<PAGE>
Exhibit 99.3
ATMI, INC.
INDEX TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULE
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Ernst & Young LLP.......................................................................... F-2
Report of Deloitte & Touche, LLP..................................................................... F-3
Report of Arthur Andersen LLP........................................................................ F-4
Reports of Rath, Anders, Dr. Wanner and Partner (GbR)................................................ F-5
Report of Arthur Andersen LLP........................................................................ F-7
Audited Financial Statements and Schedule
Supplemental Consolidated Balance Sheets - December 31, 1999 and 1998................................ F-8
Supplemental Consolidated Statements of Income for the years ended December 31, 1999,
1998, and 1997.................................................................................. F-9
Supplemental Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1997, 1998, and 1999............................................................... F-10
Supplemental Consolidated Statements of Cash Flows for the years ended December 31, 1999,
1998, and 1997.................................................................................. F-11
Notes to Supplemental Consolidated Financial Statements.............................................. F-12
Schedule II - Valuation and Qualifying Accounts...................................................... F-29
Unaudited Financial Statements
Supplemental Consolidated Balance Sheets - June 30, 2000, and December 31, 1999...................... F-30
Supplemental Consolidated Statements of Income for the six months ended June 30, 2000, and 1999...... F-31
Supplemental Consolidated Statements of Cash Flows for the six months ended June 30, 2000, and 1999.. F-32
Notes to Supplemental Consolidated Interim Financial Statements...................................... F-33
</TABLE>
F-1
<PAGE>
Report of Independent Auditors
The Board of Directors and Stockholders of
ATMI, Inc.
We have audited the supplemental consolidated balance sheets of ATMI, Inc. as of
December 31, 1999 and 1998, and the related supplemental consolidated statements
of income, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1999. Our audits also included the financial
statement schedule listed in the index. The supplemental consolidated financial
statements and schedule give retroactive effect to the merger of ATMI, Inc. and
Environmentally Safe Cleaning Alternatives Inc. and Affiliates ("ESCA") on July
7, 2000, which has been accounted for using the pooling of interests method as
described in the notes to the supplemental consolidated financial statements.
These supplemental consolidated financial statements and schedule are the
responsibility of the management of ATMI, Inc. Our responsibility is to express
an opinion on these supplemental consolidated financial statements and schedule
based on our audits. We did not audit the financial statements of ESCA, a
wholly-owned subsidiary, as of September 30, 1999 and 1998, which statements
reflect total assets constituting 1% at September 30, 1999 and 1998, and which
reflect revenues constituting 3% for each of the years ended September 30, 1999
and 1998, of the related supplemental consolidated financial statement totals
(which were combined with the accounts of ATMI, Inc. at December 31, 1999 and
1998 and for the two years then ended). Nor did we audit the financial
statements or Valuation and Qualifying Accounts Schedule Data of MST Analytics
Inc., ("MST"), a wholly-owned subsidiary, as of December 31, 1998 or for the
year ended December 31, 1998, which statements reflect total assets constituting
6% at December 31, 1998, and which reflect revenues constituting 12% for the
year ended December 31, 1998, of the related supplemental consolidated financial
statement totals. Nor did we audit the financial statements of NOW Technologies,
Inc. ("NOW"), a wholly owned subsidiary, for the year ended March 31, 1998,
which statements reflect revenues constituting 8% of the related supplemental
consolidated financial statement totals for the year ended March 31, 1998 (which
were combined with the accounts of ATMI, Inc. at December 31, 1997). Those
statements were audited by other auditors whose reports have been furnished to
us, and our opinion, insofar as it relates to data included for ESCA, MST, and
NOW is based solely on the reports of the other auditors.
We conducted our audits in accordance with auditing standards generally accepted
in the 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 and the reports of the other auditors
provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
supplemental consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of ATMI, Inc. at
December 31, 1999 and 1998, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31,
1999, after giving retroactive effect to the merger of ESCA, as described in the
notes to the supplemental consolidated financial statements, in conformity with
accounting principles generally accepted in the United States. Also, in our
opinion, the related supplemental consolidated financial statement schedule,
when considered in relation to the basic supplemental consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
/s/ ERNST & YOUNG LLP
Stamford, Connecticut
September 19, 2000
F-2
<PAGE>
INDEPENDENT AUDITORS REPORT
Board of Directors
NOW Technologies, Inc. and Subsidiaries
Bloomington, Minnesota
We have audited the consolidated statements of income, stockholders' equity
and cash flows (not presented herein) of NOW Technologies, Inc. and Subsidiaries
(the Company) for the year ended March 31, 1998. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. 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 consolidated 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 audit provides a reasonable basis for our
opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the results of the Company's operations and its cash
flows for the year ended March 31, 1998, in conformity with generally accepted
accounting principles.
/s/ DELOITTE & TOUCHE, LLP
Minneapolis, Minnesota
May 1, 1998
F-3
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of MST Analytics, Inc.
We have audited the consolidated balance sheet of MST ANALYTICS, INC. (a
Delaware corporation) AND SUBSIDIARIES as of December 31, 1998, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. We did not audit the financial
statements of MST Micro-Sensor-Technologies GmbH, Hohenschaftlarn and Sensoric
Gesellschaft fur angewandte Elektrochemie mbh & Co. KG, Hohenschaftlarn, wholly
and majority-owned subsidiaries, respectively, which statements reflect total
assets and total revenues of 55% and 47%, respectively, of the related
consolidated totals. Those statements were audited by other auditors whose
report has been furnished to us, and our opinion, insofar as it relates to the
amounts included for those entities, is solely based on the report of the other
auditors.
We conducted our audit in accordance with generally accepted auditing
standards. 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 audit and the report of the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audit and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of MST Analytics, Inc. and
Subsidiaries as of December 31, 1998, and the results of their operations and
their cash flows for the year then ended, in conformity with generally accepted
accounting principles.
/s/ Arthur Andersen LLP
Chicago, Illinois
May 28, 1999
F-4
<PAGE>
OPINION
MST Micro-Sensor-Technologie GmbH Hohenschaftlarn, Germany
We have conducted a full audit of MST Micro-Sensor-Technologie GmbH,
Hohenschaftlarn, (in the following called "MST" or "Company"), expressed in
Deutsche Mark (DM), as of December 31, 1998.
(1) These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
(2) We have conducted our audit in accordance with generally accepted auditing
standards in the United States. These standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatements. 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 audit provides a reasonable basis for our opinion.
(3) The reporting package does not present all disclosures required under US-
GAAP, e.g. no cash flow statement and no tax rationalization form have been
prepared.
(4) On the basis of our audit we certify that the documents attached to this
clearance have been issued in compliance with the methods and principles
accepted by US-GAAP.
Munich, January 22, 1999
Rath, Anders, Dr. Wanner & Partner
/s/ Kabisch /s/ Metzler
Dipl.-Kfm. Kabisch Dipl.-Kfm. Metzler
Vereidigter Buchprufer Wirtschaftsprufer
F-5
<PAGE>
OPINION
Sensoric Gesellschaft fur angewandte
Elektrochemie mbh Co. KG
Hohenschaftlarn
We have conducted a full audit of Sensoric Gesellschaft fur angewandte
Elektrochemie mbh & Co. KG, Hohenschaftlarn, (in the following called "Sensoric"
or "Company"), expressed in Deutsche Mark (DM), as of December 31, 1998.
(1) These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
(2) We have conducted our audit in accordance with generally accepted auditing
standards in the United States. These standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatements. 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 audit provides a reasonable basis for our opinion.
(3) The reporting package does not present all disclosures required under
US-GAAP, e.g. no cash flow statement and no tax rationalization form have
been prepared.
(4) On the basis of our audit we certify that the documents attached to this
clearance have been issued in compliance with the methods and principles
accepted by US-GAAP.
Munich, January 22, 1999
Rath, Anders, Dr. Wanner & Partner
/s/ Kabisch /s/ Metzler
Dipl.-Kfm. Kabisch Dipl.-Kfm. Metzler
Vereidigter Buchprufer Wirtschaftsprufer
F-6
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of Environmentally Safe Cleaning Alternatives, Inc. and
Affiliates:
We have audited the consolidated balance sheets of ENVIRONMENTALLY SAFE
CLEANING ALTERNATIVES, INC. (a New Mexico S-corporation) AND AFFILIATES as of
September 30, 1999 and 1998, and the related consolidated statements of
operations, stockholders' equity (deficit) and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 consolidated financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall consolidated financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
ENVIRONMENTALLY SAFE CLEANING ALTERNATIVES, INC. AND AFFILIATES as of September
30, 1999 and 1998, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Albuquerque, New Mexico
November 11, 1999
F-7
<PAGE>
ATMI, INC.
SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
<TABLE>
<CAPTION>
December 31,
----------------------------
1999 1998
--------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents (Note 1)........................................... $ 31,773 $ 21,702
Marketable securities (Notes 1 and 2)........................................ 60,555 64,551
Accounts receivable, net of allowance for doubtful accounts of $1,366 in
1999, and $959 in 1998 (Note 3)........................................... 42,958 26,193
Inventories (Notes 1 and 4).................................................... 21,772 19,234
Deferred income taxes (Note 8)................................................. 5,277 2,756
Other........................................................................ 6,313 7,735
--------- ---------
Total current assets.................................................... 168,648 142,171
Property, plant and equipment, net (Notes 1 and 5)................................ 55,871 55,738
Deferred income taxes (Note 8).................................................... 2,090 48
Goodwill and other long-term assets, net (Notes 1 and 11)......................... 8,766 12,660
--------- ---------
$ 235,375 $ 210,617
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................................. $ 11,181 $ 9,370
Accrued liabilities.......................................................... 10,272 10,064
Accrued salaries and related benefits........................................ 9,341 3,732
Loans, notes and bonds payable, current portion (Note 6)..................... 5,601 9,401
Capital lease obligations, current portion (Note 7).......................... 1,936 2,498
Income taxes payable (Note 8)................................................ 4,592 1,972
Deferred income taxes (Note 8)............................................... 4,436 957
--------- ---------
Total current liabilities............................................... 47,359 37,994
Loans, notes and bonds payable, less current portion (Note 6)..................... 4,487 8,826
Capital lease obligations, less current portion (Note 7).......................... 1,832 3,746
Deferred income taxes (Note 8).................................................... 3,754 4,611
Other long-term liabilities....................................................... 478 288
Minority interest................................................................. 1,109 846
Stockholders' equity (Note 10):
Preferred stock, par value $.01: 2,000 shares authorized; none issued and
outstanding............................................................... - -
Common stock, par value $.01: 50,000 shares authorized; issued 28,144 in
1999, and 27,854 in 1998.................................................. 281 278
Additional paid-in capital................................................... 124,574 120,847
Retained earnings............................................................ 44,995 34,334
Accumulated other comprehensive income (loss)................................ 6,506 (1,153)
--------- ---------
Total stockholders' equity.............................................. 176,356 154,306
--------- ---------
$ 235,375 $ 210,617
========= =========
</TABLE>
See accompanying notes.
F-8
<PAGE>
ATMI, INC.
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------
1999 1998 1997
-------- -------- ---------
<S> <C> <C> <C>
Revenues (Notes 1 and 15).................................................. $202,506 $168,061 $192,381
Cost of revenues........................................................... 95,456 84,864 92,658
-------- -------- --------
Gross profit............................................................... 107,050 83,197 99,723
Operating expenses:
Research and development (Note 1)..................................... 18,359 16,630 14,336
Selling, general and administrative (Note 13)......................... 63,820 59,093 60,920
Merger costs and related expenses (Note 11)........................... 9,914 1,700 9,000
-------- -------- --------
92,093 77,423 84,256
-------- -------- --------
Operating income........................................................... 14,957 5,774 15,467
Interest income............................................................ 4,384 4,210 1,732
Interest expense (Note 6).................................................. (1,267) (1,723) (2,644)
Other income, net.......................................................... 733 539 340
-------- -------- --------
Income before income taxes and minority interest........................... 18,807 8,800 14,895
Income taxes (Note 8)...................................................... 7,720 4,412 8,588
-------- -------- --------
Income before minority interest............................................ 11,087 4,388 6,307
Minority interest.......................................................... (263) (111) (2)
-------- -------- --------
Net income (Note 15)....................................................... $ 10,824 $ 4,277 $ 6,305
======== ======== ========
Net income per share--basic (Notes 1 and 10)............................... $ 0.40 $ 0.16 $ 0.26
======== ======== ========
Net income per share--assuming dilution (Notes 1 and 10)................... $ 0.38 $ 0.15 $ 0.24
======== ======== ========
Weighted average shares outstanding--basic (Notes 1 and 10)................ 26,773 25,978 23,950
======== ======== ========
Weighted average shares outstanding--assuming dilution (Notes 1 and 10).... 28,689 27,793 26,030
======== ======== ========
</TABLE>
See accompanying notes.
F-9
<PAGE>
ATMI, INC.
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)
<TABLE>
<CAPTION>
Accumulated
Additional Other
Common Paid-in Retained Comprehensive
Stock Capital Earnings Income Total
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996......................... $ 239 $ 41,438 $ 24,450 $ (78) $ 66,049
Issuance of 83 common shares pursuant to the
exercise of employee stock options................ -- 454 -- -- 454
Issuance of 151 common shares pursuant to the
exercise of warrants.............................. 2 1,688 -- -- 1,690
Issuance of common shares to pooled entity........... 13 4,283 -- -- 4,296
Issuance of common and preferred shares by pooled
entity............................................ -- 6,001 -- -- 6,001
Distributions to stockholders........................ -- -- (199) -- (199)
Compensation for the issuance of common shares....... -- 272 -- -- 272
Tax benefit related to nonqualified stock options.... -- 678 -- -- 678
Net income........................................... 6,305 6,305
Cumulative translation adjustment.................... -- -- -- (1,376) (1,376)
---------
Comprehensive income................................. 4,929
--------------------------------------------------------------------------
Balance at December 31, 1997......................... 254 54,814 30,556 (1,454) 84,170
--------------------------------------------------------------------------
Issuance of 159 common shares pursuant to the
exercise of employee stock options................ 1 782 -- -- 783
Issuance of common shares by pooled entity........... -- 1,379 -- -- 1,379
Sale of 2,257 common shares, net of issuance
costs of $4,161................................... 23 62,403 -- -- 62,426
Compensation for the issuance of common shares....... -- 370 -- -- 370
Tax benefit related to nonqualified stock options.... -- 1,099 -- -- 1,099
Distributions to stockholders........................ -- -- (397) -- (397)
Adjustment to reflect change in pooled entity
fiscal year....................................... -- -- (102) -- (102)
Net income........................................... -- -- 4,277 -- 4,277
Unrealized loss on available-for-sale securities
(net of tax benefit of $281)...................... -- -- -- (500) (500)
Cumulative translation adjustment.................... -- -- -- 801 801
---------
Comprehensive income................................. 4,578
--------------------------------------------------------------------------
Balance at December 31, 1998......................... 278 120,847 34,334 (1,153) 154,306
--------------------------------------------------------------------------
Issuance of 204 common shares pursuant to the
exercise of employee stock options................ 2 1,046 -- -- 1,048
Issuance of 20 common shares pursuant to the
exercise of warrants.............................. -- 222 -- -- 222
Issuance of 64 common shares pursuant to the
employee stock purchase plan...................... 1 952 -- -- 953
Issuance of common shares by pooled entity........... -- 45 -- -- 45
Distributions to stockholders........................ -- (338) -- -- (338)
Compensation for the issuance of common shares....... -- 426 -- -- 426
Tax benefit related to nonqualified stock options.... -- 1,374 -- -- 1,374
Adjustment to reflect change in pooled entity
fiscal year....................................... -- -- (163) -- (163)
Net income........................................... -- -- 10,824 -- 10,824
Unrealized gain on available-for-sale securities
(net of tax provision of $4,141).................. -- -- -- 7,860 7,860
Cumulative translation adjustment.................... -- -- -- (201) (201)
---------
Comprehensive income................................. 18,483
--------------------------------------------------------------------------
Balance at December 31, 1999......................... $ 281 $ 124,574 $ 44,995 $ 6,506 $ 176,356
--------------------------------------------------------------------------
</TABLE>
See accompanying notes.
F-10
<PAGE>
ATMI, INC.
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------
1999 1998 1997
----------- ------------ -----------
<S> <C> <C> <C>
Operating activities
Net income.............................................................. $ 10,824 $ 4,277 $ 6,305
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization........................................ 11,256 10,263 7,980
Write-down of goodwill............................................... 3,386 - -
Stock option compensation............................................ 426 370 272
Effect of change of fiscal year of pooled entity..................... (163) (102) -
Provision for bad debt............................................... 587 399 1,251
Deferred income taxes................................................ (6,677) (1,891) 2,369
Tax benefit of nonqualified stock options............................ 1,374 1,099 678
Minority interest in net earnings of subsidiaries.................... 263 111 2
Changes in operating assets and liabilities
(Increase) decrease in accounts receivable....................... (17,372) 10,284 (11,727)
(Increase) in inventory.......................................... (2,539) (814) (4,085)
Decrease (increase) in other assets.............................. 1,259 (4,418) (3,049)
Increase (decrease) in accounts payable.......................... 1,811 (1,128) (604)
Increase (decrease) in accrued expenses.......................... 5,678 (4,767) 4,071
Increase (decrease) in other liabilities......................... 3,077 (670) 473
----------- ------------ -----------
Total adjustments........................................... 2,366 8,736 (2,369)
----------- ------------ -----------
Net cash provided by operating activities................... 13,190 13,013 3,936
----------- ------------ -----------
Investing activities
Capital expenditures.................................................... (10,716) (15,701) (9,806)
Long-term investment.................................................... - (261) (250)
Sale (purchase) of marketable securities, net........................... 16,278 (47,871) 777
Payments for acquisitions............................................... - - (5,551)
Proceeds from sale of assets............................................ - 199 -
----------- ------------ -----------
Net cash provided (used) by investing activities............ 5,562 (63,634) (14,830)
----------- ------------ -----------
Financing activities
Borrowings from loans, notes, and bonds payable......................... 1,544 2,971 5,585
Payments on loans, notes, and bonds payable............................. (9,559) (6,747) (4,411)
Distributions to stockholders........................................... (338) (397) (199)
Payments on capital lease obligations................................... (2,477) (2,846) (3,125)
Proceeds from sale of common stock, net................................. 952 62,426 -
Proceeds from sale of common and preferred stock by pooled entities..... - 525 8,551
Investment by minority stockholder...................................... - - 251
Proceeds from exercise of stock options and warrants.................... 1,271 783 2,144
----------- ------------ -----------
Net cash (used) provided by financing activities............ (8,607) 56,715 8,796
----------- ------------ -----------
Effects of exchange rate changes on cash................................ (74) 120 (142)
----------- ------------ -----------
Net increase (decrease) in cash and cash equivalents.................... 10,071 6,214 (2,240)
Cash and cash equivalents, beginning of year............................ 21,702 15,488 17,728
----------- ------------ -----------
Cash and cash equivalents, end of year.................................. $ 31,773 $21,702 $ 15,488
=========== ============ ===========
Disclosure of noncash financing activities
Conversion of note payable to preferred stock by pooled entity - - $ 685
=========== ============ ===========
</TABLE>
See accompanying notes.
F-11
<PAGE>
ATMI, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Basis of Presentation
The supplemental consolidated financial statements include the
accounts of ATMI, Inc. and its majority-owned subsidiaries, after elimination of
intercompany accounts and transactions. In addition, these supplemental
consolidated financial statements give retroactive effect to the acquisition of
Environmentally Safe Cleaning Alternatives, Inc. and Affiliates ("ESCA"), which
has been accounted for using the pooling-of-interests method, and will become
the historical consolidated financial statements of the Company. The acquisition
of ESCA occurred on July 7, 2000, as described in Note 11.
Certain amounts have been reclassified to conform to the current year
presentation.
Company's Activities
ATMI, Inc. together with its subsidiaries (the "Company") is a leading
supplier of materials, equipment and related services used in the manufacture of
semiconductor devices. The Company targets specialty materials used in front-end
semiconductor manufacture. The Company provides:
. a broad range of ultrahigh-purity semiconductor materials;
. semiconductor materials packaging and delivery systems;
. sensors for the workplace and environment that detect materials
as they move through the workplace;
. point-of-use environmental equipment that abates materials;
. specialty thin film deposition services that provide coated
wafers directly to customers; and
. cleaning and refurbishment of parts used in the manufacture of
semiconductors.
Revenue Recognition
Revenues are recognized upon the shipment of goods.
Use of Estimates
The preparation of the financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results may differ from
those estimates.
Research and Development
Research and development costs, including materials, labor, and
overhead related to self-funded projects, are expensed as incurred.
Marketable Securities and Investments
Highly liquid investments with maturities of three months or less,
when purchased, are classified as cash and cash equivalents. Investments with
maturities greater than three months are classified as marketable securities.
In connection with the Company's strategic alliances and research and
development activities, it has acquired equity securities of certain of its
alliance partners.
F-12
<PAGE>
ATMI, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
1. Summary of Significant Accounting Policies (continued)
The Company accounts for investments in accordance with SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." The
Company's policy, except for its equity investments in alliance partners, is to
protect the value of its investments portfolio and to minimize principal risk by
earning returns based on current interest rates. All of the Company's marketable
securities are classified as available-for-sale as of the balance sheet date and
are reported at fair value, based on quoted market prices, with unrealized gains
and losses recorded in accumulated other comprehensive income, net of tax. The
cost of securities sold is based on the specific identification method. Interest
on these securities is accrued and included in interest income.
Management determines the classification of marketable debt securities
at the time of purchase and reevaluates such designation as of each balance
sheet date.
Inventories
Inventories are stated at the lower of cost or market using the first-
in, first-out (FIFO) method.
Property, Plant and Equipment
Property and equipment is stated at cost. Depreciation and
amortization of property, plant and equipment is computed using the straight-
line method over the estimated useful lives of the assets, which vary from three
to thirty-nine years.
Foreign Currency Translation
Adjustments relating to the translation of foreign currency to U.S.
dollars are reported as a separate component of accumulated other comprehensive
income. Gains or losses resulting from foreign currency transactions are
included in other income (expense) and have been immaterial.
Taxes
The Company accounts for income taxes in accordance with the liability
method. Under this method, deferred tax assets and liabilities are determined
based upon differences between financial reporting and the tax basis of assets
and liabilities and are measured using the enacted tax rates and laws that are
expected to be in effect when the differences are expected to reverse.
Fair Values of Financial Instruments
The Company's financial instruments include cash and cash equivalents,
marketable securities, accounts receivable, accounts payable, and debt.
Marketable securities are accounted for at fair value. All other financial
instruments are accounted for on an historical cost basis which, due to the
nature of these instruments, approximates fair value at the balance sheet dates.
F-13
<PAGE>
ATMI, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
1. Summary of Significant Accounting Policies (continued)
Long-Lived Assets
The Company reviews on a periodic basis the value of its long-lived
assets to determine whether an impairment exists. In connection with the
acquisition of Delatech, the Company recorded a charge of $3.4 million
associated with the impairment of goodwill related to an existing EcoSys product
line (see Note 11). This charge was based on the estimate of future cash flows
on a discounted basis compared with the carrying value of the goodwill. Goodwill
of $4.0 million and $8.1 million at December 31, 1999 and 1998 is amortized over
periods of ten to twenty years and is stated net of accumulated amortization of
$2.2 million and $1.5 million at December 31, 1999 and 1998, respectively.
Stock Based Compensation
The Company accounts for employee stock compensation plans in
accordance with Accounting Principle Board (APB) Opinion No. 25, "Accounting for
Stock Issued to Employees." Under APB No. 25, compensation cost is the excess,
if any, of the quoted market price of the Company's common stock at the grant
date over the amount the employee must pay to acquire the common stock. The
Company has elected to continue to account for its employee stock compensation
plans under APB No. 25. Pro forma disclosures of net income, net income per
share-basic and net income per share- assuming dilution, as if the fair value
based method of accounting had been applied, are presented in Note 10.
Per Share Data
Basic and diluted earnings per share are calculated in accordance with
FASB Statement No. 128, "Earnings Per Share".
Recent Accounting Pronouncements
In December 1999, the Securities and Exchange Commission ("SEC")
issued Staff Accounting Bulletin ("SAB") 101, "Revenue Recognition," which
provides guidance on the recognition, presentation, and disclosure of revenue in
financial statements filed with the SEC. SAB 101 outlines the basic criteria
that must be met to recognize revenue and provides guidance for disclosure
related to revenue recognition policies. At this time, the Company is still
assessing the impact of SAB 101 on its financial position and results of
operations. SAB 101 will become effective for the Company's fourth quarter of
2000.
2. Marketable Securities
Marketable securities are comprised of the following at December 31,
1999 (in thousands):
<TABLE>
<CAPTION>
Gross
Unrealized Fair
Cost Gain Value
----------------------------------------------------
<S> <C> <C> <C>
Corporate obligations.................. $ 36,887 $ -- $ 36,887
U.S. Government obligations............ 3,969 -- 3,969
Certificates of deposit................ 6,011 -- 6,011
----------------------------------------------------
Total debt securities 46,867 -- 46,867
Common stock .......................... 2,187 11,501 13,688
----------------------------------------------------
Total marketable securities $ 49,054 $ 11,501 $ 60,555
====================================================
</TABLE>
F-14
<PAGE>
ATMI, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
2. Marketable Securities (continued)
Marketable securities are comprised of the following at December 31,
1998 (in thousands):
<TABLE>
<CAPTION>
Gross
Unrealized Fair
Cost Gain Value
----------------------------------------------------
<S> <C> <C> <C>
Corporate obligations.................. $ 49,563 $ -- $ 49,563
U.S. Government obligations............ 8,695 -- 8,695
Certificates of deposit................ 4,887 -- 4,887
----------------------------------------------------
Total debt securities 63,145 -- 63,145
Common stock .......................... 2,187 (781) 1,406
----------------------------------------------------
Total marketable securities $ 65,332 (781) $ 64,551
====================================================
</TABLE>
All of the Company's marketable debt securities have maturities of
less than two years.
