UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2009
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from
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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.) |
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) |
203-794-1100
(Registrants telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Name of each exchange
on which registered |
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Common Stock, par value $0.01 per share
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The NASDAQ Stock Market LLC
(NASDAQ Global Select Market) |
Securities registered pursuant to Section 12(g) of the Act:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act. Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act. Yes o No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). Yes o No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K 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 definitions of large accelerated
filer, accelerated filer,and smaller reporting company in Rule 12b-2 of the Exchange Act
(Check one):
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Large accelerated filer o
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Accelerated filer þ
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Non-accelerated filer o
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Smaller reporting company o |
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 aggregate market value of the common stock held by non-affiliates of the registrant at June 30,
2009, was approximately $481,451,000 based on the closing sale price of such stock on the NASDAQ
Global Select Market on that date.
The number of shares outstanding of the registrants common stock as of January 31, 2010 was
31,561,277.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of our proxy statement for the annual meeting of stockholders to be held on May 26, 2010
(Part III).
ATMI, INC.
Annual Report on Form 10-K
For the Fiscal Year Ended December 31, 2009
TABLE OF CONTENTS
PART I
References in this annual report to the Company, ATMI, we, us and our refer to ATMI, Inc.
and our wholly-owned subsidiaries on a consolidated basis.
Item 1. Business
Cautionary Statements Under the Private Securities Litigation Reform Act of 1995
Forward-Looking Statements
Disclosures included in this Form 10-K 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.
Investors and others should consider the cautionary statements and risk factors discussed in Item
1A below. 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. 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.
Our Business
We believe we are among the leading suppliers of high performance materials, materials packaging
and materials delivery systems used worldwide in the manufacture of microelectronics devices. Our
products consist of front-end semiconductor performance materials, sub-atmospheric pressure gas
delivery systems for safe handling and delivery of toxic and hazardous gases to semiconductor
process equipment, high-purity materials packaging and dispensing systems that allow for the
reliable introduction of low volatility liquids and solids to microelectronics and
biopharmaceutical processes. ATMI targets semiconductor and flat-panel display manufacturers, whose
products form the foundation of microelectronics technology rapidly proliferating through the
consumer products, information technology, automotive, healthcare, and communications industries.
The market for microelectronics devices is continually changing, which drives demand for new
products and technologies at lower cost. ATMIs customers include many of the leading
semiconductor and flat-panel display manufacturers in the world who target leading edge
technologies. ATMI also addresses an increasing number of critical materials handling needs for the
life sciences markets. Our proprietary containment, mixing, and bioreactor technologies are sold
to the biotechnology and laboratory markets, which we believe offer significant growth potential.
ATMIs objective is to meet the demands of our microelectronics and life sciences customers with
solutions that maximize the efficiency of their manufacturing processes, reduce capital costs, and
minimize the time to develop new products and integrate them into their processes.
ATMIs core competencies include:
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knowledge of the science and economics of process applications for customer needs in
markets served; |
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the ability to use a combinatorial science-based research approach and high-productivity
development (HPD) capabilities to significantly shorten the new product development life
cycle and develop next generation materials necessary as the semiconductor industry moves
toward advanced technology generations, such as 22 nanometers; |
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the materials science of packaging, delivery, and deposition of ultra-pure semiconductor
materials; |
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the ability to rapidly develop innovative technology and intellectual property that
strengthens our competitive position; |
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knowledge of high-purity materials handling and dispensing systems to address life
sciences customers needs to combine these disposable components and integrate them into
disposable systems; and |
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knowledge of scalable disposable containment, mixing and bioreactor systems. |
Our customers manufacturing processes are increasingly complex, resulting in rapidly changing
requirements for materials and materials handling solutions. ATMI has historically capitalized on
the growth of the microelectronics and life sciences industries in general through:
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a strategy of leveraging the combination of our performance materials and materials
handling competence to provide greater process efficiency value to our customers; |
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an extensive research and development program that has produced a stream of proprietary
and patented products for these markets; |
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a key customer focus, which has included providing applications development in order to
offer materials solutions for future generation technologies; and |
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strategic alliances and collaboration efforts that have allowed us to add complementary
technologies to our product portfolio more rapidly than through internal development. |
ATMIs operations comprise one operating business segment.
The majority of ATMIs semiconductor business generally tracks semiconductor wafer starts.
Additional financial information about the Company and related geographic information can be found
in Item 7: Managements Discussion and Analysis of
Financial Condition and Results of Operations of this Form 10-K.
We believe we have achieved a leadership position in high-performance semiconductor materials,
materials packaging, and materials delivery systems for the microelectronics market by focusing on
providing solutions to our customers that allow them to make faster, more advanced, and less
expensive devices while improving their manufacturing asset productivity and production yields. We
also focus on partnering with customers to bring new technologies into high-volume production as
quickly and efficiently as possible. ATMI plans to continue to focus on leveraging our core
technologies to create new high-growth product lines, including growing our leadership position in
advanced interconnect applications, which today is focused on copper. We believe we also have achieved a
leadership position in the small but fast growing market for one-time use mixing applications in
the life sciences market.
Semiconductor Industry Background
The semiconductor industry has experienced periods of rapid growth, but has also experienced
downturns, often in connection with, or in anticipation of, maturing product cycles of both
semiconductor companies and their customers products and declines in general economic conditions.
These downturns have been characterized by diminished product demand, production overcapacity, and
high inventory levels. The most recent downturn in the semiconductor industry began during the
second half of 2008, driven by broader macroeconomic deterioration, in particular in the credit and
financial markets. As was widely reported starting in late 2008, the disruptions in global credit
and financial markets led to diminished liquidity and credit availability, declines in consumer
confidence, declines in economic growth, increases in unemployment rates, and uncertainty about
economic stability. In response to these events and the uncertainty they caused, our customers
cautiously managed their inventories. In the second half of 2009, the industry began to recover,
driven by customers who had reduced their inventory levels in the face of the economic downturn and
government sponsored demand generation programs. As this recovery gained momentum our quarterly
sequential results improved through 2009. We are unable to predict the likely
duration and severity of the current disruptions in the credit and financial markets and adverse
global economic conditions and the resultant effect on the semiconductor industry.
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Historically, longer-term demand for semiconductor devices has grown as the use of semiconductor
devices proliferated in a wide variety of consumer and industrial products, especially in
computing, gaming, networking and communications equipment. In periods of growth, demand for
semiconductor devices has been fueled by the ability of semiconductor manufacturers to deliver
products with:
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consistently enhanced performance characteristics and functionality; |
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reduced size, weight, power consumption and cost; and |
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shorter product development cycles. |
These past advances have been made possible, in part, by innovations in the fabrication processes
and in the materials and delivery systems used in manufacturing advanced semiconductor devices. At
the same time, semiconductor manufacturers have continually sought to streamline their supplier
relationships while the construction and management of fabrication facilities have become more
complex and costly. Because of this trend, consolidation among the providers of semiconductor
materials and materials delivery systems is expected to continue.
Semiconductor Manufacturing Process
Semiconductor devices are manufactured by repeating a complex series of process steps on a wafer
substrate usually made of silicon. The primary process steps include various kinds of materials
deposition (physical vapor deposition, chemical vapor deposition, electrochemical deposition,
atomic layer deposition, and ion implantation), etch, wafer preparation (chemical mechanical
planarization), patterning (photolithography), and cleaning (photoresist stripping), each of which
is described in more detail below.
The industry is being revolutionized by the transformation from aluminum wiring to copper wiring in
advanced semiconductor chips. Copper wiring requires many new materials to be developed, such as
barriers and insulators, planarization materials, pre- and post-deposition cleaners, pre- and
post-chemical mechanical planarization (CMP) cleaners, and post-etch photoresist and post-strip
residue removers. Each new layer of copper generates a need for additional new materials. As the
migration to copper continues, many in the industry are predicting that the number of steps
required to produce a chip will significantly increase, driving the need for as many as fifty to
sixty new materials to be developed in support of this change.
During deposition processes, several layers of conducting, semi-conducting, or insulating thin
films are formed on a wafer. Precise and reliable control of the deposition of these films is
vital to the ultimate performance of an individual device.
The most mature processes for thin film deposition and modification are physical vapor deposition,
also known as PVD or sputtering, and ion implantation. In PVD, which is used primarily for the
deposition of conducting metal layers, a high-energy beam is directed at a high-purity metal target
which in turn causes the displacement of metal atoms that are showered over the wafer, coating it
with a thin metallic film. Ion implantation is a gas-based process used principally to modify (or
dope) semi-conducting layers with a high-energy beam of material that is implanted into an
existing thin film.
Chemical vapor deposition, or CVD, is a process used in the deposition of semiconducting and
insulating thin films. In the CVD process, wafers are placed in a sophisticated reaction chamber
where specially designed gases or vaporized liquid materials are introduced. Simultaneously, a
form of energy, such as heat or plasma, is added to the chamber to cause a chemical reaction among
the materials being introduced. As a result of this reaction, a thin film
of material is deposited on the surface of the wafer. CVD-based processes have certain advantages
over PVD based processes, including:
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the relative thinness of the films applied to the wafer; |
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conformality (ability to coat evenly, especially in three-dimensional holes and trenches
designed into the device); |
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the ability to coat large areas. |
These advantages have led to periods of growth in sales of reactors and related CVD process
consumables and equipment. Consumables and related equipment include the raw materials used in the
CVD process and the delivery systems required to transport the materials around a semiconductor
plant and to a reactor.
Electrochemical deposition, or ECD, is growing rapidly as a result of the industrys desire to
use copper as the conducting layer in certain devices. The use of copper allows for smaller
circuits, because copper greatly reduces power consumption while increasing integrated circuit
(IC) speed. Nature favors copper over aluminum wiring because of its higher conductivity and
greater resistance to thermally and electrically induced short circuits. In ECD, the wafer is
placed in a bath of copper electroplating solution (the electrolyte). A power supply is connected
from the wafer substrate to a solid copper anode. When current is applied, the wafer acts as a
cathode where copper is reduced from solution and deposited onto the wafer resulting in a thin film
of copper on the wafer.
Atomic layer deposition (ALD) is a deposition method in which deposition of each atomic layer of
material is controlled by a pre-deposited layer of precursor; precursors and various components of
the film are introduced alternately; this method is used in deposition of alternative dielectrics.
Etch is a process that selectively erodes away certain thin film materials. It is carried out
either dry with corrosive gases or wet with energized liquids.
CMP is used to prepare a wafer for patterning photolithography. As wafers are processed, thin film
thicknesses vary across the surface of the wafer. Because of the fine line widths used in
photolithography, wafers need to have more consistent topography. CMP planarizes the processed
wafer by polishing the wafer using a mechanical polishing pad and slurry, an abrasive solution
containing abrasive particles and liquids and chemicals which selectively erode away the
appropriate excess materials. Given the migration to copper, precision surface preparation and
cleaning materials become more critical in the fabrication of advanced interconnect devices.
Photolithography is the process whereby patterns are developed on the wafer surface. The process
is begun by applying a photosensitive material called photoresist or resist onto the wafer
surface and shining light through a patterned photomask to selectively harden the resist.
Photoresist strip is the process of stripping away or otherwise removing excess resist material
which allows for the fabrication of the wafers circuitry.
Because thin film materials are consumables, the market for these materials, materials packaging,
and materials delivery systems generally tracks wafer starts. The thin film materials market is
also segmented into a wide variety of material types and forms. For example, many thin film
precursors are now sold as pressurized gases, which allows for easy transport around a typical
semiconductor manufacturing plant. However, many of these gases are toxic and/or hazardous,
leading to the development of safer alternatives, including the use of liquid or solid materials
and the adoption of gas handling technologies and delivery systems that minimize the danger of a
catastrophic release of toxic gas. In addition, many of the materials used are complex compounds
that have stability issues related to the form and environment in which they are made, stored and
used. Innovations in material selection, manufacturing, packaging and delivery are required to
insure reliable supply of consistently pure materials.
The extraordinarily precise process requirements for making integrated circuits dictate exceptional
purity and consistency requirements in the materials used to fabricate semiconductors. Liquids and
solids used in making
devices require special packaging and dispensing solutions to minimize exposure to air,
contamination, and degradation during temperature fluctuations and varying process conditions.
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The market for semiconductor thin film materials has expanded and contracted with the growth and
contractions of the market for semiconductor devices. The design of new thin film materials,
materials packaging, and materials delivery systems to transport these materials around a
semiconductor plant undergoes continuous innovation. This innovation has been driven by the demand
for expanding semiconductor device capabilities and corresponding decreases in circuit dimensions.
While we do expect growth in this segment, our growth may not track wafer starts as our customers
continue to focus on improving their own manufacturing processes, which may result in less material
used per wafer processed.
Flat-Panel Industry Background
The flat-panel industry has experienced periods of rapid growth, but is also exposed to rapid
downturns in anticipation of maturing product cycles, reductions in consumer demand and declines in
general economic conditions. These downturns have been characterized by diminished product demand,
production overcapacity, and high inventory levels. As was widely reported starting in late 2008,
the disruptions in global credit and financial markets led to diminished liquidity and credit
availability, declines in consumer confidence, declines in economic growth, increases in
unemployment rates, and uncertainty about economic stability. In response to these events and the
uncertainty they caused, our customers cautiously managed their inventories. Through the course of
2009, the flat-panel industry began to recover, driven by customers who had reduced their inventory
levels in the face of the economic downturn and government sponsored demand generation programs.
Given lingering economic uncertainties, we are unable to predict the likely duration of government
sponsored demand generation and lower inventory levels.
Flat-panel displays have become the standard for computer monitors, hand-held consumer devices,
televisions, and commercial display applications. Similar to semiconductors, the demand for
flat-panel displays has been fueled by the ability of manufacturers to deliver products with:
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consumer affordability through manufacturing and materials cost efficiencies; |
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improved performance and reliability; and |
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shorter product development cycles. |
The advances in flat-panel display technology have been made possible because manufacturers have
learned to leverage many of the technologies developed for the semiconductor industry as well as
improve processes that are unique to the flat-panel display industry, such as slit coating instead
of spin coating material onto the substrate to dramatically reduce material usage per substrate
processed. In some cases, because of the large volume of materials used in flat-panel
manufacturing, rapid advances in liquid materials handling and dispense applications have also
contributed to manufacturing efficiencies. Like the semiconductor industry, construction and
management of fabrication facilities have become more complex and costly, and flat-panel display
manufacturers continue to search for opportunities to bring efficiencies to their process to meet
the increasing demand for lower cost consumer products.
Flat-Panel Manufacturing Process
Flat-panel display manufacturing is fundamentally similar to semiconductor manufacturing with a
manufacturing cycle that includes photolithography and deposition process steps. The primary
difference is the size of the substrate with which the devices are made. Whereas the semiconductor
industry has standardized on 12 inch (300mm) silicon wafers as the leading technology, flat-panel
display manufacturers work with glass panels as large as ten feet across or more, which can cause
unique challenges in product handling. The scale of flat-panel manufacturing also leads to the
requirement for larger volumes of materials and, although capital costs are rapidly increasing,
materials remain a significant cost of manufacturing. As such, performance materials, materials
packaging, and materials delivery solutions that provide manufacturing process efficiencies are in
demand. While we do expect growth in this segment, our growth will not track glass starts as our
customers are moving to larger package sizes that generate less
packaging revenue per liter of material packaged and our customers continued focus on improving
their own manufacturing processes result in less material used per substrate processed.
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Life Sciences Industry Background
For several decades, the pipeline for new drugs was dominated by small molecule-based drugs or
drugs manufactured from synthetic chemical molecules. In the last few years there has been a shift
in the pipeline of the most promising drugs to large molecule-based drugs, or drugs manufactured
through biotechnology processes. In addition, the pipeline contains fewer blockbuster drugs (i.e.,
drugs with more than $1 billion of revenues per year) and more niche-market drugs to address
patient-specific treatments. This creates the need, from the research and development (R&D) and
manufacturing perspectives, for more flexible and multi-product R&D and manufacturing sites. As a
result of the high manufacturing and R&D costs in this industry, there is intense pressure by
manufacturers to improve efficiencies.
This market shift has led to an industry-wide trend towards beginning to use disposable process
technology (e.g., films and polymers) in place of traditional stainless steel processes, which will
accelerate time to market for new products, reduce capital investments, reduce cleaning and
recertification costs, and reduce contamination risk associated with multi-product manufacturing
facilities.
Life Sciences Manufacturing Process
Manufacturing in the life sciences markets is similar to semiconductor manufacturing, in that both
processes:
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produce high-purity materials; |
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must be reliable and repeatable; and |
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demand continued process automation and efficiencies in manufacturing in order to
reduce costs and to deliver value to the customers. |
ATMI is able to leverage its semiconductor manufacturing expertise in the life sciences arena by:
(1) utilizing its expertise in handling, storing, and delivering materials in a reliable manner,
and (2) utilizing its understanding of key interactions between materials and related packaging,
and life sciences one-time use applications. This is particularly the case, because the disposable
market maturity is about 10 years behind the semiconductor market.
ATMIs Strategy
ATMIs strategic intent is to be the source of process efficiency solutions to technology-driven
customers by providing innovative materials and related delivery systems and technologies to:
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Focus development and application engineering initiatives with the leading manufacturers
to provide next generation performance materials and process solutions. |
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Target high-growth, high-margin specialty markets that use ATMIs core materials and
packaging technologies and require products that are consumed in the production process. |
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Add value through performance materials packaging, dispensing, and process technologies
designed to meet the demands of users for greater levels of purity, productivity, safety,
environmental responsiveness, and speed. |
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Significantly shorten new product development time lines and the development of next
generation materials through the use of a combinatorial science-based research approach and
HPD capabilities. |
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Leverage ATMIs technology leadership by investing extensively in developing proprietary
and patented materials and process solutions, which the Company uses to quickly
commercialize new offerings for customers. |
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Form strategic alliances, including joint development programs and collaborative
marketing efforts, to accelerate the introduction of ATMIs products into existing and new
markets. |
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In summary, ATMIs strategy does not encompass a traditional materials supplier-to-customer
relationship. In those relationships, suppliers tend to provide materials to customers based
solely on the cost, quantity, and quality of the materials being supplied. Instead, ATMI works to
develop partnerships with its customers based on ATMIs ability to improve the process efficiency
of customers development, scale-up, manufacturing and supply chain processes, thereby reducing
customers total cost of ownership. ATMI seeks to provide value to its customers through the use
of its technical capabilities, and applications knowledge in a manner that changes its commercial
relationship with those customers to a value-sharing relationship.
Products
ATMI believes it is among the most innovative suppliers of high-purity materials and related
delivery systems and technologies. ATMI has sought to take advantage of the changes in the market
for materials, packaging and delivery systems by:
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developing and commercializing a broad range of front-end semiconductor performance
materials; |
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developing and commercializing sub-atmospheric pressure gas storage and delivery systems
for safe handling and delivery of toxic and hazardous gases to semiconductor process
equipment; |
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developing and commercializing innovative high-purity materials packaging and dispensing
systems that allow for the reliable introduction of low volatility liquids and solids to
semiconductor processes; |
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developing manufacturing processes to meet the critical purity and integrity
requirements of the microelectronics manufacturers; and |
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developing and commercializing single-use life sciences industry technologies using our
experience in high-purity materials packaging and dispensing systems. |
In meeting the needs of our customers, which include semiconductor device manufacturers, flat-panel
display manufacturers, chemical suppliers, semiconductor original equipment manufacturers, or OEMs,
and life sciences entities, located throughout the world, and anticipating their future
requirements, we seek to:
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utilize our global HPD capabilities incorporating high-productivity combinatorial
science-based research tools to shorten the development cycle to create new materials that
resolve current process issues, which meet the needs of advanced technology roadmaps of our
key customers; |
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maintain close relations with our customers in order to quickly understand their needs
and issues; |
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offer a complete line of performance materials, and related materials packaging,
dispensing and process technologies, and disposable containment, mixing, and bioreactor
systems; |
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provide a high level of customer service and applications support in all global markets; |
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meet customer needs for statistical quality and process control and dock-to-stock
programs; and |
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meet the industrys needs for advanced materials required for future generation devices. |
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Solutions
ATMI serves and provides applications and analytical support services to three primary markets:
integrated circuit (IC) fabrication (including ion implant and interconnect materials and
delivery systems), flat-panel displays (including advanced high-purity materials packaging and
dispensing systems), and the life sciences market.
IC Fabrication
The IC fabrication market represents the largest portion of ATMIs business and development
activities. The principal drivers for this market are cost, yield, speed, utilization of capital,
and risk reduction. Economics continue to play an important part in driving the deployment of
electronic goods with increased functionality at a lower cost dictating electronic component
success. Yield and capital utilization are significant drivers for the IC industry due to the
implications on throughput and financial return, and the challenge is compounded by the requirement
to manufacture devices at increasingly complex advanced technology generations. In an industry
where the capital infrastructure is significant and product life cycles are short, the ability to
rapidly bring the next generation technology to market can make a significant difference in our
customers success. ATMIs ability to shorten deployment of production-ready solutions is critical
to our success. And finally, the IC fabrication industry involves extremely complex manufacturing
processes where the mechanisms of advanced materials interactions are not always fully understood.
ATMIs ability to characterize and control process input variables helps to meet the need for risk
reduction.
Ion Implant Module
The primary issues within the ion implant module are production throughput, cost, and safety
because of the hazardous properties of the implant gases used. ATMIs patented SDS®
solutions use a standard gas cylinder containing an adsorbent material. The cylinder is filled
with gas under conditions such that the gas is adsorbed onto the adsorbent material at
sub-atmospheric pressure. Sub-atmospheric storage of hazardous gases minimizes potential leaks of
gas during transportation and use, thus providing significant safety and environmental improvements
over traditional high-pressure cylinders. In addition, SDS products allow more process gas to be
stored in the cylinder, providing significantly higher rates of productivity than traditional
methods of gas delivery used in ion implantation manufacturing processes. Because ion implantation
processes operate at reduced pressures, the gas can be desorbed or released from the SDS gas
sources using the ion implanters vacuum pumps. SDS gas sources can be installed and operated like
conventional high-pressure gas cylinders with minimal maintenance. These advantages have led the
majority of significant chip manufacturers to adopt this technology as the industry standard for
dopant gas delivery.
ATMI invests significant resources in developing solutions that can increase throughput and which
can provide customers a return on their investment while continuing to control the risks associated
with hazardous gases for the ion implant module. An example of these developments for ion implant
is SDS3. Materials packaged in SDS systems include primarily arsine, phosphine, and boron
trifluoride. The third generation of SDS products, called SDS3, maintains all the inherent safety
features of previous generation SDS products, but dramatically increases the gas storage capacity
by using a new adsorbent. The 2 to 3 times capacity improvement over the previous SDS products
allows ion implanter users to reduce tool down time, resulting in significant cost savings for our
customers.
Advanced Interconnect Solutions
ATMI has developed several solutions for the advanced interconnect of IC fabrication. Millions of
transistors on an integrated circuit are connected with a system of conducting wires in an
insulating media. As demand for higher electronic components capabilities and performance grows,
the need for more transistors and faster speeds is met through shrinkage. This poses problems for
IC designers since smaller devices and features result in delays of signal transfer because fewer
electrons can travel down a smaller path, and the potential for signals to short circuit increases
with the proximity of these smaller wires. The primary drivers for advanced interconnect are to
reduce the resistance of the wires (make them more conductive) and to improve the permittivity of
the dielectric (provide them with better insulation).
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These issues have been solved through the adoption of copper interconnects replacing aluminum, and
the use of low-k dielectrics. (The lower the k-value, the greater the insulation). Any particle
or defect can result in a short (where the dielectric fails and two adjacent wires connect) or an
open (where the wire fails to transmit the signal). Almost all of the development work within
ATMIs advanced interconnect capability is focused on one of two areas: 1) Providing materials and
technology that prevent particles and defects; and 2) providing materials and technology that help
to manage the film properties of the conductor and the insulator. Developments in these areas have
enabled the industry to develop advanced interconnects that are reliable and provide high yields
quickly.
Surface Preparation. ATMIs AP- and ST- brand wafer photoresist strip cleaning materials are
proprietary chemistries used for applications such as semiconductor post-etch residue removal,
wafer etching, organics removal, negative resist removal, edge bead removal, and corrosion
prevention. Our surface preparation solutions are being used in some of the most advanced copper
IC fabrication plants (fabs) around the world for various surface preparation applications such
as post-CMP cleaning and pre-nitride deposition surface treatment. The applications for these
products are expanding rapidly as the advanced IC device designs drop to 45 nanometers and below.
Customers using ATMIs surface preparation solutions are able to benefit from higher yield and more
reliable interconnects that result from fewer particles and defects.
Copper Plating. ATMI believes it is a market leader in materials used in copper ECD applications
with the ViaForm® copper materials that it offers. ViaForm materials include inorganic and
proprietary organic molecules that provide the backbone for copper interconnects. The ViaForm
solution enables manufacturers to eliminate processing steps by applying two layers of copper in a
single step known as dual damascene. Dual damascene copper processing in semiconductor devices is
a rapidly growing market with most major logic segment semiconductor companies in production at
130, 90, and 65 nanometers; in development at 45- and 32-nanometers; and research at 22-nanometers
and below. The memory segment is also experiencing growth in copper interconnect, with most memory
companies in production at 45-nanometers and in development at 32-nanometers.
Deposition. The advanced interconnects also include several processes for depositing thin films
such as CVD and atomic layer deposition (ALD) processes that are enabled by advanced liquid,
gaseous and solid precursors. The technology development of chemical synthesis and manufacturing
techniques provide ATMI with a competitive advantage in this area. ATMI markets its UltraPur
materials for pre-metal dielectric, dielectric and barrier applications. ATMI is well-positioned
for the incorporation of ALD processes by the semiconductor industry with its ProE-Vap® ampoule.
This proprietary container allows for reliable delivery of low volatility solid precursors required
for processes that demand ALD, like high-k gates.
ATMI has successfully adopted the carbon adsorption technology used in SDS and introduced products
for semiconductor deposition processes marketed under the SAGE® brand. These applications include:
low-k plasma-enhanced deposition, or PE-CVD, processes using low-k materials, pre-metal
dielectric high-density plasma, or HDP-CVD, and films using phosphine gases and thermal
deposition processes using germane gases. ATMI has also introduced a silane product in a VAC®
package used in processes such as HDP-CVD, for improved safety.
Materials Packaging. ATMIs NOWPak® liner technologies and container assemblies form the basis for
its high-purity liquid materials packaging and dispensing system product portfolio. For
applications in IC fabrication, this product line includes the: Bag-in-a-Bottle and
Bag-in-a-Drum container systems, each with its own companion dispense connection system. Each
package features a pre-cleaned collapsible inner liner, or bag, inside a rugged, high-density
polyethylene overpack. The standard liner films are made of polytetrafluoroethylene and other
polymers, which allow chemicals to be delivered to the manufacturing process without compromising
their inherent purity. The empty inner liner is easily removed for waste consolidation, and the
outer shell is recyclable or returnable for insertion of a new replacement liner. The dispensing
system promotes full use of the chemical, chemical isolation from environmental contamination, and
improved safety during dispense by sealing and isolating the chemical from the environment to
further protect the chemical and the operator.
The largest current market for NOWPak packaging products is photoresist and related chemicals used
to pattern integrated circuits and flat-panel displays. For integrated circuit patterning, these
materials are typically packaged in Bag-in-a-Bottle containers that range in size from 1 to 10
liters. Recently, applications have expanded beyond photolithography chemicals in the
semiconductor market to include photolithography ancillary chemicals, CMP slurries, and other
critical process chemicals using the recently developed 200 liter Bag-in-a-Drum container system.
9
Flat-Panel Display Market
The flat-panel display market has the potential for further growth because of the demand for flat
screen televisions and various display applications. Manufacturers in this market compete by
driving down costs and keeping yields high. To address these needs, ATMI has developed novel
high-purity materials packaging and dispensing systems.
ATMIs NOWPak® liner technologies and container assemblies also address the needs of the
flat-panel display market through the Bag-in-a-Can product, which has its own companion dispense
connection system, as described above, and uses larger 10 to 200 liter containers. The
Bag-in-a-Can features a cleaned collapsible inner liner, or bag, inside a rugged stainless steel
over pack. The standard liner films are made of proprietary multi-ply films of polyolefin and other
polymers, which allow chemicals to be delivered to the manufacturing process without compromising
their inherent purity. The empty inner liner is easily removed for waste consolidation, and the
outer shell is returned for insertion of a new replacement liner. The dispensing system promotes
full use of the chemical. The fundamentally unique advantage of the Bag-in-a-Can for the
flat-panel display market is that the drive gas used to transfer the chemical from the supply
container to the process tool is isolated from the chemistry, thereby minimizing defects and
variation in the manufacturing process.
Life Sciences
ATMI is addressing an increasing number of critical materials handling needs for the life sciences
markets. Other markets for the Companys proprietary high-purity materials handling and dispensing
systems include the biotechnology and laboratory markets, which we believe offer significant growth
potential. The biotechnology industry has been using disposable components like filters,
connectors, and disposable storage bags for several years; however, biotechnology customers have a
growing need to combine these disposable components and integrate them into disposable systems.
ATMI has responded to this trend by launching a complete offering of scalable disposable
containment, mixing and bioreactor systems.
ATMIs NewMix-Levtech proprietary disposable mixing technology is the market leading technology for
disposable mixing applications within the life sciences market. The solutions delivered to our
customers consist of a hardware system that is compatible with a one-time use mixing bag
container; the technology delivers unique particle-free mixing and is scalable to an industrial
scale. A typical biotech manufacturing process has over 20 different mixing steps starting from a
cell culture process through the final-fill drug solutions. ATMI mixing technology is typically
used for preparing buffers and media solutions for feeding the cell culture and chromatography
applications, but also other process steps like virus inactivation and final-fill solutions.
Raw Materials
We use a broad range of specialty and commodity chemicals and polymers in the development of our
products, including parts and sub-assemblies that are obtained from outside suppliers. We seek,
where possible, to have several sources of supply for all of these materials. Although we may, in
some instances, rely on a single or a limited number of suppliers, or upon suppliers in a single
country, for certain of these materials, we have not experienced any sustained interruption in
production or the supply of these materials and do not anticipate any difficulties in obtaining the
materials necessary to manufacture our products.
Working Capital
In the ordinary course of our business, we maintain an adequate level of working capital at all
times to support business needs. In accordance with our industrys practices, we do not need to
carry significant amounts of inventory to meet the delivery requirements of our customers. We
generally do not provide customers with rights of return (with the exception of standard warranty
provisions, which historically have not been material) and we generally do not provide customers
extended payment terms beyond 90 days.
10
Customers, Sales, and Marketing
ATMI sells and distributes its products worldwide primarily through a direct global sales and
service organization. For a breakdown of revenue by geography, see Note 17 in the Notes to the
Consolidated Financial Statements (Part II, Item 8 of this Form 10-K). Also, for detail regarding
revenue by product type, see Note 16 in the Notes to the Consolidated Financial Statements (Part
II, Item 8 of this Form 10-K). ATMI markets and sells its materials products to end-use customers,
chemical suppliers, and original equipment manufacturers (OEMs) through its direct sales force in
North America, Europe, Taiwan, South Korea, Japan, China, and Singapore, with limited use of
regional manufacturing representatives in certain parts of Asia and Europe. NOWPak containers are
generally sold to chemical suppliers, who sell their high-purity chemicals in NOWPak containers at
the request of end-users. ATMIs life sciences materials handling products are sold directly and
through a global distribution agreement to life sciences and certain semiconductor companies,
predominately in Europe and to an increasing extent in the United States. ATMI sells its SDS
products for ion implant applications directly to certain end-users and through an exclusive
distribution agreement with Matheson Tri-Gas, Inc. (Matheson). During the years ended December
31, 2009, 2008 and 2007, respectively, ATMI recognized $37.9 million, $83.8 million, and $86.4
million of revenues from Matheson, which represented 14.9 percent, 24.7 percent and 23.7 percent of
our revenues for these periods. During the years ended December 31, 2009, 2008 and 2007,
respectively, ATMI recognized revenues from a Taiwanese foundry of $36.2 million, $36.6 million and
$38.9 million, which represented 14.2 percent, 10.8 percent and 10.7 percent of our revenues for
these periods. There are no material seasonal effects on our business. Investors and others
should consider the cautionary statements and risk factors discussed in Item 1A below.
Manufacturing
This table summarizes the locations, products manufactured and size of ATMIs various manufacturing
facilities as of December 31, 2009.
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Location |
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Products |
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Square Footage |
Anseong, South Korea
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CVD materials
(Microelectronics)
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13,000 |
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Anseong, South Korea
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high-purity materials
packaging systems
(Microelectronics)
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10,000 |
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Burnet, TX
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liquid materials and
delivery systems
(Microelectronics)
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77,000 |
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Bloomington, MN
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high-purity materials
packaging systems
(Microelectronics / Life
sciences)
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68,000 |
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Danbury, CT
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gas delivery systems and
liquid materials
(Microelectronics)
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73,000 |
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Hoegaarden, Belgium
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high-purity materials
packaging and mixing systems
(Life sciences)
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74,000 |
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We use an exclusive contract manufacturer, Matheson, for the manufacture and distribution of our
SDS products. Under the terms of the manufacturing agreement, ATMI retains the right to
manufacture 25 percent of all SDS Products, which we manufacture in our Danbury, CT facility, while
the contract manufacturer has the right to manufacture 75 percent of all SDS Products. We also use
contract manufacturers for certain of our other materials and delivery equipment products both in
the U.S. and in Asia.
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Competition
ATMIs primary competitors in the semiconductor materials product lines include Air Products and
Chemicals (Electronics Division), DuPont Electronic Technologies, Dow Chemical Company (including
Rohm and Haas), BASF and Air Liquide as well as several smaller companies that specialize in niche
markets.
ATMIs SDS products (using adsorbent-based delivery technology) face competition from some
mechanical-based product approaches to delivering gas at sub-atmospheric pressure which currently
comprise a small portion of the market. Several companies compete with high-pressure gas cylinders
and solid sources. There are numerous domestic and foreign companies that offer products that
compete with ATMIs materials, materials packaging and materials delivery systems.
ATMI believes that its ability to compete in the markets for containers and dispensing systems is
dependent largely upon its patented NOWPak technology and its proven ability to enhance and improve
its products and technologies. Our NOWPak product line primarily competes with glass bottle
manufacturers.
ATMIs primary competitors in the life sciences product line include Sartorius Stedim Biotech S.A.,
Thermo Scientific HyClone, Millipore, and Xcellerex.
ATMI competes in established markets based on our ability to innovate and on product performance,
process efficiency, safety and price. In new and emerging markets we compete based on our ability
to develop innovative products that fulfill new and changing customer needs in an efficient,
cost-effective manner. Increased competition has, and may continue to, affect the prices we are
able to charge for our products. In addition, our competitors could own or could obtain
intellectual property rights which could restrict our ability to market our existing products
and/or to innovate and develop new products.
Research and Development
The Companys R&D expenses consist of personnel and other direct and indirect costs for internally
funded project development, including the use of outside service providers. ATMI also participates
in joint development efforts with certain semiconductor manufacturers, advanced technology
developers, and semiconductor equipment manufacturers. Total expenses for R&D for the years ended
December 31, 2009, 2008 and 2007 were $37.2 million, $37.8 million and $29.9 million, respectively.
Total research and development expenditures represented 14.6 percent, 11.2 percent, and 8.2 percent
of revenues in 2009, 2008 and 2007, respectively.
ATMI has made significant investments to create global HPD capabilities that incorporate
high-productivity combinatorial science-based research tools to shorten the new product development
life cycle and more rapidly create new materials needed by our customers for their advanced
technology roadmaps. While conventional R&D methods allow for one process experiment to be
conducted on a single wafer, HPD capabilities enable engineers to evaluate up to 192 different test
chemistries on a wafer at once. This technique allows independent control of formulation; stir rate
and exposure time at each independent site on a test surface yielding a rich source of data
regarding materials choices in a fraction of the time and at lower cost than conventional research
methods. Beyond the improvements in speed and data quality during the evaluation period, results
are also subjected to both automated and human experience-driven understanding of semiconductor
manufacturing process flows. The union of these forces produces much faster learning cycles, and
makes it possible to rapidly narrow substantial volumes of data to a most promising subset of
chemical formulations. The process is iterative, concurrently assessing large numbers of precisely
selected, newly designed test variations.
Since production of the earliest ICs, a readily identifiable group of the same dielectrics, dopants
and metals were applied with only limited refinements or modifications. The introduction of copper
has changed that dynamic; now, virtually every new technology generations requires no fewer than a
dozen new materials. Looking into the future, the industry evolution to 22 nanometer will
encompass approximately 45 new materials in a process involving nearly 1,200 steps, dramatically
increasing the need to have a tool which enables more rapid feedback for the determination of
materials that would be appropriate for individual processes. There is a significant and growing
need among our customers to have access to HPD capabilities to enable them to keep pace with these
market changes. The fundamental obstacle to overcome in trying to develop optimal chemistries
12
in this environment is that conducting experiments in the conventional serial fashion will not produce answers rapidly enough
to meet technology node insertion deadlines or competitive needs. Our HPD capabilities allow us to
pursue more new product opportunities, in a shorter time, and using fewer resources compared to
current methods. By performing a higher rate of experiments and identifying promising routes for
integrating these materials in actual production flows, and in certain instances, learning about
device characteristics, including electrical performance, much earlier in the process than
traditional approaches should differentiate ATMIs materials development capabilities from our
competition. We have recently demonstrated reductions in cycle time of up to 70 percent in the
development of certain customer solutions. We are currently using our HPD capabilities to solve
customers materials challenges in applications such as post-CMP cleaning, high-dose implant strip,
copper post-etch residue removal, high-k/metal gate cleaning and others all areas that pose
substantial development hurdles for our customers in the race to transition to the next technology
node.
While we initially focused ATMIs HPD programs primarily on wet chemistry applications, in 2009 we
added dry chemistry capabilities, which expanded our customer interactions and partnerships to
materials, such as high-k metal gate precursors, in advanced memory applications.
Strategic Alliances
ATMI forms strategic alliances, including joint development programs and collaborative marketing
efforts, to develop new products and to accelerate the introduction of its products. These
programs have led to significant technological advances, including the development of proprietary
advanced materials and semiconductor manufacturing processes. ATMI has entered into an exclusive
license, manufacture, and distribution agreement with Matheson, whereby ATMI has granted licensing
rights for the manufacturing and worldwide distribution of certain SDS products to Matheson. Both
ATMI and Matheson manufacture SDS products for worldwide distribution under this exclusive
agreement. ATMI has also entered into a strategic alliance with Enthone, Inc. (Enthone), a
subsidiary of Cookson Electronics, whereby in 2003, ATMI purchased the exclusive worldwide selling
and distribution rights to Enthones copper ECD products, including its ViaForm products, for a
period of ten years, subject to automatic renewal upon satisfaction of certain conditions. Under
the terms of the agreement, Enthone continues to manufacture the ViaForm products for ATMI. ATMI
holds a minority interest in the equity of Intermolecular, Inc., has purchased HPD tools from
Intermolecular, Inc., and has dedicated development resources with multiple key customers using
this technology platform. ATMI holds a 30 percent interest in Anji Microelectronics Co., Ltd.,
with operations in Shanghai, China, with marketing agreements and licensing agreements around
advanced semiconductor materials. ATMI also holds a minority interest in the equity of Artelis SA
(Artelis), a Belgian entity. We have partnered with Artelis in the development of disposables
technology for the life sciences markets. Most of ATMIs other strategic alliances are with leading
semiconductor manufacturers or OEMs, each of which has participated with the Company in advanced
materials and process development programs. These programs enhance ATMIs core technology base and
promote the introduction of targeted products.
Backlog
Substantial portions of our business are conducted with open-ended supply contracts that do not
specify quantities. Also, the SDS gas delivery source product carries no backlog. Therefore, the
Company does not believe that backlog as of any particular date is indicative of future results.
Patents and Proprietary Rights
ATMI has made, and continues to make, a significant investment in securing intellectual property
protection for its technology and products. ATMI seeks to protect its technology by, among other
things, filing patent applications where appropriate. The Company also relies upon trade secrets,
unpatented know-how, continuing technological innovation, and licensing opportunities to help
develop and maintain its competitive position.
As of December 31, 2009, ATMI owns or controls approximately 376 United States patents and has
approximately 193 current United States patent applications pending. Foreign counterparts of
certain of these applications have been filed, or may be filed at an appropriate time. ATMI
decides on a case-by-case basis whether, and in which countries, it will file counterparts of a
United States patent application outside the United States. ATMIs United
States patents expire between approximately 2010 and 2027. ATMI also holds approximately 24 United
States registered trademarks.
13
ATMI requires all employees, outside scientific collaborators, sponsored researchers, and most
other advisors and consultants to execute confidentiality agreements upon the commencement of
employment or consulting relationships with the Company. These agreements provide that all
confidential information developed or made known to the entity or individual during the course of
the entitys or individuals relationship with ATMI is to be kept confidential and not disclosed to
third parties except in specific circumstances. All of ATMIs employees have entered into
agreements providing for the assignment of rights to inventions made by them while employed by the
Company.
Environmental Regulation
ATMI uses hazardous materials and generates regulated waste streams as part of its manufacturing,
processing and R&D activities. As a result, the Company is subject to a variety of governmental
regulations related to the storage, use, transportation, and disposal of these materials. ATMIs
failure to comply with present or future laws could result in fines or other liabilities being
imposed on the Company, suspension of production or a cessation of operations. Investors and
others should consider the cautionary statements and risk factors discussed in Item 1A below.
Employees and Employee Relations
As of December 31, 2009, ATMI employed 693 individuals, including 298 in sales, marketing, and
administration, 259 in operations, and 136 in research and development. Approximately 10 percent
of the Companys employees are covered by collective bargaining agreements, which expire in June
2011. All of the employees covered by these agreements are based in Belgium. ATMI has never
experienced any work stoppages and considers its relations with its employees to be good.
Company Information
ATMI was incorporated under the laws of Delaware in 1997, and its predecessor company was
incorporated under the laws of Delaware in 1987. ATMIs headquarters is located at 7 Commerce
Drive, Danbury, Connecticut 06810, and the telephone number is (203) 794-1100.
ATMIs website can be found on the Internet at www.atmi.com. The website contains
information about the Company and its operations. We make available free of charge through our
website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on
Form 8-K, and amendments to these reports, as soon as reasonably practicable after we
electronically file such material with, or furnish such material to, the Securities and Exchange
Commission (SEC). These reports may be accessed on our website by following the link under
Investor and then clicking on Financial information.
Any of our reports filed or furnished with the SEC can also be obtained in print by any stockholder
who requests them from our Investor Relations Department:
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Investor Relations |
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ATMI, Inc. |
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7 Commerce Drive |
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Danbury, CT 06810 |
14
Item 1A. Risk Factors
Cautionary Statements Regarding Future Results of Operations
You should read the following cautionary statements in conjunction with the factors discussed
elsewhere in this and other of our filings with the Securities and Exchange Commission (SEC) and in
materials incorporated by reference in these filings. These cautionary statements are intended to
highlight certain factors that may affect our financial condition and results of operations and 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
because of 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.
The global economic recession and continuing uncertainty in the financial markets could
materially and adversely affect our business and results of operations.
Our business may be affected by the ongoing volatility and illiquidity in the financial and credit
markets, the general global economic recession, such as inflationary or deflationary pressures and
other market or economic challenges experienced by the world economy. There can be no assurance
that there will not be further deterioration in credit and financial markets and confidence in
economic conditions. These economic uncertainties affect businesses such as ours in a number of
ways, making it difficult to accurately forecast and plan our future business activities. The
recent tightening of credit in financial markets and the general economic downturn has led
consumers and businesses to postpone spending, which has caused our customers to delay orders with
us. In addition, financial difficulties experienced by our suppliers or distributors could result
in product delays, increased accounts receivable defaults and inventory challenges. We are unable
to predict the likely duration and severity of these disruptions in the credit and financial
markets and adverse global economic conditions, and if the current uncertain economic conditions
continue or further deteriorate, our business and results of operations could be materially and
adversely affected.
Cyclicality in the markets we sell to may adversely affect our performance.
The semiconductor market has historically been cyclical and subject to significant and often rapid
increases or decreases in demand. These changes, along with cyclical changes in the flat-panel
display market, could adversely affect our results of operations and could have an adverse effect
on the market price of our common stock. Our results of operations have been adversely affected,
and may be further affected in the future, if demand for semiconductors, or devices that use
semiconductors, or flat panels decreases or grows at a significantly slower pace than has
historically occurred. Subsequent upturns in the markets which we serve have historically been
characterized by sudden increased product demand and production capacity constraints. We may have
difficulty reacting quickly enough to a sudden upturn in demand for our products and may incur
significant expediting and manufacturing costs to meet a rapid increase in customer demand.
Our profit margins may be adversely affected by a number of factors.
Our profit margins may be adversely affected in the future by a number of factors, including
decreases in our shipment volume, reductions in, or obsolescence of, our inventory and shifts in
our product mix. Many of our expenses, particularly those relating to capital equipment and
manufacturing overhead, are fixed in the short term. Accordingly, reduced demand for our products
and services can cause our fixed production costs to be allocated across reduced production
volumes, which can adversely affect our gross margin and profitability, and reduced demand could
adversely affect our performance. Our ability to reduce expenses is further constrained because we
must continue to invest in research and development to maintain our competitive position and to
maintain service and support for our existing global customer base.
15
Our business could be adversely affected if we cannot protect our proprietary technology or if
we infringe on the proprietary technology of others.
Our proprietary technology aids our ability to compete effectively with other companies. Although
we have been awarded, have filed applications for or have been licensed under numerous patents in
the United States and other countries, these patents may not fully protect our technology or
competitive position. Further, our competitors may apply for and obtain patents that will restrict
our ability to make and sell our products.
Our competitors may intentionally infringe our patents. Third parties may also assert infringement
claims against us in the future. Litigation may be necessary to enforce patents issued to us, to
protect our trade secrets or know-how, to defend ourselves against claimed infringement of the
rights of others or to determine the scope and validity of the proprietary rights of others. The
defense and prosecution of patent suits are both costly and time-consuming, even if the outcome is
favorable to us. Outside the United States, in particular, such proceedings can be extremely
expensive and their outcome very unpredictable. An adverse outcome in the defense of a patent suit
could cause us to lose proprietary rights, subject us to significant liabilities to third parties
or require us to license rights from third parties or to cease selling our products. Any of these
events could have a material adverse effect on our business, operating results and financial
condition. We also rely on unpatented proprietary technology that others may independently develop
or otherwise obtain access to. Our inability to maintain the proprietary nature of our technologies
could negatively affect our revenues and earnings.
The loss of or significant curtailment of purchases by any of our largest customers could
adversely affect our results of operations.
While we generate revenue from hundreds of customers worldwide, the loss of or significant
curtailment of purchases by one or more of our top customers, including curtailments due to a
change in the design or manufacturing sourcing policies or practices of these customers or the
timing of customer inventory adjustments may adversely affect our results of operations. Our
customers and their customers aggressive management of inventory has already adversely affected our
results of operations and may continue to adversely affect future results of operations.
Customer driven pricing pressure may adversely affect our average selling prices.
We face aggressive cost-containment pressures from our customers. There can be no assurances that
we will be able to maintain current prices in the face of continuing pricing pressures. Over time,
the average price for our products may decline as the markets for these products become more
competitive. Any material reduction in product prices could negatively affect both revenues and
profits.
Our revenues and earnings could be negatively affected if we cannot anticipate market trends,
enhance our existing products and processes, develop and commercialize new products and processes,
and identify and consummate strategic acquisitions.
We believe that our future success will depend, in part, upon our ability to anticipate rapidly
changing technologies and market trends, to enhance our existing products and processes, to develop
and commercialize new products and processes, and to expand through selected acquisitions of
technologies or businesses or other strategic alliances. The microelectronics industry markets we
serve undergo frequent technological changes, which in turn create demand for new and improved
products and process technologies. We may not be able to improve our existing products and process
technologies or to develop and market new products and technologies that will be cost-effective or
introduced in a timely manner or accepted in the marketplace. We may not be able to leverage our
knowledge to make full use of combinatorial science and HPD capabilities into as an effective
market offering for our customers. Our failure to develop or introduce enhanced and new products
and processes in a timely manner may negatively affect our revenues and earnings, and result in a
potential impairment of assets. Management considers, on a continuing basis, potential acquisitions
of technologies and businesses and other strategic alliances, some of which may be material to us.
However, we cannot be assured that we will identify or succeed in consummating transactions with
suitable acquisition candidates or alliance partners in the future.
16
We may have difficulty obtaining the resources or products we need for manufacturing or
assembling our products or operating other aspects of our business, which could adversely affect
our ability to meet demand for our products and may increase our costs.
We have hundreds of suppliers providing various materials that we use in the production of our
products and other aspects of our business, and we seek, where possible, to have several sources of
supply for all of these materials. However, we may rely on a single or a limited number of
suppliers, or upon suppliers in a single country, for certain of these materials. The inability of
such suppliers to deliver adequate supplies of production materials or other supplies could disrupt
our production process. In addition, production could be disrupted by the unavailability of the
resources used in production such as electricity, chemicals, and gases. The unavailability or
reduced availability of the materials or resources we use in our business may require us to reduce
production of products or may require us to incur additional costs in order to obtain an adequate
supply of these materials or resources. The occurrence of any of these events could adversely
affect our business and results of operations.
We face intense competition from a variety of sources, including larger companies.
The markets for our products are intensely competitive. A number of domestic and international
companies engage in commercial activities in the markets we serve. Many of these companies have
substantially greater financial, research and development, manufacturing and marketing resources
than we do. In addition, as this industry evolves, other competitors may emerge. To remain
competitive, we must continue to invest in and focus upon research and development and product and
process innovation. We may not be successful if we cannot compete on: price, technical
capabilities, quality, or customer service.
Our global manufacturing and sales activities subject us to risks associated with legal,
political, economic or other changes.
We have facilities in eight countries worldwide and, in 2009, more than 80 percent of our revenues
came from sales to companies outside the United States. Operating internationally exposes us to
changes in export controls and other laws or policies, as well as the general political and
economic conditions, security risks, health conditions and possible disruptions in transportation
networks, of the various countries in which we operate, which could result in an adverse effect on
our business operations in such countries and our results of operations.
Our results of operations could be adversely affected by fluctuations in exchanges rates.
Given our current operations and large customer base outside the United States, we employ the use
of forward currency exchange contracts to attempt to minimize the potentially adverse earnings
effect from exchange rate fluctuations on our net balance sheet exposures. Nevertheless, in
periods when the U.S. dollar significantly fluctuates in relation to the non-U.S. currencies in
which we transact business, such as the Euro, Japanese Yen, and the South Korean Won, fluctuations
can have an adverse effect on our revenues and results of operations.
Our results of operations could be adversely affected by natural events in the locations in
which we, our customers or our suppliers operate.
We have manufacturing and other operations in locations subject to natural events such as severe
weather and earthquakes that could disrupt operations. In addition, our suppliers and customers
also have operations in such locations. A natural disaster that results in a prolonged disruption
to our operations, or our customers or suppliers operations, may adversely affect our results of
operations and financial condition.
Incorrect forecasts of customer demand could adversely affect our results of operations.
Our ability to match inventory and production mix with the product mix needed to fill current
orders and orders to be delivered may affect our ability to meet our forecasts, especially during
the current economic crisis where there is limited visibility to future wafer starts. In addition,
when responding to customers requests for shorter shipment lead times, we manufacture product
based on forecasts of customers demands. These forecasts are based on multiple assumptions. If we
inaccurately forecast customer demand, or if the industry recovers more quickly than
anticipated, we may incur expedited shipping costs to deliver products to meet customer demand or
hold excess or obsolete inventory that would reduce our profit margins and could adversely affect
our results of operations.
17
We may have difficulty managing our growth and attracting and retaining highly skilled
scientific, technical, managerial and marketing personnel, which could adversely affect our
revenues and increase our operating expenses.
Despite the recent economic downturn and contraction of our business, we have historically
experienced periods of growth and intend to grow our business in the future. The management of our
growth requires qualified personnel, systems and other resources. Our future success will depend in
part on our ability to attract and retain highly skilled scientific, technical, managerial and
marketing personnel. Competition for such personnel in the industries that we serve is intense, and
our competitors are often larger and more established than we are. We may not be successful in
attracting and retaining qualified personnel. In addition, our expansion may also significantly
strain operational, management, financial, sales and marketing and other resources. To manage
growth effectively, we must continue to enhance and integrate our information technology
infrastructure, systems and controls and successfully expand, train and manage our employee base.
We may not be able to manage this expansion effectively, including by providing satisfactory levels
of customer service and technical support. Inability to manage our growth and to attract and retain
skilled personnel could have a material adverse effect on our business, operating results and
financial condition.
We engage in acquisitions, and may encounter difficulties integrating acquired businesses with
our current operations; therefore, we may not realize the anticipated benefits of the
acquisitions.
We seek to grow through strategic acquisitions. In the past several years, we have made certain
acquisitions intended to complement and expand our business, and may continue to do so in the
future. The success of these transactions will depend on our ability to integrate assets and
personnel acquired in these transactions, apply our internal controls processes to these acquired
businesses, and cooperate with our strategic partners. We may encounter difficulties in integrating
acquisitions with our operations, applying our internal controls processes to these acquisitions,
and in managing strategic investments. Furthermore, we may not realize the degree or timing of
benefits we anticipate when we first enter into a transaction. Any of the foregoing could adversely
affect our business and results of operations.
We face the risk of product liability claims.
The manufacture and sale of our products, which include thin film and other toxic materials,
involve the risk of product liability claims. In addition, a failure of one of our products at a
customer site could interrupt the business operations of the customer. Our existing insurance
coverage limits may not be adequate to protect us from all liabilities that we might incur in
connection with the manufacture and sale of our products if a successful product liability claim or
series of product liability claims were brought against us.
Our business is potentially subject to substantial liabilities for failure to comply with
environmental regulations.
We use, generate and discharge toxic or otherwise hazardous chemicals and wastes in our
manufacturing, processing and research and development activities. As a result, we are subject to a
variety of governmental regulations related to the storage, use and disposal of these materials.
Our failure to comply with present or future laws could result in fines or other liabilities being
imposed on us, suspension of production or a cessation of operations.
In addition, under federal and state statutes and regulations, a government agency may seek to
recover its response costs and/or require future remedial measures from both operators and owners
of property where releases of hazardous substances may have occurred (including releases by prior
occupants) or are ongoing, and for which only partial indemnification may be available in some
cases.
Our activities may also result in our being subject to additional regulation. Such regulations
could require us to acquire significant additional equipment or to incur other substantial expenses
to comply with environmental laws. Our failure to control the use of hazardous substances could
subject us to substantial financial liabilities.
18
Our financial results or financial condition could be adversely affected by changes in
accounting standards and subjective assumptions, estimates and judgments by management related to
complex accounting matters.
Generally accepted accounting principles and related accounting pronouncements, implementation
guidelines and interpretations with regard to a wide range of matters that are relevant to our
business, such as revenue recognition, asset impairment, inventories, self-insurance, tax matters
and litigation, are highly complex and involve many subjective assumptions, estimates and
judgments. Changes in these rules or their interpretation or changes in underlying assumptions,
estimates or judgments could significantly change our reported or expected financial performance or
financial condition.
Our results of operations could be adversely affected by changes in taxation.
We have facilities in eight countries and, as a result, are subject to taxation and audit by a
number of taxing authorities. Tax rates vary among the jurisdictions in which we operate. Our
results of operations could be affected by market opportunities or decisions we make that cause us
to increase or decrease operations in one or more countries, or by changes in applicable tax rates
or audits by the taxing authorities in countries in which we operate. In addition, we are subject
to laws and regulations in various locations that govern the determination of which is the
appropriate jurisdiction to decide when and how much profit has been earned and is subject to
taxation in that jurisdiction. Changes in these laws and regulations could affect the locations
where we are deemed to earn income, which could in turn affect our results of operations. We have
deferred tax assets on our balance sheet. Changes in applicable tax laws and regulations could
affect our ability to realize those deferred tax assets, which could also affect our results of
operations. Each quarter we forecast our tax liability based on our forecast of our performance for
the year. If that performance forecast changes, our forecasted tax liability may change.
Compliance with changing corporate governance regulations and public disclosures may result in
additional risks and exposures.
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, have created uncertainty
for public companies such as ours. These laws, regulations, and standards are subject to varying
interpretations in many cases and as a result, their application in practice may evolve over time
as new guidance is provided by regulatory and governing bodies. This could result in continuing
uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to
disclosure and governance practices and our commitment to maintaining high standards with regard
thereto. As a result, our efforts to comply with evolving laws, regulations, and standards have
resulted in, and are likely to continue to result in, increased selling, general, and
administrative expenses and significant management time and attention. In particular, our efforts
to comply with Section 404 of the Sarbanes-Oxley Act of 2002 and the related regulations regarding
our required assessment and, our independent registered public accounting firms audit, for fiscal
2009 have necessitated, and we expect such efforts to continue to necessitate, the commitment of
significant financial and managerial resources.
Item 1B. Unresolved Staff Comments
None.
19
Item 2. Properties
This table summarizes the location and size of ATMIs significant real properties as of December
31, 2009:
|
|
|
|
|
|
|
Location |
|
Square Footage |
|
|
Lease / Own |
|
|
|
|
|
|
|
Anseong, South Korea |
|
|
13,000 |
|
|
Own |
Anseong, South Korea |
|
|
10,000 |
|
|
Lease |
Bloomington, MN |
|
|
68,000 |
|
|
Lease |
Burnet, TX |
|
|
77,000 |
|
|
Own |
Chutung Town, Taiwan |
|
|
18,000 |
|
|
Lease |
Danbury, CT (1) |
|
|
31,000 |
|
|
Lease |
Danbury, CT |
|
|
73,000 |
|
|
Lease |
Hoegaarden, Belgium |
|
|
74,000 |
|
|
Own |
Hsin-chu, Taiwan |
|
|
30,000 |
|
|
Lease |
Lexington, KY |
|
|
8,000 |
|
|
Lease |
Round Rock, TX |
|
|
15,000 |
|
|
Lease |
Shanghai, China |
|
|
7,000 |
|
|
Lease |
Suwon-si, South Korea |
|
|
7,000 |
|
|
Lease |
Tempe, AZ |
|
|
11,000 |
|
|
Lease |
Tokyo, Japan |
|
|
6,000 |
|
|
Lease |
Toyohashi, Japan |
|
|
8,000 |
|
|
Lease |
ATMI also leases various sales offices throughout the world, each one of which occupies 5,000 or
fewer square feet.
Our fixed assets as of December 31, 2009 include the manufacturing facilities and non-manufacturing
facilities such as sales and administrative offices, including leasehold improvements made to those
facilities under non-cancelable leases, set forth in the table above and a substantial quantity of
machinery and equipment. The facilities, leasehold improvements, machinery and equipment in use as
of December 31, 2009 are in good operating condition, are well-maintained and substantially all are
in regular use.
We believe that the fixed assets capitalized and facilities in operation at December 31, 2009 for
the production of our products are suitable and adequate for the business conducted therein in the
current business environment and have sufficient production capacity for their present intended
purposes. Utilization of our facilities varies based on demand for our products. We continuously
review our anticipated requirements for facilities and, based on that review, may from time to time
adjust our facility needs.
Item 3. Legal Proceedings
ATMI is, from time to time, subject to legal actions, governmental audits, and proceedings relating
to various matters incidental to its business including contract disputes, intellectual property
disputes, product liability claims, employment matters, export and trade matters, and environmental
claims. While the outcome of such matters cannot be predicted with certainty, in the opinion of
management, after reviewing such matters and consulting with ATMIs counsel and considering any
applicable insurance or indemnifications, any liability which may ultimately be incurred is not
expected to materially affect ATMIs consolidated financial position, cash flows or results of
operations.
20
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to security holders for a vote during the quarter ended December 31,
2009.
21
PART II
Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
The following graph compares the cumulative total stockholder return on the Companys common stock
with the return on the Total Return Index for the NASDAQ Global Select Market (NASDAQ US Index) and
the NASDAQ Electronic Components Stock Index. The measurement assumes a $100 investment as of
December 31, 2004 with all dividends, if any, reinvested. The data presented are on an annual
basis for the five years ended December 31, 2009. The performance shown is not necessarily
indicative of future performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Relative Stock Performance |
|
|
|
|
|
|
|
NASDAQ |
|
|
|
|
|
|
|
|
|
|
Electronic |
|
|
|
|
|
|
NASDAQ |
|
|
Components |
|
|
|
|
Date |
|
US Index |
|
|
Stock Index |
|
|
ATMI |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/04 |
|
|
100.000 |
|
|
|
100.000 |
|
|
|
100.000 |
|
12/30/05 |
|
|
102.135 |
|
|
|
99.080 |
|
|
|
124.146 |
|
12/29/06 |
|
|
112.187 |
|
|
|
108.922 |
|
|
|
135.508 |
|
12/31/07 |
|
|
121.681 |
|
|
|
122.118 |
|
|
|
143.142 |
|
12/31/08 |
|
|
58.639 |
|
|
|
65.870 |
|
|
|
68.486 |
|
12/31/09 |
|
|
84.282 |
|
|
|
102.927 |
|
|
|
82.645 |
|
The cumulative total stockholder return graph and related data provided in Part II Item 5 of this
Form 10-K is not soliciting material, is not deemed filed with the SEC and is not to be
incorporated by reference in any filing by us under the Securities Act of 1933, as amended (the
Securities Act), or the Exchange Act, whether made before or after the date hereof and
irrespective of any general incorporation language in any such filing.
22
The common stock of ATMI has traded on the NASDAQ Global Select Market under the symbol ATMI since
October 13, 1997, and the common stock of our predecessor company traded under that symbol from
1993 until October 12, 1997. This table sets forth, for the periods indicated, the high and low
sales price for the common stock as reported on the NASDAQ Global Select Market:
|
|
|
|
|
|
|
|
|
|
|
High |
|
|
Low |
|
Fiscal year ended December 31, 2009 |
|
|
|
|
|
|
|
|
1st Quarter |
|
$ |
16.75 |
|
|
$ |
11.80 |
|
2nd Quarter |
|
|
18.65 |
|
|
|
13.72 |
|
3rd Quarter |
|
|
19.77 |
|
|
|
14.99 |
|
4th Quarter |
|
|
19.41 |
|
|
|
14.47 |
|
Fiscal year ended December 31, 2008 |
|
|
|
|
|
|
|
|
1st Quarter |
|
$ |
32.53 |
|
|
$ |
25.40 |
|
2ndQuarter |
|
|
31.11 |
|
|
|
27.00 |
|
3rd Quarter |
|
|
28.18 |
|
|
|
15.02 |
|
4th Quarter |
|
|
17.81 |
|
|
|
8.70 |
|
As of January 29, 2010, there were approximately 159 holders of record of the common stock.
We have never paid cash dividends on our common stock and have no current plans to do so. There are
no contractual restrictions in place that currently materially limit, or are likely in the future
to materially limit, us from paying dividends on our common stock, but applicable state law may
limit the payment of dividends. Our present policy is to retain earnings, if any, to provide funds
for the operation and expansion of our business.
Effective July 6, 2009, Continental Stock Transfer & Trust Company replaced Computershare Trust
Company, N.A. as ATMIs stock transfer agent.
Purchases of Equity Securities There were no share repurchases during the three months ended
December 31, 2009 of any of our securities registered under Section 12 of the Exchange Act, by or
on behalf of us, or any affiliated purchaser. We withheld 1,613 shares through net share
settlements during the three months ended December 31, 2009 upon the vesting of restricted stock
awards to cover minimum tax withholding obligations.
23
Item 6. Selected Financial Data
These selected consolidated statements of operations for the years ended December 31, 2009, 2008,
2007, 2006 and 2005 and the consolidated balance sheet data as of such dates are derived from
ATMIs audited consolidated financial statements. The data below should be read in conjunction with
the consolidated financial statements and notes thereto and other financial information included
elsewhere in this Form 10-K (in thousands, except per share data).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
254,704 |
|
|
$ |
339,063 |
|
|
$ |
364,088 |
|
|
$ |
325,913 |
|
|
$ |
281,754 |
|
Cost of revenues |
|
|
152,520 |
(1) |
|
|
172,551 |
(5) |
|
|
182,480 |
(9) |
|
|
162,530 |
(11) |
|
|
140,251 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
102,184 |
|
|
|
166,512 |
(6) |
|
|
181,608 |
|
|
|
163,383 |
|
|
|
141,503 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
37,162 |
(2) |
|
|
37,809 |
|
|
|
29,879 |
|
|
|
26,217 |
|
|
|
22,284 |
|
Selling, general, and administrative |
|
|
76,359 |
(3) |
|
|
88,781 |
|
|
|
99,227 |
(10) |
|
|
90,149 |
|
|
|
78,810 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
113,521 |
|
|
|
126,590 |
|
|
|
129,106 |
|
|
|
116,366 |
|
|
|
101,094 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
(11,337 |
) |
|
|
39,922 |
|
|
|
52,502 |
|
|
|
47,017 |
|
|
|
40,409 |
|
Interest income |
|
|
1,196 |
|
|
|
3,126 |
|
|
|
7,689 |
|
|
|
8,353 |
|
|
|
7,269 |
|
Other income (expense), net |
|
|
(3,515 |
)(4) |
|
|
(2,902 |
)(7) |
|
|
(788 |
) |
|
|
486 |
|
|
|
(2,294 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
(13,656 |
) |
|
|
40,146 |
|
|
|
59,403 |
|
|
|
55,856 |
|
|
|
45,384 |
|
Provision (benefit) for income taxes |
|
|
(6,996 |
) |
|
|
6,819 |
(8) |
|
|
18,864 |
|
|
|
15,895 |
(12) |
|
|
14,662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(6,660 |
) |
|
$ |
33,327 |
|
|
$ |
40,539 |
|
|
$ |
39,961 |
|
|
$ |
30,722 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share assuming dilution |
|
$ |
(0.21 |
) |
|
$ |
1.04 |
|
|
$ |
1.16 |
|
|
$ |
1.08 |
|
|
$ |
0.85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding diluted |
|
|
31,398 |
|
|
|
32,078 |
|
|
|
35,093 |
|
|
|
36,859 |
|
|
|
36,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheet Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents, and
marketable securities (13) |
|
$ |
107,978 |
|
|
$ |
96,020 |
|
|
$ |
193,697 |
|
|
$ |
219,066 |
|
|
$ |
256,137 |
|
Working capital |
|
|
203,904 |
|
|
|
190,095 |
|
|
|
280,221 |
|
|
|
281,362 |
|
|
|
274,323 |
|
Total assets |
|
|
459,576 |
|
|
|
453,064 |
|
|
|
492,241 |
|
|
|
488,037 |
|
|
|
499,836 |
|
Long-term obligations |
|
|
18,403 |
|
|
|
16,303 |
|
|
|
10,656 |
|
|
|
1,669 |
|
|
|
3,460 |
|
Total stockholders equity |
|
|
411,490 |
|
|
|
408,897 |
|
|
|
434,383 |
|
|
|
435,496 |
|
|
|
452,720 |
|
24
The Company has never declared any cash dividends.
|
|
|
(1) |
|
Includes $1.1 million charge for incremental excess and obsolete inventory related to product
discontinuances and a reserve to cover expected product shelf-life issues; and a $3.1 million
impairment charge for long-lived assets written down to their estimated fair values primarily
related to the planned idling of manufacturing capacity of our gas products. In the third
quarter, we determined that the manufacturing capacity for these gas products will continue
normal production as we were not successful in our attempt to transition to vendor sourced
manufacturing. |
|
(2) |
|
Includes a $1.6 million impairment charge for long-lived assets written down to their
estimated fair values related primarily to idled equipment. |
|
(3) |
|
Includes a $1.4 million charge to increase our reserves for bad debt to cover exposures
related to customer bankruptcy filings and uncertainties of collections due to the current
general macroeconomic conditions; a $2.6 million impairment charge for long-lived assets
written down to their estimated fair values primarily related to redundant enterprise
management software; and a $0.6 million charge for SG&A severance costs. |
|
(4) |
|
Includes a $2.5 million impairment charge, primarily related to a write-down associated with
an auction-rate security. |
|
(5) |
|
Includes a $2.4 million business interruption claim recovery related to a fire at a contract
manufacturer in Taiwan. |
|
(6) |
|
Includes a $3.1 million benefit associated with the settlement of a dispute with a
distributor ($3.7 million recognized in revenues, with $0.6 million of associated costs
recognized in cost of revenues). |
|
(7) |
|
Includes a $2.0 million gain from the sale of a marketable security, $1.6 million of
impairment charges related to our strategic investment portfolio and $1.8 million of a
convertible note, and $1.1 million representing our proportionate share of gains on sales of
assets by one of our equity-method investees. |
|
(8) |
|
Includes a $3.7 million tax benefit (including interest) recognized to reverse previously
established reserves for uncertain tax positions as a result of the expiration of the
applicable statute of limitations. |
|
(9) |
|
Includes $1.1 million of increased customs expense on imported goods from the U.S. to an
overseas affiliate. |
|
(10) |
|
Includes $1.1 million associated with a contingent legal fee arrangement. |
|
(11) |
|
Includes $1.4 million one-time recovery of value-added taxes in Japan related to 2005. |
|
(12) |
|
Includes a $1.7 million tax benefit recognized to reverse previously established reserves for
uncertain tax positions as a result of the expiration of the applicable statute of
limitations. |
|
(13) |
|
Includes non-current marketable securities of $10.6 million, $3.7 million, $0 million, $14.4
million, and $46.3 million at December 31, 2009, 2008, 2007, 2006, and 2005, respectively. |
25
Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations
This discussion and analysis of our financial condition and results of operations should be read
together with the consolidated financial statements and the related notes thereto appearing in Item
8 of this Form 10-K.
Company Overview
We believe we are among the leading suppliers of high performance materials, materials packaging
and materials delivery systems used worldwide in the manufacture of microelectronics devices. Our
products consist of front-end semiconductor performance materials, sub-atmospheric pressure gas
delivery systems for safe handling and delivery of toxic and hazardous gases to semiconductor
process equipment, high-purity materials packaging and dispensing systems that allow for the
reliable introduction of low volatility liquids and solids to microelectronics and
biopharmaceutical processes. ATMI targets both semiconductor and flat-panel display manufacturers,
whose products form the foundation of microelectronics technology rapidly proliferating through the
consumer products, information technology, automotive, healthcare, and communications industries.
The market for microelectronics devices is continually changing, which drives demand for new
products and technologies at lower cost. ATMIs customers include many of the leading
semiconductor and flat-panel display manufacturers in the world who target leading edge
technologies. ATMI also addresses an increasing number of critical materials handling needs for the
life sciences markets. Our proprietary containment, mixing, and bioreactor technologies are sold
to the biotechnology and laboratory markets, which we believe offer significant growth potential.
ATMIs objective is to meet the demands of our microelectronics and life sciences customers with
solutions that maximize the efficiency of their manufacturing processes, reduce capital costs, and
minimize the time to develop new products and integrate them into their processes.
Use of Estimates
Preparation of our financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses. Note 1 to the
consolidated financial statements in Item 8 of this
Form 10-K describes the significant accounting policies used in preparation
of the consolidated financial statements. Management believes the most complex and sensitive
judgments, because of their significance to the Consolidated Financial Statements, result primarily
from the need to make estimates about the effects of matters that are inherently uncertain. The
most significant areas involving management judgments and estimates are described below. Actual
results in these areas could differ from managements estimates. These policies are determined by
management and have been reviewed by ATMIs Audit Committee.
Revenue Recognition
We recognize revenue in accordance with SEC Staff Accounting Bulletin No. 104, Revenue Recognition
(SAB 104), which requires that four basic criteria must be met before revenue can be recognized:
(1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been
rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured.
Revenues from product sales are generally recognized upon delivery to a common carrier when terms
are equivalent to free-on-board (FOB) origin and upon receipt by a customer when terms are
equivalent to FOB destination. In instances where final acceptance of equipment is specified by
the purchase agreement, revenue is deferred until all acceptance criteria have been satisfied.
Should changes in conditions cause management to determine these criteria are not met for certain
future transactions, revenue recognized for any reporting period could be adversely affected. We
accrue for sales returns, warranty costs, and other allowances based on a current evaluation of our
experience based on stated terms of the transactions. Should actual product failure rates or
customer return experience differ from our estimates, revisions to the estimated accruals would be
required.
We use an exclusive contract manufacturer, which is also an exclusive distribution partner, for the
manufacture and distribution of our SDS products (the Licensed Products). Under the terms of the
manufacturing agreement, ATMI retains the right to manufacture 25 percent of all Licensed Products,
while the contract manufacturer has the right to manufacture 75 percent of all Licensed Products.
Upon completion of manufacture, ATMI purchases all Licensed Products produced by the contract
manufacturer. Under the terms of the distribution agreement, we receive payment from the
distributor based upon a formula which is dependent on the sale price obtained by the
distributor to its customer. ATMI recognizes revenue from the sale of Licensed Products to this
distribution partner when the distributor sells the Licensed Products to its customers, because
that is when the sales price becomes fixed and determinable by the Company.
26
Allowance for Doubtful Accounts
The allowance for doubtful accounts is established to represent our best estimate of the net
realizable value of the outstanding accounts receivable balances. We estimate our allowance for
doubtful accounts based on past due amounts and historical write-off experience, as well as trends
and factors surrounding the credit risk of the markets we operate in and the financial viability of
specific customers. In an effort to identify adverse trends, we assess the financial health of the
markets we operate in and perform periodic credit evaluations of our customers and ongoing reviews
of account balances and agings of receivables. Amounts are considered past due when payment has
not been received within the time frame of the credit terms extended. Write-offs are charged
directly against the allowance for doubtful accounts and occur only after all collection efforts
have been exhausted. Actual write-offs and adjustments could differ from the allowance estimates
because of unanticipated changes in the business environment as well as factors and risks
surrounding specific customers.
During the first quarter of 2009, we increased our reserve by $1.5 million due to exposures related
to customer bankruptcy filings and uncertainties of collections due to the current general
macroeconomic conditions. Through the course of 2009, we recovered $0.1 million of this amount.
As of December 31, 2009 and 2008 we had $2.3 million and $1.0 million, respectively, of allowance
for doubtful accounts reserves recorded. Although management believes these reserves are adequate,
any abrupt adverse changes in market conditions may require us to record additional reserves.
Inventory Valuation Reserves
Inventory valuation reserves are established in order to report inventories at the lower of cost or
market value on our consolidated balance sheets. The determination of inventory valuation reserves
requires management to make estimates and judgments on the future salability of inventories.
Valuation reserves for excess, obsolete, and slow-moving inventory are estimated by comparing the
inventory levels of individual parts to both future sales forecasts or production requirements and
historical usage rates in order to identify inventory where the resale value or replacement value
is less than inventory cost. Other factors that management considers in determining these reserves
include whether individual inventory parts or chemicals meet current specifications and cannot be
substituted for or reworked into a part currently being sold or used as a service part, overall
market conditions, and other inventory management initiatives.
As of December 31, 2009 and 2008, we had $2.6 million and $2.4 million, respectively, of inventory
valuation reserves recorded. Although management believes these reserves are adequate, any abrupt
adverse changes in market conditions may require us to record additional inventory valuation
reserves.
Non-marketable Equity Securities
We selectively invest in non-marketable equity securities of private companies, which range from
early-stage companies that are often still defining their strategic direction to more mature
companies whose products or technologies may directly support an ATMI product or initiative. At
December 31, 2009, the carrying value of our portfolio of strategic investments in non-marketable
equity securities totaled $22.1 million ($22.4 million at December 31, 2008). Non-marketable
equity securities are included in the consolidated balance sheets under the caption Other
non-current assets.
Investments in non-marketable equity securities are inherently risky, and some of these companies
are likely to fail. Their success (or lack thereof) is dependent on product development, market
acceptance, operational efficiency, attracting and retaining talented professionals, and other key
business success factors. In addition, depending on their future prospects, they may not be able to
raise additional funds when needed or they may receive lower
valuations, with less favorable investment terms than in previous financings, and the investments
would likely become impaired.
27
We review our investments quarterly for indicators of impairment; however, for non-marketable
equity securities, the impairment analysis may require significant judgment to identify events or
circumstances that would likely have a significant adverse effect on the fair value of the
investment. The indicators that we use to identify those events or circumstances include (a) the
investees revenue and earnings trends relative to predefined milestones and overall business
prospects, (b) the technological feasibility of the investees products and technologies, (c) the
general market conditions in the investees industry or geographic area, including adverse
regulatory or economic changes, (d) factors related to the investees ability to remain in
business, such as the investees liquidity, and the rate at which the investee is using its cash,
and (e) the investees receipt of additional funding at a lower valuation.
Investments identified as having an indicator of impairment are subject to further analysis to
determine if the investment is other-than-temporarily impaired, in which case we write the
investment down to its fair value, using the framework required by Accounting Standards
Codification (ASC) 820 Fair Value Measurements and Disclosures. When an investee is not
considered viable from a financial or technological point of view, we write down the entire
investment since we consider the estimated fair market value to be nominal. If an investee obtains
additional funding at a valuation lower than our carrying amount or requires a new round of equity
funding to stay in operation and the new funding does not appear imminent, we presume that the
investment is other-than-temporarily impaired, unless specific facts and circumstances indicate
otherwise. We recognized no impairments in our portfolio of non-marketable equity securities in
2009 ($1.6 million in 2008 and none in 2007).
Income Taxes
The future tax benefit arising from net deductible temporary differences and net operating loss and
tax credit carryforwards is $3.8 million at December 31, 2009 and $3.1 million at December 31,
2008. We believe that our earnings during the periods when the temporary differences become
deductible will be sufficient to realize the related future income tax benefits. For those
jurisdictions where the expiration date of tax carryforwards or the projected operating results
indicate that realization is not likely, a valuation allowance is provided.
In assessing the need for a valuation allowance, we estimate future taxable income, considering the
feasibility of ongoing tax planning strategies and the realizability of tax loss carryforwards.
Valuation allowances related to deferred tax assets can be affected by changes to tax laws, changes
to statutory tax rates and future taxable income levels. In the event we were to determine that we
would not be able to realize all or a portion of our deferred tax assets in the future, we would
reduce such amounts through a charge to income in the period in which that determination is made or
when tax law changes are enacted. Conversely, if we were to determine that we would be able to
realize our deferred tax assets in the future in excess of the net carrying amounts, we would
decrease the recorded valuation allowance through an increase to income in the period in which that
determination is made. With the January 1, 2009 adoption of revised business combinations rules,
changes in deferred tax asset valuation allowances recorded in a business combination and income
tax uncertainties after the acquisition date generally will affect income tax expense.
In the ordinary course of business there is inherent uncertainty in quantifying our income tax
positions. We assess our income tax positions and record tax benefits for all years subject to
examination based upon managements evaluation of the facts, circumstances and information
available at the reporting date. For those tax positions where it is more likely than not that a
tax benefit will be sustained, we have recorded the largest amount of tax benefit with a greater
than 50 percent likelihood of being realized upon ultimate settlement with a taxing authority. For
those income tax positions where it is not more likely than not that a tax benefit will be
sustained, no tax benefit has been recognized in the financial statements. For a discussion of
current tax matters, see Note 11 to the consolidated financial statements in Item 8 of this
Form 10-K.
Depreciable Lives of Property, Plant and Equipment
ATMIs net property, plant and equipment at December 31, 2009 and 2008 was $124.6 million and
$136.4 million, respectively, representing 27.1 percent and 30.1 percent, respectively, of the
Companys consolidated total assets.
28
Depreciation expense for the years ended December 31, 2009, 2008 and 2007 was $22.3 million, $20.1
million and $18.6 million, respectively. Management judgment is required in the determination of
the estimated depreciable lives that are used to calculate annual depreciation expense and
accumulated depreciation.
Property, plant and equipment are recorded at cost and depreciated over the assets useful lives on
a straight-line basis for financial reporting purposes. The estimated useful life represents the
projected period of time that the asset will be productively employed by the Company and is
determined by management based on many factors, including historical experience with similar assets
and technological life cycles. Circumstances and events relating to these assets are monitored to
ensure that changes in asset lives or impairments are identified and prospective depreciation
expense or impairment expense is adjusted accordingly. The depreciation periods used are:
buildings, 15 to 35 years; machinery and equipment, 5 to 10 years; computer equipment and software,
3 to 7 years; cylinders and canisters, 7 to 10 years; furniture and fixtures, 5 years; and
leasehold improvements, over the lesser of the lease term or estimated useful life. We use
accelerated depreciation methods for tax purposes where appropriate.
Equity-Based Compensation
The Company uses the Black-Scholes-Merton options-pricing model to determine the fair value of
stock options under ASC 718 Compensation Stock Compensation. Management is required to make
certain assumptions with respect to selected model inputs, including anticipated changes in the
underlying stock price (i.e., expected volatility) and option exercise activity (i.e., expected
term). For awards granted subsequent to January 1, 2006, expected volatility is based on the
historical volatility of ATMI common stock for a period shorter than the expected term of the
options. We have excluded the historical volatility prior to the public announcement regarding the
sale of our non-core businesses in 2004, because those businesses that were sold represented a
significant portion of ATMIs consolidated business and were subject to considerable cyclicality
associated with the semiconductor equipment industry, which drove increased volatility in ATMIs
stock price. The expected term of options granted represents the period of time that options are
expected to be outstanding. The risk-free rate is based on the U.S. Treasury yield curve in effect
at the time of grant for a period commensurate with the estimated expected term. We recognize
expense only for those awards expected to vest. If factors change and result in different
assumptions in the application of ASC 718 in future periods, the stock option expense that the
Company records for future grants may differ significantly from what the Company has recorded in
the current period.
Equity-based compensation expense is generally recognized on a straight-line basis over the
estimated service period of the awards.
Fair Value Measurements
All of our financial assets and liabilities are measured at fair value based upon Level 1 or Level
2 inputs, as defined under ASC 820, with the exception of one auction rate security, which has been
measured using Level 3 inputs, because the security is illiquid. For Level 1 measurements, we use
quoted prices in active markets for identical assets and liabilities. For Level 2 measurements, we
use observable inputs other than Level 1 prices, such as quoted prices for similar assets and
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. For Level 3 measurements, we use unobservable inputs to the
valuation methodology that are significant to the measurement of fair value of assets or
liabilities.
The calculation of fair value for our auction rate security requires critical judgments and
estimates by management including assumptions about the anticipated term and the yield that a
market participant would require to purchase such a security in the current market environment. As
of December 31, 2009 we have recorded a temporary impairment charge of $2.1 million, net of tax,
within the caption accumulated other comprehensive income on the consolidated balance sheets
based upon an independent third-party valuation we received for this auction-rate security. In
2009, we have also recorded a credit loss of $0.3 million in our consolidated statement of
operations. While we believe the valuation methodologies are appropriate, the use of valuation
methodologies is highly judgmental and changes in methodologies or market conditions for this
security can have a material impact on the values of the related assets, our financial position,
and overall liquidity.
29
Goodwill and Other Intangible Assets
The assets and liabilities of acquired businesses are recorded under the purchase method of
accounting at their estimated fair values at the dates of acquisition. Goodwill represents costs in
excess of fair values assigned to the underlying net assets of acquired businesses.
Goodwill and intangible assets deemed to have indefinite lives are not amortized, but are subject
to annual impairment testing. The identification and measurement of goodwill impairment involves
the estimation of the fair value of reporting units. The estimates of fair value of reporting
units are based on the best information available as of the date of the assessment, which primarily
incorporate management assumptions about expected future cash flows and contemplate other valuation
techniques. Future cash flows can be affected by changes in the global economy and local
economies, changes in the microelectronics and biopharmaceutical industries, changes in technology,
and the execution of managements plans. We concluded that goodwill was not impaired during 2009.
A 10% decline in our projected reporting unit cash flows would not impact the conclusion we reached
in 2009. Although no goodwill impairment has been recorded to date, there can be no assurances
that future goodwill impairments will not occur.
Other Long-Lived Amortizable Assets
We evaluate the potential impairment of other long-lived assets when appropriate. If the carrying
value of assets exceeds the sum of the undiscounted expected future cash flows, the carrying value
of the asset is written down to fair value.
Recent Accounting Pronouncements
See Note 1 to the consolidated financial statements in Item 8 of this Form 10-K for information
concerning recently issued accounting pronouncements.
Related Party Transactions
The Companys related parties are primarily unconsolidated equity affiliates. The Company did not
engage in any material transactions involving related parties that included terms or other aspects
that differ from those which would be negotiated with independent parties.
Results of Operations
This table shows the effect of compensation cost arising from equity-based payment arrangements on
the consolidated statements of operations (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
$ |
315 |
|
|
$ |
339 |
|
|
$ |
375 |
|
Research and development |
|
|
523 |
|
|
|
530 |
|
|
|
432 |
|
Selling, general, and administrative |
|
|
4,902 |
|
|
|
5,831 |
|
|
|
6,791 |
|
|
|
|
|
|
|
|
|
|
|
Total equity-based compensation expense |
|
|
5,740 |
|
|
|
6,700 |
|
|
|
7,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Provision for income taxes |
|
|
1,912 |
|
|
|
2,237 |
|
|
|
2,556 |
|
|
|
|
|
|
|
|
|
|
|
Net equity-based compensation expense |
|
$ |
3,828 |
|
|
$ |
4,463 |
|
|
$ |
5,042 |
|
|
|
|
|
|
|
|
|
|
|
30
Year Ended December 31, 2009 Compared to Year Ended December 31, 2008
Overview
During the year ended December 31, 2009, ATMIs revenues declined by 24.9 percent compared to the
year ended December 31, 2008, primarily due to the severe global economic downturn causing
reductions in wafer starts and lower fab utilization rates, which was magnified by excess inventory in
the SDS distribution channel, as well as our customers aggressive management of their inventories.
Our gross margin declined by 900 basis points to 40.1 percent in 2009 compared to 49.1 percent in
2008, primarily because of sales volume reductions as a result of the global recession and by
unfavorable product mix caused by excess inventory in the SDS distribution channel. Research and
development expenses (R&D) declined 1.7 percent to $37.2 million in 2009 from $37.8 million in
2008. The decrease was driven primarily by reduced employee and discretionary spending partially
offset by asset impairments taken in the first half of 2009. Selling, general and administrative
expenses (SG&A) decreased by 14.0 percent in 2009 from 2008. The decrease is primarily the
result of reduced employee expenses, controlled travel and entertainment, and other discretionary
spending controls. Driven by the decline in sales, SG&A, as a percent of revenues, increased to
30.0 percent in 2009 compared to 26.2 percent in 2008. Operating income decreased 128.4 percent in
2009 to a loss of $11.3 million, primarily due to the decline in revenues and inclusive of
non-recurring expense items. Our effective tax benefit rate was 51.2 percent in 2009, compared to
an effective tax rate of 17.0 percent in 2008. As a result of the global recession and the charges discussed
above, we incurred a net loss of $6.7 million ($0.21 per diluted share) in 2009 compared to net
income of $33.3 million ($1.04 per diluted share) in 2008.
During 2009, we recognized $7.3 million ($3.1 million in cost of revenues, $1.6 million in research
and development, and $2.6 million in selling, general and administrative) of impairment charges for
long-lived assets that are being held and used, but were deemed either redundant or idled due to
uncertainties of future demand, a $2.4 million impairment charge for an auction-rate security, $1.4
million of bad debt expense, and $2.1 million for excess and obsolete inventory expense. In
response to the economic circumstances, we implemented targeted cost-reduction actions to better
align the Companys activities with expectations for customer demand for our products and to
preserve cash, without hindering our commitment to make investments that we expect to drive future
growth. These actions resulted in lower spending in 2009 compared to 2008 in the following areas:
salaries and incentives ($12.8 million); travel and entertainment ($4.4 million), and recruiting
and relocation ($0.9 million). We also amended an alliance agreement in order to better
align the timing of certain support activities related to our HPD capabilities to the expected
timing of our customer integration activities. The amendment reduced the amount we were
contractually committed to pay for these support activities in 2009 and confirms commitments to pay
for these incremental activities in 2010. We plan to continue to actively invest in our HPD
capabilities in the foreseeable future, because we believe this investment will drive significant
new revenue opportunities in advanced materials and will be a competitive advantage for ATMI. In 2010, we
are planning for an $8 million to $10 million increase in R&D spending, inclusive of the $3.0
million we deferred previously from 2009 to 2010.
This is a summary of selected consolidated earnings information (in thousands of dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
|
|
|
2009 |
|
|
2008 |
|
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
254,704 |
|
|
$ |
339,063 |
|
|
|
(24.9 |
%) |
Cost of revenues |
|
|
152,520 |
|
|
|
172,551 |
|
|
|
(11.6 |
%) |
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
102,184 |
|
|
|
166,512 |
|
|
|
(38.6 |
%) |
Gross margin |
|
|
40.1 |
% |
|
|
49.1 |
% |
|
|
(9.0 |
%) |
Research and development |
|
|
37,162 |
|
|
|
37,809 |
|
|
|
(1.7 |
%) |
R&D as a percent of revenues |
|
|
14.6 |
% |
|
|
11.2 |
% |
|
|
3.4 |
% |
Selling, general, and administrative |
|
|
76,359 |
|
|
|
88,781 |
|
|
|
(14.0 |
%) |
SG&A as a percent of revenues |
|
|
30.0 |
% |
|
|
26.2 |
% |
|
|
3.8 |
% |
Operating income (loss) |
|
|
(11,337 |
) |
|
|
39,922 |
|
|
|
(128.4 |
%) |
Operating margin |
|
|
(4.5 |
%) |
|
|
11.8 |
% |
|
|
(16.3 |
%) |
Effective tax rate |
|
|
(51.2 |
%) |
|
|
17.0 |
% |
|
|
(68.2 |
%) |
Net income (loss) |
|
$ |
(6,660 |
) |
|
$ |
33,327 |
|
|
|
(120.0 |
%) |
Diluted earnings per share |
|
$ |
(0.21 |
) |
|
$ |
1.04 |
|
|
|
(120.2 |
%) |
31
Revenues. Revenues decreased 24.9 percent to $254.7 million in 2009 from $339.1 million in 2008.
The decline in revenues in 2009 compared to 2008 occurred in both our microelectronics and life
sciences product lines and was primarily the result of the global economic downturn, magnified by
excess inventory in the SDS distribution channel. Revenues in our microelectronics product lines
declined 25.6 percent to $230.7 million in 2009 from $310.1 million in 2008. The primary driver of
the decline in microelectronics revenues was excess inventory in the SDS channel which was driven
by our customers aggressive management of their inventories. Consumer electronics spending, the
primary driver of wafer starts and fab utilization rates was flat in 2009 compared to 2008 with
declines in the first half of 2009 and signs of improvement in the second half of the year.
Reductions in average selling prices accounted for approximately 2 percent of the decline in
microelectronics revenues in 2009. Revenues in our life sciences product lines decreased 17.0
percent in 2009 to $24.0 million compared to $28.9 million 2008. The decline in life sciences
revenues is primarily attributable to global macroeconomic conditions, customer reductions in
capital spending and aggressive management of inventories by biopharmaceutical companies as a
result of economic uncertainties. Reductions in average selling prices accounted for approximately
1 percent of the decline in life sciences revenues in 2009. The effect of foreign currency was not
significant in 2009 as declines associated with the US dollar weakness against the Japanese Yen
were partially offset by strengthening in the Euro.
Gross Profit. Gross profit decreased 38.6 percent to $102.2 million in 2009 from $166.5 million in
2008. Gross profit in our microelectronics product lines decreased 38.7 percent to $95.1 million in
2009 from $155.0 million in 2008. Sales volume reductions as a result of the global recession and
unfavorable product mix caused by excess inventory in the SDS distribution channel were the primary
drivers of the decline in gross profit. Gross profit was also reduced by $3.1 million from asset
impairment charges, due primarily to the planned idling of manufacturing capacity of gas products
to eliminate a redundant cost structure, $2.1 million of expense to increase our reserves for
excess and obsolete inventories to cover expected chemical shelf-life issues in our
microelectronics product lines partially offset by $2.4 million in reduced employee costs. The 2008
gross profit margins included benefits from a $3.1 million settlement with a distributor and a $2.4
million business interruption claim recovery. Removing the impacts of one-time events, our 2009
gross margins were 41.9 percent compared to 48.1 percent in 2008. Gross profit margins in our
microelectronics product lines were approximately 41 percent in 2009 compared to approximately 50
percent in 2008 driven by lower volume, average selling price declines, as discussed above, and our
mix of sales. In our life sciences product line, gross profit declined 38.3 percent to $7.1
million compared to $11.5 million in 2008 driven primarily by lower revenue volumes due to the
global recession, increased fixed costs to develop a global manufacturing platform, and higher
quality control expenses. Gross profit margins in our life sciences product lines declined to
approximately 30 percent in 2009 compared to approximately 40 percent in 2008.
Research and Development Expenses. R&D decreased only 1.7 percent to $37.2 million in 2009 from
$37.8 million in 2008 because we continued our funding of investments to develop advanced materials
and HPD capabilities. The decrease in R&D spending was primarily caused by reduced employee
expenses of $1.6 million compared to 2008, cost reduction activities leading to reduced outsourced
service spending including patent and trademark services of $2.7 million compared to 2008,
partially offset by a $1.6 million asset impairment charge related to idled equipment, $0.8 million
of lower government contract reimbursements, $0.7 million of higher equipment depreciation costs,
and planned increases in spending associated with HPD licensing and outsourced development related
to cleans chemistries of $0.7 million. The spending in 2009 was higher as a percent of revenues
than 2008, driven by the decline in revenue, partially offset by our continued investments in new
product development in order to position ourselves for the future. As a result of the global
economic recession and related impact on our business, we amended an alliance agreement in 2009 in
order to better align the timing of certain HPD capabilities support activities to the expected
timing of our customer integration activities. The amendment reduced the amount we were
contractually committed to pay for support activities in 2009 and confirms commitments to pay for
these incremental activities in 2010. These incremental activities in 2010 are expected to add $3.0
million of R&D expense in that year. We plan to continue to actively invest in our HPD capabilities
in the foreseeable future, because we believe this investment will drive significant new
opportunities in cleans chemistries and other new products and will be a competitive advantage for
ATMI. In 2010, we are planning for an $8 million to $10 million increase in R&D spending,
inclusive of the $3.0 million described above, compared to 2009.
32
Selling, General, and Administrative Expenses. SG&A decreased 14 percent (or $12.4 million) to
$76.4 million in 2009 from $88.8 million in 2008. SG&A, as a percentage of revenues, increased to
30.0 percent in 2009 compared to 26.2 percent in 2008. As a result of the economic environment, we
implemented cost reduction activities which drove the decline in SG&A. These activities included
reduced salaries and incentives ($7.5 million), travel and entertainment ($3.0 million), outside
professional services ($1.7 million), and trade show costs ($0.8 million) and savings from the
temporary suspension of the Companys discretionary 401K match ($0.6 million). Legal litigation
costs were $1.6 million lower in 2009 compared to the same period of 2008 due to the settlement of
the litigation with Praxair. The results in 2009 include $2.5 million of asset impairment charges
related primarily to redundant enterprise management software, and a $1.4 million charge to
increase our reserves for bad debt to cover exposures related to customer bankruptcy filings and
uncertainties of collections due to current general macroeconomic conditions.
Operating Income (loss). We incurred an operating loss of $11.3 million in 2009 compared to
generating operating income of $39.9 million in 2008. This change is from a variety of factors, as
noted above.
Interest Income. Interest income decreased to $1.2 million in 2009 from $3.1 million in 2008. The
primary reason for the decrease was lower rates of return given the significant reduction in market
interest rates since the prior year.
Impairment of Investments. The results for 2009 included a first quarter $2.5 million impairment
charge, primarily related to a write-down associated with an auction-rate security. In 2008,
Ceradyne, Inc. completed its acquisition of SemEquip, Inc. (SemEquip), an entity in which ATMI
had previously invested. Prior to the acquisition, ATMIs cost-basis investment in SemEquip was
$2.2 million. ATMI received $0.6 million representing its share of the closing proceeds. As a
result, we wrote off the remaining $1.6 million balance from our investment in SemEquip due to the
uncertainty of collecting amounts in the future related to the earnout provisions of the deal.
Also in 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.
Other Income (Expense), Net. We recognized $1.2 million of losses from investments accounted for by
the equity method and $0.2 million of realized and unrealized losses on foreign exchange in 2009.
The 2008 results include $0.6 million of losses from investments accounted for by the equity
method, net of a $1.1 million gain representing our after-tax, proportionate share from the sale of
assets by an equity-method investee, a $2.0 million gain from the sale of a marketable security,
and $0.6 million of realized losses on foreign exchange.
Provision (Benefit) for Income Taxes. In 2009, we had an effective income tax benefit rate of 51.2
percent, compared to a 2008 effective income tax rate of 17.0 percent. The 2009 income tax benefit
rate differs from the Federal statutory rate of 35.0 percent primarily due to the benefit of lower
income tax rates in foreign jurisdictions, and a net $0.7 million reversal of previously
established reserves, primarily resulting from the lapse of the applicable statutes of limitations.
The 2008 effective income tax rate of 17.0 percent differs from the Federal statutory rate of 35.0
percent primarily due to a $3.7 million reversal of previously established reserves, as a result of
the lapse of the applicable statutes of limitations, the shift in mix of our pretax income to lower
income tax jurisdictions, and effect of R&D credits. As of December 31, 2009, the Company had a
net deferred tax asset on the balance sheet of $3.8 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. The Company has been audited in the United
States by the Internal Revenue Service through tax year 2007.
33
Year Ended December 31, 2008 Compared to Year Ended December 31, 2007
Overview
During the year ended December 31, 2008, ATMIs revenues declined by 6.9 percent compared to the
year ended December 31, 2007, primarily due to the global economic downturn, which began in earnest
in the second half of 2008 and drove significant declines in demand across almost all segments of
the economy. Our gross margin declined by 80 basis points to 49.1 percent in 2008 compared to 49.9
percent in 2007, due to lower revenue volumes, 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 changes, which was effective beginning January 1, 2008 (such costs were
previously reflected in SG&A), and higher logistics costs due to fuel surcharges in the first half
of the year. The realignment of operations activities caused gross margin and SG&A to decline by
approximately 180 basis points in 2008 compared to 2007. These 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 focused on improving our
global supply chain and customer satisfaction. R&D increased 26.5 percent to $37.8 million in 2008
from $29.9 million in 2007. The increase was driven primarily by the continued investment in our
global HPD activities. SG&A decreased by 10.5 percent in 2008 from 2007. As a percent of revenues,
SG&A decreased to 26.2 percent in 2008 compared to 27.3 percent in 2007. The decrease is primarily
because of the organizational realignment discussed above, and reductions in discretionary spending
as a result of the global economic downturn. Operating income decreased 24.0 percent in 2008 to
$39.9 million, primarily due to the decline in revenues. During 2008 we recognized impairments of
$3.4 million on our strategic investment portfolio and a convertible note, partially offset by a
recognized gain of $2.0 million from the sale of a marketable security, and $1.1 million of
after-tax income representing our proportionate share of gains on sales of assets by one of our
equity-method investees. Our effective tax rate was 17.0 percent in 2008, inclusive of a $3.7
million tax benefit (including interest), compared to 31.8 percent in 2007. Net income decreased
17.8 percent to $33.3 million ($1.04 per diluted share, a 10.3 percent decrease) compared to $40.5
million ($1.16 per diluted share) in 2007.
During 2008, we repurchased 2.1 million shares of our common stock, for $58.3 million under our
share repurchase program, compared to 2.2 million shares of our common stock, repurchased for $68.5
million in 2007.
This is a summary of selected consolidated earnings information (in thousands of dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
|
|
|
2008 |
|
|
2007 |
|
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
339,063 |
|
|
$ |
364,088 |
|
|
|
(6.9 |
%) |
Cost of revenues |
|
|
172,551 |
|
|
|
182,480 |
|
|
|
(5.4 |
%) |
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
166,512 |
|
|
|
181,608 |
|
|
|
(8.3 |
%) |
Gross margin |
|
|
49.1 |
% |
|
|
49.9 |
% |
|
|
(0.8 |
%) |
Research and development |
|
|
37,809 |
|
|
|
29,879 |
|
|
|
26.5 |
% |
R&D as a percent of revenues |
|
|
11.1 |
% |
|
|
8.2 |
% |
|
|
2.9 |
% |
Selling, general, and administrative |
|
|
88,781 |
|
|
|
99,227 |
|
|
|
(10.5 |
%) |
SG&A as a percent of revenues |
|
|
26.2 |
% |
|
|
27.3 |
% |
|
|
(1.1 |
%) |
Operating income |
|
|
39,922 |
|
|
|
52,502 |
|
|
|
(24.0 |
%) |
Operating margin |
|
|
11.8 |
% |
|
|
14.4 |
% |
|
|
(2.6 |
%) |
Effective tax rate |
|
|
17.0 |
% |
|
|
31.8 |
% |
|
|
(14.8 |
%) |
Net income |
|
$ |
33,327 |
|
|
$ |
40,539 |
|
|
|
(17.8 |
%) |
Diluted earnings per share |
|
$ |
1.04 |
|
|
$ |
1.16 |
|
|
|
(10.3 |
%) |
Revenues. Revenues decreased 6.9 percent to $339.1 million in 2008 from $364.1 million in 2007.
The decline in revenues occurred in our microelectronics product lines and was primarily the result
of the global economic downturn, which resulted in significant reductions in wafer starts and
reductions in fab utilization rates as demand for consumer electronics devices slowed. Revenues in
our microelectronics product lines declined 9.7 percent to $310.1 million in 2008 compared to
$343.3 million in 2007. The primary driver of the reduction in revenues was wafer starts, which
began to significantly decline during the last several months of 2008. The decline in our revenues
was further magnified by reductions of inventory in the SDS and flat-panel display distribution
channels, as well as our customers aggressive management of their inventories. Consumer
electronics
34
spending, the primary driver of wafer start growth, declined dramatically since the end of the previous year. The 2008
revenues include a $3.7 million benefit associated with settlement of a dispute with our
manufacturing and distribution partner for SDS products. Reductions in average selling prices of
our products accounted for approximately 3.2 percent of the decline in microelectronics revenues.
Revenues in our life sciences product lines increased 39.2 percent in 2008 to $28.9 million
compared to $20.8 million in 2007. More than half of the increase in life sciences revenues came
from the LevTech, which we acquired in January 2008, with the remaining increase being driven by
new products, as disposable mixing solutions gained traction in the biopharmaceutical markets, and
limited pricing increases. The effect of foreign currency was not significant in 2008 as declines
associated with weakness in the Korean Won were offset by strengthening in the Japanese Yen and the
Euro.
Gross Profit. Gross profit decreased 8.3 percent to $166.5 million in 2008 from $181.6 million in
2007. Our gross margin percentage decreased during this time period from 49.9 percent in 2007 to
49.1 percent in 2008. Approximately 180 basis points of the gross margin decline is a result of the
redirection of certain supply chain and operations activities discussed above. Gross profit in our
microelectronics product lines decreased 10 percent to $155.0 million in 2008 from $172.8 million
in 2007. Gross profit margins in our microelectronics product lines were approximately 50 percent
in both 2008 and 2007. The 2008 gross profit margins included benefits from the distributor
settlement (approximately 100 basis points) and the business interruption claim recovery
(approximately 80 basis points), both mentioned above. Gross profit margins were unfavorably
impacted by the volume and average selling price declines discussed above and higher logistics
costs due to fuel surcharges in the first half of 2008. The 2007 gross profit margins in our
microelectronics product lines were negatively impacted by lower shipment volumes in our materials
packaging product lines due to flat-panel display market softness in the first half of 2007, $1.1
million of increased customs expenses on imported goods from the U.S. to an overseas subsidiary,
and also due to the consequences of a manufacturing defect, which was since remedied. Gross profit
in our life sciences product lines increased 31 percent to $11.5 million in 2008 compared to $8.8
million in 2007. Gross profit margins in our life sciences product lines declined by over 200 basis
points from 42 percent in 2007 to 40 percent in 2008. The primary reasons for the decline in gross
profit margins in the life sciences product lines were the realignment of certain supply chain and
operations activities discussed above (negative impact of approximately 480 basis points),
partially offset by average selling price increases for certain products (favorable impact of
approximately 85 basis points) and the benefit from the LevTech acquisition (approximately 200
basis points).
Research and Development Expenses. R&D increased 26.5 percent to $37.8 million in 2008 from $29.9
million in 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 $5.7 million of higher licensing and outsourced development costs, $3.0 million of
higher staffing related expenses and $0.7 million of higher equipment depreciation costs). As a
percentage of revenues, R&D spending was 11.1 percent in 2008 compared to 8.2 percent in 2007. The
spending in 2008 was higher as a percent of revenues than we had planned, primarily because
revenues were lower than expected for the reasons noted above.
Selling, General, and Administrative Expenses. SG&A decreased 10.5 percent (or $10.4 million) to
$88.8 million in 2008 from $99.2 million in 2007. SG&A, as a percentage of revenues, decreased to
26.2 percent in 2008 compared to 27.3 percent in 2007. Approximately $6.0 million of the decline
is due to the realignment of activities as a result of the functional organization changes
mentioned above. Other cost reductions from 2007 include incentive compensation ($2.6 million),
legal litigation costs ($2.4 million), and travel ($1.1 million), partially offset by net increases
in salaries ($1.1 million) and facilities-related costs ($1.2 million).
Operating Income(loss).
Operating income decreased 24.0 percent to $39.9 million in 2008, or 11.8 percent of revenues, from
$52.5 million in 2007, or 14.4 percent of revenues. These changes are from a variety of factors,
as noted above.
Interest Income. Interest income decreased to $3.1 million in 2008 from $7.7 million in 2007. The
primary reasons for the decrease were lower invested cash and marketable securities balances as a
result of the Companys share repurchase program, the acquisition of LevTech, capital spending and
other strategic investments, and lower rates of return given the significant reduction in market
interest rates in 2008.
35
Impairment of Investments. In 2008, Ceradyne, Inc. completed its acquisition of SemEquip, Inc.
(SemEquip), an entity in which ATMI had previously invested. Prior to the acquisition, ATMIs
cost-basis investment in SemEquip was $2.2 million. ATMI received $0.6 million representing its
share of the closing proceeds. As a result, we wrote off the remaining $1.6 million balance from
our investment in SemEquip due to the uncertainty of collecting amounts in the future related to
the earnout provisions of the deal. Also in 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.
Other Income (Expense), Net. The 2008 results include $0.6 million of losses from investments
accounted for by the equity method, net of a $1.1 million gain, representing our after-tax,
proportionate share from the sale of assets by an equity-method investee, a $2.0 million gain from
the sale of a marketable security, and $0.6 million of realized losses on foreign exchange.
Provision (benefit) for Income Taxes. In 2008, we reduced our income tax provision by $3.7 million
(including interest), by reversing previously established reserves, as a result of the lapse of the
applicable statute of limitations. The effective tax rate for 2008 was 17.0 percent compared to an
effective tax rate of 31.8 percent in 2007. Excluding the tax benefit, our effective tax rate was
26.3 percent in 2008. The 2008 effective tax rate of 17.0 percent differs from the Federal
statutory rate of 35.0 percent primarily due to R&D tax credits, the shift in mix of our pre-tax
income to lower income tax jurisdictions, and the tax benefit described above. As of December 31,
2008, the Company had a net deferred tax asset on the balance sheet of $3.1 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.
Liquidity and Capital Resources
We assess liquidity in terms of our ability to generate cash to fund our operating and investing
activities. Of particular importance to management are cash flows generated by operating activities
and cash used for capital expenditures.
Until required for use in the business, we invest our cash reserves in bank deposits, certificates
of deposit, money market securities, government and government-sponsored bond obligations, and
other interest bearing marketable debt instruments in accordance with our investment policy. We
have contracted with investment advisers to invest our funds consistent with our investment policy.
The value of our investments may be adversely affected by increases in interest rates, instability
in the global financial markets that reduces the liquidity of securities included in our portfolio,
and by other factors which may result in other-than-temporary declines in value of the investments,
which could impact our financial position and our overall liquidity. Each of these events may cause
us to record charges to reduce the carrying value of our investment portfolio or sell investments
for less than our acquisition cost. We attempt to mitigate these risks with the assistance of our
investment advisors by investing in high quality securities and monitoring the overall risk profile
of our portfolio. We also maintain a well-diversified portfolio that limits our credit exposure
through concentration limits set within our investment policy.
We have financed our operating needs, capital expenditures, and share buybacks through cash flows
from our operations, and existing cash. We expect to finance our current and planned operating
requirements principally through cash from operations, as well as existing cash resources. We
believe that these funds will be sufficient to meet our operating requirements for the foreseeable
future. However, we may, from time to time, seek additional funding through a combination of
additional equity and debt financings or from other sources.
Under existing tax laws, we plan to carry back the 2009 U.S. tax loss which is expected to result
in a $10.9 million cash refund to be received in 2010.
36
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.
ATMI has entered into a pledge agreement with Anji Microelectronics Co., Ltd. (Anji) for the
issuance of a financial guarantee in order to assist Anji in retaining its bank financing. See Note
15 for further discussion.
See Part I, Item 1A, Risk Factors of this Form 10-K for risk factors that could negatively impact
our cash position and ability to fund future operations.
A summary of our cash flows follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
2009 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
Cash provided by (used for): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Activities |
|
$ |
28,761 |
|
|
$ |
60,616 |
|
Investing Activities |
|
|
(18,596 |
) |
|
|
(52,656 |
) |
Financing Activities |
|
|
(995 |
) |
|
|
(56,541 |
) |
Effects of exchange rate changes on cash |
|
|
942 |
|
|
|
(1,600 |
) |
Net cash provided by operating activities decreased by $31.9 million primarily from:
|
|
Decrease in net income of $40.0 million to a net loss of $6.7 million |
|
|
|
Decrease in cash used related to changes in inventories of $9.9 million due to decreased
demand, arising from weaker economic conditions, compared to prior year inventory growth which
was required to meet customer demand through out the prior year |
|
|
|
Cash used related to changes in deferred income taxes of $3.9 million |
|
|
|
Decrease in cash used by changes in accrued expenses of $5.4 million |
|
|
|
Increase in cash provided by change in accounts payable of $10.5 million due primarily to
timing of payments |
|
|
|
Decrease in cash provided by changes in accounts receivable of $23.4 million due to the
reduction in full year 2009 revenues and also to timing of collections |
Net cash used for investing activities decreased by $34.1 million primarily from:
|
|
Decrease in capital spending of $33.3 million primarily because of the purchase of research
tools used in our HPD activities in 2008 |
|
|
|
Decrease in acquisitions of $33.1 million, due to the $27.7 million purchase of LevTech,
Inc. and $5.4 million paid for certain assets acquired from Artelis in 2008 |
|
|
|
Decrease in cash paid for cost-basis and equity-basis investments of $10.0 million due to
the investment in Intermolecular in 2008 |
|
|
|
Increase in cash used for purchases of marketable securities of $21.7 million |
|
|
|
Decrease in cash proceeds from sales and maturities of marketable securities of $20.6
million |
Net cash used for financing activities decreased by $55.5 million primarily from:
|
|
Decrease in treasury stock purchases of $58.7 million |
|
|
|
Decrease in cash due to a net reduction in the outstanding amount of our credit line of
$1.7 million |
|
|
|
Reduction of proceeds from exercise of stock options of $1.4 million |
37
Summary of Contractual Obligations
This is a summary of consolidated debt, lease, purchase and other obligations at December 31, 2009
(see Notes 4, 7, 8, 10 and 15 of the consolidated financial statements in Item 8 of this Form
10-K), in thousands:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period |
|
|
|
|
|
|
|
Less Than |
|
|
|
|
|
|
|
|
|
|
Contractual Obligations: |
|
Total |
|
|
1 Year |
|
|
1-3 Years |
|
|
4-5 Years |
|
|
Thereafter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital leases |
|
$ |
106 |
|
|
$ |
53 |
|
|
$ |
47 |
|
|
$ |
6 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating leases |
|
$ |
8,275 |
|
|
|
3,807 |
|
|
|
4,137 |
|
|
|
331 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase obligations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory |
|
$ |
7,444 |
|
|
|
7,444 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital |
|
$ |
502 |
|
|
|
502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (1) |
|
$ |
13,990 |
|
|
|
13,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
21,936 |
|
|
|
21,936 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank guarantee (2) |
|
$ |
4,000 |
|
|
|
4,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Line of credit |
|
$ |
483 |
|
|
|
483 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other L/T liabilities (3) |
|
$ |
4,387 |
|
|
|
|
|
|
|
3,933 |
|
|
|
|
|
|
|
454 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt, lease, purchase, and
other long-term liability
obligations |
|
$ |
39,187 |
|
|
$ |
30,279 |
|
|
$ |
8,117 |
|
|
$ |
337 |
|
|
$ |
454 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes $13.3 million commitment to purchase R&D services associated with a strategic alliance partner. |
|
(2) |
|
On behalf of Anji Microelectronics Co., Ltd. |
|
(3) |
|
Includes $3.8 million of asset retirement obligations. |
See
Note 10 to the consolidated financial statements in Item 8 of
this Form 10-K for further discussion on leases
Off-Balance Sheet Arrangements
ATMI has entered into a pledge agreement with Anji Microelectronics Co., Ltd. (Anji) for the
issuance of a financial guarantee up to $4.0 million in order to assist Anji in securing bank
financing, which is to expire no later than June 30, 2010. ATMIs guarantee is secured by Anjis
assets and additional equity interests in Anjis operating subsidiaries. We believe that, based on
independent credit rating agency research, and our knowledge of their business, Anji continues to
be an acceptable credit risk. The fair value of the financial guarantee is $0.2 million at
December 31, 2009.
Operations Outside the United States
For the years ended December 31, 2009, 2008 and 2007, sales outside the United States, including
Asia and Europe, accounted for 80.2 percent, 77.3 percent and 76.7 percent, respectively, of the
Companys revenues. Sales to Taiwan for the years ended December 31, 2009, 2008 and 2007 were 21.8
percent, 23.5 percent and 24.5 percent, respectively, of the Companys revenues. Sales to Japan
for the years ended December 31, 2009, 2008 were 14.3 percent, 12.7 percent and 12.6 percent,
respectively, of the Companys revenues. Sales to South Korea for the years ended December 31,
2009, 2008 were 20.2 percent, 13.8 percent and 13.5 percent, respectively, of the Companys
revenues. Management anticipates that the Companys sales outside the United States will continue
to account for a significant percentage of total revenues. The Company has wholly-owned
subsidiaries in Taiwan, Singapore, China, Japan, and Germany where the Company sells and services
several product lines. The Company also has a wholly-owned subsidiary in South Korea that
manufactures, sells, and distributes materials packaging, materials delivery equipment, and
thin-film materials to the semiconductor and flat-panel display markets in South Korea. In
addition, the Company has a wholly-owned subsidiary in Belgium where it manufactures and sells
high-purity materials packaging products primarily to the life sciences industry.
38
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
As of December 31, 2009, the Companys cash and cash equivalents and marketable securities included
bank deposits, certificates of deposit, money market securities, and government and
government-sponsored bond obligations. As of December 31, 2009, an increase of 100 basis points in
interest rates on securities with maturities greater than one year would reduce the fair value of
the Companys marketable securities portfolio by approximately $0.7 million. Conversely, a
reduction of 100 basis points in interest rates on securities with maturities greater than one year
would increase the fair value of the Companys marketable securities portfolio by approximately
$0.5 million.
Foreign Currency Exchange Risk
Most of the Companys sales are denominated in U.S. dollars and as a result, the Company has
limited exposure to foreign currency exchange risk with respect to sales made. Approximately 36
percent of the Companys revenues for the year ended December 31, 2009 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 and meet the other related accounting requirements.
We generally do not hedge overseas sales denominated in foreign currencies or translation
exposures. Further, we do not enter into derivative instruments for trading or speculative purposes
and all of our derivatives were highly effective throughout the periods reported.
At December 31, 2009, we held forward foreign currency exchange contracts as fair value hedges with
notional amounts totaling $2.9 million, which are being used to hedge recorded foreign denominated
liabilities and which will be settled in either JPY or New Taiwan Dollars (NTD). The functional
currency of our Taiwanese subsidiary is U.S. dollars. We have opened a foreign currency position to
hedge a significant local currency prepayment made by our Taiwanese subsidiary related to income
tax exposures. Holding other variables constant, if there were a 10 percent decline in foreign
exchange rates for the JPY and NTD, the fair market value of the foreign exchange contracts
outstanding at December 31, 2009 would increase by approximately $0.3 million, which would be
expected to be fully offset by foreign exchange gains on the amounts being hedged. The effect of an
immediate 10 percent change in other foreign exchange rates would not be expected to have a
material effect on the Companys future operating results or cash flows.
39
Changes in Market Risk
The global recession, driven initially by the crisis in global credit and financial markets, has
caused extreme disruptions, including severely diminished liquidity and credit availability,
declines in consumer confidence, increases in unemployment rates, and uncertainty about economic
stability. There can be no assurance that there will not be further deterioration in credit and
financial markets and confidence in economic conditions. These economic uncertainties affect
businesses such as ours in a number of ways, making it difficult to accurately forecast and plan
our future business activities. The current constriction of credit in financial markets may
continue to lead consumers and businesses to postpone spending, which may cause our customers to
continue to aggressively manage their inventories and delay their future orders with us. In
addition, financial difficulties experienced by our suppliers or distributors could result in
product delays, increased accounts receivable defaults and inventory challenges. The likely
duration and severity of the current disruptions in the credit and financial markets remains
uncertain and continues to have a negative impact on global economic conditions, and if the current
economic conditions continue or deteriorate, our business and results of operations could be
materially and adversely affected.
Item 8. Financial Statements and Supplementary Data
The Reports of Independent Registered Public Accounting Firm, the consolidated financial statements
and the financial statement schedule that are listed in the Index to Consolidated Financial
Statements and Financial Statement Schedule are included herein on pages F-1 through F-36.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Conclusion Regarding the Effectiveness of Disclosure 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-K. There are inherent limitations to the effectiveness of any system
of disclosure controls and procedures, including the possibility of human error and the
circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure
controls and procedures can only provide reasonable assurance of achieving their control
objectives. Based upon this evaluation, our CEO and CFO concluded that, as of the end of the
period covered by this Form 10-K, our disclosure controls and procedures were effective in that
they provided reasonable assurance that the information we are required to disclose in the reports
we file or submit under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the applicable rules and forms, and that it is accumulated and
communicated to our management, including our CEO and CFO, as appropriate, to allow timely
decisions regarding required disclosure.
Managements Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over
financial reporting. Internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external reporting purposes in accordance with accounting principles
generally accepted in the United States of America. Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Our management has
assessed the effectiveness of our internal control over financial reporting as of December 31,
2009. In making its assessment, management has used the criteria set forth by the Committee of
Sponsoring Organizations (COSO) of the Treadway Commission in Internal ControlIntegrated
Framework. Our management concluded that based on its assessment, our internal control over
financial reporting was effective as of December 31, 2009. The Companys internal control over
financial reporting as of December 31, 2009 has been audited by Ernst & Young LLP, an
independent registered public accounting firm, as stated in their attestation report on the
Companys internal control over financial reporting, which is included in this annual report.
40
There has been no change in our internal control over financial reporting during the quarter ended
December 31, 2009 that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
Item 9B. Other Information
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Information required by Item 10 has been omitted from this report, and is incorporated by reference
to the sections Section 16(a) Beneficial Ownership Reporting Compliance, Election of Directors,
Board Operations and Executive Officers in our definitive Proxy Statement for the 2010 Annual
Meeting of Stockholders, which we will file with the SEC pursuant to Regulation 14A within 120 days
after the end of our 2009 fiscal year.
Item 11. Executive Compensation
Information required by Item 11 has been omitted from this report and is incorporated by reference
to the sections Board Operations and Compensation and Other Information Concerning Officers and
Directors in our definitive Proxy Statement for the 2010 Annual Meeting of Stockholders, which we
will file with the SEC pursuant to Regulation 14A within 120 days after the end of our 2009 fiscal
year.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Information required by Item 12 has been omitted from this report and is incorporated by reference
to the sections Stock Ownership and Equity Compensation Plan Information in our definitive
Proxy Statement for the 2010 Annual Meeting of Stockholders, which we will file with the SEC
pursuant to Regulation 14A within 120 days after the end of our 2009 fiscal year.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information required by Item 13 has been omitted from this report and is incorporated by reference
to the sections Certain Relationships and Related Transactions and Board Operations in our
definitive Proxy Statement for the 2010 Annual Meeting of Stockholders, which we will file with the
SEC pursuant to Regulation 14A within 120 days after the end of our 2009 fiscal year.
Item 14. Principal Accountant Fees and Services
Information required by Item 14 has been omitted from this report and is incorporated by reference
to the section Fees of Independent Registered Public Accounting Firm and Report of the Audit
Committee in our definitive Proxy Statement for the 2010 Annual Meeting of Stockholders, which we
will file with the SEC pursuant to Regulation 14A within 120 days after the end of our 2009 fiscal
year.
41
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) The following documents are filed as part of this annual report on Form 10-K:
(1) Financial Statements:
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Reports of Independent Registered Public Accounting Firm |
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Consolidated Balance Sheets December 31, 2009 and 2008 |
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Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007 |
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Consolidated Statements of Stockholders Equity for the years ended December 31, 2009,
2008 and 2007 |
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Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007 |
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Notes to Consolidated Financial Statements |
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(2) Financial Statement Schedule:
Schedule II Valuation and Qualifying Accounts
The Reports of Independent Registered Public Accounting Firm, consolidated financial statements and
financial statement schedule listed in the Index to Consolidated Financial Statements and Financial
Statement Schedule on page F-1 hereof are filed as part of this report, commencing on page F-2
hereof.
All other financial statement schedules are omitted as the required information is not applicable
or the information is shown in the consolidated financial statements or related notes.
(3) Exhibits
The documents set forth below are filed herewith or incorporated herein by reference to the
location indicated.
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Exhibit No. |
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Description |
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2.01 |
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Agreement and Plan of Merger, dated as of January 4,
2008 by and among Advanced Technology Materials, Inc.,
ATMI Acquisition Corp., and LevTech, Inc. (Filed as
Exhibit 10.30 to ATMIs 2007 Annual Report on Form 10-K,
File No. 1-16239, and incorporated herein by reference). |
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3.01 |
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Restated Certificate of Incorporation dated as of July
30, 2005 (Filed as Exhibit 3 (i) to ATMIs Current
Report on Form 8-K on August 3, 2005, File No. 1-16239,
and incorporated herein by reference). |
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3.02 |
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Amended and Restated Bylaws of ATMI dated December 17,
2008 (Filed as Exhibit 3.1 to ATMIs Current Report on
Form 8-K on December 18, 2008, File No. 1-16239, and
incorporated herein by reference). |
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4.01 |
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Specimen of ATMIs Common Stock Certificate (Filed on
September 10, 1997 as Exhibit 4.01 to the Companys
Registration Statement on Form S-4, Registration No.
333-35323). |
42
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Exhibit No. |
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Description |
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4.02 |
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Rights Agreement, dated as of October 13, 2000, between
ATMI, Inc. and Fleet National Bank, as Rights Agent
(Filed as Exhibit 4.02 to ATMIs 2008 Annual Report on
Form 10-K, File No. 1-16239, and incorporated herein by
reference). |
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10.01 |
* |
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Employment Agreement between Eugene G. Banucci, Ph.D.
and ATMI, Inc., effective as of January 1, 2005 (Filed
as Exhibit 10.1 to ATMIs Current Report on Form 8-K on
September 19, 2005, File No. 1-16239, and incorporated
herein by reference). |
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10.02 |
* |
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Employment Agreement between Daniel P. Sharkey and ATMI,
Inc. dated December 31, 2004 (Filed as Exhibit 10.1 to
ATMIs Current Report on Form 8-K on January 5, 2005,
File No. 1-16239, and incorporated herein by reference). |
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10.03 |
* |
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Employment Agreement between Douglas A. Neugold and
ATMI, Inc. dated December 31, 2004 (Filed as Exhibit
10.1 to ATMIs Current Report on Form 8-K/A on January
5, 2005, File No. 1-16239, and incorporated herein by
reference). |
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10.04 |
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Agreement of Lease between Melvyn J. Powers and Mary P.
Powers d/b/a/ M&M Realty and Advanced Technology
Materials, Inc., dated December 23, 1994 (Filed as
Exhibit 10.04 to ATMIs 2008 Annual Report on Form 10-K,
File No. 1-16239, and incorporated herein by reference). |
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10.05 |
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First Amendment to Agreement of Lease dated as of
November 22, 2000 by and between Commerce Park Realty,
LLC and Advanced Technology Materials, Inc. (Filed as
Exhibit 10.05 to ATMIs 2005 Annual Report on Form 10-K,
File No. 1-16239, and incorporated herein by reference). |
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10.06 |
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Second Amendment to Agreement of Lease dated as of March
24, 2003 by and between Commerce Park Realty, LLC and
Advanced Technology Materials, Inc. (Filed as Exhibit
10.05 to ATMIs 2005 Annual Report on Form 10-K, File
No. 1-16239, and incorporated herein by reference). |
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10.07 |
* |
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ATMIs 1995 Stock Plan (Filed as Exhibit 10.07 to ATMIs
2008 Annual Report on Form 10-K, File No. 1-16239, and
incorporated herein by reference). |
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10.08 |
* |
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ATMIs 1997 Stock Plan, dated October 10, 1997 (Filed on
April 6, 1998 as Exhibit 99.1 to the Companys
Registration Statement on Form S-8, Registration No.
333-49561). |
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10.09 |
* |
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ATMIs 1998 Stock Plan, dated May 20, 1998 (Filed on
June 9, 1998 as Exhibit 99.1 to the Companys
Registration Statement on Form S-8, Registration No.
333-56349). |
43
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Exhibit No. |
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Description |
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10.10 |
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Agreement of Lease between Seymour R. Powers, Leon Griss
and Ruth Griss and Advanced Technology Materials, Inc.,
dated November 24, 2000 (Filed as Exhibit 10.10 to
ATMIs 2008 Annual Report on Form 10-K, File No.
1-16239, and incorporated herein by reference). |
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10.11 |
* |
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ATMIs 2000 Stock Plan, dated May 24, 2000 (Filed on
September 20, 2000 as Exhibit 99.1 to the Companys
Registration Statement on Form S-8, Registration No.
333-46222). |
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10.12 |
* |
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ATMIs 2003 Stock Plan (as amended May 21, 2003), (Filed
on August 1, 2003 as Exhibit 4.6 to the Companys
Registration Statement on Form S-8, Registration No.
333-107591). |
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10.13 |
* |
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ATMIs 1998 Employee Stock Purchase Plan, (as amended
February 28, 2003), (Filed on August 1, 2003 as Exhibit
4.7 to the Companys Registration Statement on Form S-8,
Registration No. 333-107591). |
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10.14 |
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Alliance Agreement dated as of May 16, 2003 by and
between Advanced Technology Materials, Inc. on its own
behalf and on behalf of its Affiliates and Enthone, Inc.
(Filed as Exhibit 10.15 to ATMIs 2003 Annual Report on
Form 10-K, File No. 1-16239, and incorporated herein by
reference). (1) |
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10.15 |
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Stock Purchase Agreement dated as of July 14, 2003 by
and among Advanced Technology Materials, Inc., Lente,
LLC and the Persons listed on the signature page thereto
(Filed as Exhibit 10.16 to ATMIs 2003 Annual Report on
Form 10-K, File No. 1-16239, and incorporated herein by
reference). (1) |
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10.16 |
* |
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Non-Employee Directors Deferred Compensation Program of
ATMI, Inc. 1998 Stock Plan (Filed as Exhibit 10.19 to
ATMIs 2005 Annual Report on Form 10-K, File No.
1-16239, and incorporated herein by reference). |
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10.17 |
* |
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Form of ATMI, Inc. Executive Management Restricted Stock
Grant Agreement (Filed as Exhibit 10.20 to ATMIs 2006
Annual Report on Form 10-K, File No. 1-16239, and
incorporated herein by reference). |
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10.18 |
* |
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Form of ATMI, Inc. Employee Non-Qualified Stock Option
Agreement (Filed as Exhibit 10.21 to ATMIs 2006 Annual
Report on Form 10-K, File No. 1-16239, and incorporated
herein by reference). |
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10.19 |
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Agreement of Lease between West Real Estate and
Management, Inc. and ATMI Packaging, Inc., and ATMI,
Inc., dated October 21, 2004 (Filed as Exhibit 10.23 to
ATMIs 2004 Annual Report on Form 10-K, File No.
1-16239, and incorporated herein by reference). |
44
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Exhibit No. |
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Description |
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10.20 |
* |
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Form of ATMI, Inc. Employee Restricted Stock Grant
Agreement Non-Executive Management (Filed as Exhibit
10.23 to ATMIs 2006 Annual Report on Form 10-K, File
No. 1-16239, and incorporated herein by reference). |
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10.21 |
* |
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Form of ATMI, Inc. Non-Employee Director Restricted
Stock Grant (Filed as Exhibit 10.24 to ATMIs 2006
Annual Report on Form 10-K, File No. 1-16239, and
incorporated herein by reference). |
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10.22 |
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First Amendment to Agreement of Lease dated as of March
24, 2003 by and between Seymour R. Powers, Trustee, and
Leon Griss and Advanced Technology Materials, Inc.
(Filed as Exhibit 10.25 to ATMIs 2005 Annual Report on
Form 10-K, File No. 1-16239, and incorporated herein by
reference). |
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10.23 |
* |
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Amendment to ATMIs 1998 Employee Stock Purchase Plan
(amended effective February 28, 2003 and January 1,
2007), (Filed as Exhibit 99 to ATMIs Form 10-Q for the
quarter ended September 30, 2006, File No. 1-16239, and
incorporated herein by reference). |
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10.24 |
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Second Amendment to Agreement of Lease dated as of
January 18, 2007 by and between Seymour R. Powers,
Trustee, and Carole Kolsky, Deborah A. Tauber and
Stephen L. Griss (as successors to Leon Griss and Ruth
Griss) and Advanced Technology Materials, Inc. (Filed as
Exhibit 10.27 to ATMIs 2006 Annual Report on Form 10-K,
File No. 1-16239, and incorporated herein by reference). |
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10.25 |
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Third Amendment to Agreement of Lease dated as of
January 18, 2007 by and between Commerce Park Realty,
LLC and Advanced Technology Materials, Inc. (Filed as
Exhibit 10.28 to ATMIs 2006 Annual Report on Form 10-K,
File No. 1-16239, and incorporated herein by reference). |
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10.26 |
* |
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Form of ATMI, Inc. Non-Employee Directors Non-Qualified
Stock Option Agreement (Filed as Exhibit 10.29 to ATMIs
2006 Annual Report on Form 10-K, File No. 1-16239, and
incorporated herein by reference). |
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10.27 |
* |
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Employment Agreement between Timothy C. Carlson and
ATMI, Inc. dated December 31, 2004 (Filed as Exhibit
10.31 to ATMIs 2007 Annual Report on Form 10-K, File
No. 1-16239, and incorporated herein by reference). |
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10.28 |
* |
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Amendment to Employment Agreement between Timothy C.
Carlson and ATMI, Inc. dated August 1, 2005 (Filed as
Exhibit 10.32 to ATMIs 2007 Annual Report on Form 10-K,
File No. 1-16239, and incorporated herein by reference). |
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10.29 |
* |
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Employment Agreement between Ellen Harmon and ATMI, Inc.
dated January 14, 2008 (Filed as Exhibit 10.33 to ATMIs
2007 Annual Report Form 10-K, File No. 1-16239, and
incorporated herein by reference). |
45
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Exhibit No. |
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Description |
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10.30 |
* |
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Amendment to Employment Agreement between Timothy C.
Carlson and ATMI, Inc. dated January 31, 2008, effective
as of September 7, 2007 (Filed as Exhibit 10.34 to
ATMIs 2007 Annual Report on Form 10-K, File No.
1-16239, and incorporated herein by reference). |
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10.31 |
* |
|
Amendment to Employment Agreement between Daniel P.
Sharkey and ATMI, Inc. dated January 31, 2008, effective
as of September 7, 2007 (Filed as Exhibit 10.35 to
ATMIs 2007 Annual Report on Form 10-K, File No.
1-16239, and incorporated herein by reference). |
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10.32 |
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First Amendment to Agreement of Lease between West Real
Estate and Management, Inc. and ATMI Packaging, Inc.,
and ATMI, Inc., dated September 23, 2008 (Filed as
Exhibit 10.32 to ATMIs 2008 Annual Report on Form 10-K,
File No. 1-16239, and incorporated herein by reference). |
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10.33 |
* |
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Amendment to Employment Agreement between Douglas A.
Neugold and ATMI, Inc. dated April 14, 2008 (Filed as
Exhibit 10.2 to ATMIs Current Report on Form 8-K, filed
on April 16, 2008, File No. 1-16239, and incorporated
herein by reference). |
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10.34 |
* |
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Amendment to Employment Agreement between Daniel P.
Sharkey and ATMI, Inc. dated April 14, 2008 (Filed as
Exhibit 10.3 to ATMIs Current Report on Form 8-K, filed
on April 16, 2008, File No. 1-16239, and incorporated
herein by reference). |
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10.35 |
* |
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Amendment to Employment Agreement between Timothy C.
Carlson and ATMI, Inc. dated April 14, 2008 (Filed as
Exhibit 10.4 to ATMIs Current Report on Form 8-K, filed
on April 16, 2008, File No. 1-16239, and incorporated
herein by reference). |
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10.36 |
* |
|
Amendment to Employment Agreement between Ellen Harmon
and ATMI, Inc. dated April 14, 2008 (Filed as Exhibit
10.5 to ATMIs Current Report on Form 8-K, filed on
April 16, 2008, File No. 1-16239, and incorporated
herein by reference). |
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10.37 |
* |
|
First Amendment to Non-Employee Directors Deferred
Compensation Program of ATMI, Inc. 1998 Stock Plan
(Filed as Exhibit 10.1 to ATMIs Current Report on Form
8-K, filed on March 6, 2008, File No. 1-16239, and
incorporated herein by reference). |
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10.38 |
* |
|
Amendment to The ATMI, Inc. 1998 Stock Plan (Filed as
Exhibit 10.2 to ATMIs Current Report on Form 8-K, filed
on March 6, 2008, File No. 1-16239, and incorporated
herein by reference). |
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10.39 |
* |
|
Amendment to The ATMI, Inc. 2000 Stock Plan (Filed as
Exhibit 10.3 to ATMIs Current Report on Form 8-K, filed
on March 6, 2008, File No. 1-16239, and incorporated
herein by reference). |
46
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Exhibit No. |
|
Description |
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10.40 |
* |
|
ATMI, Inc. 2003 Stock Plan (as Amended May 21, 2003 and
March 2, 2008) (Filed as Exhibit 10.4 to ATMIs Current
Report on Form 8-K, filed on March 6, 2008, File No.
1-16239, and incorporated herein by reference). |
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10.41 |
* |
|
ATMI, Inc. Non-Employee Directors Deferred Compensation
Program of ATMI, Inc. 2003 Stock Plan (Filed as Exhibit
10.5 to ATMIs Current Report on Form 8-K, filed on
March 6, 2008, File No. 1-16239, and incorporated herein
by reference). |
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21 |
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Subsidiaries of ATMI, Inc. |
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23 |
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Consent of Independent Registered Public Accounting Firm. |
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31.1 |
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Certification of Chief Executive Officer pursuant to
Rule 13a-14(a) and Rule 15d-14(a) of the Securities
Exchange Act, as amended. |
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31.2 |
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Certification of Chief Financial Officer pursuant to
Rule 13a-14(a) and Rule 15d-14(a) of the Securities
Exchange Act, as amended. |
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32 |
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Certification of Chief Executive Officer and Chief
Financial Officer Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 is furnished herewith. |
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* |
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Indicates a management contract or compensatory plan or arrangement. |
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(1) |
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Portions omitted pursuant to a request for confidential treatment. |
47
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
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ATMI, Inc. |
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February 18, 2010 |
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By:
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/s/ Douglas A. Neugold
Douglas A. Neugold
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President and Chief Executive Officer |
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates
indicated.
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Signature |
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Title |
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Date |
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/s/ Douglas A. Neugold
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President, Chief Executive Officer and Director
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February 18, 2010 |
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(principal executive officer) |
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/s/ Timothy C. Carlson
Timothy C. Carlson
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Executive Vice President, Chief Financial Officer
and Treasurer (principal financial and
accounting officer)
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February 18, 2010 |
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/s/ Eugene G. Banucci, Ph.D.
Eugene G. Banucci, Ph.D.
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Chairman of the Board and Director
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February 18, 2010 |
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/s/ Mark A. Adley
Mark A. Adley
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Director
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February 18, 2010 |
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/s/ Robert S. Hillas
Robert S. Hillas
|
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Director
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February 18, 2010 |
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/s/ Stephen H. Mahle
Stephen H. Mahle
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Director
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February 18, 2010 |
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/s/ C. Douglas Marsh
C. Douglas Marsh
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Director
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February 18, 2010 |
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/s/ Frederick C. Flynn, Jr.
Frederick C. Flynn, Jr.
|
|
Director
|
|
February 18, 2010 |
|
|
|
|
|
/s/ Cheryl L. Shavers, Ph.D.
Cheryl L. Shavers, Ph.D.
|
|
Director
|
|
February 18, 2010 |
48
ATMI, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULE
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Page |
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F-2 |
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Audited Financial Statements |
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F-4 |
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F-5 |
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F-6 |
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F-7 |
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F-8 |
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Financial Statement Schedule |
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F-36 |
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F-1
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders of ATMI, Inc.
We have audited the accompanying consolidated balance sheets of ATMI, Inc. as of December 31, 2009
and 2008, and the related consolidated statements of operations, stockholders equity, and cash
flows for each of the three years in the period ended December 31, 2009. Our audits also included
the financial statement schedule listed in the Index at Item 15(a). These financial statements and
schedule are the responsibility of the Companys management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the consolidated financial position of ATMI, Inc. at December 31, 2009 and 2008, and the
consolidated results of its operations and its cash flows for each of the three years in the period
ended December 31, 2009, in conformity with U.S. generally accepted accounting principles. Also,
in our opinion, the related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects the information set
forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), ATMI, Inc.s internal control over financial reporting as of December 31,
2009, based on criteria established in Internal ControlIntegrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 18,
2010 expressed an unqualified opinion thereon.
/s/ ERNST & YOUNG LLP
Stamford, Connecticut
February 18, 2010
F-2
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders of ATMI, Inc.
We have audited ATMI, Inc.s internal control over financial reporting as of December 31, 2009,
based on criteria established in Internal ControlIntegrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (the COSO criteria). ATMI, Inc.s management is
responsible for maintaining effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over financial reporting included in Item 9A,
Managements Report on Internal Control Over Financial Reporting. Our responsibility is to
express an opinion on the Companys internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk,
and performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
A companys internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A
companys internal control over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and directors of the company;
and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the companys assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
In our opinion, ATMI, Inc. maintained in all material respects, effective internal control over
financial reporting as of December 31, 2009, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated balance sheets of ATMI, Inc. as of December 31, 2009 and
2008, and the related consolidated statements of operations, stockholders equity, and cash flows
for each of the three years in the period ended December 31, 2009 and our report dated February 18,
2010 expressed an unqualified opinion thereon.
/s/ ERNST & YOUNG LLP
Stamford, Connecticut
February 18, 2010
F-3
ATMI, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2009 |
|
|
2008 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
64,738 |
|
|
$ |
54,626 |
|
Marketable securities, current portion |
|
|
32,650 |
|
|
|
37,739 |
|
Accounts receivable, net of allowances of $2,287 and $958, respectively |
|
|
44,184 |
|
|
|
42,229 |
|
Inventories, net |
|
|
53,761 |
|
|
|
55,986 |
|
Income taxes receivable |
|
|
10,844 |
|
|
|
4,847 |
|
Deferred income taxes |
|
|
8,027 |
|
|
|
6,947 |
|
Prepaid expenses and other current assets |
|
|
19,383 |
|
|
|
15,585 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
233,587 |
|
|
|
217,959 |
|
|
|
|
|
|
|
|
|
|
Property, plant, and equipment, net |
|
|
124,609 |
|
|
|
136,425 |
|
Goodwill |
|
|
33,394 |
|
|
|
33,355 |
|
Other intangibles, net |
|
|
23,202 |
|
|
|
27,202 |
|
Marketable securities, non-current |
|
|
10,590 |
|
|
|
3,655 |
|
Deferred income taxes, non-current |
|
|
2,707 |
|
|
|
1,581 |
|
Other non-current assets |
|
|
31,487 |
|
|
|
32,887 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
459,576 |
|
|
$ |
453,064 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
14,788 |
|
|
$ |
12,867 |
|
Accrued liabilities |
|
|
4,804 |
|
|
|
5,277 |
|
Accrued salaries and related benefits |
|
|
4,480 |
|
|
|
6,445 |
|
Income taxes payable |
|
|
1,800 |
|
|
|
635 |
|
Loans and notes payable, current |
|
|
483 |
|
|
|
1,102 |
|
Other current liabilities |
|
|
3,328 |
|
|
|
1,538 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
29,683 |
|
|
|
27,864 |
|
|
|
|
|
|
|
|
|
|
Deferred income taxes, non-current |
|
|
6,916 |
|
|
|
5,469 |
|
Other non-current liabilities |
|
|
11,487 |
|
|
|
10,834 |
|
|
|
|
|
|
|
|
|
|
Stockholders equity: |
|
|
|
|
|
|
|
|
Preferred stock, par value $.01 per share: 2,000 shares authorized; none issued |
|
|
|
|
|
|
|
|
Common stock, par value $.01 per share: 100,000 shares authorized; |
|
|
393 |
|
|
|
392 |
|
39,354 and 39,199 issued and 31,388 and 31,268 outstanding in 2009
and 2008, respectively |
|
|
|
|
|
|
|
|
Additional paid-in capital |
|
|
426,436 |
|
|
|
421,040 |
|
Treasury stock at cost (7,966 and 7,931 shares in 2009 and 2008,
respectively) |
|
|
(227,670 |
) |
|
|
(227,101 |
) |
Retained earnings |
|
|
208,927 |
|
|
|
214,300 |
|
Accumulated other comprehensive income |
|
|
3,404 |
|
|
|
266 |
|
|
|
|
|
|
|
|
Total stockholders equity |
|
|
411,490 |
|
|
|
408,897 |
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity |
|
$ |
459,576 |
|
|
$ |
453,064 |
|
|
|
|
|
|
|
|
See accompanying notes.
F-4
ATMI, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
254,704 |
|
|
$ |
339,063 |
|
|
$ |
364,088 |
|
Cost of revenues |
|
|
152,520 |
|
|
|
172,551 |
|
|
|
182,480 |
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
102,184 |
|
|
|
166,512 |
|
|
|
181,608 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
37,162 |
|
|
|
37,809 |
|
|
|
29,879 |
|
Selling, general and administrative |
|
|
76,359 |
|
|
|
88,781 |
|
|
|
99,227 |
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
113,521 |
|
|
|
126,590 |
|
|
|
129,106 |
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
(11,337 |
) |
|
|
39,922 |
|
|
|
52,502 |
|
Interest income |
|
|
1,196 |
|
|
|
3,126 |
|
|
|
7,689 |
|
Impairment of investments |
|
|
(2,486 |
) |
|
|
(3,432 |
) |
|
|
|
|
Other income (expense), net |
|
|
(1,029 |
) |
|
|
530 |
|
|
|
(788 |
) |
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
(13,656 |
) |
|
|
40,146 |
|
|
|
59,403 |
|
Provision (benefit) for income taxes |
|
|
(6,996 |
) |
|
|
6,819 |
|
|
|
18,864 |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(6,660 |
) |
|
$ |
33,327 |
|
|
$ |
40,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share basic |
|
$ |
(0.21 |
) |
|
$ |
1.06 |
|
|
$ |
1.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding basic |
|
|
31,398 |
|
|
|
31,447 |
|
|
|
34,169 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share diluted |
|
$ |
(0.21 |
) |
|
$ |
1.04 |
|
|
$ |
1.16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding diluted |
|
|
31,398 |
|
|
|
32,078 |
|
|
|
35,093 |
|
See accompanying notes.
F-5
ATMI, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
Common |
|
|
Paid-in |
|
|
Treasury |
|
|
Retained |
|
|
Comprehensive |
|
|
|
|
|
|
Stock |
|
|
Capital |
|
|
Stock |
|
|
Earnings |
|
|
Income |
|
|
Total |
|
Balance at December 31, 2006 |
|
$ |
383 |
|
|
$ |
389,346 |
|
|
$ |
(100,305 |
) |
|
$ |
140,434 |
|
|
$ |
5,638 |
|
|
$ |
435,496 |
|
Issuance of 589 shares of common stock pursuant
to the exercise of employee stock options |
|
|
6 |
|
|
|
13,692 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,698 |
|
Issuance of 17 shares of common stock pursuant
to the employee stock purchase plan |
|
|
1 |
|
|
|
498 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
499 |
|
Purchase of 2,224 treasury shares |
|
|
|
|
|
|
|
|
|
|
(68,539 |
) |
|
|
|
|
|
|
|
|
|
|
(68,539 |
) |
Equity based compensation |
|
|
|
|
|
|
7,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,598 |
|
Income tax benefit from equity-based compensation |
|
|
|
|
|
|
1,289 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,289 |
|
Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,539 |
|
|
|
|
|
|
|
40,539 |
|
Reclassification adjustment related to
marketable securities sold in net unrealized
loss position, net of $694 tax provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,182 |
|
|
|
1,182 |
|
Change in fair value on available-for-sale
securities, net of deferred income tax of $64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
186 |
|
|
|
186 |
|
Change in fair value of derivative financial
instruments, net of deferred income tax of $46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78 |
|
|
|
78 |
|
Cumulative translation adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,357 |
|
|
|
2,357 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007 |
|
|
390 |
|
|
|
412,423 |
|
|
|
(168,844 |
) |
|
|
180,973 |
|
|
|
9,441 |
|
|
|
434,383 |
|
Issuance of 60 shares of common stock pursuant
to the exercise of employee stock options |
|
|
1 |
|
|
|
1,318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,319 |
|
Issuance of 15 shares of common stock pursuant
to the employee stock purchase plan |
|
|
|
|
|
|
324 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
324 |
|
Purchase of 2,113 treasury shares |
|
|
|
|
|
|
|
|
|
|
(58,257 |
) |
|
|
|
|
|
|
|
|
|
|
(58,257 |
) |
Equity based compensation |
|
|
|
|
|
|
6,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,700 |
|
Income tax benefit from equity-based compensation |
|
|
|
|
|
|
276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
276 |
|
Other |
|
|
1 |
|
|
|
(1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,327 |
|
|
|
|
|
|
|
33,327 |
|
Reclassification adjustment related to
marketable securities sold in net unrealized
gain position, net of $925 tax provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,574 |
) |
|
|
(1,574 |
) |
Change in fair value on available-for-sale
securities, net of deferred income tax of $938 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,598 |
) |
|
|
(1,598 |
) |
Reclassification adjustment to earnings related to
derivative financial instruments at prior period
end, net of deferred income tax of $46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(78 |
) |
|
|
(78 |
) |
Cumulative translation adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,925 |
) |
|
|
(5,925 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,152 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008 |
|
|
392 |
|
|
|
421,040 |
|
|
|
(227,101 |
) |
|
|
214,300 |
|
|
|
266 |
|
|
|
408,897 |
|
Issuance of 15 shares of common stock
pursuant to the exercise of employee stock
options |
|
|
|
|
|
|
236 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
236 |
|
Purchase of 35 treasury shares |
|
|
|
|
|
|
|
|
|
|
(569 |
) |
|
|
|
|
|
|
|
|
|
|
(569 |
) |
Equity based compensation |
|
|
|
|
|
|
5,740 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,740 |
|
Income tax deficiency from equity-based
compensation |
|
|
|
|
|
|
(579 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(579 |
) |
Other |
|
|
1 |
|
|
|
(1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative effect of adoption of new
accounting standard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,287 |
|
|
|
(1,287 |
) |
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,660 |
) |
|
|
|
|
|
|
(6,660 |
) |
Reclassification adjustment related to
marketable securities sold in net unrealized
gain position, net of $32 tax provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(55 |
) |
|
|
(55 |
) |
Change in fair value on available-for-sale
securities, net of deferred income tax of $1,139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,940 |
|
|
|
1,940 |
|
Cumulative translation adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,540 |
|
|
|
2,540 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,235 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009 |
|
$ |
393 |
|
|
$ |
426,436 |
|
|
$ |
(227,670 |
) |
|
$ |
208,927 |
|
|
$ |
3,404 |
|
|
$ |
411,490 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
F-6
ATMI, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
Operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(6,660 |
) |
|
$ |
33,327 |
|
|
$ |
40,539 |
|
Adjustments to reconcile net income (loss) to cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
26,799 |
|
|
|
24,141 |
|
|
|
21,795 |
|
Provision for bad debt |
|
|
1,381 |
|
|
|
300 |
|
|
|
|
|
Provision for inventory obsolescence |
|
|
2,093 |
|
|
|
1,544 |
|
|
|
856 |
|
Deferred income taxes |
|
|
(1,880 |
) |
|
|
2,039 |
|
|
|
(1,507 |
) |
Income tax benefit (deficiency) from share-based payment arrangements |
|
|
(579 |
) |
|
|
276 |
|
|
|
1,289 |
|
Excess tax benefit from share-based payment arrangements |
|
|
|
|
|
|
(241 |
) |
|
|
(974 |
) |
Equity-based compensation expense |
|
|
5,740 |
|
|
|
6,700 |
|
|
|
7,598 |
|
Realized gain on marketable securities |
|
|
|
|
|
|
(1,967 |
) |
|
|
|
|
Long-lived asset impairments |
|
|
7,298 |
|
|
|
177 |
|
|
|
815 |
|
Loss from equity-method investments |
|
|
1,167 |
|
|
|
649 |
|
|
|
989 |
|
Impairment of investments |
|
|
2,486 |
|
|
|
3,432 |
|
|
|
|
|
Other |
|
|
281 |
|
|
|
29 |
|
|
|
98 |
|
Changes in operating assets and liabilities, net of effect of acquisitions: |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(2,790 |
) |
|
|
20,608 |
|
|
|
(4,386 |
) |
Inventories |
|
|
400 |
|
|
|
(9,489 |
) |
|
|
(760 |
) |
Other assets |
|
|
(3,767 |
) |
|
|
2,579 |
|
|
|
(8,563 |
) |
Accounts payable |
|
|
1,808 |
|
|
|
(8,698 |
) |
|
|
2,163 |
|
Accrued expenses |
|
|
(2,446 |
) |
|
|
(7,821 |
) |
|
|
(8,412 |
) |
Income taxes |
|
|
(4,983 |
) |
|
|
(5,755 |
) |
|
|
3,868 |
|
Other liabilities |
|
|
2,413 |
|
|
|
(1,214 |
) |
|
|
9,536 |
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
28,761 |
|
|
|
60,616 |
|
|
|
64,944 |
|
|
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(17,318 |
) |
|
|
(50,621 |
) |
|
|
(35,271 |
) |
Proceeds from the sale of property, plant and equipment |
|
|
33 |
|
|
|
26 |
|
|
|
347 |
|
Acquisitions of cost-basis and equity-basis investments |
|
|
|
|
|
|
(10,000 |
) |
|
|
(3,301 |
) |
Acquisitions, net of cash acquired |
|
|
|
|
|
|
(33,091 |
) |
|
|
|
|
Purchases of marketable securities |
|
|
(66,540 |
) |
|
|
(44,856 |
) |
|
|
(240,101 |
) |
Proceeds from sales or maturities of marketable securities |
|
|
65,243 |
|
|
|
85,886 |
|
|
|
298,800 |
|
Other |
|
|
(14 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used for) investing activities |
|
|
(18,596 |
) |
|
|
(52,656 |
) |
|
|
20,474 |
|
|
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Excess tax benefit from share-based payment arrangements |
|
|
|
|
|
|
241 |
|
|
|
974 |
|
Purchases of treasury stock |
|
|
(569 |
) |
|
|
(59,234 |
) |
|
|
(68,400 |
) |
Proceeds from exercise of stock options |
|
|
236 |
|
|
|
1,643 |
|
|
|
14,195 |
|
Credit line borrowings |
|
|
5,675 |
|
|
|
13,917 |
|
|
|
|
|
Credit line repayments |
|
|
(6,291 |
) |
|
|
(12,815 |
) |
|
|
|
|
Other |
|
|
(46 |
) |
|
|
(293 |
) |
|
|
(63 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash used for financing activities |
|
|
(995 |
) |
|
|
(56,541 |
) |
|
|
(53,294 |
) |
|
|
|
|
|
|
|
|
|
|
Effects of exchange rate changes on cash and cash equivalents |
|
|
942 |
|
|
|
(1,600 |
) |
|
|
(913 |
) |
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
10,112 |
|
|
|
(50,181 |
) |
|
|
31,211 |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period |
|
|
54,626 |
|
|
|
104,807 |
|
|
|
73,596 |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
64,738 |
|
|
$ |
54,626 |
|
|
$ |
104,807 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash interest paid |
|
$ |
188 |
|
|
$ |
229 |
|
|
$ |
46 |
|
Cash income taxes paid |
|
$ |
1,552 |
|
|
$ |
14,109 |
|
|
$ |
13,993 |
|
See accompanying notes.
F-7
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Summary of Significant Accounting Policies
Description of Business
ATMI, Inc. (the Company, ATMI, or we) believes it is among the leading suppliers of high
performance materials, materials packaging and materials delivery systems used worldwide in the
manufacture of microelectronics devices. Our products consist of front-end semiconductor
performance materials, sub-atmospheric pressure gas delivery systems for safe handling and delivery
of toxic and hazardous gases to semiconductor process equipment, high-purity materials packaging
and dispensing systems that allow for the reliable introduction of low volatility liquids and
solids to microelectronics and biopharmaceutical processes. ATMI targets semiconductor and
flat-panel display manufacturers, whose products form the foundation of microelectronics technology
rapidly proliferating through the consumer products, information technology, automotive, and
communications industries. The market for microelectronics devices is continually changing, which
drives demand for new products and technologies at lower cost. ATMIs customers include many of
the leading semiconductor and flat-panel display manufacturers in the world who target leading edge
technologies. ATMI also addresses an increasing number of critical materials handling needs for the
life sciences markets. Our proprietary containment, mixing, and bioreactor technologies are sold
to the biotechnology and laboratory markets, which we believe offer significant growth potential.
ATMIs objective is to meet the demands of our microelectronics and life sciences customers with
solutions that maximize the efficiency of their manufacturing processes, reduce capital costs, and
minimize the time to develop new products and integrate them into their processes.
Consolidation
The consolidated financial statements include the accounts of all subsidiaries where control
exists. Equity investments generally consist of 20 percent to 50 percent owned operations where
the Company exercises significant influence. Operations less than 20 percent owned, where the
Company does not exercise significant influence, are generally carried at cost. Earnings from
equity investments are reported, net of income taxes, within the caption, Other income (expense),
net on the consolidated statements of operations. Intercompany transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles (GAAP) requires management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, revenues, and expenses. While actual results could differ,
management believes such estimates to be reasonable.
Revenue Recognition and Accounts Receivable
We recognize revenue in accordance with SEC Staff Accounting Bulletin No. 104, Revenue Recognition
(SAB 104), which requires that four basic criteria must be met before revenue can be recognized:
(1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been
rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured.
Revenues from product sales are generally recognized upon delivery to a common carrier when terms
are equivalent to free-on-board (FOB) origin and upon receipt by a customer when terms are
equivalent to FOB destination. In instances where final acceptance of equipment is specified by
the purchase agreement, revenue is deferred until all acceptance criteria have been satisfied.
Should changes in conditions cause management to determine these criteria are not met for certain
future transactions, revenue recognized for any reporting period could be adversely affected. We
accrue for sales returns, warranty costs, and other allowances based on a current evaluation of our
experience based on stated terms of the transactions.
The Company uses an exclusive contract manufacturer (Matheson Tri-Gas), which is also an exclusive
distribution partner, for the manufacture and distribution of its SDS products (the Licensed
Products). Under the terms of the manufacturing agreement, ATMI retains the right to manufacture
25 percent of all Licensed Products, while the contract manufacturer has the right to manufacture
75 percent of all Licensed Products. Upon completion of
manufacture, ATMI purchases all Licensed Products produced by the contract manufacturer. Under the
terms of the distribution agreement, ATMI receives payment from the distributor based upon a
formula which is dependent on the sale price obtained by the distributor to its customer. ATMI
recognizes revenue from the sale of Licensed Products to this distribution partner when the
distributor sells the Licensed Products to its customers, because that is when the sales price
becomes fixed and determinable by the Company. During the years ended December 31, 2009, 2008 and
2007, ATMI recognized $37.9 million, $83.8 million, and $86.4 million of revenues from this
distributor, respectively. During the years ended December 31, 2009, 2008 and 2007, ATMI
recognized revenues from a Taiwanese foundry of $36.2 million, $36.6 million, and $38.9 million,
respectively.
F-8
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Billings to customers for shipping and handling are included in revenues. Costs incurred for
shipping and handling of products are charged to cost of revenues. Credit is extended to customers
based on an evaluation of each customers financial condition; generally, collateral is not
required. However, given the current economic environment, several customers have been put on cash
terms. Revenues are presented in the consolidated financial statements net of sales allowances and
discounts. Accounts receivable are presented in the consolidated financial statements net of the
allowance for doubtful accounts. Taxes collected from customers and remitted to governmental
authorities are presented on a net basis; that is, they are excluded from revenues.
Allowance for Doubtful Accounts
The allowance for doubtful accounts is established to represent our best estimate of the net
realizable value of the outstanding accounts receivable balances. We estimate our allowance for
doubtful accounts based on past due amounts and historical write-off experience, as well as trends
and factors surrounding the credit risk of the markets we operate in and the financial viability of
specific customers. In an effort to identify adverse trends, we assess the financial health of the
markets we operate in and perform periodic credit evaluations of our customers and ongoing reviews
of account balances and aging of receivables. Amounts are considered past due when payment has not
been received within the time frame of the credit terms extended. Write-offs are charged directly
against the allowance for doubtful accounts and occur only after all collection efforts have been
exhausted.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit
risk consist primarily of cash and cash equivalents, marketable securities, accounts receivable,
and currency forward exchange contracts. The Company invests its cash and cash equivalents and
marketable securities in U.S. Government and municipal debt obligations and other corporate debt
obligations. The Company had amounts due from two customers that accounted for approximately 38
percent and 39 percent of accounts receivable at December 31, 2009 and 2008, respectively.
Research and Development
Costs associated with the development of new products and improvements to existing products are
charged to expense as incurred.
Cash and Cash Equivalents and Marketable Securities
Highly liquid investments with maturities of three months or less, when acquired, are classified as
cash and cash equivalents. Investments in publicly traded securities with maturities greater than
three months, when acquired, are classified as marketable securities.
All of the Companys marketable securities are classified as available-for-sale as of the balance
sheet date and are reported at fair value, with unrealized gains and losses included in
stockholders equity as a component of accumulated other comprehensive income, net of applicable
taxes. We regularly review the fair value of marketable security declines below amortized cost
basis to evaluate whether the decline is other-than-temporary. In making this determination, the
Company considers all available evidence including, among other things, considering the duration
and extent of the decline and the economic factors influencing the market to determine if the fair
value will recover to equal or exceed the amortized cost. If we determine that the fair value will
not recover, an other-than-temporary impairment is recognized, net of applicable taxes.
F-9
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In April 2009, the guidance on the recognition and presentation of other-than-temporary impairments
was amended for debt securities, like our Massachusetts Student Loan Portfolio (MEFA) auction
rate security, requiring us to determine both the credit and non-credit components when we conclude
an investment has an other-than-temporary impairment. The change resulted in a second quarter 2009
recognition of a cumulative-effect adjustment to retained earnings, with a corresponding adjustment
to accumulated other comprehensive income because we recognized a non-cash other-than-temporary
impairment of $2.4 million for our auction rate security in the first quarter of 2009. As part of
the transition of adoption we determined the amount of the impairment related to credit loss and
the amount related to all other factors. Since we concluded that we had no current intent to sell
this security and it was not more likely than not that we will be required to sell the security
before anticipated recovery of its remaining amortized cost, we adjusted accumulated other
comprehensive income (loss) for the component of the impairment loss due to all other factors, net
of tax. Of the total $2.4 million pre-tax loss recognized in the first quarter of 2009, we
determined the credit loss was $0.3 million and the loss due to other factors was $2.1 million. The
credit loss of $0.3 million is being accreted to the cost basis of the security ratably over the
expected term of the security, currently estimated to be 16 years. The estimated fair value of the
auction rate security was $2.6 million at December 31, 2009. See Note 6 for further discussion
regarding the auction rate security.
Marketable securities that are in a temporarily impaired position, where management has the ability
and intent to hold until anticipated recovery or maturity, are classified as either current or
non-current based on the remaining contractual maturity of the security. Those securities in a
temporarily impaired position with contractual maturities greater than one year are classified as
non-current.
As part of our ongoing cash management optimization efforts during 2009, the Company determined not
to renew our South Korean time deposits which were classified as marketable securities in 2008. At
December 31, 2009 and 2008, the Company had no time deposits and $9.5 million, respectively, in
South Korea. At December 31, 2009, the proceeds from the time deposits were held in U.S.
investment accounts to preserve liquidity.
Non-marketable Equity Securities
We selectively invest in non-marketable equity securities of private companies, which range from
early-stage companies that are often still defining their strategic direction to more mature
companies whose products or technologies may directly support an ATMI product or initiative. At
December 31, 2009, the carrying value of our portfolio of strategic investments in non-marketable
equity securities totaled $22.1 million ($22.4 million at December 31, 2008), of which $14.0
million are accounted for at cost ($13.2 million at December 31, 2008), and $8.1 million are
accounted for using the equity method of accounting ($9.2 million at December 31, 2008).
Non-marketable equity securities are included in the consolidated balance sheets under the caption
Other non-current assets. ATMIs share of the income or losses of all equity-method investees,
using the most current financial information available, which is one month behind ATMIs normal
closing date, is included in our results of operations from the investment date forward.
We review our investments quarterly for indicators of impairment; however, for non-marketable
equity securities, the impairment analysis may require significant judgment to identify events or
circumstances that would likely have a significant adverse effect on the fair value of the
investment. The indicators that we use to identify those events or circumstances include (a) the
investees revenue and earnings trends relative to predefined milestones and overall business
prospects, (b) the technological feasibility of the investees products and technologies, (c) the
general market conditions in the investees industry or geographic area, including adverse
regulatory or economic changes, (d) factors related to the investees ability to remain in
business, such as the investees liquidity, and the rate at which the investee is using its cash,
and (e) the investees receipt of additional funding at a lower valuation.
Investments identified as having an indicator of impairment are subject to further analysis to
determine if the investment is other-than-temporarily impaired, in which case we write the
investment down to its fair value, using the framework described in ASC 820, Fair Value
Measurements and Disclosures. When an investee is not considered viable from a financial or
technological point of view, we write down the entire investment since we consider the estimated
fair market value to be nominal. If an investee obtains additional funding at a valuation lower
than our carrying amount or requires a new round of equity funding to stay in operation and the new
funding does not appear imminent, we presume that the investment is other-than-temporarily
impaired, unless specific facts and circumstances indicate otherwise. We had no impairments in our
portfolio of non-marketable equity securities in
2009 ($1.6 million in 2008 and none in 2007). Recognized losses associated with investment
impairments are included in the consolidated statements of operations under the caption Impairment
of investments.
F-10
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In July 2005, ATMI purchased 30 percent of the outstanding common stock of Anji Microelectronics
Co., Ltd. (Anji), an entity in the development stage of researching and developing advanced
semiconductor materials, with primary operations in Shanghai, China. We have determined that Anji
is a variable interest entity. However, we have determined that we are not the primary beneficiary
of Anji because we are not expected to absorb the majority of the expected losses or gains, nor
would ATMI receive a majority of the expected residual returns. ATMI accounts for this investment
using the equity method of accounting. The carrying value of ATMIs investment in Anji exceeds
ATMIs share of Anjis net assets by approximately $5.3 million. The carrying value of our
investment in Anji represents the cash paid, less our share of the cumulative losses, and pursuant
to an independent valuation obtained, the excess purchase price over the underlying net assets is
deemed to be goodwill. At December 31, 2009, the fair value of a guarantee ATMI provided on behalf
of Anji was $0.2 million (see Note 15) and our maximum exposure to loss is $9.3 million, and
consists of $6.0 million of our carrying value in this investment, plus $3.3 million associated
with Anjis bank line of credit, which is guaranteed by ATMI.
Inventories
Inventories are stated at the lower of cost or market, using the first-in, first-out (FIFO)
method. Inventory valuation reserves are established in order to report inventories at the lower
of cost or market value on our consolidated balance sheets. The determination of inventory
valuation reserves requires management to make estimates and judgments on the future salability of
inventories. Valuation reserves for excess, obsolete, and slow-moving inventory are estimated by
comparing the inventory levels of individual parts to both future sales forecasts or production
requirements and historical usage rates in order to identify inventory where the resale value or
replacement value is less than inventory cost. Other factors that management considers in
determining these reserves include whether individual inventory parts or chemicals meet current
specifications and cannot be substituted for or reworked into a part currently being sold or used
as a service part, overall market conditions, and other inventory management initiatives.
As of December 31, 2009 and 2008 we had $2.6 million and $2.4 million, respectively, of inventory
valuation reserves recorded.
Property, Plant, and Equipment, net
Property, plant, and equipment are carried at cost, net of accumulated depreciation. Depreciation
is calculated on the straight-line method based on the estimated useful lives of the assets, which
range from 3 to 35 years (see Note 7). The estimated useful life represents the projected period of
time that the asset will be productively employed by the Company and is determined by management
based on many factors, including historical experience with similar assets and technological life
cycles. Circumstances and events relating to these assets are monitored to ensure that changes in
asset lives or impairments are identified and prospective depreciation expense or impairment
expense is adjusted accordingly. The depreciation periods used are: buildings, 15 to 35 years;
machinery and equipment, 5 to 10 years; computer equipment and software, 3 to 7 years; cylinders
and canisters, 7 to 10 years; furniture and fixtures, 5 years; and leasehold improvements, over the
lesser of the lease term or estimated useful life. We use accelerated depreciation methods for tax
purposes where appropriate.
F-11
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Asset-Retirement Obligations
An asset-retirement obligation (ARO) is recognized in the period in which sufficient information
exists to determine the fair value of the liability with a corresponding increase to the carrying
amount of the related property, plant, and equipment which is then depreciated over its useful
life. The liability is initially measured at fair value and then accretion expense is recorded in
each subsequent period. The Companys AROs are primarily associated with four leased facilities
where we have made substantial modifications to the leased property and we are obligated to restore
the facilities at the end of the contractual term of each lease. See Note 10 for further
discussion on leases.
Income Taxes
Current income taxes are determined based on estimated taxes payable or refundable on tax returns
for the current year. Deferred income taxes are determined using enacted tax rates for the effect
of temporary differences between the book and tax bases of recorded assets and liabilities. The
effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date. The Company recognizes the benefit of an income tax
position only if it is more likely than not (greater than 50 percent) that the tax position will be
sustained upon tax examination, based solely on the technical merits of the tax position.
Otherwise, no benefit can be recognized. The tax benefits recognized are measured based on the
largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate
settlement. Additionally, the Company accrues interest and related penalties, if applicable, on all
tax exposures for which reserves have been established consistent with jurisdictional tax laws,
which is included in income tax expense. See Note 11 for more information and disclosures on income
taxes.
Fair Value of Financial Instruments
The Company measures and reports financial assets and financial liabilities on a fair value basis,
consistent with ASC 820 Fair Value Measurements and Disclosures, using the following three
categories for classification and disclosure purposes:
Level 1 Quoted prices in active markets for identical assets and liabilities. Level 1 assets and
liabilities consist of cash, 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.
Level 3 Unobservable inputs to the valuation methodology that are significant to the measurement
of fair value of assets or liabilities. At December 31, 2009, our auction-rate-security is the
only item reflected in this category.
See Note 6 for more information on the methods and assumptions used to estimate the fair value of
our other financial instruments.
F-12
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Foreign Currency Exchange Contracts
We use forward foreign currency exchange contracts to hedge specific or anticipated exposures
relating to intercompany payments (primarily U.S. export sales to subsidiaries at pre-established
U.S. dollar prices), intercompany loans and other specific and identified exposures. The terms of
the forward foreign currency exchange contracts are matched to the underlying transaction being
hedged, and are typically under one year. Because such contracts are directly associated with
identified transactions, they are an effective hedge against fluctuations in the value of the
foreign currency underlying the transaction.
Changes in the fair value of derivatives designated as fair-value hedges are recognized in earnings
as an offset to the change in the fair values of the underlying exposures being hedged. The
changes in fair value of derivatives that are designated as cash-flow hedges are deferred in
accumulated other comprehensive income (loss) and are recognized in earnings as the underlying
hedged transaction occurs. Any ineffectiveness is recognized in earnings immediately. We do not
enter into derivative instruments for trading or speculative purposes and all of our derivatives
were highly effective throughout the periods reported. At December 31, 2009, we did not have any
cash flow hedges outstanding.
Counterparties to forward foreign currency exchange contracts are primarily major banking
institutions with credit ratings of investment grade or better and no collateral is required. There
are no significant risk concentrations. Management believes the risk of incurring losses on
derivative contracts related to credit risk is remote.
Goodwill and Other Indefinite-Lived Intangible Assets
The assets and liabilities of acquired businesses are recorded under the purchase method of
accounting at their estimated fair values at the dates of acquisition. Goodwill represents costs in
excess of fair values assigned to the underlying net assets of acquired businesses.
Goodwill and intangible assets deemed to have indefinite lives are not amortized, but are subject
to annual impairment testing. The identification and measurement of goodwill impairment involves
the estimation of the fair value of reporting units. The estimates of fair value of reporting
units are based on the best information available as of October 31, 2009, which primarily
incorporate management assumptions about expected future cash flows and contemplate other valuation
techniques. No goodwill impairment has been recorded to date.
Other Long-Lived Assets
We evaluate the potential impairment of other long-lived assets when indicators of impairment are
present. If the carrying value of assets exceeds the sum of the undiscounted expected future cash
flows, the carrying value of the asset is written down to fair value. We amortize acquired patents
and other amortizable intangible assets over their estimated useful lives. All amortizable
intangible assets are amortized using the straight-line method over the estimated useful lives of
the assets, ranging from 3 to 14 years.
Intercompany Loans
In certain circumstances, the Company maintains intercompany agreements with and among our
wholly-owned subsidiaries under which funds are provided to subsidiaries to finance general
business activities. Since settlement of these agreements is not expected in the foreseeable
future, and there is no repayment schedule as part of the agreements, we treat these loans as
permanent advances. Therefore, any associated foreign exchange gains and losses are deferred in
accumulated other comprehensive income in the period in which they arise.
Translation of Foreign Currencies
We conduct business in many different currencies and, accordingly, are subject to the inherent
risks associated with foreign exchange rate movements. The financial position and results of
operations of many of our foreign subsidiaries are measured using the local currency as the
functional currency. Foreign currency denominated assets and liabilities are translated into U.S.
dollars at the exchange rates existing at the respective balance sheet dates, and income and
expense items are translated at the average exchange rates during the respective periods. The
aggregate
effects of translating the balance sheets of these subsidiaries are deferred as a separate
component of Stockholders equity.
F-13
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Equity-based Compensation
The Company recognizes compensation expense in its consolidated financial statements for all
share-based payments granted based on the fair value on the date of grant. For share-based
payments granted with a service period vesting restriction, compensation expense is recognized on a
straight-line basis over the awards respective vesting period. For share-based payments granted
with a performance condition, we accrue compensation expense when we determine it is probable that
the awards will be earned.
Recently Issued Accounting Pronouncements
In June 2009, the FASB issued Accounting Standards Update (ASU) 2009-17, Improvement to
Financial Reporting by Enterprises Involved with Variable Interest Entities. This Statement amends
previous guidance to require us to perform an analysis of our existing investments to determine
whether our variable interest or interests give us a controlling financial interest in a variable
interest entity. This analysis identifies the primary beneficiary of a variable interest entity as
the enterprise that has both the power to direct the activities of significant impact on a variable
interest entity and the obligation to absorb losses or receive benefits from the variable interest
entity that could potentially be significant to the variable interest entity. It also requires
ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest
entity. This Statement is effective as of the beginning of each reporting entitys first annual
reporting period that begins after November 15, 2009, for interim periods within that first annual
reporting period, and for interim and annual reporting periods thereafter. Earlier application is
prohibited. We do not anticipate a material impact from the adoption of this standard.
In October 2009, the FASB issued ASU 2009-13, Revenue Recognition (Topic 605). This Update
provides amendments to the criteria in Subtopic 605-24 for separating consideration in
multiple-deliverable revenue arrangements. It establishes a hierarchy of selling prices to
determine the selling price of each specific deliverable which includes vendor-specific objective
evidence (if available), third-party evidence (if vendor-specific evidence is not available), or
estimated selling price if neither of the first two are available. This Update also eliminates the
residual method for allocating revenue between the elements of an arrangement and requires that
arrangement consideration be allocated at the inception of the arrangement. Finally, this Update
expands the disclosure requirements regarding a vendors multiple-deliverable revenue arrangements.
This Update is effective for fiscal years beginning on or after June 15, 2010. We do not anticipate
any material impact from this Update.
