors which may result in other-than-temporary declines in value of the investments,
which could impact our financial position and our overall liquidity. Each of these events may cause
us to record charges to reduce the carrying value of our investment portfolio or sell investments
for less than our acquisition cost. We attempt to mitigate these risks with the assistance of our
investment advisors by investing in high-quality securities and monitoring the overall risk profile
of our portfolio. We also maintain a well-diversified portfolio that limits our credit exposure
through concentration limits set within our investment policy.
We have financed our operating needs and capital expenditures through cash flows from our
operations, and existing cash. We expect to continue to finance current and planned operating
requirements principally through cash from operations, as well as existing cash resources. We
believe that these funds will be sufficient to meet our operating requirements for the foreseeable
future. However, we may, from time to time, seek additional funding through a combination of
equity and debt financings or from other sources.
Under existing tax laws, we plan to carry back the 2009 U.S. tax loss which is expected to result
in a $10.9 million cash refund in 2010.
During April 2010, ATMI entered into a loan arrangement with an equity-method investee to provide
approximately $2.7 million in funds to the investee for working capital needs.
We continue to invest in R&D to provide future sources of revenue through the development of new
products, as well as through additional uses for existing products. We consider R&D and the
development of new products and technologies an integral part of our growth strategy and a core
competency of the Company. Likewise, we continue to make capital expenditures in order to expand
and modernize manufacturing facilities around the globe and to drive efficiencies throughout the
organization. Additionally, management considers, on a continuing basis, potential acquisitions of
strategic technologies and businesses complementary to the Companys current business.
28
A summary of our cash flows follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
Cash provided by (used for):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities
|
|
$
|
19,545
|
|
|
$
|
7,467
|
|
Investing activities
|
|
|
(34,374
|
)
|
|
|
1,554
|
|
Financing activities
|
|
|
(1,142
|
)
|
|
|
(1,457
|
)
|
Effects of exchange rate changes
on cash and cash equivalents
|
|
|
73
|
|
|
|
347
|
|
Net cash provided by operating activities increased by $12.1 million primarily from:
|
|
Increase in net income of $27.0 million (to net income of $8.7 million)
|
|
|
Reduction in cash used related to changes in deferred income taxes of $3.3 million
|
|
|
Increase in cash provided by change in accounts payable of $2.2 million due primarily to
timing of payments
|
|
|
Decrease in cash provided by changes in accounts receivable of $14.1 million due to
significantly higher sales in 1Q 2010 compared to 1Q 2009
|
|
|
Increase in cash used related to changes in inventories of $2.9 million driven by stronger
year-over-year demand and resulting build of safety stock
|
|
|
Decrease in cash used related to changes in income taxes payable of $6.7 million driven by
prior year operating loss
|
Net cash used for investing activities increased by $35.9 million primarily from:
|
|
Increase in cash used for purchases of marketable securities of $24.7 million
|
|
|
Decrease in cash proceeds from sales and maturities of marketable securities of $11.5
million
|
Net cash used for financing activities decreased by $0.3 million primarily from:
|
|
Net repayments on the credit line of $0.4 million
|
Critical Accounting Estimates
There have been no material changes from the methodologies applied by management for critical
accounting estimates previously disclosed in ATMIs most recent Annual Report on Form 10-K.
Off-Balance Sheet Arrangements and Contractual Obligations
ATMI has entered into a pledge agreement with Anji Microelectronics Co., Ltd. (Anji) for the
issuance of a financial guarantee up to $4.0 million in order to assist Anji in securing bank
financing, which is to expire no later than June 30, 2010. ATMIs guarantee is secured by Anjis
assets and additional equity interests in Anjis operating subsidiaries. We believe that, based on
independent credit rating agency research, and our knowledge of their business, Anji continues
to be an acceptable credit risk. The fair value of the financial guarantee is $0.2 million at
March 31, 2010.
29
|
|
|
Item 3.
|
|
Quantitative and Qualitative Disclosures About Market Risk
|
Interest Rate Risk
. As of March 31, 2010, the Companys cash and cash equivalents and
marketable securities included bank deposits, certificates of deposit, money market securities,
government and government-sponsored bond obligations. As of March 31, 2010, an increase of 100
basis points in interest rates on securities with maturities greater than one year would reduce the
fair value of the Companys marketable securities portfolio by approximately $0.7 million.
Conversely, a reduction of 100 basis points in interest rates on securities with maturities greater
than one year would increase the fair value of the Companys marketable securities portfolio by
approximately $0.8 million.
Foreign Currency Exchange Risk
. Most of the Companys sales are denominated in U.S. dollars
and as a result, the Company does not have any significant exposure to foreign currency exchange
risk with respect to sales made. Approximately 30 percent, of the Companys revenues for the
three-month period ended March 31, 2010 were denominated in Japanese Yen (JPY), Korean Won, and
Euros, but a majority of the product is sourced in U.S. dollars. Management periodically reviews
the Companys exposure to currency fluctuations. This exposure may change over time as business
practices evolve and could have a material effect on the Companys financial results in the future.
We use forward foreign exchange contracts to hedge specific exposures relating to intercompany
payments and anticipated, but not yet committed, intercompany sales (primarily parent company
export sales to subsidiaries at pre-established U.S. dollar prices). The terms of the forward
foreign exchange contracts are generally matched to the underlying transaction being hedged, and
are typically under one year.
Because such contracts are directly associated with identified transactions, they are an effective
hedge against fluctuations in the value of the foreign currency underlying the transaction. We
recognize in earnings (Other income (expense), net) changes in the fair value of all derivatives
designated as fair value hedges that are highly effective and recognize in accumulated other
comprehensive income (loss) any changes in the fair value of all derivatives designated as cash
flow hedges that are highly effective and meet the other related accounting requirements. We
generally do not hedge overseas sales denominated in foreign currencies or translation exposures.
Further, we do not enter into derivative instruments for trading or speculative purposes and all of
our derivatives were highly effective throughout the periods reported.
At March 31, 2010, we held forward foreign currency exchange contracts as fair value hedges with
notional amounts totaling $9.1 million, which are being used to hedge recorded foreign denominated
liabilities and which will be settled in either JPY, EUR or New Taiwan Dollars (NTD). The
functional currency of our Taiwanese subsidiary is U.S. dollars. We have opened a foreign currency
position to hedge a significant local currency prepayment made by our Taiwanese subsidiary related
to income tax exposures. Holding other variables constant, if there were a 10 percent decline in
foreign exchange rates for the JPY, NTD and EUR, the fair market value of the foreign exchange
contracts outstanding at March 31, 2010 would decrease by approximately $1.8 million, which would
be expected to be fully offset by foreign exchange
gains on the amounts being hedged. The effect of an immediate 10 percent change in other foreign
exchange rates would not be expected to have a material effect on the Companys future operating
results or cash flows.
30
Changes in Market Risk
. The recent global recession, driven initially by the crisis in
global credit and financial markets, has caused extreme disruptions, including severely diminished
liquidity and credit availability, declines in consumer confidence, increases in unemployment
rates, and uncertainty about economic stability. There can be no assurance that there will not be
further deterioration in credit and financial markets and confidence in economic conditions. These
economic uncertainties affect businesses such as ours in a number of ways, making it difficult to
accurately forecast and plan our future business activities. The current constriction of credit in
financial markets may continue to lead consumers and businesses to postpone spending, which may
cause our customers to continue to aggressively manage their inventories and delay their future
orders with us. In addition, financial difficulties experienced by our suppliers or distributors
could result in product delays, increased accounts receivable defaults and inventory challenges.
|
|
|
Item 4.
|
|
Controls and Procedures
|
Our management, with the participation of our Chief Executive Officer (CEO) and Chief Financial
Officer (CFO), has evaluated the effectiveness of our disclosure controls and procedures (as such
term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the
period covered by this Form 10-Q. There are inherent limitations to the effectiveness of any system
of disclosure controls and procedures, including the possibility of human error and the
circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure
controls and procedures can only provide reasonable assurance of achieving their control
objectives. Based upon this evaluation, our CEO and CFO concluded that, as of the end of the
period covered by this Form 10-Q, our disclosure controls and procedures were effective in that
they provided reasonable assurance that the information we are required to disclose in the reports
we file or submit under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the applicable rules and forms, and that it is accumulated and
communicated to our management, including our CEO and CFO, as appropriate, to allow timely
decisions regarding required disclosure.
We routinely review our internal control over financial reporting and from time to time make
changes intended to enhance the effectiveness of our internal control over financial reporting.
There have been no changes to our internal control over financial reporting as such term is defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act during the first quarter of fiscal 2010
that we believe materially affected, or will be reasonably likely to materially affect, our
internal control over financial reporting.
31
PART
II OTHER INFORMATION
|
|
|
Item 1.
|
|
Legal Proceedings
|
ATMI is, from time to time, subject to legal actions, governmental audits, and proceedings relating
to various matters incidental to its business, including contract disputes, intellectual property
disputes, product liability claims, employment matters, export and trade matters, and environmental
claims. While the outcome of such matters cannot be predicted with certainty, in the opinion of
management, after reviewing such matters and consulting with ATMIs counsel and considering any
applicable insurance or indemnifications, any liability which may ultimately be incurred is not
expected to materially affect ATMIs consolidated financial position, cash flows or results of
operations.
There have been no material changes to the Risk Factors, which are described in more detail in our
Annual Report on Form 10-K for the fiscal year ended December 31, 2009, and our other subsequent
filings with the Securities and Exchange Commission and in materials incorporated by reference in
these filings. See also Cautionary Statements Under the Private Securities Litigation Reform Act
of 1995 within this Form 10-Q.
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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Purchases of Equity Securities There were no share repurchases during the three months ended
March 31, 2010 of any of our securities registered under Section 12 of the Exchange Act, by or on
behalf of us, or any affiliated purchaser. We withheld 34,935 shares (at an average price of
$18.35 per share) through net share settlements during the three months ended March 31, 2010, upon
the vesting of restricted stock awards to cover minimum tax withholding obligations.
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Item 5.
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Other Information
|
None.
32
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31.1
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|
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Certification of the Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
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|
|
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31.2
|
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Certification of the Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
|
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32
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Certifications of the Chief Executive Officer and Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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33
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
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ATMI, Inc.
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April 21, 2010
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|
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By:
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/s/ Douglas A. Neugold
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|
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Douglas A. Neugold
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|
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President and Chief Executive Officer
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|
|
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By:
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/s/ Timothy C. Carlson
|
|
|
|
Timothy C. Carlson
|
|
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|
Executive Vice President,
Chief Financial Officer and Treasurer
|
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34
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