3. Accounts Receivable
Credit is extended to commercial customers based on an evaluation of
their financial condition, and collateral is not generally required. The
evaluation of financial condition is performed to reduce the risk of loss. The
Company has not experienced any material losses due to uncollectible accounts
receivable. Certain transactions with foreign customers are supported by letters
of credit. The Company maintains an allowance for doubtful accounts at a level
that management believes is sufficient to cover potential credit losses.
Amounts due from various agencies of the U.S. Government were
approximately $2.7 million and $2.1 million at December 31, 1999 and 1998,
respectively.
4. Inventories
Inventories are comprised of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
-----------------------------
1999 1998
----------- ----------
<S> <C> <C>
Raw materials.................. $16,127 $14,353
Work in process................ 3,059 2,392
Finished goods................. 4,115 4,350
----------------------------
23,301 21,095
Obsolescence reserve........... (1,529) (1,861)
----------------------------
$21,772 $19,234
============================
</TABLE>
F-15
<PAGE>
ATMI, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
5. Property, Plant and Equipment
Property, plant and equipment is comprised of the following (in thousands):
<TABLE>
<CAPTION> December 31,
-------------------------
1999 1998
---------- ---------
<S> <C> <C>
Land................................... $ 2,738 $ 1,944
Buildings.............................. 9,875 10,522
Machinery and equipment................ 72,219 64,859
Furniture and fixtures................. 7,006 5,726
Leasehold improvements................. 9,486 8,212
-------------------------
101,324 91,263
Accumulated depreciation and
amortization.......................... (45,453) (35,525)
-------------------------
$ 55,871 $ 55,738
=========================
</TABLE>
Depreciation and amortization expense for property, plant and equipment
for the years ended December 31, 1999, 1998 and 1997, was $10.6 million, $9.4
million and $7.4 million, respectively.
6. Loans, Notes and Bonds Payable
Loans, notes and bonds payable consist of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
--------------------------
1999 1998
------------ -----------
<S> <C> <C>
Note payable bearing interest at 8.25%, due in three annual installments
beginning January 1, 1999................................................... $ 1,333 $ 2,000
Term loans with Connecticut state agency, bearing interest ranging between
5%-5.75%, due between January 2000 and June 2002............................ 1,490 2,212
Credit lines with commercial banks, bearing interest ranging between
6.50%-9.25% available through February 2000................................. 1,508 2,376
Notes payable primarily with commercial banks and leasing companies, bearing
interest ranging between 2.5%-6.0%, due between April 1998 and September
2008........................................................................ 3,387 7,484
Equipment loan payable to a finance company, fixed principal and interest
payments due monthly, bearing interest at prime (8.25% at December 31,
1999) plus 1%, due between December 1999 and September 2000................. 70 -
Mortgages payable, bearing interest at 8.63%, due November
2016........................................................................ - 1,455
City of Bloomington, Minnesota Industrial Revenue Bond, interest rate is
variable (4.2% and 4.4% at December 31, 1999 and 1998), quarterly payments
of $0.1 million, due September 2005......................................... 2,300 2,700
------- -------
10,088 18,227
Less current portion........................................................... (5,601) (9,401)
------- -------
$ 4,487 $ 8,826
======= =======
</TABLE>
F-16
<PAGE>
ATMI, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
6. Loans, Notes and Bonds Payable (continued)
The balance of loans and notes payable at December 31, 1999 and 1998,
respectively include amounts due in foreign currencies as follows: Belgian
Francs 64,046,000 and 68,499,000 ($1,595,000 and $1,994,000) and Deutschmarks
4,486,000 and 7,498,000 ($2,305,000 and $4,502,000). The approximate aggregate
debt maturities are as follows as of December 31, 1999 (in thousands):
2000 $ 3,702
2001 2,763
2002 1,810
2003 672
2004 522
Thereafter 619
------------
$ 10,088
============
The term loans are collateralized by various equipment, leasehold
improvements and renovations in the Company's Connecticut facility. The
mortgages are collateralized by the building at the Company's Napa, California
facility. The majority of the Company's notes payable are secured by the related
real property or equipment. The Company's credit lines are secured by
substantially all the assets of certain of the Company's subsidiaries and have
available borrowing capacity approximating $2.0 million at December 31, 1999.
The Company is in compliance with the credit line and notes payable covenants.
The bondholders may tender the City of Bloomington, Minnesota bonds at any
time for the principal amount plus accrued interest. As a result, they have been
classified as a current liability. The Company has the option to convert the
bonds to a fixed rate provided all bonds can be remarketed at the fixed rate.
The first fixed rate optional redemption date would be July 1 of the year that
is halfway between the conversion date and July 1, 2005. If redeemed, the
Company must pay 102% and 101% of bond principal in the first and second years
following the first fixed rate optional redemption date, respectively. Prior to
conversion to a fixed rate, the Company has the option to redeem the bonds
without premium.
Interest paid was $1.4 million, $2.3 million, and $2.8 million, for the
years ended December 31, 1999, 1998, and 1997, respectively.
Certain of the Company's subsidiaries' financing agreements contain
limitations or prohibitions on the payment of dividends without the lender's
consent or in conjunction with the subsidiary's failure to comply with various
financial covenants. The Company has never declared or paid cash dividends on
its capital stock. The Company does not anticipate paying any cash dividends in
the foreseeable future.
F-17
<PAGE>
ATMI, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
7. Leases
The Company is obligated under capital leases for certain machinery and
equipment that expire at various dates during the next five years. The gross
amount of machinery and equipment under the capital leases and the related
accumulated depreciation were as follows (in thousands):
December 31,
------------------
1999 1998
-------- -------
Machinery and equipment.......... $10,385 $12,274
Accumulated depreciation......... (3,178) (3,111)
-------- -------
$ 7,207 $ 9,163
======== =======
The following is a schedule of future minimum lease payments for capital
leases as of December 31, 1999 (in thousands):
2000......................................... $ 2,175
2001......................................... 1,560
2002......................................... 365
-------------
Total lease payments.............................. 4,100
Less amount representing interest................. (332)
-------------
Present value of net capital lease payments....... 3,768
Less current portion.............................. (1,936)
-------------
Long-term portion................................. $ 1,832
=============
The Company leases office and manufacturing facilities, and certain
manufacturing equipment under several operating leases expiring between 2000 and
2005. Rental expense was $5.0 million, $5.2 million, and $4.6 million, for the
years ended December 31, 1999, 1998 and 1997, respectively.
The following is a schedule of future minimum lease payments for operating
leases as of December 31, 1999 (in thousands):
Operating
Leases
-------------
2000............................ $ 3,736
2001............................ 2,816
2002............................ 1,981
2003............................ 1,194
2004............................ 1,028
Thereafter...................... 741
-------------
Total minimum lease payments......... $ 11,496
=============
F-18
<PAGE>
ATMI, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
8. Income Taxes
Pretax income was taxed in the following jurisdictions (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
1999 1998 1997
------- ------ -------
<S> <C> <C> <C>
Domestic.................... $15,950 $5,331 $13,587
Foreign..................... 2,594 3,358 1,306
------- ------ -------
Total pretax income......... $18,544 $8,689 $14,893
======= ====== =======
</TABLE>
Significant components of the provision for income taxes for the periods
presented are as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
------------------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal............... $11,811 $ 4,539 $5,305
State................. 1,635 1,116 740
Foreign............... 951 648 174
------- ------- ------
Total current.............. 14,397 6,303 6,219
------- ------- ------
Deferred:
Federal............... (5,901) (1,816) 1,896
State................. (746) (536) 321
Foreign............... (30) 461 152
-------- ------- ------
Total deferred............. (6,677) (1,891) 2,369
-------- ------- ------
$ 7,720 $ 4,412 $8,588
======= ======= ======
</TABLE>
Significant components of the Company's deferred tax assets and
liabilities are as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
----------------------------
1999 1998
---------- ----------
<S> <C> <C>
Deferred tax assets:
Accrued liabilities....................................... $ 3,565 $ 1,234
Inventory reserves........................................ 1,713 1,183
Net operating loss and tax credit carryforwards........... 1,823 2,045
Other, net................................................ 266 496
----------------------------
7,367 4,958
Valuation allowance............................................ - (2,154)
----------------------------
7,367 2,804
Deferred tax liabilities:
Depreciation and amortization............................. (3,736) (4,614)
Unrealized gain on marketable securities.................. (4,141) -
Other, net................................................ (313) (954)
----------------------------
(8,190) (5,568)
----------------------------
Net deferred tax liabilities................................... $ (823) $(2,764)
============================
</TABLE>
The valuation allowance was eliminated as a result of changes in estimates
regarding the realizability of net operating loss and tax credit carryforwards
of certain acquired companies.
F-19
<PAGE>
ATMI, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
8. Income Taxes (continued)
As of December 31, 1999, the Company has federal net operating loss
carryforwards of $4.6 million attributable to certain acquired companies and tax
credit carryforwards of $0.2 million. The net operating loss and tax credit
carryforwards will expire at various dates beginning in 2007 through 2019, if
not utilized. Utilization of the net operating losses and credits may be subject
to a substantial annual limitation due to the "change in ownership" provisions
of the Internal Revenue Code of 1986 and similar state provisions.
Income taxes paid for the years ended December 31, 1999, 1998, and 1997
were $9.2 million, $9.4 million and $6.1 million, respectively.
The reconciliation of income tax computed at the U.S. federal statutory tax
rate to the Company's tax expense is (in thousands):
<TABLE>
<CAPTION>
For the Year Ended December 31,
-----------------------------------
1999 1998 1997
------- -------- ---------
<S> <C> <C> <C>
U.S. statutory rate....................................... $ 6,489 $ 2,957 $ 5,063
State income taxes........................................ 657 266 662
Foreign income taxes...................................... (162) 228 (24)
Effect of nondeductible acquisition expenses.............. 1,851 599 3,548
Net operating loss carryforward utilization............... -- -- (296)
Foreign sales corporation benefit......................... (773) (324) --
Change in valuation allowance of deferred tax assets...... (2,154) 855 (954)
Tax liabilities accrued................................... 1,511 -- --
Other, net................................................ 301 (169) 589
------------------------------------
$ 7,720 $ 4,412 $ 8,588
====================================
</TABLE>
South Korea has granted the Company a five year full income tax exemption,
which expires in 2003, and an additional three year 50% exemption, which expires
in 2006. The effect of the tax exemption was to reduce income tax expense by
$0.2 million and $0.1 million for the years ended December 31, 1999 and 1998,
respectively.
The former securityholders of the ADCS Group have agreed to indemnify the
Company against losses arising out of certain tax matters. As security for these
tax matters, the former securityholders of the ADCS Group have delivered 700,000
shares of the Company's common stock which they received into escrow (see Note
11). While the possible exposures are difficult to quantify, the Company
believes that, regardless of the probability that liabilities arise, the
potential exposures range from $0 to $22 million depending on the tax matter.
Although the former securityholders of the ADCS Group have agreed to indemnify
the Company against losses arising out of such tax matters, any assessments, if
ultimately determined against the Company, would result in a charge to the
Company's results of operations. During the second quarter of 1999, the Company
was notified by the Internal Revenue Service of an assessment of $2.1 million
for certain tax matters. The Company believes that such assessment is without
merit and intends to vigorously defend its position in these tax matters.
F-20
<PAGE>
ATMI, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
9. Profit Sharing Plan
The Company maintains a 401(k) profit sharing plan covering substantially
all of its domestic employees and is subject to the provisions of the Employee
Retirement Income Security Act of 1974. The Company's matching contributions are
discretionary by plan year and were $0.4 million, $0.1 million and $0.1 million
for 1999, 1998 and 1997, respectively.
10. Stockholders' Equity
In March 1998, the Company completed a registered underwritten public
offering of 5,428,000 shares, including over-allotments, of common stock at
$29.50 per share. Net proceeds to the Company of $62.4 million were from
2,257,291 shares sold by the Company while 3,170,709 shares were sold by certain
stockholders. Costs of the offering, including underwriting commissions, were
$4.2 million.
Stock Plans
The Company has certain stock plans, which provide for the granting of up
to 4,515,833 nonqualified stock options, incentive stock options ("ISOs"), stock
appreciation rights and restricted stock awards to employees, directors and
consultants of the Company.
Under the terms of these stock plans, nonqualified options granted may not
be at a price of less than 50% of the fair market value of the common stock on
the date of grant, and ISOs granted may not be at a price of less than 100% of
fair market value of the common stock on the date of grant. All grants have been
made at fair market value under the plans. Options are generally exercisable
commencing one year after the date of grant at the rate of 20% per annum on a
cumulative basis. Nonqualified options expire up to ten years from the date of
grant, and ISOs expire five to ten years from the date of grant.
<TABLE>
<CAPTION>
Number of Option Price
Shares Per Share
-------------------------------------
<S> <C> <C>
Options outstanding at December 31, 1996..................... 958,216 $ 0.28 - $17.63
Granted................................................. 1,023,506 $ 2.10 - $40.13
Canceled................................................ (348,250) $ 0.53 - $40.13
Exercised............................................... (82,520) $ 0.28 - $13.50
------------- ---------------
Options outstanding at December 31, 1997 1,550,952 $ 0.28 - $29.38
Granted................................................. 752,440 $14.00 - $33.00
Canceled................................................ (110,130) $ 5.63 - $33.00
Exercised............................................... (158,918) $ 0.28 - $17.63
------------- --------------
Options outstanding at December 31, 1998 2,034,344 $ 0.28 - $33.00
Granted................................................. 1,148,954 $19.19 - $37.38
Canceled................................................ (134,658) $ 5.63 - $27.00
Exercised............................................... (204,085) $ 0.28 - $29.38
------------- ---------------
Options outstanding at December 31, 1999..................... 2,844,555 $ 0.44 - $37.38
============= ===============
</TABLE>
At December 31, 1999, options for 1,017,946 shares were exercisable and
options for 805,667 shares were available for grant. Exercise prices for 282,340
options outstanding ranged from $0.44-$4.04; 376,638 options outstanding ranged
from $5.63-$10.00; 449,808 options outstanding ranged from $10.13-$20.00;
956,820 options outstanding ranged from $20.88-$24.25; and 778,949 options
outstanding ranged from $24.38-$37.38 as of December 31, 1999.
F-21
<PAGE>
ATMI, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
10. Stockholders' Equity (continued)
The weighted average exercise price and remaining contractual life of
options outstanding at December 31, 1999 was $18.94 and 7.8 years, respectively.
As a result of the NOW and MST mergers in 1998 and 1999, respectively (see
Note 11), stock options of NOW and MST were converted into 205,089 and 123,016
of ATMI stock options. NOW stock options were converted into ATMI stock options
at historical prices ranging from $4.04 to $8.90 and MST stock options were
converted into ATMI stock options at historical prices ranging from $2.10 to
$15.74.
If compensation expense for the Company's plans had been determined for all
stock option grants based on the fair value at the grant dates for awards under
those plans, consistent with the method described in SFAS No. 123, the Company's
net income, net income per share-basic and net income per share-assuming
dilution would have been reduced to the pro forma amounts indicated below (in
thousands, except per share data):
<TABLE>
<CAPTION>
Pro forma
-------------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Net income................................. $ 7,226 $ 2,326 $ 5,466
Net income per share--basic................ $ 0.27 $ 0.09 $ 0.23
Net income per share--assuming dilution.... $ 0.25 $ 0.08 $ 0.21
</TABLE>
The fair value of each option grant, for pro forma disclosure purposes,
was estimated on the date of grant using the Black-Scholes option pricing model
with the following weighted average assumptions:
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Expected dividend yield....................... None None None
Risk free interest rate....................... 5.80% 5.50% 6.00%
Expected volatility........................... .615 .628 .560
Expected life of options...................... 7.5 years 7.5 years 7.5 years
</TABLE>
The weighted average fair value of non-canceled stock options granted in
1999, 1998 and 1997 was $17.18, $14.74 and $17.04, respectively.
Employee Stock Purchase Plan
The Employee Stock Purchase Plan ("ESPP Plan") was approved in May 1998
and enables all employees to subscribe at six month intervals to purchase shares
of common stock at the lower of 85% of the fair market value of the shares on
the first day or last day of each six-month period. A maximum of 500,000 shares
is authorized for subscription. At December 31, 1999, 64,000 shares have been
issued under the ESPP Plan, and no such shares were issued in 1998.
F-22
<PAGE>
ATMI, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
10. Stockholders' Equity (continued)
Earnings Per Share
The following table presents the computation of basic and diluted earnings
per share (in thousands, except per share data):
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Numerator:
Net income............................................ $10,824 $ 4,277 $ 6,305
======================================
Denominator:
Denominator for basic earnings per share-
Weighted-average shares............................ 26,773 25,978 23,950
Dilutive effect of contingent shares related to
acquisitions subject to escrow arrangements........ 1,186 1,326 1,326
Dilutive effect of employee stock options................. 730 489 754
--------------------------------------
Denominator for diluted earnings per share............ 28,689 27,793 26,030
======================================
Net income per share--basic................................. $ 0.40 $ 0.16 $ 0.26
======================================
Net income per share--assuming dilution..................... $ 0.38 $ 0.15 $ 0.24
======================================
</TABLE>
Options to purchase 18,900, 720,520 and 16,000 shares of common stock,
outstanding as of December 31, 1999, 1998 and 1997, respectively, were not
included in the computation of diluted earnings per share because their exercise
prices were greater than the average market price of the common shares and,
therefore, their inclusion would be antidilutive.
11. Mergers and Acquisitions
The Company has consummated nine mergers since 1997, each of which has
been accounted for as a pooling of interests. The entities acquired and share
consideration exchanged were as follows:
<TABLE>
<CAPTION>
Shares Held in
Year of Escrow
Company Acquisition Shares Issued December 31, 1999
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Environmentally Safe Cleaning Alternatives, Inc. and
Affiliates 2000 370,000 37,000
TeloSense Corporation 1999 232,000 -
Advanced Chemical Systems International, Inc. 1999 1,202,000 61,000
Delatech Incorporated 1999 2,347,000 234,000
NewForm N.V. 1999 550,000 55,000
MST Analytics, Inc. 1999 993,000 99,000
NOW Technologies, Inc. 1998 1,594,000 -
ADCS Group (Note 8) 1997 5,469,000 700,000
Lawrence Semiconductor Laboratories, Inc. 1997 3,671,000 -
</TABLE>
F-23
<PAGE>
ATMI, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
11. Mergers and Acquisitions (continued)
The former securityholders of the aforementioned entities have agreed
to indemnify the Company from and against certain losses arising out of breaches
of representations and warranties made by the respective securityholders. As
security for these obligations, certain former securityholders agreed to escrow
a certain specified amount of the merger consideration. These shares will be
released from escrow in accordance with the terms of the respective merger
agreements.
The Company has reduced retained earnings by $163,000 and $102,000 in
1999 and 1998, respectively, to adjust retained earnings for the different
fiscal year ends of certain of the acquired entities and has combined the year-
end September 30, 1999, 1998 and 1997 financial results for ESCA with the
December 31, 1999, 1998 and 1997 financial results of the Company.
In connection with the investigation, analysis and closings of the
aforementioned transactions, the Company recorded merger costs and related
expenses of $10.5 million, $1.7 million and $9.0 million in 1999, 1998, and
1997, respectively. During 1999, the Company reversed approximately $0.6 million
of merger costs accrued in prior years. Included within merger costs and related
expenses in 1999 is a charge of $4.4 million related to the Delatech acquisition
to recognize the impaired value of certain inventory ($1 million) and goodwill
($3.4 million) associated with an existing environmental equipment product line.
These charges were based on the estimate of future cash flows on a discounted
basis compared with the carrying value of these assets.
For the years ended December 31, 1999, 1998 and 1997, prior to the
acquisitions, revenues and net income of acquired companies included in the
financial statements are as follows (in thousands):
<TABLE>
<CAPTION>
Revenues: 1999 1998 1997
--------- --------------------------------------------------------------
<S> <C> <C> <C>
ATMI ............................... $196,236 $97,874 $101,877
ESCA ............................... $ 6,270 $ 2,955 $ 369
TeloSense, ACSI and Delatech........... - $42,994 $ 62,043
NewForm and MST........................ - $24,238 $ 13,237
NOW ............................... - - $ 14,855
<CAPTION>
Net Income (Loss): 1999 1998 1997
------------------ --------------------------------------------------------------
<S> <C> <C> <C>
ATMI ............................... $ 10,546 $ 6,465 $4,421
ESCA ............................... $ 278 $ (658) $ (90)
TeloSense, ACSI and Delatech........... - $(2,024) $1,228
NewForm and MST........................ - $ 494 $ (762)
NOW ............................... - - $1,508
</TABLE>
On July 15, 1997, MST acquired 100% of the outstanding capital stock of
four operating companies (i) Environmental Monitoring Technology S.A., a Swiss
holding company which owns 100% of the stock of MST Measurement Systems, Inc.;
(ii) Micro-Sensor Technologie GmbH; (iii) FPM Analytics, Inc. and (iv) Sensoric
GmbH ("four operating companies"). The aggregate purchase price for the four
operating companies was $18.8 million which was composed of cash of $5.6
million, the issuance of stock, and a two-year promissory note of $0.1 million.
F-24
<PAGE>
ATMI, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
11. Mergers and Acquisitions (continued)
The acquisition was accounted for as a purchase and, accordingly, the
operating results of the four operating companies have been included in the
Company's consolidated financial statements since the date of acquisition (July
15, 1997). The excess of the aggregate purchase price over the fair market value
of the net assets acquired of $4.4 million is being amortized over 10 years. The
following unaudited pro forma consolidated results of operations for the year
ended December 31, 1997 assume that the acquisition of the four operating
companies occurred as of January 1, 1997 (in thousands, except per share data):
1997
----------------
Net revenues $ 200,625
Income before taxes and minority interest $ 15,395
Net income $ 6,803
Net income per share assuming dilution $ 0.26
12. Comprehensive Income
During 1998, the Company adopted FASB Statement No. 130, "Reporting
Comprehensive Income." Statement No. 130 requires the reporting of comprehensive
income in addition to net income from operations. Comprehensive income is a more
inclusive financial reporting methodology that includes disclosure of certain
financial information that historically has not been recognized in the
calculation of net income.
The components of comprehensive income are as follows (in thousands):
<TABLE>
<CAPTION>
Currency Unrealized Gain
Translation (Loss) on Available-
Adjustments for-Sale Securities Total
----------------------------------------------------------------
<S> <C> <C> <C>
Balance at December 31, 1996...................... $ (78) $ -- $ (78)
Cumulative translation adjustment................. (1,376) -- (1,376)
----------------------------------------------------------------
Balance at December 31, 1997...................... (1,454) -- (1,454)
----------------------------------------------------------------
Unrealized loss on available-for-sale
securities (net of tax benefit of $281)........... -- (500) (500)
Cumulative translation adjustment................. 801 -- 801
----------------------------------------------------------------
Balance at December 31, 1998...................... (653) (500) (1,153)
----------------------------------------------------------------
Unrealized gain on available-for-sale
securities (net of tax provision of $4,141)....... -- 7,860 7,860
Cumulative translation adjustment................. (201) -- (201)
----------------------------------------------------------------
Balance at December 31, 1999...................... $ (854) $7,360 $ 6,506
----------------------------------------------------------------
</TABLE>
13. Severance Charge
During the fourth quarter of 1999, the Company terminated the
employment of four executive officers within its Materials segment and one
executive officer within its Technologies segment and recorded a charge of $2.3
million, reflected in selling, general, and administrative expenses in the
Company's 1999 results of operations. As of December 31, 1999, there were no
payments charged against this liability. Payments for this liability will be
made in 2000.
F-25
<PAGE>
ATMI, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
14. Commitments and Contingencies
On May 15, 1997, LSL settled patent infringement litigation with an
equipment manufacturer, related to equipment used by LSL that was purchased from
another manufacturer. Under the terms of the related settlement agreement, LSL
paid the manufacturer $2.0 million during 1997 and agreed to purchase reactors
from the manufacturer assuming LSL's business conditions justify such purchases.
LSL had purchased a reactor at an approximate fair market value of $2.5 million
during the year ended December 31, 1997.
In December 1998, a former office employee initiated a legal proceeding
against the Company alleging personal injuries to her minor child (then unborn)
allegedly resulting from her exposure to various chemicals while employed by the
Company. The plaintiffs have claimed damages of $25.0 million and unspecified
exemplary damages. The Company has denied the plaintiffs' legal allegations and
is vigorously defending this action. While the Company cannot predict the
outcome of this proceeding at this time, the Company believes it is without
merit.
In the normal course of business, the Company is involved in various
lawsuits and claims. Although the ultimate outcome of any of these legal
proceedings cannot be determined at this time, management, including internal
counsel, does not believe that the outcome of these proceedings, individually or
in the aggregate, will have a material adverse effect on the Company's financial
position or results of operations.
15. Segment and Geographic Data
During 1998, the Company adopted FASB Statement No. 131 "Disclosure
About Segments of an Enterprise and Related Information". The Company has two
segments: Materials and Technologies. The reportable segments are each managed
separately because they manufacture and distribute distinct products with
different production processes. The Company evaluates performance and allocates
resources based on operating profit or loss, not including interest and other
income or expense and income taxes. Intercompany sales are not material among
segments or operating divisions. The general corporate assets primarily include
cash and marketable securities, goodwill and other long-lived assets.
The following tables provide reported results for each of these
segments (in thousands):
<TABLE>
<CAPTION>
For the year ended December 31,
----------------------------------------
1999 1998 1997
---------------------------------------------------------
<S> <C> <C> <C>
Revenues
--------
Materials..................................................... $ 96,711 $ 71,279 $ 83,060
Technologies.................................................. 105,795 96,782 109,321
---------------------------------------------------------
Consolidated revenues......................................... $ 202,506 $ 168,061 $ 192,381
=========================================================
1999 1998 1997
---------------------------------------------------------
Operating Income (Loss)
-----------------------
Materials..................................................... $ 19,335 $ 11,373 $ 17,757
Technologies.................................................. 5,536 (3,899) 6,710
Merger costs and related expenses............................. (9,914) (1,700) (9,000)
---------------------------------------------------------
Consolidated operating income................................. $ 14,957 $ 5,774 $ 15,467
=========================================================
</TABLE>
F-26
<PAGE>
ATMI, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
15. Segment and Geographic Data
The following tables provide reported results for each of these
segments (in thousands) (continued):
<TABLE>
<CAPTION>
For the year ended December 31,
----------------------------------------
1999 1998 1997
---------------------------------------------------------
<S> <C> <C> <C>
Consolidated Net Income
-----------------------
Operating income from reportable segments..................... $14,957 $ 5,774 $ 15,467
Other profit or (loss)........................................ 3,587 2,915 (574)
Income tax provision.......................................... (7,720) (4,412) (8,588)
---------------------------------------------------------
Consolidated net income....................................... $10,824 $ 4,277 $ 6,305
=========================================================
<CAPTION>
At December 31,
---------------
1999 1998
--------------------------------------
<S> <C> <C>
Identifiable Assets
-------------------
Materials..................................................... $ 60,717 $ 45,166
Technologies.................................................. 81,466 75,286
General corporate assets...................................... 93,192 90,165
--------------------------------------
Total consolidated assets..................................... $ 235,375 $ 210,617
======================================
</TABLE>
The Company's geographic data for the years ended December 31, 1999,
1998 and 1997 are as follows:
<TABLE>
<CAPTION>
Europe and
(In thousands) United States Pacific Rim Other Eliminations Total
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 31, 1999
Total revenues $ 125,506 $ 54,563 $ 24,176 $ (1,739) $ 202,506
Long-lived assets $ 57,724 $ 1,589 $ 638 $ - $ 59,951
December 31, 1998
Total revenues $ 115,415 $ 34,451 $ 20,779 $ (2,584) $ 168,061
Long-lived assets $ 61,817 $ 1,373 $ 653 $ - $ 63,843
December 31, 1997
Total revenues $ 136,822 $ 42,829 $ 14,572 $ (1,842) $ 192,381
Long-lived assets $ 55,251 $ 1,734 $ 498 $ - $ 57,483
</TABLE>
Revenues are attributed to countries based on the location of the
customer. No one specific country within the Pacific Rim or Europe accounted for
greater than 10% of consolidated revenues in 1999, 1998 and 1997. Revenues and
net income of the foreign subsidiaries is not material to the consolidated
operations of the Company for each of the three years in the period ended
December 31, 1999. The Company utilized one vendor to manufacture and distribute
product that accounted for approximately 13%, 10% and 7% of revenues in 1999,
1998 and 1997, respectively.
F-27
<PAGE>
ATMI, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Quarterly Results of Operations (unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Quarter Year
---------------------------------------------------- ---------
1999 First Second Third Fourth 1999
---- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenues................................... $ 38,517 $ 50,947 $ 53,677 $ 59,365 $ 202,506
Gross profit............................... $ 19,851 $ 27,310 $ 28,130 $ 31,759 $ 107,050
Net income (loss).......................... $ 1,744 $ (577) (a) $ 5,988 $ 3,669 (b) $ 10,824
Net income (loss) per share--basic......... $ 0.06 $ (0.02) $ 0.22 $ 0.14 $ 0.40
Net income (loss) per share--assuming
dilution................................ $ 0.06 $ (0.02) $ 0.21 $ 0.13 $ 0.38
Quarter Year
---------------------------------------------------- ---------
1998 First Second Third Fourth 1998
---- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenues................................... $ 52,406 $ 45,041 $ 35,823 $ 34,791 $ 168,061
Gross profit............................... $ 28,739 $ 21,578 $ 15,253 $ 17,627 $ 83,197
Net income (loss).......................... $ 5,757 $ 1,210 $ (2,494) (c) $ (196) $ 4,277
Net income (loss) per share--basic......... $ 0.23 $ 0.05 $ (0.09) (c) $ (0.03) $ 0.16
Net income (loss) per share--assuming
dilution................................ $ 0.22 $ 0.05 $ (0.09) (c) $ (0.03) $ 0.15
</TABLE>
(a) Includes merger costs and related expenses of $7.2 million incurred in the
ACSI, Delatech, and TeloSense acquisitions.
(b) Includes merger costs and related expenses of $3.3 million incurred in
completing the MST Analytics and NewForm N.V. acquisitions, and a charge of
$2.3 million of severance for five executive officers of the Material and
Technologies segments.
(c) Includes merger costs and related expenses of $1.7 million incurred in
completing the NOW acquisition, and a severance charge of $0.4 million for
severance for employees. The severance was completed by December 31, 1998.
F-28
<PAGE>
Schedule II
ATMI, INC.
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
<TABLE>
<CAPTION>
Balance at Balance at
Beginning Charged to End
Year Ended of Period Cost/Expense Deductions of Period
---------- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
December 31, 1999
Allowance for doubtful accounts........... $ 959 $ 587 $ (180) (a) $ 1,366
Obsolescence reserve...................... 1,861 1,143 (1,475) (b) 1,529
Severance accrual......................... 0 2,300 0 2,300
December 31, 1998
Allowance for doubtful accounts........... $ 1,487 $ 399 $ (927) (a) $ 959
Obsolescence reserve...................... 1,737 1,365 (1,241) (b) 1,861
Severance accrual......................... 0 402 (402) (c) 0
December 31, 1997
Allowance for doubtful accounts........... $ 682 $ 1,251 $ (446) (a) $ 1,487
Obsolescence reserve...................... 952 1,608 (823) (b) 1,737
</TABLE>
(a) Reflects write offs of bad debts.
(b) Reflects disposals of obsolete inventory.
(c) Reflects payments made during 1998.
F-29
<PAGE>
ATMI, Inc.
Supplemental Consolidated Balance Sheets
(in thousands, except per share data)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
--------------------- ---------------------
Assets (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents................................................. $ 31,768 $ 31,773
Marketable securities..................................................... 121,203 60,555
Accounts receivable, net of allowance for doubtful accounts of $1,481 in
2000 and $1,366 in 1999................................................. 56,742 42,958
Inventories............................................................... 30,268 21,772
Deferred income taxes..................................................... 5,277 5,277
Other..................................................................... 10,989 6,313
--------------- ---------------
Total current assets................................................ 256,247 168,648
Property and equipment, net.................................................. 66,514 55,871
Deferred income taxes........................................................ 2,090 2,090
Goodwill and other long-term assets, net..................................... 7,156 8,766
--------------- ---------------
$ 332,007 $ 235,375
=============== ===============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable.......................................................... $ 17,099 $ 11,181
Accrued liabilities....................................................... 9,607 10,272
Accrued salaries and related benefits..................................... 6,362 9,341
Loans, notes and bonds payable, current portion........................... 5,453 5,601
Capital lease obligations, current portion................................ 3,059 1,936
Income taxes payable...................................................... 10,367 4,592
Deferred income taxes..................................................... 3,647 4,436
--------------- ---------------
Total current liabilities........................................... 55,594 47,359
Loans, notes and bonds payable, less current portion......................... 4,064 4,487
Capital lease obligations, less current portion.............................. 6,253 1,832
Deferred income taxes........................................................ 959 3,754
Other long-term liabilities.................................................. 923 478
Minority interest............................................................ 1,379 1,109
Stockholders' equity:
Preferred stock, par value $.01: 2,000 shares authorized; none issued and
outstanding............................................................ - -
Common stock, par value $.01: 50,000 shares authorized; issued and
outstanding 30,031 in 2000 and 28,144 in 1999......................... 300 281
Additional paid-in capital.............................................. 192,866 124,574
Retained earnings....................................................... 68,401 44,995
Accumulated other comprehensive income.................................. 1,268 6,506
--------------- ---------------
Total stockholders' equity.................................................. 262,835 176,356
--------------- ---------------
$ 332,007 $ 235,375
=============== ===============
</TABLE>
See accompanying notes.
F-30
<PAGE>
ATMI, Inc.
Supplemental Consolidated Statements of Income
(unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Six months ended June 30,
--------------------------------------------
2000 1999
--------------------- ---------------------
<S> <C> <C>
Revenues............................................................. $ 134,169 $ 89,464
Cost of revenues..................................................... 62,918 42,303
----------------- -----------------
Gross profit......................................................... 71,251 47,161
Operating expenses:
Research and development......................................... 12,990 8,493
Selling, general and administrative............................... 32,157 29,458
Merger costs and related expenses................................. --- 6,800
----------------- -----------------
45,147 44,751
----------------- -----------------
Operating income..................................................... 26,104 2,410
Interest income...................................................... 3,252 2,289
Interest expense..................................................... (674) (717)
Other income, net.................................................... 8,692 44
----------------- -----------------
Income before income taxes and minority interest .................... 37,374 4,026
Income taxes......................................................... 13,698 2,777
----------------- -----------------
Income before minority interest...................................... 23,676 1,249
Minority interest.................................................... (270) (83)
----------------- -----------------
Net income........................................................... $ 23,406 $ 1,166
================= =================
Net income per share-basic........................................... $ 0.82 $ 0.04
================= =================
Net income per share-assuming dilution............................... $ 0.78 $ 0.04
================= =================
Weighted average shares outstanding-basic............................ 28,437 26,711
================= =================
Weighted average shares outstanding-assuming dilution................ 30,081 28,443
================= =================
</TABLE>
See accompanying notes.
F-31
<PAGE>
ATMI, Inc.
Supplemental Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six months ended June 30,
-----------------------------------
2000 1999
---------------- -----------------
<S> <C> <C>
Operating activities
Net income........................................................................ $ 23,406 $ 1,166
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization................................................ 5,709 5,467
Long-lived asset impairment.................................................. --- 3,386
Provision for bad debt....................................................... 186 290
Deferred income taxes........................................................ (789) 1,409
Effect of change of fiscal year of pooled entity............................. (95) (163)
Realized gain on sale of investment.......................................... (9,520) --
Realized loss on investments................................................. 1,250 --
Minority interest in net earnings of consolidated subsidiaries............... 270 83
Changes in operating assets and liabilities
(Increase) in accounts receivable........................................ (13,934) (8,271)
(Increase) decrease in inventory......................................... (8,499) 375
(Increase) decrease in other assets...................................... (4,469) 1,943
Increase (decrease) in accounts payable.................................. 6,001 (20)
(Decrease) increase in accrued expenses.................................. (3,606) 878
Increase in other liabilities............................................ 6,240 2,841
---------------- -----------------
Total adjustments................................................................. (21,256) 8,218
---------------- -----------------
Net cash provided by operating activities......................................... 2,150 9,384
---------------- -----------------
Investing activities
Capital expenditures.............................................................. (15,903) (4,095)
(Purchase) sale of marketable securities, net..................................... (58,933) 2,889
---------------- -----------------
Net cash used by investing activities............................................. (74,836) (1,206)
---------------- -----------------
Financing activities
Borrowings from capital lease obligations......................................... 6,840 --
Payments on loans, notes and bonds payable........................................ (1,095) (6,530)
Payments on capital lease obligations............................................. (1,296) (1,212)
Proceeds from sale of common shares, net.......................................... 64,178 954
Proceeds from exercise of stock options and warrants.............................. 4,334 33
---------------- -----------------
Net cash provided (used) by financing activities.................................. 72,961 (6,755)
---------------- -----------------
Effects of exchange rate changes on cash.......................................... (220) 223
Net increase in cash and cash equivalents......................................... 55 1,646
Cash and cash equivalents, beginning of period.................................... 31,713 21,680
---------------- -----------------
Cash and cash equivalents, end of period.......................................... $ 31,768 $ 23,326
================ =================
</TABLE>
See accompanying notes.
F-32
<PAGE>
ATMI, Inc.
Notes To Supplemental Consolidated Interim Financial Statements
(unaudited)
1. Basis of Presentation
The accompanying unaudited supplemental consolidated interim financial
statements of ATMI, Inc. ("ATMI" or the "Company") have been prepared in
accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X
and do not include all of the financial information and disclosures required by
generally accepted accounting principles. In addition, these unaudited
supplemental consolidated interim financial statements give retroactive effect
to the ESCA acquisition on July 7, 2000, which has been accounted for using the
pooling-of-interests method. The ESCA acquisition is more fully described in
Note 9.
In the opinion of the management of ATMI, Inc., the financial information
contained herein has been prepared on the same basis as the audited consolidated
supplemental financial statements for the year ended December 31, 1999 contained
in the Company's Current Report on Form 8-K/A, and includes adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the unaudited quarterly results set forth herein. These unaudited supplemental
consolidated interim financial statements should be read in conjunction with the
December 31, 1999 audited supplemental consolidated financial statements and
notes thereto included in the Company's Current Report on Form 8-K/A. The
Company's quarterly results have, in the past, been subject to fluctuation and,
thus, the operating results for any quarter are not necessarily indicative of
results for any future fiscal period.
2. Per Share Data
The following table presents the computation of basic and diluted earnings per
share for the six months ended June 30 (in thousands, except per share data):
<TABLE>
<CAPTION>
2000 1999
------- -------
<S> <C> <C>
Numerator:
Net income ........................................ $23,406 $ 1,166
======= =======
Denominator:
Denominator for basic earnings per share........... 28,437 26,711
Dilutive effect of contingent shares related
to acquisitions................................. 737 1,246
Dilutive effect of employee stock options
and warrants, net of tax benefit.............. 907 486
------- -------
Denominator for diluted earnings per share........... 30,081 28,443
------- =======
Net income per share--basic......................... $ 0.82 $ 0.04
======= =======
Net income per share--assuming dilution............. $ 0.78 $ 0.04
======= =======
</TABLE>
F-33
<PAGE>
ATMI, Inc.
Notes To Supplemental Consolidated Interim Financial Statements (continued)
(unaudited)
3. Inventory
Inventory is comprised of the following (in thousands):
June 30, December 31,
2000 1999
-------------- ---------------
Raw materials............ $ 22,559 $ 16,127
Work in process.......... 3,929 3,059
Finished goods........... 5,631 4,115
-------------- ---------------
32,119 23,301
Obsolescence reserve..... (1,851) (1,529)
-------------- ---------------
$ 30,268 $ 21,772
============== ===============
4. Comprehensive Income
Comprehensive income is a more inclusive financial reporting methodology
that includes disclosure of certain financial information that historically has
not been recognized in the calculation of net income. The following table
presents the computation of comprehensive income for the six months ended June
30 (in thousands):
Six Months Ended
June 30,
2000 1999
------------------------
Net income................................... $ 23,406 $ 1,166
------------------------
Cumulative translation adjustment............. (228) 324
Unrealized (loss) gain on available-for-sale
securities (net of taxes of $1,346 in 2000
and $922 in 1999)......................... (1,330) 1,640
Reclassification adjustment for realized gain
on securities sold........................ (3,680) -
------------------------
Comprehensive income......................... $ 18,168 $ 3,130
========================
5. Segment Data
Segment information included under the caption "Segment Data" in
Management's Discussion and Analysis of Financial Condition and Results of
Operations is incorporated herein by reference and is an integral part of these
unaudited supplemental interim financial statements.
6. Income Taxes
During the second quarter of 1999, the Company was notified by the Internal
Revenue Service of an assessment of $2.1 million for certain tax matters. The
Company believes that such assessment is without merit and intends to vigorously
defend its position in these tax matters.
F-34
<PAGE>
ATMI, Inc.
Notes To Supplemental Consolidated Interim Financial Statements (continued)
(unaudited)
7. Public Offering
On April 4, 2000, the Company completed a registered underwritten public
offering of 2,800,000 shares of the Company's common stock at $45.00 per share.
Of such shares, the Company sold 1,500,000 shares and certain stockholders sold
1,300,000 shares. The Company received net proceeds from the offering of
approximately $63.5 million.
8. Recent Accounting Pronouncements
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") 101, "Revenue Recognition in Financial
Statements," which provides guidance on the recognition, presentation and
disclosure of revenue in financial statements filed with the SEC. SAB 101
outlines the basic criteria that must be met to recognize revenue and provides
guidance for disclosure related to revenue recognition policies. In June 2000,
the SEC delayed the implementation of this Staff Accounting Bulletin until no
later than the fourth quarter of 2000. At this time, the Company is still
assessing the impact of SAB 101 on its financial position and results of
operations.
9. Mergers and Acquisitions
On July 7, 2000, pursuant to an Agreement and Plan of Merger, the Company
issued 369,505 shares of its common stock in exchange for all of the ownership
interests of Environmentally Safe Cleaning Alternatives, Inc. ("ESCA"). This
transaction has been accounted for as a pooling of interests. ESCA is a provider
of environmentally safe cleaning services to the global microelectronics
industry.
The former securityholders of ESCA have agreed to indemnify the Company
from and against certain losses arising out of breaches of representations and
warranties made by the respective securityholders. As security for these
obligations, the former securityholders of ESCA delivered into escrow 37,000
shares of the Company's Common Stock which they received in connection with this
acquisition.
ESCA's fiscal year ended on September 30. The financial statements of ATMI
have been restated to combine ESCA's fiscal year-end September 30 and ATMI's
fiscal year-end December 31. Certain adjustments have been made to the financial
statements to combine their operations. An adjustment of $95,000 was made to
retained earnings to adjust for the different fiscal year ends. The following
represents unaudited results of operations of the Company and the merged ESCA
entity for the six months ended June 30, 2000 and 1999:
Six Months Ended June 30,
2000 1999
--------------------------
Revenues:
ATMI................. $130,592 $86,563
ESCA................. $ 3,577 $ 2,901
Net Income:
ATMI................. $ 23,284 $ 659
ESCA................. $ 122 $ 507
F-35
