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 June 30, 2008
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 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
þ
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Accelerated filer
o
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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 June 30, 2008 was
31,252,024.
ATMI, INC.
Quarterly Report on Form 10-Q
For the Quarter Ended June 30, 2008
TABLE OF CONTENTS
2
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
ATMI, Inc.
Consolidated Balance Sheets
(in thousands, except per share data)
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June 30,
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December 31,
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2008
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2007
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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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46,105
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$
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104,807
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Marketable securities, current portion
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51,752
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88,890
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Accounts receivable, net of allowances of $672 and $670, respectively
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59,130
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61,405
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Inventories, net
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56,630
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48,885
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Income taxes receivable
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1,104
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Deferred income taxes
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11,095
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9,577
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Prepaid expenses and other current assets
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12,532
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12,755
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Total current assets
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237,244
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327,423
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Property, plant, and equipment, net
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127,127
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106,171
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Goodwill
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33,339
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13,730
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Other intangibles, net
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24,338
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17,407
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Other long-term assets
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30,288
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27,510
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Total assets
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$
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452,336
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$
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492,241
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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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22,339
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$
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22,735
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Accrued liabilities
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6,480
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8,380
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Accrued salaries and related benefits
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7,461
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10,961
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Income taxes payable
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164
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2,647
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Other current liabilities
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3,910
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2,479
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Total current liabilities
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40,354
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47,202
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Deferred income taxes, non-current
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2,374
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912
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Other long-term liabilities
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10,232
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9,744
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Commitments and contingencies (Note 5)
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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 $.01 per share: 100,000 shares authorized;
39,182 and 38,981 issued and 31,252 and 33,164 outstanding in 2008
and 2007, respectively
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392
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390
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Additional paid-in capital
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418,121
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412,423
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Treasury stock at cost, 7,930 and 5,817 shares in 2008 and 2007,
respectively
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(227,080
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)
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(168,844
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)
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Retained earnings
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201,037
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180,973
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Accumulated other comprehensive income
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6,906
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9,441
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Total stockholders equity
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399,376
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434,383
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Total liabilities and stockholders equity
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$
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452,336
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$
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492,241
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See accompanying notes.
3
ATMI, Inc.
Consolidated Statements of Income
(unaudited)
(in thousands, except per share data)
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Three Months Ended
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June 30,
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2008
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2007
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Revenues
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$
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89,487
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$
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92,432
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Cost of revenues
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43,199
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47,247
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Gross profit
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46,288
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45,185
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Operating expenses:
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Research and development
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9,583
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7,298
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Selling, general and administrative
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23,330
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26,238
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Total operating expenses
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32,913
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33,536
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Operating income
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13,375
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11,649
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Interest income
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818
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1,963
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Other expense, net
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(291
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)
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(47
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)
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Income before income taxes
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13,902
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13,565
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Provision for income taxes
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4,223
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4,294
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Net income
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$
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9,679
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$
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9,271
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Earnings per common share basic
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$
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0.31
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$
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0.27
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Weighted average shares outstanding basic
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31,234
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34,455
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Earnings per common share diluted
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$
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0.30
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$
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0.26
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Weighted average shares outstanding diluted
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32,091
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35,369
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See accompanying notes.
4
ATMI, Inc.
Consolidated Statements of Income
(unaudited)
(in thousands, except per share data)
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Six Months Ended
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June 30,
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2008
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2007
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Revenues
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$
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182,284
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$
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174,586
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Cost of revenues
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89,630
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90,127
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Gross profit
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92,654
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84,459
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Operating expenses:
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Research and development
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18,075
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14,544
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Selling, general and administrative
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46,035
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50,790
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Total operating expenses
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64,110
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65,334
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Operating income
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28,544
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19,125
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Interest income
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1,771
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3,809
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Other expense, net
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(982
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)
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(2
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)
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Income before income taxes
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29,333
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22,932
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Provision for income taxes
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9,269
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7,338
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Net income
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$
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20,064
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$
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15,594
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Earnings per common share basic
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$
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0.63
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$
|
0.45
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Weighted average shares outstanding basic
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31,621
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34,562
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Earnings per common share diluted
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$
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0.62
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$
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0.44
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Weighted average shares outstanding diluted
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32,453
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|
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35,486
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See accompanying notes.
5
ATMI, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(unaudited)
(in thousands)
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Accumulated
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Other
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Additional
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Comprehensive
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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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Income
|
|
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|
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Stock
|
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Capital
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Stock
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Earnings
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(Loss)
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Total
|
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|
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|
|
|
|
|
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Balance at December 31, 2007
|
|
$
|
390
|
|
|
$
|
412,423
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|
|
$
|
(168,844
|
)
|
|
$
|
180,973
|
|
|
$
|
9,441
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|
|
$
|
434,383
|
|
Issuance of 65 shares of common
stock pursuant to the exercise
of employee stock options
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|
|
1
|
|
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|
1,486
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|
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|
|
|
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|
|
|
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|
1,487
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|
Purchase of 2,112 treasury shares
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|
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(58,236
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)
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|
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|
|
|
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|
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(58,236
|
)
|
Equity based compensation
|
|
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|
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|
4,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,163
|
|
Income tax benefit from
equity-based compensation
|
|
|
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
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|
Other
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,064
|
|
|
|
|
|
|
|
20,064
|
|
Reclassification adjustment
related to marketable securities
sold in unrealized gain
position, net of $859 tax
provision
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,462
|
)
|
|
|
(1,462
|
)
|
Change in fair value on
available-for-sale securities
net of deferred income tax of
$483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(823
|
)
|
|
|
(823
|
)
|
Change in fair value of
derivative financial
instruments, net of deferred
income tax of $96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(164
|
)
|
|
|
(164
|
)
|
Cumulative translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(86
|
)
|
|
|
(86
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2008
|
|
$
|
392
|
|
|
$
|
418,121
|
|
|
$
|
(227,080
|
)
|
|
$
|
201,037
|
|
|
$
|
6,906
|
|
|
$
|
399,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
6
ATMI, Inc.
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
Operating activities
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
20,064
|
|
|
$
|
15,594
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
11,259
|
|
|
|
10,891
|
|
Provision for inventory obsolescence
|
|
|
686
|
|
|
|
361
|
|
Deferred income taxes
|
|
|
944
|
|
|
|
(930
|
)
|
Income tax benefit from share-based payment arrangements
|
|
|
50
|
|
|
|
627
|
|
Excess tax benefit from share-based payment arrangements
|
|
|
(239
|
)
|
|
|
(412
|
)
|
Equity-based compensation expense
|
|
|
4,163
|
|
|
|
4,261
|
|
Realized gain on sale of marketable securities
|
|
|
(1,967
|
)
|
|
|
|
|
Loss from equity-method investments
|
|
|
785
|
|
|
|
319
|
|
Impairment on investments
|
|
|
1,791
|
|
|
|
|
|
Other
|
|
|
10
|
|
|
|
13
|
|
Changes in operating assets and liabilities, net of effect of acquisition:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
3,494
|
|
|
|
(4,131
|
)
|
Inventories
|
|
|
(7,487
|
)
|
|
|
1,504
|
|
Other assets
|
|
|
(284
|
)
|
|
|
(891
|
)
|
Accounts payable
|
|
|
(690
|
)
|
|
|
876
|
|
Accrued expenses
|
|
|
(6,115
|
)
|
|
|
(5,560
|
)
|
Income taxes
|
|
|
(1,273
|
)
|
|
|
2,907
|
|
Other liabilities
|
|
|
1,600
|
|
|
|
5,438
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
26,791
|
|
|
|
30,867
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(30,841
|
)
|
|
|
(13,742
|
)
|
Equity-basis investment
|
|
|
|
|
|
|
(1,362
|
)
|
Acquisition, net of cash acquired
|
|
|
(27,673
|
)
|
|
|
|
|
Purchases of marketable securities
|
|
|
(14,875
|
)
|
|
|
(131,718
|
)
|
Proceeds from sales or maturities of marketable securities
|
|
|
44,810
|
|
|
|
121,287
|
|
|
|
|
|
|
|
|
Net cash used for investing activities
|
|
|
(28,579
|
)
|
|
|
(25,535
|
)
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
Excess tax benefit from share-based payment arrangements
|
|
|
239
|
|
|
|
412
|
|
Purchases of treasury stock
|
|
|
(59,212
|
)
|
|
|
(22,872
|
)
|
Proceeds from exercise of stock options
|
|
|
1,487
|
|
|
|
7,392
|
|
Credit line borrowings
|
|
|
2,948
|
|
|
|
|
|
Credit line repayments
|
|
|
(1,802
|
)
|
|
|
|
|
Other
|
|
|
(249
|
)
|
|
|
(37
|
)
|
|
|
|
|
|
|
|
Net cash used for financing activities
|
|
|
(56,589
|
)
|
|
|
(15,105
|
)
|
|
|
|
|
|
|
|
Effects of exchange rate changes on cash and cash equivalents
|
|
|
(325
|
)
|
|
|
(606
|
)
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(58,702
|
)
|
|
|
(10,379
|
)
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
104,807
|
|
|
|
73,596
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
46,105
|
|
|
$
|
63,217
|
|
|
|
|
|
|
|
|
See accompanying notes.
7
ATMI, Inc.
Notes To Consolidated Interim Financial Statements
(unaudited)
1. Description of Business
ATMI, Inc. (the Company, ATMI, or we) believes it is a leading supplier of high
performance materials, materials packaging and materials delivery systems used worldwide in the
manufacture of microelectronics devices. ATMI targets both semiconductor and flat-panel display
manufacturers, whose products form the foundation of microelectronics technology rapidly
proliferating through the information technology, automotive, communication, and consumer products
industries. The market for microelectronics devices is growing and continually changing, which
drives demand for new products and technologies at lower cost. ATMIs objective is to meet the
demands of microelectronics manufacturers with solutions that maximize the efficiency of their
manufacturing processes, reduce capital costs, and minimize the time to ramp new processes and
deliver new products. 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 high-purity materials handling and dispensing systems now include the biotechnology and
laboratory markets, which we believe offer significant growth potential.
2. Significant Accounting Policies and Other Information
Basis of Presentation
The accompanying consolidated interim financial statements of ATMI, Inc. at June 30, 2008 and
for the quarters and six-month periods ended June 30, 2008 and 2007 are unaudited, but in the
opinion of management include all adjustments (consisting only of normal recurring 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, 2007 audited consolidated financial statements and notes thereto included in the
Companys Annual Report on Form 10-K. 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, 2007 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.
8
Earnings Per Share
This table shows the computation of basic and diluted earnings per share (in thousands, except
per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
9,679
|
|
|
$
|
9,271
|
|
|
$
|
20,064
|
|
|
$
|
15,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic earnings per share
- weighted average shares
|
|
|
31,234
|
|
|
|
34,455
|
|
|
|
31,621
|
|
|
|
34,562
|
|
Dilutive effect of employee stock options
|
|
|
465
|
|
|
|
558
|
|
|
|
446
|
|
|
|
587
|
|
Dilutive effect of restricted stock
|
|
|
392
|
|
|
|
356
|
|
|
|
386
|
|
|
|
337
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for diluted earnings per
common share - weighted average shares
|
|
|
32,091
|
|
|
|
35,369
|
|
|
|
32,453
|
|
|
|
35,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share-basic
|
|
$
|
0.31
|
|
|
$
|
0.27
|
|
|
$
|
0.63
|
|
|
$
|
0.45
|
|
Earnings per share-assuming dilution
|
|
$
|
0.30
|
|
|
$
|
0.26
|
|
|
$
|
0.62
|
|
|
$
|
0.44
|
|
Stock options for 610,000 shares and 766,000 shares for the quarter and six months ended June
30, 2008, respectively, were excluded in the computation of diluted earnings per share because the
exercise prices were greater than the average market price of the common stock. Stock options for
333,000 shares and 325,000 shares for the quarter and six months ended June 30, 2007, respectively,
were excluded in the computation of diluted earnings per share because the exercise prices were
greater than the average market price of the common stock.
Inventories, Net
Inventories at June 30, 2008 and December 31, 2007 were (in thousands):
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2007
|
|
Raw materials
|
|
$
|
14,979
|
|
|
$
|
16,005
|
|
Work in process
|
|
|
1,286
|
|
|
|
1,063
|
|
Finished goods
|
|
|
42,568
|
|
|
|
34,134
|
|
|
|
|
|
|
|
|
Gross inventories
|
|
|
58,833
|
|
|
|
51,202
|
|
Excess and obsolescence reserve
|
|
|
(2,203
|
)
|
|
|
(2,317
|
)
|
|
|
|
|
|
|
|
Inventories, net
|
|
$
|
56,630
|
|
|
$
|
48,885
|
|
|
|
|
|
|
|
|
9
Credit Line
During the second quarter of 2008, our wholly-owned Japanese subsidiary entered into a
revolving line of credit agreement with a major Japanese bank for approximately $8.5 million (900
million Japanese Yen) for the primary purpose of cost-effectively funding the purchase of high
productivity development tools and related equipment and local working capital needs in a favorable
interest rate environment. The line of credit is guaranteed by ATMI, Inc. At June 30, 2008, we had
a balance outstanding on this line of credit of $1.1 million.
Income Taxes
We have not provided for U.S. federal income and foreign withholding taxes on approximately
$38.0 million of undistributed earnings from non-U.S. operations as of June 30, 2008, 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.
Our effective income tax rate was 30.4% and 31.6% for the three and six month periods ended
June 30, 2008, respectively. The effective income tax rates differ from the U.S. federal statutory
income tax rate of 35.0% primarily due to the mix of income attributable to the various countries
in which we conduct business, tax-exempt interest income, and research and development tax credits
in Taiwan.
It is reasonably possible that in the next three 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 $0.3 million to $4.4 million. The
Company has been audited by the Internal Revenue Service through tax year 2005.
Goodwill and Other Intangible Assets
Goodwill and Other intangibles balances at June 30, 2008 and December 31, 2007 were (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patents &
|
|
|
|
|
|
|
Total Other
|
|
|
|
Goodwill
|
|
|
Trademarks
|
|
|
Other
|
|
|
Intangibles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross amount as of December 31, 2007
|
|
$
|
13,730
|
|
|
$
|
27,533
|
|
|
$
|
5,969
|
|
|
$
|
33,502
|
|
Accumulated Amortization
|
|
|
|
|
|
|
(11,367
|
)
|
|
|
(4,728
|
)
|
|
|
(16,095
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2007
|
|
$
|
13,730
|
|
|
$
|
16,166
|
|
|
$
|
1,241
|
|
|
$
|
17,407
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount as of June 30, 2008
|
|
$
|
33,339
|
|
|
$
|
35,142
|
|
|
$
|
7,270
|
|
|
$
|
42,412
|
|
Accumulated Amortization
|
|
|
|
|
|
|
(13,056
|
)
|
|
|
(5,018
|
)
|
|
|
(18,074
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2008
|
|
$
|
33,339
|
|
|
$
|
22,086
|
|
|
$
|
2,252
|
|
|
$
|
24,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
Changes in carrying amounts of Goodwill and Other intangibles for the six months ended June
30, 2008 were (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patents &
|
|
|
|
|
|
|
Total Other
|
|
|
|
Goodwill
|
|
|
Trademarks
|
|
|
Other
|
|
|
Intangibles
|
|
|
Balance at December 31, 2007
|
|
$
|
13,730
|
|
|
$
|
16,166
|
|
|
$
|
1,241
|
|
|
$
|
17,407
|
|
Acquisition
|
|
|
19,677
|
|
|
|
7,600
|
|
|
|
1,300
|
|
|
|
8,900
|
|
Amortization
|
|
|
|
|
|
|
(1,688
|
)
|
|
|
(281
|
)
|
|
|
(1,969
|
)
|
Other, including foreign currency translation
|
|
|
(68
|
)
|
|
|
8
|
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2008
|
|
$
|
33,339
|
|
|
$
|
22,086
|
|
|
$
|
2,252
|
|
|
$
|
24,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On January 4, 2008, ATMI acquired all of the outstanding capital stock of LevTech, Inc.
(LevTech), a market-leading provider of disposable mixing technologies to the biotechnology and
pharmaceutical industries based in Lexington, Kentucky, for a cash payment of approximately $27.7
million, including direct acquisition costs. The acquisition was recorded under the purchase method
of accounting and, accordingly, LevTechs results of operations are included in the Companys
financial statements from the date of acquisition (January 4, 2008). The purchase price was
allocated to assets acquired and liabilities assumed based on a preliminary evaluation of their
respective fair values at the date of acquisition as summarized below (in thousands).
|
|
|
|
|
Identified intangible assets
|
|
$
|
8,900
|
|
Net deferred taxes
|
|
|
(1,052
|
)
|
Net assets acquired
|
|
|
148
|
|
Goodwill
|
|
|
19,677
|
|
|
|
|
|
Purchase price, net of cash acquired
|
|
$
|
27,673
|
|
|
|
|
|
The excess of the purchase price over the preliminary assessment of fair value of identifiable
net assets acquired has been recorded as goodwill. Net assets acquired is presented net of cash
acquired of $0.3 million. $7.6 million of the identified intangible assets is included in patents
and trademarks and will be amortized using the straight-line method over periods ranging from 7 to
10 years. $1.3 million of identified intangible assets, related to customer relationships, is
included in other intangibles and will be amortized using the straight-line method over 13 years.
Goodwill acquired is not deductible for income tax purposes.
Recently Issued Accounting Pronouncements
In March 2008, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 161,
Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement
No. 133 (SFAS 161). This new standard requires enhanced disclosures for derivative instruments,
including those used in hedging activities. It is effective for fiscal years and interim periods
beginning after November 15, 2008, and will be applicable to the Company in the first quarter of
fiscal 2009. We have determined that it will not have a significant effect on the determination or
reporting of our financial results.
11
Recently Adopted Accounting Standards
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, (SFAS 157). This
statement defines fair value, establishes a framework for measuring fair value and expands the
related disclosure requirements. This statement applies under other accounting pronouncements that
require or permit fair value measurements. On February 6, 2008, the FASB deferred the effective
date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a recurring basis. These
nonfinancial items include assets and liabilities such as reporting units measured at fair value in
a goodwill impairment test and nonfinancial assets acquired and liabilities assumed in a business
combination. SFAS No. 157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007 and was adopted by the Company effective January 1, 2008. The effect of
adoption of SFAS No. 157 is discussed in Note 6 Fair Value.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets
and Financial Liabilities Including an amendment of FASB Statement No. 115, which permits
entities to elect to measure many financial instruments and certain other items at fair value that
are not currently required to be measured at fair value. This election is irrevocable. SFAS
No. 159 was effective in the first quarter of fiscal 2008. The Company did not elect to apply the
fair value option to any of its financial instruments.
Other
As a result of the redirection of certain supply chain and operations activities associated
with the 2007 organizational realignment (which we announced in September 2007, but which became
effective in January 2008), certain associated expenses have been redirected from selling, general,
and administrative expense (SG&A) to cost of revenues in 2008. Redirected activities include
those functions in two of our locations that were previously focused on supporting and
administering plant operations, whereas in the current organization, those activities have been
redirected and realigned to improve our global supply chain capabilities to improve overall
customer satisfaction. This change reduced gross margin and SG&A as a percentage of revenues by
approximately 1.8 percentage points. We expect this change to have a 1.5 percentage point effect
on gross margins and SG&A, as a percentage of revenues, for the full-year 2008.
During 2007, a fire at a contract manufacturer in Taiwan destroyed approximately $1.8 million
of ATMIs assets, which has been recovered from our insurers. As a result of the fire, we filed a
business interruption claim with our insurance carrier during the second quarter of 2008. However,
at this time we are unable to estimate the amount or timing of any potential recoveries against
that claim.
12
3. Equity-Based Compensation
Summary of Plans
This table shows the number of shares approved by shareholders for each equity-based
compensation plan and the number of shares that remain available for equity awards at June 30, 2008
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
# of Shares
|
|
|
Shares
|
|
Stock Plan
|
|
Approved
|
|
|
Available
|
|
|
|
|
|
|
|
|
|
|
2000 Stock Plan (1)
|
|
|
2,000
|
|
|
|
313
|
|
2003 Stock Plan (1)
|
|
|
3,000
|
|
|
|
1,132
|
|
Employee Stock Purchase Plan (2)
|
|
|
1,000
|
|
|
|
291
|
|
|
|
|
|
|
|
|
Totals
|
|
|
6,000
|
|
|
|
1,736
|
|
|
|
|
|
|
|
|
|
|
|
(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)
|
|
Effective January 1, 2007, this plan was amended such that 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, as that term is defined by SFAS No. 123(R).
|
The Company issued 57,460 and 305,148 shares of common stock as a result of exercises by
employees under its employee stock option plans in the first six months of 2008 and 2007,
respectively. The Company issued 252,632 and 226,354 shares of restricted stock that include only
a time-based vesting requirement in the first six months of 2008 and 2007, respectively.
The Company issued 144,187 and 92,041 shares of restricted stock to its executive officers
that include performance-based as well as time-based vesting requirements in the first six months
of 2008 and 2007, respectively. During 2007, 14,740 of the 2007 awards were forfeited due to
terminations of employment by two executive officers. In the first six months of 2008, 73,630 of
the 2007 awards were forfeited as a result of the failure to achieve the operating income growth
targets established by the Board of Directors for 2007.
13
4. Comprehensive Income
The components of comprehensive income are (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
9,679
|
|
|
$
|
9,271
|
|
|
$
|
20,064
|
|
|
$
|
15,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative translation adjustment
|
|
|
(1,541
|
)
|
|
|
512
|
|
|
|
(86
|
)
|
|
|
500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of
available-for-sale securities
(net of tax benefit of $421 and
$483 in 2008 and tax provision
of $493 and $554 in 2007)
|
|
|
(716
|
)
|
|
|
840
|
|
|
|
(823
|
)
|
|
|
943
|
|
Change in fair value of
derivative financial instruments
(net of tax provision (benefit)
of $194 and ($96) in 2008 and $0
and $0 in 2007)
|
|
|
331
|
|
|
|
|
|
|
|
(164
|
)
|
|
|
|
|
Reclassification adjustment
related to marketable
securities sold (net of tax benefit of $857 and $859
in 2008 and tax provision of $35 and $52 in 2007) (1)
|
|
|
(1,460
|
)
|
|
|
60
|
|
|
|
(1,462
|
)
|
|
|
89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
$
|
6,293
|
|
|
$
|
10,683
|
|
|
$
|
17,529
|
|
|
$
|
17,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Determined based on the specific identification method.
|
5. Commitments and Contingencies
In July 2003, a subsidiary of ATMI filed suit against Praxair, Inc., the parent company of
Praxair Electronics, in the United States District Court for the Southern District of New York,
charging it with infringing two patents ATMI holds for certain gas storage and delivery systems
based on the marketing of Praxairs UpTime system. In April 2006, the New York District Court
granted Praxairs request for summary judgment that all asserted claims in two of ATMIs patents
are invalid, and that decision was upheld on appeal in April 2007.
In December 2003, Praxair, Inc. and Praxair Technology, Inc. filed suit against ATMI, Inc. and
Advanced Technology Materials, Inc. in the United States District Court for the District of
Delaware alleging infringement of three patents owned by Praxair Technology, Inc. related to
certain gas storage and delivery systems. Praxair was seeking damages and an injunction against
ATMI marketing its VAC system. In 2005, the Delaware District Court invalidated one of Praxairs
patents by summary judgment. In June 2007, the Delaware District Court held that the two remaining
Praxair patents were unenforceable due to inequitable conduct. This positive outcome triggered
ATMIs payment obligation pursuant to a limited contingent fee arrangement with certain outside
counsel. As a result, we recognized $1.1 million of expense in the second quarter of 2007, which
was recorded in selling, general and administrative expenses. In July 2007, Praxair appealed the
decision to the Federal Circuit Court.
In 2005, a subsidiary of ATMI filed suit against Praxair, Inc. and Praxair GmbH in Dusseldorf,
Germany, charging infringement of a patent ATMI holds for certain gas storage and delivery systems.
Since the third quarter of 2006, a preliminary injunction against Praxair selling or supplying its
UpTime system in Germany was in effect. In March 2007, ATMI voluntarily withdrew the preliminary
injunction in view of customer concerns, among other considerations.
A decision in favor of Praxair was rendered by the trial court in November 2006 on one of the
asserted patent claims, which was appealed.
14
In August 2006, a subsidiary of ATMI filed suit in Belgium against Praxair, Inc. and Belgian
affiliates of Praxair, Inc. charging infringement of a patent ATMI holds for certain gas storage
and delivery systems. A preliminary injunction is in place against the public marketing of the
UpTime system worldwide and, in September 2007, ATMI was awarded EUR 207,000 for Praxairs
violation of that injunction. The award was received by ATMI during the first quarter of 2008 and
has been recorded as an offset to selling, general and administrative expenses in the consolidated
statement of income. In addition, a preliminary injunction has been in place against Praxairs
supply of UpTime in several European countries.
In February 2008, Praxair, Inc. filed suit against ATMI, Inc. and Advanced Technology
Materials, Inc. in the United States District Court for the Northern District of California
alleging violations of federal antitrust law and state law relating to a gas supply arrangement and
patent litigation activities in the U.S. and Europe. Praxair was seeking a preliminary injunction
and other damages, which preliminary injunction was denied by the court in June.
On July 11, 2008, ATMI entered into a global settlement agreement with Praxair, Inc. that
resolved the foregoing actions between the parties. The Delaware litigation is continuing by
agreement of the parties, with damages stipulated so that each partys maximum liability would be
$100,000, depending on the form of the decision. The parties will be free to market and sell
worldwide their respective mechanical, sub-atmospheric delivery container products that were the
subject of the disputes.
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, 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.
During 2007, ATMI entered into a pledge agreement with Anji Microelectronics Co., Ltd.
(Anji), an equity-method investee, for the issuance of a 3-year standby letter of credit up to
$3.1 million in order to assist Anji in securing bank financing. The standby letter of credit has
been secured by Anjis assets and additional equity interests in Anjis operating subsidiaries.
Included in Other long-term liabilities at June 30, 2008 is $0.2 million representing the fair
value of the guarantee. As of June 30, 2008, Anji has drawn down $1.9 million against the line of
credit secured by the letter of credit.
15
6. Fair Value
The Company adopted SFAS No. 157 effective January 1, 2008 for financial assets and
liabilities measured on a recurring basis. SFAS No. 157 applies to all financial assets and
financial liabilities that are being measured and reported on a fair value basis. There was no
impact upon adoption of SFAS No. 157 to the consolidated financial statements. SFAS No. 157
requires disclosure that establishes a framework for measuring fair value and expands disclosure
about fair value measurements. The statement requires fair value measurement be classified and
disclosed in one of the following three categories:
Level 1
- Quoted prices in active markets for identical assets and liabilities. Level 1
assets and liabilities consist of cash, certificates of deposit, 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, including forward foreign currency exchange contracts
that are primarily measured based on the foreign currency spot and forward rates quoted by the
banks or foreign currency dealers.
Level 3
- Unobservable inputs to the valuation methodology that are significant to the
measurement of fair value of assets or liabilities. Level 3 assets consisted of one Massachusetts
Educational Financing Authority auction rate security, comprising part of a student loan portfolio,
with a par value of $5.0 million, a stated maturity date in 2038, and a reset date of March 12,
2009. During March 2008, the annual auction for this security failed, and as a result, the
tax-exempt coupon rate of interest was reset to the default interest rate of 6.55% from its
previous rate of 3.75%. We will not have access to these funds 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. Currently, despite a AA credit rating and a premium coupon
rate, no secondary market is active given the current turmoil in the credit markets. At June 30,
2008 we recorded a temporary impairment charge of $0.7 million within Accumulated Other
Comprehensive Income 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.
16
Assets / Liabilities Measured at Fair Value on a Recurring Basis
This table summarizes the Companys assets (liabilities) measured at fair value on a recurring
basis at June 30, 2008 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measured Using
|
|
|
|
|
|
|
|
Quoted
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
Prices in
|
|
|
Observ-
|
|
|
Unobser-
|
|
|
|
|
|
|
|
Active
|
|
|
able
|
|
|
vable
|
|
|
|
|
|
|
|
Markets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
Total
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash
equivalents, and
available-for-sale
marketable securities
|
|
$
|
102,206
|
|
|
$
|
58,885
|
|
|
$
|
38,972
|
|
|
$
|
4,349
|
|
Derivative liabilities
|
|
$
|
(236
|
)
|
|
$
|
(236
|
)
|
|
|
|
|
|
|
|
|
The company recorded gains of $0.8 million and $0.2 million for the three and six-month
periods ended June 30, 2008, respectively, and gains of $0.4 million and $0.1 million for the three
and six-month periods ended June 30, 2007, respectively, under the caption Other expense, net in
the consolidated statements of income related to changes in the fair value of its financial
instruments for forward foreign currency exchange contracts accounted for as fair value hedges.
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 six-months ended June 30,
2008 (in thousands). There were no gains or losses due to changes in fair value, including both
realized and unrealized gains and losses, recorded in net income for Level 3 assets and liabilities
for the three and six-month periods ended June 30, 2008.
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2008
|
|
|
|
Fair Value Measurements Using
|
|
|
|
Significant Unobservable Inputs
|
|
|
|
(Level 3)
|
|
|
|
Available-For-
|
|
|
|
|
|
|
Sale
|
|
|
|
|
|
|
Marketable
|
|
|
|
|
|
|
Securities
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
$
|
|
|
|
$
|
|
|
Total gains (losses), realized and unrealized
|
|
|
|
|
|
|
|
|
Included in net income
|
|
|
|
|
|
|
|
|
Included in other comprehensive income
|
|
|
(651
|
)
|
|
|
(651
|
)
|
Purchases, issuances, and settlements, net
|
|
|
|
|
|
|
|
|
Transfers in (out) of Level 3
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
Balance at June 30, 2008
|
|
$
|
4,349
|
|
|
$
|
4,349
|
|
|
|
|
|
|
|
|
17
Assets / Liabilities Measured at Fair Value on a Nonrecurring Basis
This table presents losses recorded during the six months ended June 30, 2008 for financial
instruments that are recorded at fair value on a nonrecurring basis (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measured Using
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
Quoted Prices
|
|
|
Observ-
|
|
|
Unobser-
|
|
|
|
|
|
|
Balance as
|
|
|
in Active
|
|
|
able
|
|
|
vable
|
|
|
Total
|
|
|
|
of June 30,
|
|
|
Markets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
Gains
|
|
|
|
2008
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
(Losses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-marketable securities
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(1,791
|
)
|
In the second quarter of 2008, due to changes in events and circumstances related to a
convertible note due from an early-stage semiconductor materials venture, the fair value of this
investment was significantly impacted, resulting in a $1.8 million impairment charge, representing
the full value of the note. ATMIs interest in this note, in the event of default, is secured by
certain technology owned by the venture, but recoverability of amounts due have become unlikely.
The fair value measurement was calculated using unobservable inputs, classified as Level 3,
requiring significant management judgment due to the absence of quoted market prices, inherent lack
of liquidity, and the long-term nature of this investment.
The carrying value of other financial instruments, including cash, accounts receivable,
accounts payable, and accrued liabilities approximate fair value due to their short maturities.
|
|
|
Item 2.
|
|
Managements Discussion and Analysis of Financial Condition and Results of Operations.
|
Three and Six Months Ended June 30, 2008 as Compared to 2007
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. These forward-looking statements only reflect present
expectations as of the time of the filing of this Quarterly Report. 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 a difference include:
|
|
cyclicality in the markets in which we operate;
|
|
|
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;
|
18
|
|
availability of supply from a single or limited number of suppliers or from suppliers in a
single country;
|
|
|
intensely competitive markets for our products;
|
|
|
changes in export controls 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;
|
|
|
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 several different countries;
|
|
|
intense competition for highly skilled scientific, technical, managerial and marketing
personnel;
|
|
|
inability to continue to anticipate rapidly changing technologies and market trends, to
enhance our existing products and processes, to develop, commercialize, sell and deliver 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 liability 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;
|
|
|
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 potential exposure for pre-existing contamination of our facilities,
which may not be covered completely by existing indemnification arrangements; 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 the Companys Annual Report on Form
10-K for the fiscal year ended December 31, 2007, and 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. Like other companies, we are susceptible to
macroeconomic downturns in the United States or abroad that may affect the general economic climate
and our performance and the performance of our customers. 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.
19
Company Overview
ATMI believes it is a leading supplier of high performance materials, materials packaging and
materials delivery systems used worldwide in the manufacture of microelectronics devices. ATMI
targets both semiconductor and flat-panel display manufacturers, whose products form the foundation
of microelectronics technology rapidly proliferating through the information technology,
automotive, communication and consumer products industries. The market for microelectronics devices
is growing and continually changing, which drives demand for new products and technologies at lower
cost. ATMIs objective is to meet the demands of microelectronics manufacturers with solutions that
maximize the efficiency of their manufacturing processes, reduce capital costs, and minimize the
time to ramp new processes and deliver new products. ATMIs customers include many of the leading
semiconductor and flat-panel display manufacturers in the world who target leading edge
technologies.
Results of Operations
Executive Summary
In the second quarter of fiscal 2008, ATMIs revenues declined by 3.2 percent compared to the
second quarter of 2007, despite $1.2 million of favorable foreign currency translation, primarily
the result of a delay in the shipment of certain SDS products, reduced materials and equipment
sales to the memory sector, customer material usage efficiencies as customers continue to improve
their own internal processes, and slower-than-anticipated adoption of new products. Our gross
margin improved to 51.7 percent in the second quarter of 2008 compared to 48.9 percent in the
second quarter of 2007 given improved product mix from lower deposition equipment revenues and
continued operational efficiency improvements. This improvement came despite increased costs
reflected in cost of revenues as a result of the redirection of certain supply chain and operations
activities associated with our 2007 organizational realignment, which became effective in 2008
(such costs were previously reflected in selling, general, and administrative expenses (SG&A)).
Redirected activities include those functions in two of our locations that were previously focused
on supporting and administering plant operations, whereas in the current organization those
activities have been redirected and realigned to improve our global supply chain to improve overall
customer satisfaction. This change reduced gross margins and SG&A as a percentage of revenues by
approximately 1.8 percentage points and is expected to have approximately a 1.5 percentage point
effect on gross margins and SG&A, as a percentage of revenues, throughout 2008. Research and
development (R&D) expenses increased 31.3 percent to $9.6 million in the second quarter of 2008
from $7.3 million in the second quarter of 2007. The increase was driven entirely by the continued
investment in our high productivity development activities. At 10.7 percent, R&D spending as a
percent of revenues was higher than expected primarily because of the revenue shortfall vs.
expectations. SG&A decreased by 11.1 percent in the second quarter of 2008 from the second quarter
of 2007. As a percent of revenues, SG&A decreased to 26.1 percent in the second quarter of 2008
compared to 28.4 percent in the same period a year ago.
20
Our effective tax rate was 30.4 percent in the second quarter of 2008 compared to 31.7 percent in
the second quarter of 2007. The reduction was primarily a result of R&D tax credits in Taiwan
related to our investment in high productivity development tools and related equipment. Operating
profit for the second quarter increased 14.8 percent from the prior year to $13.4 million.
Interest income was down 58.3% from the prior year due to lower invested balances given the
repurchase of $59.2 million of our common stock in the first quarter of 2008. Net income for the
quarter increased 4.4 percent to $9.7 million ($0.30 per diluted share, a 15.4 percent increase)
compared to $9.3 million ($0.26 per diluted share) in the second quarter of 2007.
In the first half of fiscal 2008, ATMIs revenues grew by 4.4 percent compared to the first
half of 2007, including $3.1 million (or 1.8 percent) related to favorable foreign currency
translation. Our gross margin improved to 50.8 percent in the first half of 2008 compared to 48.4
percent in the first half of 2007. This improvement occurred despite the increased costs
associated with redirected activities discussed above. R&D increased 24.3 percent in the first
half of 2008 compared to the first half of 2007. As a percent of revenues, R&D increased to 9.9
percent in the first half of 2008 compared to 8.3 percent in the first half of 2007. SG&A
decreased 9.4 percent in the first half of 2008 compared to the first half of 2007. As a percent
of revenues, SG&A decreased to 25.3 percent from 29.1 percent in the first half of 2007 for the
reasons noted above. Our effective tax rate was 31.6 percent in the first half of 2008 compared to
32.0 percent in the first half of 2007. The reduction was primarily related to R&D tax credits in
Taiwan. Net income for the first six months of 2008 increased 28.7 percent to $20.1 million ($0.62
per diluted share, a 40.9 percent increase) compared to $15.6 million ($0.44 per diluted share) in
the first six months of 2007.
On January 4, 2008, ATMI acquired all of the outstanding capital stock of LevTech, Inc.
(LevTech), a market-leading provider of disposable mixing technologies to the biotechnology and
pharmaceutical industries based in Lexington, Kentucky, for a cash payment of approximately $27.7
million, including direct acquisition costs. The acquisition was recorded under the purchase method
of accounting and, accordingly, LevTechs results of operations are included in the Companys
financial statements from the date of acquisition.
In the first quarter of 2008, we repurchased 2.1 million shares of our common stock, for $59.2
million under our share repurchase program. There were no repurchases during the second quarter of
2008.
Going forward, business and market uncertainties may affect results. See Cautionary
Statements Under the Private Securities Litigation Reform Act of 1995 above and Managements
Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on
Form 10-K for the fiscal year ended December 31, 2007 for a full discussion of the key factors
which affect our business and operating results.
21
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
% Change
|
|
Quarter ended June 30,
|
|
$
|
89,487
|
|
|
$
|
92,432
|
|
|
|
(3.2
|
%)
|
Six Months Ended June 30,
|
|
$
|
182,284
|
|
|
$
|
174,586
|
|
|
|
4.4
|
%
|
Revenues decreased 3.2 percent to $89.5 million in the second quarter of 2008 from $92.4
million in the second quarter of 2007. The decrease in revenues was primarily the result of a
delay in the shipment of certain SDS products, reduced materials and equipment sales to the memory
sector, customer material usage efficiencies as customers continue to improve their own internal
processes, and slower-than-anticipated adoption of new products. A significant SDS product shipment
to China at the end of June was delayed because of customs and security procedures associated with
the upcoming Olympic Games. Management expects this shipment to be completed in the third quarter.
Had currency values been unchanged from the second quarter of 2007, revenues would have been $1.2
million lower than the reported revenues of $89.5 million, or 4.4 percent lower than the second
quarter of 2007. The majority of benefit we received from currency translation came from the
weakening of the U.S. dollar against both the Euro and Japanese Yen.
Revenues increased 4.4 percent to $182.3 million in the first six months of 2008 from $174.6
million in the first six months of 2007. The increase in revenues was driven primarily by stronger
volumes in Asia for our SDS and flat-panel display applications, and in our life sciences product
lines as new products gained traction with several significant customers, including revenues
contributed by the LevTech acquisition. As noted above, a significant SDS product shipment to
China at the end of June was delayed because of customs and security procedures associated with the
Olympic Games. Had currency values been unchanged from the first half of 2007, revenues would have
been $3.1 million lower than the reported revenues of $182.3 million, or 2.7 percent higher than
the first half of 2007. The majority of benefit we received from currency translation came from
the weakening of the U.S. dollar against both the Euro and Japanese Yen.
Gross Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
% of
|
|
|
|
|
|
|
% of
|
|
|
|
Amount
|
|
|
Revenues
|
|
|
Amount
|
|
|
Revenues
|
|
Quarter ended June 30
|
|
$
|
46,288
|
|
|
|
51.7
|
%
|
|
$
|
45,185
|
|
|
|
48.9
|
%
|
Six Months Ended June 30
|
|
$
|
92,654
|
|
|
|
50.8
|
%
|
|
$
|
84,459
|
|
|
|
48.4
|
%
|
Gross profit increased 2.4 percent to $46.3 million in the second quarter of 2008 from $45.2
million in the second quarter of 2007. Our gross margin percentage increased to 51.7 percent in
2008 from 48.9 percent in 2007, despite the increase in cost of revenues associated with the
organization realignment described above, primarily because of favorable revenue mix in our SDS and
flat-panel display product lines, reduced lower margin deposition equipment revenues, and
manufacturing efficiencies in our U.S. plants.
Gross profit increased 9.7 percent to $92.7 million in the first six months of 2008 from $84.5
million in the first six months of 2007. Our gross margin percentage increased during this
time period to 50.8 percent in 2008 from 48.4 percent in 2007 due to the reasons described
above.
22
Research and Development Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
% of
|
|
|
|
|
|
|
% of
|
|
|
|
Amount
|
|
|
Revenues
|
|
|
Amount
|
|
|
Revenues
|
|
Quarter ended June 30
|
|
$
|
9,583
|
|
|
|
10.7
|
%
|
|
$
|
7,298
|
|
|
|
7.9
|
%
|
Six Months Ended June 30
|
|
$
|
18,075
|
|
|
|
9.9
|
%
|
|
$
|
14,544
|
|
|
|
8.3
|
%
|
R&D expenses increased 31.3 percent to $9.6 million in the second quarter of 2008 from $7.3
million in the second quarter of 2007. The increase in R&D spending was primarily caused by
planned increases in spending associated with high productivity development activities related to
cleans chemistries (including staffing-related expenses and equipment depreciation costs), and
higher costs associated with patents. As a percentage of revenues, R&D spending was 10.7 percent
in the second quarter of 2008, which is higher than what we had expected primarily because revenues
were lower than expected for the reasons noted above.
R&D expenses increased 24.3 percent to $18.1 million in the first six months of 2008 from
$14.5 million in the first six months of 2007. The increase in R&D spending was primarily caused
by planned increases in spending associated with high-productivity development activities related
to cleans chemistries (including staffing-related expenses and equipment depreciation costs), and
higher costs associated with patents.
Selling, General and Administrative Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
% of
|
|
|
|
|
|
|
% of
|
|
|
|
Amount
|
|
|
Revenues
|
|
|
Amount
|
|
|
Revenues
|
|
Quarter ended June 30
|
|
$
|
23,330
|
|
|
|
26.1
|
%
|
|
$
|
26,238
|
|
|
|
28.4
|
%
|
Six Months Ended June 30
|
|
$
|
46,035
|
|
|
|
25.3
|
%
|
|
$
|
50,790
|
|
|
|
29.1
|
%
|
SG&A decreased 11.1 percent to $23.3 million in the second quarter of 2008 from $26.2 million
in the second quarter of 2007. Most of the reduction was a result of the organizational
realignment described above, with the associated redirection of costs to cost of revenues.
Litigation expenses were also considerably lower in 2008 compared to 2007, as the 2007 results
included a $1.1 million legal fee (associated with a contingent fee arrangement). We expect
litigation costs to be significantly reduced in future quarters due to the recent settlement of the
litigation with Praxair.
SG&A decreased 9.4 percent to $46.0 million in the first half of 2008 from $50.8 million in
the first half of 2007. Most of the reduction was a result of the organizational realignment
described above, with the associated redirection of costs to cost of revenues. Litigation expenses
were also considerably lower in 2008 compared to 2007, due to the reasons mentioned above.
23
Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
% of
|
|
|
|
|
|
|
% of
|
|
|
|
Amount
|
|
|
Revenues
|
|
|
Amount
|
|
|
Revenues
|
|
Quarter ended June 30
|
|
$
|
13,375
|
|
|
|
14.9
|
%
|
|
$
|
11,649
|
|
|
|
12.6
|
%
|
Six Months Ended June 30
|
|
$
|
28,544
|
|
|
|
15.7
|
%
|
|
$
|
19,125
|
|
|
|
11.0
|
%
|
Operating income increased 14.8 percent to $13.4 million in the second quarter of 2008
(representing 14.9 percent of revenues) from $11.6 million in the second quarter of 2007
(representing 12.6 percent of revenues). Operating income increased 49.2 percent to $28.5 million
in the first half of 2008 (representing 15.7 percent of revenues) from $19.1 million in the first
half of 2007 (representing 11.0 percent of revenues). These changes are from a variety of factors,
as noted above.
Interest Income
Interest income decreased to $0.8 million in the second quarter of 2008 from $2.0 million in
the second quarter of 2007 and decreased to $1.8 million in the first half of 2008 from $3.8
million in the first half of 2007. The primary reasons for the decreases were lower invested cash
and marketable securities balances as a result of the Companys share repurchase program, the
acquisition of LevTech, and lower rates of return given recent market interest rate declines.
Other Expense, Net
During the second quarter of 2008, due to changes in events and circumstances related to a
convertible note due from an early-stage semiconductor materials venture that is in bankruptcy, we
recognized an impairment charge of $1.8 million to fully write down the value of this convertible
note. Also during the second quarter of 2008, we recognized a $2.0 million gain from the sale of a
marketable equity security.
Provision for Income Taxes
|
|
|
|
|
|
|
|
|
|
|
Effective Rate
|
|
|
|
2008
|
|
|
2007
|
|
Quarter ended June 30
|
|
|
30.4
|
%
|
|
|
31.7
|
%
|
Six Months Ended June 30
|
|
|
31.6
|
%
|
|
|
32.0
|
%
|
Our effective income tax rates are impacted by the change in the mix of income attributed to
the various countries in which we conduct business, changes in the levels of tax-exempt interest
income, and R&D tax credits in Taiwan. As of June 30, 2008, the Company had a net deferred tax
asset on the balance sheet of $8.7 million, primarily because of temporary differences (i.e.,
accrued liabilities, inventory adjustments, equity-based compensation, and depreciation and
amortization), state tax credit carry forwards, federal and state net operating loss carry
forwards, and R&D tax credits in Taiwan.
It is reasonably possible that in the next three 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 $0.3 million to $4.4 million.
The Company has been audited by the Internal Revenue Service through tax year 2005.
24
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 the management of liquidity are cash flows
generated by operating activities, cash used for capital expenditures, cash used to repurchase
common stock, cash obtained through lines of credit, and cash generated from the sale of common
stock through exercises of employee stock options.
We manage our worldwide cash requirements considering the cost effectiveness of the funds
available from the many subsidiaries through which we conduct our business, including the use of
revolving lines of credit in countries where interest rates are favorable. We believe that our
existing cash and cash equivalents and marketable securities positions at this time, and our future
operating cash flows will be sufficient to meet our operating cash needs for the foreseeable
future. Further, we expect to be able to obtain debt or equity financing to provide additional
sources of liquidity should they be required.
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.
A summary of our Cash Flows follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
|
|
2008
|
|
|
2007
|
|
Cash provided by (used for):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Activities
|
|
$
|
26,791
|
|
|
$
|
30,867
|
|
Investing Activities
|
|
|
(28,579
|
)
|
|
|
(25,535
|
)
|
Financing Activities
|
|
|
(56,589
|
)
|
|
|
(15,105
|
)
|
Effects of exchange rate changes on cash
|
|
|
(325
|
)
|
|
|
(606
|
)
|
Net cash provided by operating activities decreased by $4,076 comprised primarily of the
following components:
|
|
|
Increase in net income of $4,470
|
|
|
|
Increase in cash provided by changes in accounts receivable of $7,625, primarily
because of increased focus on reduction of days sales outstanding in Asia and also
due to timing of collections in general
|
|
|
|
Cash used related to changes in inventories of $7,487 compared to cash provided
by changes in inventories of $1,504, due to revenue growth and safety stock builds in 2008
|
25
|
|
|
Decrease in cash provided by changes in our income taxes payable, primarily due
to timing, of $4,180
|
|
|
|
Increase in cash used by other operating or working capital accounts of $5,352
|
Net cash used by investing activities increased by $3,044 primarily from:
|
|
|
Increase in capital spending of $17,099 primarily because of the purchase of
research tools used in our high productivity development activities
|
|
|
|
$27,673 of cash paid for the purchase of LevTech, Inc. on January 4, 2008
|
|
|
|
Decrease in cash used for purchases of marketable securities of $116,843
|
|
|
|
Decrease in cash proceeds from sales and maturities of marketable securities of
$76,477
|
Net cash used for financing activities increased by $41,484 primarily from:
|
|
|
Increase in treasury stock purchases of $36,340
|
|
|
|
Decrease of $5,905 in proceeds from stock option exercises in 2008
|
|
|
|
Increase in credit line borrowings of $2,948
|
|
|
|
Increase in credit line repayments of $1,802
|
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
We have extended standby letters of credit to certain third parties for, a leased facility, in
connection with a litigation matter in Europe, and to guarantee the debt of an equity-method
investee. Circumstances that could cause the contingent obligations and liabilities arising from
these letters of credit are primarily related to nonperformance under a contract or deterioration
in the financial condition of the guaranteed party.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
.
As of June 30, 2008, the Companys cash and cash equivalents and
marketable securities included money market securities, government and government-sponsored bond
obligations, corporate bond obligations, and commercial paper. As of June 30, 2008, 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 $0.5 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 $0.6 million.
26
Foreign Currency Exchange Risk
.
Most of the Companys sales are denominated in U.S.
dollars and as a result, the Company doesnt have any significant exposure to foreign currency
exchange risk with respect to sales made. Approximately 28 percent of the Companys revenues for
the quarter and six month periods ended June 30, 2008 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 hedging instruments that are highly effective and
recognize in accumulated other comprehensive income any changes in the fair value of all
derivatives designated as cash flow hedging instruments that are highly effective. 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 June 30, 2008, we held forward foreign currency exchange contracts designated as fair value
hedges with notional amounts totaling $6.9 million and forward foreign currency exchange contracts
designated as cash flow hedges with notional amounts totaling $4.0 million, which are being used to
hedge recorded foreign denominated assets and forecasted inter-company transactions, respectively,
all of which will be settled in JPY. Holding other variables constant, if there were a 10 percent
decline in foreign exchange rates for the JPY, the fair market value of the JPY contracts
outstanding at June 30, 2008 would decrease by approximately $1.2 million ($0.8 million would be
expected to be fully offset by foreign exchange gains on the amounts being hedged, and the
remaining $0.4 million would be reported in accumulated other comprehensive income, until the
forecasted hedged transactions were recognized). 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.
Changes in Market Risk
. Other than the recent turmoil in the markets associated with
sub-prime credit investments, there have been no material quantitative changes in market risk
exposure between December 31, 2007 and June 30, 2008. At June 30, 2008, we held one Massachusetts
Educational Financing Authority auction rate security, comprising part of a student loan portfolio,
with a stated maturity date in 2038, a par value of $5.0 million and a reset date of March 12,
2009. During March 2008, the annual auction for this security failed, and as a result, the
tax-exempt coupon rate of interest was reset to the default interest rate of 6.55% from its
previous rate of 3.75%. We will not have access to these funds 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. Currently, despite a AA credit rating and a premium coupon
rate, no secondary market is active given the current turmoil in the credit markets. At June 30,
2008, we recorded a temporary impairment charge of $0.7 million within Accumulated Other
Comprehensive Income 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.
27
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 our 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 are effective
in that they provide 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 second quarter of fiscal 2008
that we believe materially affected, or will be reasonably likely to materially affect, our
internal control over financial reporting.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
In July 2003, a subsidiary of ATMI filed suit against Praxair, Inc., the parent company of
Praxair Electronics, in the United States District Court for the Southern District of New York,
charging it with infringing two patents ATMI holds for certain gas storage and delivery systems
based on the marketing of Praxairs UpTime system. In April 2006, the New York District Court
granted Praxairs request for summary judgment that all asserted claims in two of ATMIs patents
are invalid, and that decision was upheld on appeal in April 2007.
In December 2003, Praxair, Inc. and Praxair Technology, Inc. filed suit against ATMI, Inc. and
Advanced Technology Materials, Inc. in the United States District Court for the District of
Delaware alleging infringement of three patents owned by Praxair Technology, Inc. related to
certain gas storage and delivery systems. Praxair was seeking damages and an injunction against
ATMI marketing its VAC system. In 2005, the Delaware District Court invalidated one of Praxairs
patents by summary judgment. In June 2007, the Delaware District Court held that the two remaining
Praxair patents were unenforceable due to inequitable conduct. This positive outcome triggered
ATMIs payment obligation pursuant to a limited contingent fee arrangement with certain outside
counsel. As a result, we recognized $1.1 million of expense in the second quarter of 2007, which
was recorded in selling, general and administrative expenses. In July 2007, Praxair appealed the
decision to the Federal Circuit Court.
In 2005, a subsidiary of ATMI filed suit against Praxair, Inc. and Praxair GmbH in Dusseldorf,
Germany, charging infringement of a patent ATMI holds for certain gas storage and delivery systems.
Since the third quarter of 2006, a preliminary injunction against Praxair selling or supplying its
UpTime system in Germany was in effect. In March 2007, ATMI voluntarily withdrew the preliminary
injunction in view of customer concerns, among other considerations.
A decision in favor of Praxair was rendered by the trial court in November 2006 on one of the
asserted patent claims, which was appealed.
28
In August 2006, a subsidiary of ATMI filed suit in Belgium against Praxair, Inc. and Belgian
affiliates of Praxair, Inc. charging infringement of a patent ATMI holds for certain gas storage
and delivery systems. A preliminary injunction is in place against the public marketing of the
UpTime system worldwide and, in September 2007, ATMI was awarded EUR 207,000 for Praxairs
violation of that injunction. The award was received by ATMI during the first quarter of 2008 and
has been recorded as an offset to selling, general and administrative expenses in the consolidated
statement of income. In addition, a preliminary injunction has been in place against Praxairs
supply of UpTime in several European countries.
In February 2008, Praxair, Inc. filed suit against ATMI, Inc. and Advanced Technology
Materials, Inc. in the United States District Court for the Northern District of California
alleging violations of federal antitrust law and state law relating to a gas supply arrangement and
patent litigation activities in the U.S. and Europe. Praxair was seeking a preliminary injunction
and other damages, which preliminary injunction was denied by the court in June.
On July 11, 2008, ATMI entered into a global settlement agreement with Praxair, Inc. that
resolved the foregoing actions between the parties. The Delaware litigation is continuing by
agreement of the parties, with damages stipulated so that each partys maximum liability would be
$100,000, depending on the form of the decision. The parties will be free to market and sell
worldwide their respective mechanical, sub-atmospheric delivery container products that were the
subject of the disputes.
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, 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.
Item 1A. Risk Factors
There have been no material changes to our Risk Factors in the Companys Annual Report on Form
10-K for the fiscal year ended December 31, 2007.
29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 4. Submission of Matters to a Vote of Security Holders
We held our annual meeting of stockholders on May 22, 2008. As of April 14, 2008, the record
date for the meeting, 32,095,224 shares of ATMI common stock were outstanding. A quorum consisting
of 30,864,285 shares of common stock were present or represented at the meeting. The following
actions were approved at the meeting: (1) two Class II directors were elected for a term expiring
at the annual meeting of stockholders in 2011; and (2) the appointment of Ernst & Young LLP as the
Companys Independent Registered Public Accounting Firm for the fiscal year ending December 31,
2008 was ratified.
This table represents the votes tabulated for the election of the two Class II directors:
|
|
|
|
|
|
|
|
|
Director
|
|
In Favor
|
|
|
Withheld
|
|
|
Mark A. Adley
|
|
|
30,342,024
|
|
|
|
522,261
|
|
Eugene G. Banucci
|
|
|
30,353,540
|
|
|
|
510,745
|
|
This table represents the votes tabulated for the ratification of Ernst & Young LLP as the
Companys Independent Registered Public Accounting Firm for the fiscal year ending December 31,
2008:
|
|
|
|
|
|
|
|
|
Votes For
|
|
Votes Against
|
|
|
Abstentions
|
|
|
30,794,867
|
|
|
66,733
|
|
|
|
2,685
|
|
Item 5. Other Information
None.
30
Item 6. Exhibits
|
|
|
|
|
|
31.1
|
|
|
Certification of the Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
31.2
|
|
|
Certification of the Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
32
|
|
|
Certifications of the Chief Executive Officer and Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
31
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.
|
|
|
|
|
|
|
|
|
ATMI, Inc.
|
|
|
July 23, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By
|
|
/s/ Douglas A. Neugold
|
|
|
|
|
|
|
Douglas A. Neugold
|
|
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
By
|
|
/s/ Timothy C. Carlson
|
|
|
|
|
|
|
Timothy C. Carlson
|
|
|
|
|
|
|
Executive Vice President, Chief Financial
|
|
|
|
|
|
|
Officer and Treasurer
|
|
|
32
EXHIBIT INDEX
|
|
|
|
|
|
31.1
|
|
|
Certification of the Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
31.2
|
|
|
Certification of the Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
32
|
|
|
Certifications of the Chief Executive Officer and Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
33