In January 2010, the FASB issued ASU 2010-02, Accounting and Reporting for Decreases in Ownership
of a Subsidiary a Scope Clarification. This Update provides amendments to Subtopic 810-10 and
related guidance within U.S. GAAP to clarify that the scope of the decrease in ownership provisions
applies to (1) A subsidiary or group of assets that is a business or nonprofit activity, (2) A
subsidiary that is a business or nonprofit activity that is transferred to an equity method
investee or joint venture, and (3) An exchange of a group of assets that constitutes a business or
nonprofit activity for a noncontrolling interest in an entity (including an equity method investee
or joint venture). If a decrease in ownership occurs in a subsidiary that is not a business, an
entity first needs to consider whether the substance of the transaction causing the decrease in
ownership is addressed in other U.S. GAAP, such as transfers of financial assets, revenue
recognition, exchanges of nonmonetary assets, sales of in substance real estate, or conveyances of
oil and gas mineral rights, and apply that guidance as applicable. If no other guidance exists, an
entity should apply the guidance in ASC 810-10. We do not anticipate any material impact from this
Update.
F-14
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic
820). This Update provides amendments to Subtopic 820-10 and related guidance within U.S. GAAP to
require disclosure of the transfers in and out of Levels 1 and 2 and a schedule for Level 3 that
separately identifies purchases, sales, issuances and settlements. It also clarifies exposing
disclosures requirements indicating that disaggregate information regarding classes of assets and
liabilities that make up each level and more detail regarding valuation techniques and inputs.
This Update is effective for fiscal years beginning on or after December 15, 2009 except for the
disclosure regarding Level 3 activity which is effective for fiscal years beginning after December
15, 2010. We do not anticipate any material impact from this Update.
Other
During the first quarter of 2009, we recognized a $1.5 million charge to increase our reserves for
bad debt to cover exposures related to customer bankruptcy filings and uncertainties of collections
due to the current general macroeconomic conditions. We subsequently recovered $0.1 million of this
amount.
As a result of the global economic recession and related impact on our business, we amended an
alliance agreement in 2009 to better align the timing of certain high-productivity development
(HPD) capabilities support activities to the expected timing of our customer integration
activities. The amendment reduced the amount we were contractually committed to pay for these
support activities in 2009 and confirms commitments to pay for these incremental activities in
2010. These incremental activities in 2010 are expected to add $3.0 million of expense in that
year. We plan to continue to actively invest in our HPD capabilities in the foreseeable future,
because we believe this investment will drive significant new revenue opportunities in advanced materials
and will be a competitive advantage for ATMI.
As a result of the redirection of certain supply chain and operations activities associated with
the 2007 organizational changes (which we announced in September 2007, but which did not become
effective until January 1, 2008), certain associated expenses have been realigned from selling,
general, and administrative expense (SG&A) to cost of revenues in 2008. These 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
focused on improving our global supply chain capabilities and overall customer satisfaction. This
change reduced gross margin and SG&A as a percentage of revenues in 2008 by approximately 180 basis
points compared to 2007. Our 2009 organizational structure is consistent with 2008.
2. Insurance Claim Recoveries
We did not have any material claims or recoveries from our insurance carriers in 2009.
During 2007, a fire at a contract manufacturer in Taiwan destroyed approximately $1.8 million of
ATMIs assets, all of 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,
and recovered $2.4 million related to this claim, which has been recorded as an offset to cost of
revenues in our consolidated statements of operations, and has been included as a component of
operating cash flows in our consolidated statements of cash flows.
F-15
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Marketable Securities
Marketable securities include at December 31, (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
|
2008 |
|
|
|
|
|
|
|
Gross |
|
|
|
|
|
|
|
|
|
|
Gross |
|
|
|
|
|
|
|
|
|
|
Unrealized |
|
|
Estimated |
|
|
|
|
|
|
Unrealized |
|
|
Estimated |
|
|
|
Cost |
|
|
Gain (Loss) |
|
|
Fair Value |
|
|
Cost |
|
|
Gain (Loss) |
|
|
Fair Value |
|
Securities in unrealized gain position: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
$ |
343 |
|
|
$ |
2,029 |
|
|
$ |
2,372 |
|
|
$ |
251 |
|
|
$ |
296 |
|
|
$ |
547 |
|
Government debt
obligations (1) |
|
|
7,321 |
|
|
|
51 |
|
|
|
7,372 |
|
|
|
22,325 |
|
|
|
205 |
|
|
|
22,530 |
|
GS (2) debt obligations |
|
|
16,974 |
|
|
|
20 |
|
|
|
16,994 |
|
|
|
3,000 |
|
|
|
10 |
|
|
|
3,010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
|
24,638 |
|
|
|
2,100 |
|
|
|
26,738 |
|
|
|
25,576 |
|
|
|
511 |
|
|
|
26,087 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities in unrealized loss position: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
192 |
|
|
|
(117 |
) |
|
|
75 |
|
Government debt
obligations (1) |
|
|
909 |
|
|
|
(1 |
) |
|
|
908 |
|
|
|
|
|
|
|
|
|
|
|
|
|
GS (2) debt obligations |
|
|
13,022 |
|
|
|
(29 |
) |
|
|
12,993 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Auction-rate security (3) |
|
|
4,672 |
|
|
|
(2,071 |
) |
|
|
2,601 |
|
|
|
5,000 |
|
|
|
(1,345 |
) |
|
|
3,655 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
|
18,603 |
|
|
|
(2,101 |
) |
|
|
16,502 |
|
|
|
5,192 |
|
|
|
(1,462 |
) |
|
|
3,730 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities at amortized cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time deposits (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,502 |
|
|
|
|
|
|
|
9,502 |
|
Government debt
obligations (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,075 |
|
|
|
|
|
|
|
2,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,577 |
|
|
|
|
|
|
|
11,577 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total marketable securities |
|
$ |
43,241 |
|
|
$ |
(1 |
) |
|
$ |
43,240 |
|
|
$ |
42,345 |
|
|
$ |
(951 |
) |
|
$ |
41,394 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
State and municipal government debt obligations |
|
(2) |
|
Government sponsored |
|
(3) |
|
Massachusetts Educational Financing Authority (MEFA) auction rate security Par Value $5,000,000 less non-cash
credit loss of $328,000 |
|
(4) |
|
In 2009, we did not renew our South Korean time deposits. |
In 2008 we realized a $2.0 million gain on sale of an available-for-sale marketable equity
security.
The amortized cost and estimated fair value of available-for-sale securities, by contractual
maturity, as of December 31, 2009 are shown below (in thousands); expected maturities may differ
from contractual maturities because the issuers of the securities may exercise the right to prepay
obligations without prepayment penalties.
F-16
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated |
|
|
|
Cost |
|
|
Fair Value |
|
|
|
|
|
|
|
|
|
|
Due in one year or less |
|
$ |
24,537 |
|
|
$ |
24,566 |
|
Due between one and three years |
|
|
13,689 |
|
|
|
13,701 |
|
Auction-rate security (due in 2038) |
|
|
4,672 |
|
|
|
2,601 |
|
|
|
|
|
|
|
|
|
|
|
42,898 |
|
|
|
40,868 |
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
343 |
|
|
|
2,372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
43,241 |
|
|
$ |
43,240 |
|
|
|
|
|
|
|
|
As of December 31, 2009, 10 out of the 23 marketable securities currently held were in an
unrealized loss position. This table shows the Companys marketable securities that were in an
unrealized loss position at December 31, 2009, and also shows the duration of time the security had
been in an unrealized loss position (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Than 12 Months |
|
|
12 Months or Greater |
|
|
Total |
|
|
|
|
|
|
|
Unrealized |
|
|
|
|
|
|
Unrealized |
|
|
|
|
|
|
Unrealized |
|
|
|
Fair Value |
|
|
Losses |
|
|
Fair Value |
|
|
Losses |
|
|
Fair Value |
|
|
Losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government debt obligations |
|
$ |
908 |
|
|
$ |
(1 |
) |
|
|
|
|
|
|
|
|
|
$ |
908 |
|
|
$ |
(1 |
) |
GS debt obligations |
|
|
12,993 |
|
|
|
(29 |
) |
|
|
|
|
|
|
|
|
|
|
12,993 |
|
|
|
(29 |
) |
Auction-rate security |
|
|
|
|
|
|
|
|
|
|
2,601 |
|
|
|
(2,071 |
) |
|
|
2,601 |
|
|
|
(2,071 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
13,901 |
|
|
$ |
(30 |
) |
|
$ |
2,601 |
|
|
$ |
(2,071 |
) |
|
$ |
16,502 |
|
|
$ |
(2,101 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Note 6 for further discussion. |
4. Inventories
Inventories include at December 31, (in thousands):
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
|
2008 |
|
Raw materials |
|
$ |
14,985 |
|
|
$ |
15,588 |
|
Work in process |
|
|
2,446 |
|
|
|
1,209 |
|
Finished goods (1) |
|
|
38,924 |
|
|
|
41,558 |
|
|
|
|
|
|
|
|
|
|
|
56,355 |
|
|
|
58,355 |
|
Excess and obsolescence reserve |
|
|
(2,594 |
) |
|
|
(2,369 |
) |
|
|
|
|
|
|
|
Inventories, net |
|
$ |
53,761 |
|
|
$ |
55,986 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
$4.9 million and $5.1 million of finished goods inventory resides at non-ATMI consignment
locations at December 31, 2009 and 2008, respectively. |
As of December 31, 2009, the Company had commitments for inventory purchases of $7.4 million.
F-17
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Foreign Currency Exchange Contracts
At December 31, 2009, we held forward foreign currency exchange contracts designated as fair value
hedges with notional amounts totaling $2.9 million, of which $1.6 million will be settled in Taiwan
Dollars and $1.3 million will be settled in Japanese Yen. The fair market value (gain or loss) on
these contracts was not significant as of December 31, 2009.
At December 31, 2008, we held forward foreign currency exchange contracts designated as fair value
hedges with notional amounts totaling $3.9 million, all of which were settled in Japanese Yen.
The fair market value (gain or loss) on these contracts was not significant as of December 31,
2008.
6. Fair Value Measurements
At December 31, 2009 and 2008, we have included the fair value of our Auction Rate Security under
the caption Marketable securities, non-current in the consolidated balance sheets.
Assets / Liabilities Measured at Fair Value on a Recurring Basis
This table summarizes the Companys assets (liabilities) measured at fair value on a recurring
basis at December 31, 2009 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measured Using |
|
|
|
|
|
|
|
Quoted |
|
|
|
|
|
|
|
|
|
|
|
|
|
Prices in |
|
|
Other |
|
|
|
|
|
|
|
|
|
|
Active |
|
|
Observable |
|
|
Unobservable |
|
|
|
|
|
|
|
Markets |
|
|
Inputs |
|
|
Inputs |
|
|
|
Total |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
Cash, cash
equivalents, and
available-for-sale
marketable
securities |
|
$ |
107,978 |
|
|
$ |
67,110 |
|
|
$ |
38,267 |
|
|
$ |
2,601 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
exchange contract
liability |
|
$ |
(116 |
) |
|
$ |
(116 |
) |
|
|
|
|
|
|
|
|
The Company recorded gains of $0.2 million and $0.1 million for the years ended December 31, 2009
and 2008, respectively, and a loss of $0.5 million for the year ended December 31, 2007, under the
caption Other income (expense), net in the consolidated statements of operations, related to
changes in the fair value of its financial instruments for forward foreign currency exchange
contracts accounted for as fair value hedges.
During 2009, our valuation methodologies were consistent with previous years and there were no
transfers into or out of Level 3 based on changes in observable inputs.
F-18
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 year ended December 31,
2009 (in thousands).
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using Significant |
|
|
|
Unobservable Inputs (Level 3) |
|
|
|
Available-For- |
|
|
|
|
|
|
Sale Marketable |
|
|
|
|
|
|
Securities |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008 |
|
$ |
3,655 |
|
|
$ |
3,655 |
|
Total gains (losses), realized and unrealized: |
|
|
|
|
|
|
|
|
Included in net income |
|
|
(328 |
) |
|
|
(328 |
) |
Included in accumulated other comprehensive income |
|
|
(726 |
) |
|
|
(726 |
) |
Purchases, issuances, and settlements, net |
|
|
|
|
|
|
|
|
Transfers into (out of) Level 3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009 |
|
$ |
2,601 |
|
|
$ |
2,601 |
|
|
|
|
|
|
|
|
See Note 3 for further discussion.
Assets / Liabilities Measured at Fair Value on a Nonrecurring Basis
In accordance with the provisions of ASC 360 Property, Plant and Equipment, long-lived assets
held and used with a carrying amount of $8.4 million were written down to their estimated fair
values of $1.1 million, resulting in an impairment charge of $7.3 million in 2009. The fair value
measurements were calculated using unobservable inputs (primarily using discounted cash flow
analyses and reliance on market knowledge of internal experts), classified as Level 3, requiring
significant management judgment due to the absence of quoted market prices or observable inputs for
assets of a similar nature. $3.1 million of the impairment charge is included in cost of revenues
and is primarily related to the planned idling of manufacturing capacity of our gas products. $1.6
million of the impairment charge is included in research and development expense and is related
primarily to idled equipment used in our research and development efforts. $2.6 million of the
impairment charge is included in selling, general and administrative expense and is primarily
related to redundant enterprise management software. In 2009, we determined that the manufacturing
capacity in our gas products line, which we had planned to idle earlier in the year, will continue
normal production as we were not successful in our attempts to transition to vendor sourced
manufacturing.
In 2008, Ceradyne, Inc. (Ceradyne) completed its acquisition of SemEquip, Inc., an entity in
which ATMI had previously invested. Ceradyne paid $25 million in cash at the closing and is
committed to contingent consideration up to $100 million over the next 15 years, based on SemEquip
revenues achieved during that period. Prior to the acquisition, ATMIs cost-basis investment in
SemEquip was $2.2 million. ATMI received $0.6 million representing its share of the closing
proceeds and wrote off the remaining balance from our investment in SemEquip of $1.6 million due to
the uncertainty of collecting any amounts in the future related to the earnout. The write off is
included in the caption, Impairment of investments in the consolidated statements of operations.
Also in 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 became 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 impairment charge is included in the caption, Impairment of
investments in the consolidated statements of operations. During 2009, we collected $0.5 million
of amounts due under the note, which we recognized as a gain under the caption, Other income
(expense), net in the consolidated statement of operations. If further amounts due, including
interest, are collected in the future, we will recognize a gain for those amounts.
F-19
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Due to their nature, the carrying value of cash, receivables, and payables approximates fair value.
7. Property, Plant and Equipment, Net
Property, plant, and equipment, net, consists of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2009 |
|
|
2008 |
|
Land |
|
$ |
1,104 |
|
|
$ |
1,063 |
|
Buildings |
|
|
25,453 |
|
|
|
24,910 |
|
Machinery and equipment |
|
|
123,257 |
|
|
|
106,389 |
|
Computer equipment and software |
|
|
37,293 |
|
|
|
35,485 |
|
Cylinders and canisters |
|
|
37,230 |
|
|
|
34,744 |
|
Furniture and fixtures |
|
|
2,640 |
|
|
|
2,713 |
|
Leasehold improvements |
|
|
21,499 |
|
|
|
21,668 |
|
Construction in progress |
|
|
6,260 |
|
|
|
15,353 |
|
|
|
|
|
|
|
|
|
|
|
254,736 |
|
|
|
242,325 |
|
Accumulated depreciation and amortization |
|
|
(130,127 |
) |
|
|
(105,900 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
124,609 |
|
|
$ |
136,425 |
|
|
|
|
|
|
|
|
Depreciation and amortization expense for property, plant, and equipment for the years ended
December 31, 2009, 2008 and 2007 was $22.3 million, $20.1 million, and $18.6 million, respectively.
Fully depreciated assets, which were no longer in use, of approximately $1.0 million and $3.0
million were written off in the years ended December 31, 2009 and 2008, respectively.
We recognized impairment losses from property, plant, and equipment of $7.3 million, $0.2 million,
and $0.8 million in the years ended December 31, 2009, 2008 and 2007, respectively. Refer to Note
6 for additional information.
As of December 31, 2009, the Company had commitments for capital expenditures of $0.5 million.
This table shows amounts recorded in the consolidated statements of operations related to
depreciation and amortization expense for property, plant, and equipment (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
Cost of revenues |
|
$ |
10,633 |
|
|
$ |
9,207 |
|
|
$ |
7,499 |
|
Research and development |
|
|
4,381 |
|
|
|
3,681 |
|
|
|
2,984 |
|
Selling, general, and administrative |
|
|
7,314 |
|
|
|
7,178 |
|
|
|
8,080 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total depreciation and amortization |
|
$ |
22,328 |
|
|
$ |
20,066 |
|
|
$ |
18,563 |
|
|
|
|
|
|
|
|
|
|
|
F-20
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Goodwill and Other Intangibles
Changes in carrying amounts of goodwill and other intangibles for the years ended December 31, 2009
and 2008, respectively, were (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patents & |
|
|
|
|
|
|
Total Other |
|
|
|
Goodwill |
|
|
Trademarks |
|
|
Other |
|
|
Intangibles |
|
Balance at December 31, 2007 |
|
$ |
13,730 |
|
|
$ |
16,166 |
|
|
$ |
1,241 |
|
|
$ |
17,407 |
|
Acquisitions |
|
|
19,764 |
|
|
|
12,742 |
|
|
|
1,300 |
|
|
|
14,042 |
|
Amortization expense |
|
|
|
|
|
|
(3,410 |
) |
|
|
(665 |
) |
|
|
(4,075 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other, including foreign currency translation |
|
|
(139 |
) |
|
|
(272 |
) |
|
|
100 |
|
|
|
(172 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008 |
|
$ |
33,355 |
|
|
$ |
25,226 |
|
|
$ |
1,976 |
|
|
$ |
27,202 |
|
Acquisitions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense |
|
|
|
|
|
|
(3,604 |
) |
|
|
(867 |
) |
|
|
(4,471 |
) |
Other, including foreign currency
translation (1) |
|
|
39 |
|
|
|
138 |
|
|
|
333 |
|
|
|
471 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009 |
|
$ |
33,394 |
|
|
$ |
21,760 |
|
|
$ |
1,442 |
|
|
$ |
23,202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes $0.4 million of costs incurred in 2009 related to the asset purchase agreement with Artelis SA.
Goodwill and other intangibles balances at December 31, 2009 and 2008 were (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patents & |
|
|
|
|
|
|
Total Other |
|
|
|
Goodwill |
|
|
Trademarks |
|
|
Other |
|
|
Intangibles |
|
Gross amount as of December 31, 2008 |
|
$ |
33,355 |
|
|
$ |
40,003 |
|
|
$ |
7,001 |
|
|
$ |
47,004 |
|
Accumulated amortization |
|
|
|
|
|
|
(14,777 |
) |
|
|
(5,025 |
) |
|
|
(19,802 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008 |
|
$ |
33,355 |
|
|
$ |
25,226 |
|
|
$ |
1,976 |
|
|
$ |
27,202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross amount as of December 31, 2009 |
|
$ |
33,394 |
|
|
$ |
40,490 |
|
|
$ |
7,003 |
|
|
$ |
47,493 |
|
Accumulated amortization |
|
|
|
|
|
|
(18,730 |
) |
|
|
(5,561 |
) |
|
|
(24,291 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009 |
|
$ |
33,394 |
|
|
$ |
21,760 |
|
|
$ |
1,442 |
|
|
$ |
23,202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This table shows amounts recorded in the consolidated statements of operations related to
amortization expense for intangibles (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
Cost of revenues |
|
$ |
296 |
|
|
$ |
133 |
|
|
$ |
58 |
|
Research and development |
|
|
|
|
|
|
|
|
|
|
21 |
|
Selling, general, and administrative |
|
|
4,175 |
|
|
|
3,942 |
|
|
|
3,164 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total amortization |
|
$ |
4,471 |
|
|
$ |
4,075 |
|
|
$ |
3,243 |
|
|
|
|
|
|
|
|
|
|
|
F-21
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The approximate amortization expense expected to be recognized related to intangible assets is (in
thousands):
|
|
|
|
|
Year |
|
Amount |
|
2010 |
|
$ |
3,901 |
|
2011 |
|
|
3,004 |
|
2012 |
|
|
2,981 |
|
2013 |
|
|
2,981 |
|
2014 |
|
|
2,981 |
|
Thereafter |
|
|
7,354 |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
23,202 |
|
|
|
|
|
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 $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 an evaluation of their respective
fair values at the date of acquisition as summarized below (in thousands).
|
|
|
|
|
Identified intangible assets |
|
$ |
8,900 |
|
Net deferred taxes |
|
|
(1,139 |
) |
Net assets acquired |
|
|
148 |
|
Goodwill |
|
|
19,764 |
|
|
|
|
|
Purchase price, net of cash acquired |
|
$ |
27,673 |
|
|
|
|
|
The excess of the purchase price over the estimated fair value of identifiable net assets acquired
has been recorded as goodwill. Net assets acquired are presented net of cash acquired of $0.3
million. $7.6 million of the identified intangible assets are included in patents and trademarks
and are being amortized 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 is being
amortized over 13 years. Goodwill acquired is not deductible for income tax purposes.
In 2008, ATMI, through its wholly-owned subsidiary in Belgium, entered into an asset purchase
agreement with Artelis SA, a Belgian entity of which ATMIs Belgian subsidiary owns 40 percent, to
purchase certain disposable bioreactor and mixing assets for use in the biotechnology and
pharmaceutical industries for approximately $5.4 million, including direct acquisition costs. ATMI
recognized $5.1 million of identified intangible assets in the acquisition, which are being
amortized over periods between 3 and 10 years. As a result of these asset purchases, we recognized
a $1.1 million gain representing our after-tax proportionate share of Arteliss gains on the sale
of assets. This gain is included in our consolidated statements of operations under the caption,
Other income (expense), net.
F-22
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. Other Non-Current Assets
In 2007, ATMI entered into a purchase agreement with Intermolecular, Inc. (Intermolecular), an
entity in which ATMI owns a minority equity stake (accounted for at cost). As part of the
agreement, ATMI purchased HPD capabilities from Intermolecular, which expanded upon an existing
alliance agreement. We have since committed to purchase additional
HPD capabilities (including tool sets), as well as services
related to the use of these tools, including the use of dedicated research personnel. In December
2007, ATMI made a $10.0 million royalty prepayment to Intermolecular, which is expected to be
applied to guaranteed royalties associated with products developed
using the HPD capabilities in the years
2010 to 2012. In 2009, we applied $0.5 million of prepaid royalties and we expect to apply $2.0
million in 2010. The 2010 amount is included in the consolidated balance sheets under the caption,
Prepaid expenses and other current assets. The remaining portion of the prepaid royalties, $6.9
million and the value of the warrant we currently possess of $0.6 million, are both included in the
consolidated balance sheets under the caption, Other non-current assets. ATMIs ownership stake
in Intermolecular is $13.2 million at December 31, 2009, including $10.0 million invested in 2008.
We amended the alliance agreement in 2009 to better align the timing of certain HPD platform
support activities to the expected timing of our customer integration activities. The amendment
reduced the amount we were contractually committed to pay for these support activities in 2009 and
confirmed commitments to pay for these incremental activities in 2010. These incremental activities
in 2010 are expected to add $3.0 million of expense in that year.
10. Leases
The Company leases office and manufacturing facilities, and certain manufacturing equipment under
several operating leases expiring between 2010 and 2014. Rental expense was $4.3 million, $3.6
million, and $4.5 million for the years ended December 31, 2009, 2008 and 2007, respectively.
Below is a schedule of future minimum lease payments for operating leases as of December 31, 2009
(in thousands):
|
|
|
|
|
|
|
Operating |
|
|
|
Leases |
|
2010 |
|
$ |
3,807 |
|
2011 |
|
|
3,099 |
|
2012 |
|
|
1,038 |
|
2013 |
|
|
320 |
|
2014 |
|
|
11 |
|
|
|
|
|
Total minimum lease payments |
|
$ |
8,275 |
|
|
|
|
|
We lease two facilities in Danbury, CT. One facility houses our research and development
activities and certain of our microelectronics manufacturing capabilities, and contains
approximately 73,000 square feet of space. We entered into an amendment of this lease on October
30, 2008, which extended the lease term to December 31, 2011. For the period November 1, 2008 to
December 31, 2009, the monthly base rent is $40,475. For the period January 1, 2010 to December
31, 2011, the monthly base rent is $42,094. There are two successive five-year renewal periods
available to ATMI under this lease. As a condition of the fourth amendment, we agreed to certain
restoration obligations associated with this facility, which we are accounting for as an ARO,
associated with the leasehold improvements made to this facility. The discounted fair value of the
ARO is $2.9 million.
F-23
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The other facility in Danbury, CT is our headquarters, and contains approximately 31,000 square
feet of space. We entered into the third amendment of this lease on October 30, 2008, which
extended the lease term to December 31, 2011. For the period November 1, 2008 to December 31,
2011, the monthly base rent is $17,606. There are two successive five-year renewal periods
available to ATMI under this lease.
We lease a facility in Bloomington, MN where we manufacture high-purity materials packaging and
dispensing systems, within our microelectronics and life sciences product lines. This facility
contains approximately 68,000 square feet of space. We entered into the first amendment of this
lease on September 23, 2008, which extended the lease term to August 31, 2013. For the period
September 1, 2008 to August 31, 2010, the monthly base rent is $26,479. For the period September
1, 2010 to August 31, 2013, the monthly base rent is $26,706. There are two successive three-year
renewal periods available to ATMI under this lease. As a condition of the first amendment, we
agreed to certain restoration obligations associated with this facility, which we are accounting
for as an ARO, associated with the leasehold improvements made to this facility. The discounted
fair value of the ARO is $0.3 million.
Changes in the carrying amounts of the Companys AROs at December 31, 2009 are shown below (in
thousands):
|
|
|
|
|
Balance as of December 31, 2008 |
|
$ |
3,350 |
|
|
|
|
|
|
Liabilities incurred |
|
|
352 |
|
Liabilities settled |
|
|
|
|
Accretion expense |
|
|
49 |
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2009 |
|
$ |
3,751 |
|
|
|
|
|
The ARO liability is included in the consolidated balance sheets under the caption, Other
non-current liabilities.
F-24
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. Income Taxes
Pre-tax income (loss) from continuing operations was taxed in these jurisdictions (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
|
|
|
Domestic |
|
$ |
(20,784 |
) |
|
$ |
28,830 |
|
|
$ |
48,174 |
|
Foreign |
|
|
7,128 |
|
|
|
11,316 |
|
|
|
11,229 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total pre-tax income (loss) |
|
$ |
(13,656 |
) |
|
$ |
40,146 |
|
|
$ |
59,403 |
|
|
|
|
|
|
|
|
|
|
|
Significant components of the provision (benefit) for income taxes for the year ended are (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
|
|
|
Current: |
|
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
$ |
(7,349 |
) |
|
$ |
2,369 |
|
|
$ |
16,090 |
|
State |
|
|
79 |
|
|
|
809 |
|
|
|
1,152 |
|
Foreign |
|
|
2,154 |
|
|
|
1,602 |
|
|
|
3,129 |
|
|
|
|
|
|
|
|
|
|
|
Total current |
|
|
(5,116 |
) |
|
|
4,780 |
|
|
|
20,371 |
|
|
|
|
|
|
|
|
|
|
|
Deferred: |
|
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
|
(85 |
) |
|
|
3,293 |
|
|
|
(1,134 |
) |
State |
|
|
(392 |
) |
|
|
(134 |
) |
|
|
(96 |
) |
Foreign |
|
|
(1,403 |
) |
|
|
(1,120 |
) |
|
|
(277 |
) |
|
|
|
|
|
|
|
|
|
|
Total deferred |
|
|
(1,880 |
) |
|
|
2,039 |
|
|
|
(1,507 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(6,996 |
) |
|
$ |
6,819 |
|
|
$ |
18,864 |
|
|
|
|
|
|
|
|
|
|
|
Significant components of the Companys deferred tax assets and liabilities are (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2009 |
|
|
|
|
|
|
2008 |
|
Deferred tax assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Accrued liabilities |
|
$ |
5,619 |
|
|
|
|
|
|
$ |
4,767 |
|
Inventory reserves |
|
|
1,866 |
|
|
|
|
|
|
|
2,372 |
|
Net operating loss and tax credit carryforwards |
|
|
7,966 |
|
|
|
|
|
|
|
6,167 |
|
Equity-based compensation |
|
|
6,850 |
|
|
|
|
|
|
|
6,132 |
|
Other, net |
|
|
429 |
|
|
|
|
|
|
|
332 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,730 |
|
|
|
|
|
|
|
19,770 |
|
Valuation allowance |
|
|
(579 |
) |
|
|
|
|
|
|
(446 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,151 |
|
|
|
|
|
|
|
19,324 |
|
Deferred tax liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
(17,475 |
) |
|
|
|
|
|
|
(16,265 |
) |
Unrealized gain on marketable securities |
|
|
(858 |
) |
|
|
|
|
|
|
|
|
|
|
|
(18,333 |
) |
|
|
|
|
|
|
(16,265 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets |
|
$ |
3,818 |
|
|
|
|
|
|
$ |
3,059 |
|
|
|
|
|
|
|
|
|
|
|
|
The valuation allowance relates to realizability of certain U.S. state and foreign net
operating losses and certain U.S. state and foreign tax credits.
F-25
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2009, the Company had the following deferred tax assets related to net
operating loss (NOLs) and tax credit carryforwards (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Expiration |
|
|
|
|
|
|
|
Federal |
|
|
|
|
|
|
-NOLs |
|
$ |
1,468 |
|
|
2021-2027 |
-Credits |
|
|
83 |
|
|
2019-2026 |
|
|
|
|
|
|
|
|
$ |
1,551 |
|
|
|
|
|
|
|
|
|
State |
|
|
|
|
|
|
-NOLs |
|
|
841 |
|
|
2014-2029 |
-Credits |
|
|
1,780 |
|
|
2010-2024 |
|
|
|
|
|
|
|
|
$ |
2,621 |
|
|
|
|
|
|
|
|
|
Foreign |
|
|
|
|
|
|
- NOLs |
|
|
2,196 |
|
|
None |
- Credits |
|
|
1,598 |
|
|
2012 |
|
|
|
|
|
|
|
|
$ |
3,794 |
|
|
|
|
|
|
|
|
|
Total |
|
$ |
7,966 |
|
|
|
|
|
|
|
|
|
The reconciliation of income tax expense (benefit) from operations computed at the U.S.
federal statutory tax rate to the Companys tax expense (benefit) is (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
U.S. statutory rate |
|
$ |
(4,779 |
) |
|
$ |
14,052 |
|
|
$ |
20,791 |
|
State income taxes |
|
|
(196 |
) |
|
|
439 |
|
|
|
686 |
|
Foreign income taxes |
|
|
(2,375 |
) |
|
|
(2,039 |
) |
|
|
(1,062 |
) |
Tax exempt income |
|
|
(213 |
) |
|
|
(705 |
) |
|
|
(1,894 |
) |
Change in valuation allowance of deferred tax assets |
|
|
133 |
|
|
|
(24 |
) |
|
|
(105 |
) |
Adjustment to tax liabilities |
|
|
457 |
|
|
|
(2,371 |
) |
|
|
677 |
|
Research & development credits |
|
|
(284 |
) |
|
|
(2,442 |
) |
|
|
(491 |
) |
Other, net |
|
|
261 |
|
|
|
(91 |
) |
|
|
262 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(6,996 |
) |
|
$ |
6,819 |
|
|
$ |
18,864 |
|
|
|
|
|
|
|
|
|
|
|
ATMI has not provided for U.S. federal income and foreign withholding taxes on approximately
$50.4 million of undistributed earnings from non-U.S. operations as of December 31, 2009, 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.
South Korea has granted the Company an income tax exemption that expires in 2014, including the
last two years at 50 percent of the exemption. The exemption applies only to income related to one
of the Companys product lines. The effect of the tax exemption was to reduce income tax expense
by $1.3 million, $1.2 million, and $0.5 million for the years ended December 31, 2009, 2008, and
2007.
At December 31, 2009, ATMI had $6.2 million of unrecognized tax benefits, which, if recognized,
would favorably affect the effective income tax rate in future periods. This amount is included in
the caption Other non-current liabilities on the consolidated balance sheets, together with $0.9
million of accrued interest (net) on tax reserves and $0 accrued for penalties. In 2008, we had
$6.0 million of unrecognized tax benefits, which, if recognized, would have favorably affected the
effective income tax rate in future periods.
F-26
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The reconciliation of the unrecognized tax benefits (exclusive of interest) at the beginning and
end of 2009 is (in thousands):
|
|
|
|
|
Beginning Balance January 1, 2009 |
|
$ |
5,981 |
|
Increases from prior period positions |
|
|
1,614 |
|
Decreases from prior period positions |
|
|
(53 |
) |
Increases from current period positions |
|
|
834 |
|
Decreases from current period positions |
|
|
|
|
Decreases related to settlements with taxing authorities |
|
|
(639 |
) |
Decreases from lapse of statute of limitations |
|
|
(1,555 |
) |
|
|
|
|
Ending Balance December 31, 2009 |
|
$ |
6,182 |
|
|
|
|
|
It is reasonably possible that in the next 12 months, because of changes in facts and
circumstances, the unrecognized tax benefits for tax positions taken related to previously filed
tax returns may decrease. The range of possible decrease is zero to $1.9 million. In 2009, the
Company finalized an IRS tax audit for tax years 2006 and 2007, and a tax audit of our Taiwanese
subsidiary for tax years 2004 and 2005; in both instances, the settled adjustments were not
significant to ATMIs results of operations.
12. Defined Contribution Plan
The Company maintains a defined contribution plan (401(k) Plan) covering substantially all of its
U.S. employees that is subject to the provisions of the Employee Retirement Income Security Act of
1974. The Companys matching contributions are discretionary by plan year and were approximately
$1.1 million, $1.8 million, and $1.7 million for the years ended December 31, 2009, 2008 and 2007,
respectively. On June 5, 2009, the Company discontinued the matching of contributions, but the
Company match was reinstated on October 9, 2009. The Plan provides for discretionary matching
contributions of 100 percent of the first 3 percent of each participants eligible compensation
plus 50 percent on the next 2 percent of each participants eligible compensation, up to statutory
limitations. There is no matching contribution above 5 percent of each participants eligible
compensation.
13. Stockholders Equity
This table shows the effect of compensation cost arising from equity-based payment arrangements
recognized in the consolidated statements of operations (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
$ |
315 |
|
|
$ |
339 |
|
|
$ |
375 |
|
Research and development |
|
|
523 |
|
|
|
530 |
|
|
|
432 |
|
Selling, general, and administrative |
|
|
4,902 |
|
|
|
5,831 |
|
|
|
6,791 |
|
|
|
|
|
|
|
|
|
|
|
Total equity-based compensation expense |
|
|
5,740 |
|
|
|
6,700 |
|
|
|
7,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Provision for income taxes |
|
|
1,912 |
|
|
|
2,237 |
|
|
|
2,556 |
|
|
|
|
|
|
|
|
|
|
|
Net equity-based compensation expense |
|
$ |
3,828 |
|
|
$ |
4,463 |
|
|
$ |
5,042 |
|
|
|
|
|
|
|
|
|
|
|
No equity-based compensation cost was capitalized.
F-27
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Summary of Plans
We currently have three equity-based compensation plans which provide for the granting of up to
6,000,000 shares of common stock pursuant to nonqualified stock options, incentive stock options
(ISOs), stock appreciation rights and restricted stock awards to employees, directors and
consultants of the Company. Stock options typically vest over periods ranging from one to four
years with a maximum term of ten years. Restricted stock awards typically vest over periods
ranging from three to five years. Shares issued as a result of stock option exercises are
primarily settled by the issuance of new shares.
This table shows the number of shares approved by shareholders for each plan and the number of
shares that remain available for equity awards at December 31, 2009 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
# of |
|
|
|
# of Shares |
|
|
Shares |
|
Stock Plan |
|
Approved |
|
|
Available |
|
|
|
|
|
|
|
|
|
|
2000 Stock Plan (1) |
|
|
2,000 |
|
|
|
101 |
|
2003 Stock Plan (1) |
|
|
3,000 |
|
|
|
773 |
|
Employee Stock Purchase Plan (2) |
|
|
1,000 |
|
|
|
270 |
|
|
|
|
|
|
|
|
Totals |
|
|
6,000 |
|
|
|
1,144 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Exercise prices for ISOs and non-qualified stock options granted under this plan may
not be less than 100 percent of the fair market value for the Companys common stock on the
date of grant. |
|
(2) |
|
Employees may purchase shares at 95 percent of the closing price on the day previous
to the last day of each six-month offering period. This plan is not considered to be
compensatory, under existing accounting rules. |
Fair Value
The Company uses the Black-Scholes-Merton options-pricing model to determine the fair value of
stock options under ASC 718 Compensation Stock Compensation. Management is required to make
certain assumptions with respect to selected model inputs, including anticipated changes in the
underlying stock price (i.e., expected volatility) and option exercise activity (i.e., expected
term). For awards granted subsequent to January 1, 2006, expected volatility is based on the
historical volatility of ATMI common stock for a period shorter than the expected term of the
options. We have excluded the historical volatility prior to the public announcement regarding the
sale of our non-core businesses in 2004, because those businesses that were sold represented a
significant portion of ATMIs consolidated business and were subject to considerable cyclicality
associated with the semiconductor equipment industry, which drove increased volatility in ATMIs
stock price. The expected term of options granted is derived using historical exercise patterns
which represent the period of time that options granted are expected to be outstanding. The
risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for a
period commensurate with the estimated expected term. In accordance with ASC 718, in the
determination of equity-based compensation cost, the Company estimates the total number of
instruments that will be forfeited as a result of a failure to provide the requisite service to
earn the award.
F-28
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The weighted-average fair value of options granted during the years ended December 31, 2009, 2008
and 2007 was $6.44, $13.48 and $12.75, respectively, based on the Black-Scholes-Merton
options-pricing model. These weighted-average assumptions were used for grants in the periods
indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
Stock option grants: |
|
|
|
|
|
|
|
|
|
|
|
|
Risk free interest rate |
|
|
2.15 |
% |
|
|
3.61 |
% |
|
|
4.53 |
% |
Expected term, in years |
|
|
7.20 |
|
|
|
6.70 |
|
|
|
6.25 |
|
Expected volatility |
|
|
41.4 |
% |
|
|
36.0 |
% |
|
|
32.7 |
% |
Dividend yield |
|
|
0 |
% |
|
|
0 |
% |
|
|
0 |
% |
The Company uses historical data to estimate forfeitures of awards from employee terminations
in order to estimate compensation cost for awards expected to vest. In addition, we separate
employees into groups that have similar characteristics for purposes of making forfeiture
estimates.
Stock Option and Restricted Stock Activity
This table shows the option activity under the plans as of December 31, 2009 and changes during the
year then ended (options are expressed in thousands; averages are calculated on a weighted basis;
life in years; intrinsic value expressed in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
|
|
Average |
|
|
Average |
|
|
Aggregate |
|
|
|
of |
|
|
Exercise |
|
|
Remaining |
|
|
Intrinsic |
|
|
|
Options |
|
|
Price |
|
|
Life |
|
|
Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2008 |
|
|
2,213 |
|
|
$ |
26.08 |
|
|
|
|
|
|
|
|
|
Granted |
|
|
262 |
|
|
$ |
13.82 |
|
|
|
|
|
|
|
|
|
Exercised |
|
|
(1 |
) |
|
$ |
17.34 |
|
|
|
|
|
|
|
|
|
Forfeited |
|
|
(278 |
) |
|
$ |
26.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2009 |
|
|
2,196 |
|
|
$ |
24.68 |
|
|
|
4.1 |
|
|
$ |
1,435 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2009 |
|
|
1,773 |
|
|
$ |
25.77 |
|
|
|
3.1 |
|
|
$ |
179 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The aggregate intrinsic value represents the difference between the Companys closing stock
price of $18.62 as of December 31, 2009 and the exercise price of the dilutive options at that
date, multiplied by the number of dilutive options outstanding at that date. The total intrinsic
value of stock options exercised during the years ended December 31, 2009, 2008 and 2007 was $0,
$0.4 million, and $5.1 million, respectively. The total fair value of options which vested during
the years ended December 31, 2009, 2008 and 2007 was $2.1 million (167,000 shares), $4.4 million
(338,000 shares), and $5.7 million (437,000 shares) respectively.
An income tax deficiency was recognized in additional paid-in capital from equity-based
compensation totaling $0.6 million for the year ended December 31, 2009, and the income tax
benefits recognized in additional paid-in capital from equity-based compensation totaled $0.3
million and $1.3 million for the years ended December 31, 2008 and 2007, respectively.
F-29
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
This table shows restricted stock activity as of December 31, 2009 and changes during the year then
ended (shares are expressed in thousands; averages are calculated on a weighted basis):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average |
|
|
|
Number |
|
|
Grant |
|
|
|
of |
|
|
Date Fair |
|
|
|
Shares |
|
|
Value |
|
|
|
|
|
|
|
|
|
|
Nonvested at December 31, 2008 |
|
|
867 |
|
|
$ |
28.81 |
|
Granted |
|
|
637 |
|
|
$ |
14.63 |
|
Vested |
|
|
(141 |
) |
|
$ |
26.83 |
|
Forfeited |
|
|
(246 |
) |
|
$ |
28.71 |
|
|
|
|
|
|
|
|
|
Nonvested at December 31, 2009 |
|
|
1,117 |
|
|
$ |
20.99 |
|
|
|
|
|
|
|
|
|
The total fair value of restricted stock which vested during the years ended December 31, 2009
and 2008 was $3.8 million and $3.3 million, respectively ($1.7 million in the year ended December
31, 2007).
As of December 31, 2009, $2.0 million of unrecognized compensation cost related to non-vested stock
options is expected to be recognized over a weighted-average period of approximately 1.6 years. As
of December 31, 2009, $10.1 million of unrecognized compensation cost related to restricted stock
is expected to be recognized over a weighted-average period of approximately 2.2 years.
Earnings Per Share
This table shows the computation of basic and diluted earnings per share (in thousands, except per
share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(6,660 |
) |
|
$ |
33,327 |
|
|
$ |
40,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic earnings (loss) per share weighted average shares |
|
|
31,398 |
|
|
|
31,447 |
|
|
|
34,169 |
|
Dilutive effect of employee stock options |
|
|
|
|
|
|
279 |
|
|
|
550 |
|
Dilutive effect of restricted stock |
|
|
|
|
|
|
352 |
|
|
|
374 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for diluted earnings (loss) per common share weighted average shares |
|
|
31,398 |
|
|
|
32,078 |
|
|
|
35,093 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share-basic |
|
$ |
(0.21 |
) |
|
$ |
1.06 |
|
|
$ |
1.19 |
|
Earnings (loss) per share-diluted |
|
$ |
(0.21 |
) |
|
$ |
1.04 |
|
|
$ |
1.16 |
|
F-30
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
This table shows the potential common shares excluded from the calculation of weighted-average
shares outstanding because their effect was considered to be antidilutive (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Antidilutive shares |
|
|
1,934 |
|
|
|
1,484 |
|
|
|
340 |
|
The Company has never declared or paid cash dividends on its capital stock.
In October 2005, the Companys Board of Directors approved a share repurchase program for up to
$75.0 million of ATMI common stock and in August 2006, the Companys Board of Directors approved a
second share repurchase program for an additional $150.0 million (collectively, the Repurchase
Programs). The Repurchase Programs were completed on March 7, 2008. Share repurchases were made
from time to time in open market transactions at prevailing market prices or in privately
negotiated transactions. Management determined the timing and amount of purchases under the
Repurchase Programs based upon market conditions or other factors. Under the Repurchase Programs,
the Company purchased a total of 7,931,000 shares of its common stock at an average price of $28.63
per share.
F-31
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. Accumulated Other Comprehensive Income
The components of accumulated other comprehensive income are (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss) |
|
|
Unrealized |
|
|
|
|
|
|
|
|
|
|
on |
|
|
Gain (Loss) |
|
|
|
|
|
|
Currency |
|
|
Available- |
|
|
on |
|
|
|
|
|
|
Translation |
|
|
for-Sale |
|
|
Derivative |
|
|
|
|
|
|
Adjustments |
|
|
Securities |
|
|
Instruments |
|
|
Total |
|
Balance at December 31, 2006 |
|
$ |
4,433 |
|
|
$ |
1,205 |
|
|
$ |
0 |
|
|
$ |
5,638 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification adjustment related to marketable
securities in unrealized loss position at prior period
end, net of $694 tax benefit (1) |
|
|
|
|
|
|
1,182 |
|
|
|
|
|
|
|
1,182 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of available-for-sale securities,
net of deferred income tax of $109 |
|
|
|
|
|
|
186 |
|
|
|
|
|
|
|
186 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of derivative financial instruments,
net of deferred income tax of $46 |
|
|
|
|
|
|
|
|
|
|
78 |
|
|
|
78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative translation adjustment |
|
|
2,357 |
|
|
|
|
|
|
|
|
|
|
|
2,357 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007 |
|
$ |
6,790 |
|
|
$ |
2,573 |
|
|
$ |
78 |
|
|
$ |
9,441 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification adjustment related to marketable
securities in unrealized loss position at prior period
end, net of $925 tax provision (1) |
|
|
|
|
|
|
(1,574 |
) |
|
|
|
|
|
|
(1,574 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of available-for-sale securities,
net of deferred income tax of $938 |
|
|
|
|
|
|
(1,598 |
) |
|
|
|
|
|
|
(1,598 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification adjustment to earnings related to
derivative financial instruments at prior period
end, net of deferred income tax of $46 |
|
|
|
|
|
|
|
|
|
|
(78 |
) |
|
|
(78 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative translation adjustment |
|
|
(5,925 |
) |
|
|
|
|
|
|
|
|
|
|
(5,925 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008 |
|
$ |
865 |
|
|
$ |
(599 |
) |
|
|
|
|
|
$ |
266 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative effect of adoption of new accounting standard |
|
|
|
|
|
|
(1,287 |
) |
|
|
|
|
|
|
(1,287 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification adjustment related to marketable
securities in net unrealized gain position at prior period
end, net of $32 tax provision (1) |
|
|
|
|
|
|
(55 |
) |
|
|
|
|
|
|
(55 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of available-for-sale securities,
net of deferred income tax of $1,139 |
|
|
|
|
|
|
1,940 |
|
|
|
|
|
|
|
1,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative translation adjustment |
|
|
2,540 |
|
|
|
|
|
|
|
|
|
|
|
2,540 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009 |
|
$ |
3,405 |
|
|
$ |
(1 |
) |
|
|
|
|
|
$ |
3,404 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Determined based on the specific identification method |
F-32
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. Commitments, Contingencies, and Other
ATMI is, from time to time, subject to legal actions, governmental audits, and proceedings relating
to various matters incidental to its business including contract disputes, intellectual property
disputes, product liability claims, employment matters, export and trade matters, and environmental
claims. While the outcome of such matters cannot be predicted with certainty, in the opinion of
management, after reviewing such matters and consulting with ATMIs counsel and considering any
applicable insurance or indemnifications, any liability which may ultimately be incurred is not
expected to materially affect ATMIs consolidated financial position, cash flows or results of
operations.
ATMI has entered into a pledge agreement with Anji Microelectronics Co., Ltd. (Anji) for the
issuance of a financial guarantee up to $4.0 million in order to assist Anji in securing bank
financing, which is to expire no later than June 30, 2010. ATMIs guarantee is secured by Anjis
assets and additional equity interests in Anjis operating subsidiaries. We believe that, based on
independent credit rating agency research, and our knowledge of their business, Anji continues to
be an acceptable credit risk. The fair value of the financial guarantee is $0.2 million at
December 31, 2009.
At December 31, 2009, our wholly-owned Japanese subsidiary had a revolving line of credit agreement
with a major Japanese bank for approximately $2.7 million for the primary purpose of
cost-effectively funding capital purchases and local working capital needs in a favorable interest
rate environment. The line of credit is guaranteed by ATMI, Inc. The balance outstanding on this
line of credit was $0.5 million at December 31, 2009. $2.2 million remains available for future
use.
ATMI currently has self-insurance limits for U.S. employee medical claims. The medical plan for
U.S. employees has a stop-loss of $0.1 million per individual occurrence and an annual aggregate
stop-loss of $4.8 million.
Other
Approximately 10 percent of the Companys employees are covered by collective bargaining agreements
that will expire in 2011. All of the employees covered by these agreements are based in Belgium.
The net assets of the Companys Belgian subsidiary represent approximately 5 percent of the
Companys consolidated net assets.
16. Segments
ATMI is organized along functional lines of responsibility, whereby each member of the Companys
executive team has global responsibility for each respective functional area, such as supply chain
operations, sales, marketing, and research and development. The executive team is the chief
operating decision maker of ATMI. Discrete financial information is only prepared at the
product-line level for revenues and certain direct costs. Functional results are reviewed at the
consolidated level. ATMIs operations comprise one operating segment.
ATMI derives virtually all its revenues from providing materials and packaging products and related
integrated process solutions to microelectronics and life sciences manufacturers. ATMIs products
are consumed or used in the front-end manufacturing process. They span many different technology
applications at various stages of maturity and in many cases are inter-related in their application
to a customers process.
F-33
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Revenues from external customers, by product type, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, |
|
(In thousands) |
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Microelectronics |
|
$ |
230,707 |
|
|
$ |
310,141 |
|
|
$ |
343,307 |
|
Life sciences |
|
$ |
23,997 |
|
|
$ |
28,922 |
|
|
$ |
20,781 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
254,704 |
|
|
$ |
339,063 |
|
|
$ |
364,088 |
|
|
|
|
|
|
|
|
|
|
|
17. Geographic Data
The Companys geographic data for the years ended December 31, 2009, 2008 and 2007 are (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
Europe and |
|
|
|
|
(In thousands) |
|
U.S. |
|
|
Taiwan |
|
|
Japan |
|
|
South Korea |
|
|
Pacific Rim |
|
|
Belgium |
|
|
Other |
|
|
Total |
|
December 31, 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
50,347 |
|
|
$ |
55,454 |
|
|
$ |
36,482 |
|
|
$ |
51,555 |
|
|
$ |
31,347 |
|
|
$ |
2,759 |
|
|
$ |
26,760 |
|
|
$ |
254,704 |
|
Long-lived assets |
|
|
168,678 |
|
|
|
8,513 |
|
|
|
7,354 |
|
|
|
3,274 |
|
|
|
265 |
|
|
|
24,216 |
|
|
|
392 |
|
|
|
212,692 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
76,949 |
|
|
$ |
79,547 |
|
|
$ |
43,068 |
|
|
$ |
46,909 |
|
|
$ |
48,388 |
|
|
$ |
2,900 |
|
|
$ |
41,302 |
|
|
$ |
339,063 |
|
Long-lived assets |
|
|
185,022 |
|
|
|
9,386 |
|
|
|
7,644 |
|
|
|
3,476 |
|
|
|
239 |
|
|
|
23,696 |
|
|
|
407 |
|
|
|
229,870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
84,938 |
|
|
$ |
89,162 |
|
|
$ |
45,961 |
|
|
$ |
48,995 |
|
|
$ |
51,249 |
|
|
$ |
2,929 |
|
|
$ |
40,854 |
|
|
$ |
364,088 |
|
Long-lived assets |
|
|
144,259 |
|
|
|
4,436 |
|
|
|
1,404 |
|
|
|
2,764 |
|
|
|
322 |
|
|
|
11,175 |
|
|
|
458 |
|
|
|
164,818 |
|
Revenues are attributed to countries based on the location of the customer. Long-lived assets
are located in the respective geographic regions, as shown above. Other than Taiwan, Japan,
Belgium, and South Korea, no one specific country within the Pacific Rim, Europe, South America,
and other regions accounted for greater than 10 percent of consolidated revenues and long-lived
assets in 2009, 2008 and 2007.
18. Subsequent Events
The Company has evaluated all subsequent events through February 18, 2010, which represents the
filing date of this Form 10-K with the Securities and Exchange Commission, to ensure that this Form
10-K includes appropriate disclosure of events both recognized in the financial statements as of
December 31, 2009, and events which occurred subsequent to December 31, 2009 but were not
recognized in the financial statements.
As of February 18, 2010, there were no subsequent events which required recognition or disclosure.
F-34
ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
19. Quarterly Results of Operations (Unaudited)
Summarized quarterly results of operations data is as follows (in thousands, except per share
amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter |
|
|
|
First |
|
|
Second |
|
|
Third |
|
|
Fourth |
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
37,362 |
|
|
$ |
60,095 |
|
|
$ |
72,610 |
|
|
$ |
84,637 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
6,931 |
(a) |
|
|
23,807 |
|
|
|
33,038 |
|
|
|
38,408 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
(26,960) |
(b) |
|
|
(3,191 |
) |
|
|
8,038 |
|
|
|
10,776 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(18,424) |
(c) |
|
$ |
(1,744 |
) |
|
$ |
6,539 |
(d) |
|
$ |
6,969 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share |
|
$ |
(0.59 |
) |
|
$ |
(0.06 |
) |
|
$ |
0.21 |
|
|
$ |
0.22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income (loss) per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share |
|
$ |
(0.59 |
) |
|
$ |
(0.06 |
) |
|
$ |
0.21 |
|
|
$ |
0.22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
92,797 |
|
|
$ |
89,487 |
|
|
$ |
86,684 |
|
|
$ |
70,095 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
46,366 |
|
|
|
46,288 |
|
|
|
41,426 |
|
|
|
32,432 |
(g) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
15,169 |
|
|
|
13,375 |
|
|
|
9,954 |
|
|
|
1,424 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
10,385 |
|
|
$ |
9,679 |
(e) |
|
$ |
10,063 |
(f) |
|
$ |
3,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share |
|
$ |
0.32 |
|
|
$ |
0.31 |
|
|
$ |
0.32 |
|
|
$ |
0.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share |
|
$ |
0.32 |
|
|
$ |
0.30 |
|
|
$ |
0.32 |
|
|
$ |
0.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Includes $1.1 million charge for incremental excess and obsolescence related to product
discontinuances and a general reserve to cover expected product shelf-life issues; and $2.9
million impairment charge in cost of revenues for long-lived assets written down to their
estimated fair values primarily related to the planned idling of manufacturing capacity of our
gas products. In the third quarter, we determined that the manufacturing capacity for these
gas products will continue normal production as we were not successful in our attempt to
transition to vendor sourced manufacturing. |
|
(b) |
|
Includes $1.5 million impairment charge for long-lived assets written down to their estimated
fair values related primarily to idled equipment used in our research and development efforts;
$1.5 million charge to increase our reserves for bad debt to cover exposures related to
customer bankruptcy filings and uncertainties of collections due to the current general
macroeconomic conditions; and $1.8 million impairment charge in selling, general and
administrative expense for long-lived assets written down to their estimated fair values
primarily related to redundant enterprise management software. |
|
(c) |
|
Includes a $2.5 million impairment charge, primarily related to a write-down associated with
an auction-rate security. |
|
(d) |
|
Includes a $0.7 million charge related to statutes of limitations expirations. |
|
(e) |
|
Includes a $2.0 million gain from the sale of a marketable security, offset by a $1.8 million
impairment charge related to an uncollectible convertible note receivable due from an
early-stage semiconductor materials venture. |
|
(f) |
|
Includes a $1.6 million impairment charge related to our strategic investment portfolio, and
$0.7 million representing our after-tax proportionate share of a gain on sale of assets by one
of our equity-method investees. |
|
(g) |
|
Includes a $3.1 million net benefit associated with the settlement of a dispute with a
distributor ($3.7 million recognized in revenues, with $0.6 million of associated costs
recognized in cost of revenues), and $2.4 million of benefit recognized from a business
interruption claim recovery. |
F-35
ATMI, Inc.
Schedule II Valuation and Qualifying Accounts
Three Years Ended December 31, 2009
(In thousands)
Allowances for Doubtful Accounts and Sales Returns:
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2006 |
|
$ |
666 |
|
Doubtful accounts written off (net) |
|
|
(3 |
) |
Other adjustments |
|
|
7 |
|
|
|
|
|
Balance December 31, 2007 |
|
|
670 |
|
Provision charged to income |
|
|
300 |
|
Doubtful accounts written off (net) |
|
|
(9 |
) |
Other adjustments |
|
|
(3 |
) |
|
|
|
|
Balance December 31, 2008 |
|
|
958 |
|
Provision charged to income |
|
|
1,381 |
|
Doubtful accounts written off (net) |
|
|
(68 |
) |
Other adjustments |
|
|
16 |
|
|
|
|
|
Balance December 31, 2009 |
|
$ |
2,287 |
|
|
|
|
|
Allowance for Excess and Obsolete Inventories:
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2006 |
|
$ |
2,353 |
|
Provision charged to income |
|
|
856 |
|
Disposals of inventory written off |
|
|
(912 |
) |
Other adjustments |
|
|
20 |
|
|
|
|
|
Balance December 31, 2007 |
|
|
2,317 |
|
Provision charged to income |
|
|
1,544 |
|
Disposals of inventory written off |
|
|
(1,131 |
) |
Other adjustments |
|
|
(361 |
) |
|
|
|
|
Balance December 31, 2008 |
|
|
2,369 |
|
Provision charged to income |
|
|
2,093 |
|
Disposals of inventory written off |
|
|
(1,798 |
) |
Other adjustments |
|
|
(70 |
) |
|
|
|
|
Balance December 31, 2009 |
|
$ |
2,594 |
|
|
|
|
|
Future Income Tax Benefits Valuation Allowance:
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2006 |
|
$ |
416 |
|
Additions charged to income tax expense |
|
|
20 |
|
Reductions credited to income tax expense |
|
|
(125 |
) |
Other adjustments |
|
|
(33 |
) |
|
|
|
|
Balance December 31, 2007 |
|
|
278 |
|
Additions charged to income tax expense |
|
|
52 |
|
Reductions credited to income tax expense |
|
|
(76 |
) |
Other adjustments |
|
|
192 |
|
|
|
|
|
Balance December 31, 2008 |
|
|
446 |
|
Additions charged to income tax expense |
|
|
147 |
|
Reductions credited to income tax expense |
|
|
(14 |
) |
|
|
|
|
Balance December 31, 2009 |
|
$ |
579 |
|
|
|
|
|
F-36