UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

For the quarterly period ended June 30, 2004

For the transition period from                     to                    

Commission file Number: 1-16239

ATMI, Inc.

203-794-1100
(Registrant’s 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 x No o

Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Act). Yes x No o

The number of shares outstanding of the registrant’s common stock as of August 2, 2004 was 31,368,169.

ATMI, INC.
Quarterly Report on Form 10-Q
For the Quarter Ended June 30, 2004

TABLE OF CONTENTS

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

ATMI, Inc.

See accompanying notes.

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ATMI, Inc.

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.

See accompanying notes.

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ATMI, Inc.

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 Annual Report on Form 10-K for the fiscal year ended December 31, 2003 (the “Annual Report”), 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 Company’s audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2003 included in the Company’s Annual Report. 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, 2003 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. Discontinued Operations

     In June 2004, the Company completed the sale of its semiconductor fabrication plant parts cleaning services business, “Fab Services,” for total proceeds of $6.8 million, including $4.9 million of cash, received on July 1, 2004 (included in other current assets in the June 30, 2004 consolidated balance sheet), and a note for the balance. Additional contingent consideration of up to $0.3 million may be received based on the achievement of certain operating targets. A gain of $0.2 million, net of taxes, was recognized on the sale of the Fab Services business.

     In May 2004, the Company completed the sale of its life safety sensors business for total proceeds of $11.0 million, including $0.5 million, which remains in escrow pending the outcome of a review and agreement of assets sold. A gain of $0.2 million, net of taxes, was recognized on the sale of the life safety sensors business.

     In March 2004, the Company completed the sale of its gallium nitride materials business for total proceeds of $10.3 million. A gain of $1.0 million, net of taxes, was recognized on the sale of the gallium nitride materials business.

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     The aggregate gains from the sales of the business units noted above are included in the accompanying statement of operations as a gain on disposal of discontinued operations, net of income taxes. Cash generated from the discontinued operations is recorded in the cash account on the continuing operations balance sheet.

     Revenues and losses from discontinued operations were as follows (in thousands):

     The assets and liabilities of the discontinued operations were as follows (in thousands):

(1) The balance at June 30, 2004 excludes approximately $1.6 million of assets transferred from discontinued operations to continuing operations.

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3. Inventories

     Inventories are comprised of the following (in thousands):

4. Other Intangibles

     Other intangibles consisted of the following (in thousands):

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5. Warranty Accrual

     ATMI’s equipment products are generally sold with a 12 to 24-month warranty period. Parts and labor are covered under the terms of the warranty agreement. The warranty provision is based on historical experience by product type. Changes in the warranty accrual during the first six months of 2004 were as follows (in thousands):

A warranty reserve of approximately $1.1 million related to discontinued operations is included in liabilities held for sale, but is not included in the table above.

6. Stock-Based Compensation

     The Company has several stock-based employee compensation plans, which are described more fully in the Annual Report. The Company accounts for these stock-based compensation plans under the recognition and measurement principles of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations. ATMI has charged to expense approximately $0.06 million and $0.11 million of deferred compensation related to the issuance of restricted shares of ATMI common stock during the three and six-month periods ended June 30, 2004, respectively.

     The following table sets forth the effect on net income (loss) and income (loss) per share if the Company had applied the fair value recognition provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting For Stock-Based Compensation”, to stock-based employee compensation (in thousands, except per share data):

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7. Other Comprehensive Income (Loss)

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