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SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to               

Commission file Number: 0-30130

ATMI, Inc.

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        No  

The number of shares outstanding of the registrant’s common stock as of Aug 7, 2002 was 30,638,088.

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ATMI, INC.
Quarterly Report on Form 10-Q
For the Quarter Ended June 30, 2002

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PART I — FINANCIAL INFORMATION

Item 1.   Financial Statements

ATMI, Inc.
Consolidated Balance Sheets
(in thousands, except per share data)

See accompanying notes.

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ATMI, Inc.
Consolidated Statements of Operations
(unaudited)
(in thousands, except per share data)

See accompanying notes.

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ATMI, Inc.
Consolidated Statements of Operations
(unaudited)
(in thousands, except per share data)

See accompanying notes.

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ATMI, Inc.
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)

See accompanying notes.

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ATMI, Inc.
Notes To Consolidated Interim Financial Statements
(unaudited)

1.

Basis of Presentation

         The accompanying unaudited consolidated interim financial statements of ATMI, Inc. (“ATMI” or the “Company”) have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and do not include all of the financial information and disclosures required by GAAP in the United States.

         In the opinion of the management of ATMI, the financial information contained herein has been prepared on the same basis as the audited consolidated financial statements contained in the Company’s Form 10-K, and includes adjustments (consisting of normal recurring adjustments) necessary to present fairly the unaudited quarterly results set forth herein. These unaudited consolidated interim financial statements should be read in conjunction with the December 31, 2001 audited consolidated financial statements and notes thereto included in the Company’s Form 10-K. The Company’s quarterly results have, in the past, been subject to fluctuation and, thus, the operating results for any quarter are not necessarily indicative of results for any future fiscal period.

         The consolidated Balance Sheet at December 31, 2001 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.

         Certain prior year amounts have been reclassified to conform to the current year’s presentation.

2.

Recent Accounting Pronouncements

         Effective January 1, 2002, ATMI has adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” which supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.” There was no material impact on ATMI’s financial position or results of operations as a result of adopting this new standard.

         In April 2002, the Financial Accounting Standards Board (FASB) issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections,” which will become effective for ATMI in fiscal year 2003. SFAS No. 145 changes the way gains and losses from extinguishment of debt are classified in the financial statements, and amends SFAS No. 13 to require that lease modifications having economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. ATMI anticipates that adoption of this standard will not materially impact the Company’s financial position or results of operations.

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         In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities,” which nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity.” SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred, rather than on the date of commitment to an exit plan. The provisions of this Statement are effective for exit or disposal activities that are initiated after December 31, 2002. ATMI anticipates that adoption of this standard will not materially impact the Company’s financial position or results of operations.

3.

Per Share Data

         The following table presents the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data):

4.

Inventories

         Inventories are comprised of the following (in thousands):

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5.

Goodwill and Other Intangibles

         The Company adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets” effective January 1, 2002. SFAS No. 142 changes the way companies account for goodwill in that goodwill is no longer amortized, but will be tested for impairment at least annually. The Statements of Operations for the three and six month periods ended June 30, 2002 include the effect of adopting this new standard. The effect on reported net income for the three and six-month periods ended June 30, 2001 is shown in the following table (in thousands, except per share data):

         Intangibles consisted of the following (in thousands):

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6.

Long-term Debt

         During the first half of 2002, the Company paid down the entire $13.5 million outstanding as of December 31, 2001 on the $20.0 million financing agreement entered into during the first quarter of 2001.

7.

Leases

         During the first half of 2002, the Company paid down the entire $5.1 million of capital lease obligations outstanding as of December 31, 2001.

8.

Other Comprehensive Income (Loss)

         The components of other comprehensive income (loss) are as follows (in thousands):

9.

Segment Data

         Segment information is included under the caption “Segment Data” in Management’s Discussion and Analysis of Financial Condition and Results of Operations, which is incorporated herein by reference and is an integral part of these unaudited interim financial statements.

10. Income Taxes

         The former securityholders of the ADCS Group have agreed to indemnify the Company against losses arising out of possible tax liabilities of ADCS. As security for these potential liabilities, the former securityholders of ADCS deposited 700,000 shares of the Company’s common stock, which they received in connection with the Company’s acquisition of ADCS, into escrow. While the possible exposures are difficult to quantify, the Company believes that, regardless of the probability that liabilities will arise, the potential exposures range from $0 to $22 million depending

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on the resolution of the tax matter. Although the former securityholders of ADCS have agreed to indemnify the Company against losses arising out of such tax matters, any assessments, if ultimately determined against the Company, would result in a charge to the Company’s results of operations. During the second quarter of 1999, the Company was notified by the Internal Revenue Service of an assessment of $2.1 million for certain of these tax matters. The current value of the shares held in escrow provides indemnity towards the mid to upper range of the potential exposure. The Company intends to vigorously defend its position in these tax matters in U.S. Tax Court in 2002.

11. Restructuring Charges

         The operating results for the six months ended June 30, 2001 include a $12.8 million charge for severance and other costs associated with a restructuring initiative announced by management, of which $0.6 million is included in cost of revenues related to a write-down of inventory. During the third quarter of 2001, a second restructuring charge of $1.8 million was taken for severance related costs associated with a restructuring initiative announced by management during that quarter. The second initiative became necessary as a result of the severe decline in end-use semiconductor device demand.

         The restructuring initiatives include severance costs of $5.4 million, including the third quarter 2001 initiative of $1.8 million, and represent a reduction of approximately 21% of the Company’s worldwide workforce, including operations, sales and marketing, and other administrative employees. All of the affected employees had left their positions by June 30, 2002. These initiatives involve a number of actions intended to improve productivity and align the Company’s organization more closely with its customers. The restructuring initiatives and other charges also include $9.2 million for plant closings, lease termination fees, and various other asset write-offs or write-downs. Management anticipates that restructuring costs will be paid by December 31, 2002, except for ongoing lease costs for exited facilities, which will be paid over the remaining lease terms.

         The following tables set forth the activity in the restructuring accruals, which are included in accrued liabilities, as of June 30, 2002 (in thousands):

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12.

Other Income

         The first six months of 2002 results include a gain of approximately $1.0 million from the sale of available-for-sale securities, offset by a write-down of approximately $0.3 million for an other-than-temporary decline in fair value of other available-for-sale securities.

         In July 1999, ATMI filed suit against a company, alleging infringement of certain liquid delivery system patents. Later in 1999, that company filed suit against ATMI alleging infringement of a particular semiconductor process patent. In March 2001, an agreement was reached that addressed the settlement of both claims. Although the terms of the settlement remain confidential, ATMI received a payment in the settlement, which has been recorded in the 2001 financial statements as other income, net of related expenses.

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Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

         ATMI is a leading supplier of materials, equipment and related services used worldwide in the manufacture of semiconductor devices. ATMI specifically targets the “front-end” semiconductor materials market. This market includes the processes used to convert a bare silicon wafer into a fully functional wafer that contains many copies of a semiconductor device or “chip”. To complete the manufacturing process, this functional wafer is taken through a “back-end” manufacturing process that includes wafer dicing into chips, packaging and testing. ATMI’s customers include most of the leading semiconductor manufacturers in the world.

         ATMI has organized its operations along two business segments: Materials and Technologies. The Materials segment provides products that are used in the semiconductor manufacturing process and related packaging and delivery systems. The Technologies segment provides products and services that sense and environmentally control these materials while also providing specialized thin film deposition and outsourced parts cleaning and tool maintenance services to semiconductor device manufacturers. The Technologies segment also includes ATMI’s venture and government funded research and development activities.

         The semiconductor industry in general and the semiconductor equipment industry in particular have been highly cyclical and have experienced periods of overcapacity at various times, resulting in significantly reduced demand for semiconductor materials, capital equipment and wafer processing services. In 2001, the semiconductor industry experienced a severe downturn of unprecedented magnitude; however, the market appears to be recovering slowly. According to industry research, wafer starts in June 2002 were 9.5% lower than peak production levels in November 2000, but have increased each month in 2002. Equipment orders in March 2002 were 53% lower than peak levels in September 2000, but have steadily increased in each month of the six-month period ended June 30, 2002. ATMI’s first quarter 2002 operating results were impacted by the industry downturn, especially with regard to our product lines that track industry manufacturing capacity. The second quarter of 2002 showed an increase in materials demand, as overall sales sequentially increased 19% versus the first quarter. However, lack of visibility remains and the level of recovery in the near term is uncertain. With regard to capital equipment spending, there remains substantial over-capacity on a global basis. Currently, there is some advanced technology equipment spending, but management believes that the likelihood of significant capacity expansion is low in the near term.

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Results of Operations

         The following table sets forth selected financial data as a percentage of total revenues for the periods indicated: