UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

For the quarterly period ended September 30, 2004

For the transition period from                     to                    

Commission file Number: 1-16239

ATMI, Inc.

203-794-1100

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

The number of shares outstanding of the registrant’s common stock as of November 1, 2004 was 31,403,095.

ATMI, INC.
Quarterly Report on Form 10-Q
For the Quarter Ended September 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.

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 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 September 2004, the Company completed the sale of its Emosyn smartcard business for $15.1 million in cash and a 16.4% investment in the entity that acquired the Emosyn smartcard business. The investment of $2.6 million has been accounted for on the cost basis. A gain of $3.3 million, net of taxes, was recognized on the sale of the Emosyn smartcard business.

     In July 2004, the Company completed the sale of its epitaxial services business for proceeds of $38.0 million and contingent consideration of $3.0 million, which has not yet been recognized, based on the satisfaction of certain conditions. A gain of $0.1 million, net of taxes, was recognized on the sale of the epitaxial services business.

     In June 2004, the Company completed the sale of its semiconductor parts cleaning services business, “Fab Services,” for total proceeds of $6.8 million, including $4.9 million of cash, and a note for the balance. Additional contingent consideration of up to $0.3 million, which has not yet been recognized, may be recognized 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.

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     In May 2004, the Company completed the sale of its life safety sensors business for total proceeds of $11.0 million. A gain of $0.2 million, net of taxes, was initially recognized on the sale of the life safety sensors business, but that gain was adjusted in the third quarter of 2004 to $0.1 million, net of taxes, due to an adjustment of the sale price as a result of changes in working capital accounts actually sold.

     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 initially recognized on the sale of the gallium nitride materials business. The gain was subsequently adjusted in the third quarter of 2004 to $1.1 million to reflect the actual transaction costs incurred.

     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):

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     The assets and liabilities of the discontinued operations, which at September 30, 2004 relates entirely to the Company’s environmental abatement equipment business, were as follows (in thousands):

     Management expects to receive proceeds in excess of the net carrying value of the environmental abatement equipment business and expects a sale to be consummated during the fourth quarter of 2004.

     The one-year holding period for the classification as held for sale, as prescribed by Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” will expire during the fourth quarter of 2004. In the event the Company is unable to complete a sale of the environmental abatement equipment business within the one-year holding period prescribed by, and subject to the exceptions set forth in, SFAS No. 144, the assets and liabilities would be reclassified to assets held and used. The associated results of operations of such business would be reclassified to income (loss) from continuing operations for all periods presented in the financial statements.

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3. Inventories

     Inventories are comprised of the following (in thousands):

4. Goodwill and Other Intangibles

     Other intangibles consisted of the following (in thousands):

     Changes in the carrying amounts of goodwill and other intangibles for the nine-month period ended September 30, 2004 were as follows:

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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 nine months of 2004 were as follows (in thousands):

     A warranty reserve of approximately $1.4 million related to discontinued operations is included in liabilities held for sale, but is not included in the table above.

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6. Net Income (Loss) Per Share

     Basic earnings (loss) per share from continuing operations is determined by dividing the Company’s income (loss) from continuing operations by the weighted average number of shares of common stock outstanding. Diluted earnings (loss) per share also includes dilutive common stock equivalents outstanding after applying the “treasury stock” method to outstanding stock options, unvested restricted stock, and warrants and the “if converted” method to convertible debt. A reconciliation of the numerator and denominator of the diluted earnings per share from continuing operations computation is as follows: