##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-K

|    |  |                                                                                     
|--- |  | ------------------------------------------------------------------------------------
|[X] |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2002

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

For the transition period from __________ to __________

Commission file Number: 0-22756

ATMI, Inc.

(Exact name of registrant as specified in its charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 06-1481060                          
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer Identification No.)

|                                         |  |           
|---------------------------------------- |  | ----------
|7 Commerce Drive, Danbury, CT            |  | 06810     
|                                         |  |           
|(Address of principal executive offices) |  | (Zip Code)

203-794-1100

(Registrants telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:

|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of each class |  | Name of each exchange
on which registered
|                    |  |                                          
|None                |  | Not Applicable                           

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.01 par value

(Title of each class)




---

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [x]  No


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K [  ]

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

The aggregate market value of the voting stock held by non-affiliates of the
registrant at June 28, 2002, was approximately $680,424,000 based on the
closing price of $22.37 per share.

The number of shares outstanding of the registrants common stock as of
February 18, 2003 was 30,727,249.

DOCUMENTS INCORPORATED BY REFERENCE:

Proxy Statement for the Annual Meeting of Stockholders to be held on May 21,
2003 (Part III).





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TABLE OF CONTENTS



|                                                                                                 |                                                                                                |  |  |  |  |  |  | 
|------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                                                                          
|                                                                                                 | Item 1. Business.                                                                             
|                                                                                                 | Item 2. Properties                                                                            
|                                                                                                 | Item 3. Legal Proceedings                                                                     
|                                                                                                 | Item 4. Submission of Matters to a Vote of Security Holders.                                  
|PART II.                                                                                        
|                                                                                                 | Item 5. Market for Registrants Common Equity and Related Stockholder Matters.                
|                                                                                                 | Item 6. Selected Financial Data.                                                              
|                                                                                                 | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
|                                                                                                 | Item 7A. Quantitative and Qualitative Disclosures About Market Risk.                          
|                                                                                                 | Item 8. Financial Statements and Supplementary Data.                                          
|                                                                                                 | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. 
|PART III.                                                                                       
|                                                                                                 | Item 10. Directors and Executive Officers of the Registrant.                                  
|                                                                                                 | Item 11. Executive Compensation.                                                              
|                                                                                                 | Item 12. Security Ownership of Certain Beneficial Owners and Management.                      
|                                                                                                 | Item 13. Certain Relationships and Related Transactions.                                      
|                                                                                                 | Item 14. Controls and Procedures.                                                             
|PART IV                                                                                         
|                                                                                                 | Item 15. Exhibits, Financial Statement Schedule, and Reports on Form 8-K.                     
|SIGNATURES                                                                                      
|CERTIFICATIONS                                                                                  
|INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT                      SCHEDULE
|EX-12.01: RATIO OF EARNINGS TO FIXED CHARGES                                                    
|EX-21.01: SUBSIDIARIES                                                                          
|EX-23.01: CONSENT OF ERNST & YOUNG LLP                                                          
|EX-99: CERTIFICATION                                                                            



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##### Table of Contents



ATMI, INC.
Annual Report on Form 10-K
For the Fiscal Year Ended December 31, 2002

TABLE OF CONTENTS

|                                                                            |  |                                                                                       |     |      |    | 
|--------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------- | --- | ---- | -- | 
|                                                                            |  |                                                                                       |     | Page
|                                                                            |  |                                                                                       |     |     
|Part I                                                                      |  |                                                                                       |     |     
|Item 1.                                                                     |  | Business                                                                              |     |      | 3  | 
|Item 2.                                                                     |  | Properties                                                                            |     |      | 18 | 
|Item 3.                                                                     |  | Legal Proceedings                                                                     |     |      | 19 | 
|Item 4.                                                                     |  | Submission of Matters to a Vote of Security Holders                                   |     |      | 19 | 
|Part II                                                                     |  |                                                                                       |     |      |    | 
|Item 5.                                                                     |  | Market for Registrants Common Equity and Related
Stockholder Matters                 |     |      | 20 | 
|Item 6.                                                                     |  | Selected Financial Data                                                               |     |      | 21 | 
|Item 7.                                                                     |  | Managements Discussion and Analysis of Financial
Condition and Results of Operations |     |      | 22 | 
|Item 7A.                                                                    |  | Quantitative and Qualitative Disclosures About Market Risk                            |     |      | 31 | 
|Item 8.                                                                     |  | Financial Statements and Supplementary Data                                           |     |      | 31 | 
|Item 9.                                                                     |  | Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure  |     |      | 32 | 
|Part III                                                                    |  |                                                                                       |     |      |    | 
|Item 10.                                                                    |  | Directors and Executive Officers of the Registrant                                    |     |      | 32 | 
|Item 11.                                                                    |  | Executive Compensation                                                                |     |      | 32 | 
|Item 12.                                                                    |  | Security Ownership of Certain Beneficial Owners and Management                        |     |      | 32 | 
|Item 13.                                                                    |  | Certain Relationships and Related Transactions                                        |     |      | 32 | 
|Item 14.                                                                    |  | Controls and Procedures                                                               |     |      | 32 | 
|Part IV                                                                     |  |                                                                                       |     |      |    | 
|Item 15.                                                                    |  | Exhibits, Financial Statement Schedule, and Reports on Form 8-K                       |     |      | 33 | 
|Signatures                                                                  |  |                                                                                       |     |      | 36 | 
|Certifications                                                              |  |                                                                                       |     |      | 37 | 
|Index to Consolidated Financial Statements and Financial Statement Schedule |  |                                                                                       | F-1 |     





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PART I




Item 1.   Business.

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

ATMI has further refined its market focus to target specialty materials
used in front-end semiconductor manufacturing. These specialty materials are
used in eight key process steps that are used repetitively to add functionality
to a silicon wafer. Despite the downturn in the past two years, the
semiconductor industry has grown worldwide over time and front-end
manufacturing processes have become increasingly complex, resulting in rapidly
changing requirements for semiconductor materials. ATMI has capitalized on the
growth of the semiconductor industry in general, and front-end processing in
particular, through:



| |  |  | a comprehensive research and development program that has provided
a stream of proprietary and patented products for this market;                   
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | a strategy of delivering a complete materials solution to our
customers including materials, packaging, delivery systems, sensing and
abatement; and
|
| |  |  | an aggressive mergers and acquisitions effort that has allowed us
to more rapidly move toward one-stop purchasing for our customers.                

ATMI has organized its operations along two business segments: Materials
and Technologies.

Materials provides:



| |  |  | a broad range of ultrahigh-purity semiconductor materials; and
| | - |  | --------------------------------------------------------------
|
| |  |  | semiconductor materials packaging and delivery systems.       

Technologies provides:



| |  |  | 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 our customers; and  
|
| |  |  | outsourced parts cleaning and semiconductor fabrication tool maintenance.                          

ATMI also conducts its venture activities and its government-funded research
and development activities in the Technologies segment.

ATMIs business has evolved to consist of a mix of consumables and
services that track wafer starts, or the number of silicon wafers processed
into fully functional semiconductor devices, and equipment purchases, which
generally track the expansion of industry capacity. Consequently, ATMI
believes that its overall business is less volatile than that of a typical
semiconductor capital equipment supplier. Materials and Technologies accounted
for approximately 63% and 37%, respectively, of ATMIs revenues in 2002,
approximately 52% and 48%, respectively, of its revenues in 2001, and
approximately 46% and 54%, respectively, of its revenues in 2000. Additional
financial

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information about the segments of the Company can be found in the Managements
Discussion and Analysis of Financial Condition and Results of Operations
section of this Form 10-K.

Over the last several years, ATMI has achieved a leadership position by
providing a more complete line of products than its competitors through
innovation and acquisitions. ATMI plans to continue its growth through product
line expansion in each of its existing market segments and to leverage its core
technology to create new high growth businesses. Additionally, ATMI expects to
leverage its product offerings that surround the process tools in a
semiconductor fabrication facility, or fab, into a value proposition whereby
ATMI can manage the lifecycle of material flow through a customers
manufacturing process, from delivery to abatement, and thereby positively
impact the efficiency of our customers semiconductor manufacturing processes.

Due to deteriorating market conditions in the Companys gallium arsenide
epitaxial services product line, the Company recognized an asset impairment
charge of $34.6 million in the third quarter of 2002, of which $3.1 million is
included in cost of revenues related to a write-down of inventory. The
remainder of the charge relates to long-lived assets, including deposits on
fixed assets. The assets in this line of business were written down to their
estimated fair value, less costs of disposal. In January 2003, a third party
purchased certain assets of the gallium arsenide product line and assumed the
facility lease in Phoenix, Arizona.

Semiconductor Industry Background

Despite the severe downturn in the semiconductor industry in the past two
years, the industry has grown significantly over time as the use of
semiconductor devices has proliferated in a wide variety of consumer and
industrial products, especially in computing, networking and communications
equipment. This increase in demand for semiconductor devices has been fueled
by the ability of semiconductor manufacturers to deliver products with:



| |  |  | consistently enhanced performance characteristics and functionality;
| | - |  | --------------------------------------------------------------------
|
| |  |  | improved reliability;                                               
|
| |  |  | increased memory capacity; and                                      
|
| |  |  | reduced size, weight, power consumption and cost.                   

These advances have been made possible by innovations in the fabrication
processes, equipment and materials used in manufacturing advanced semiconductor
devices. At the same time, as the construction and management of fabrication
facilities has become more complex, semiconductor manufacturers are seeking to
streamline their supplier relationships and reduce the number of suppliers upon
which they rely. In turn, this is driving significant consolidation among the
providers of semiconductor capital equipment, materials and materials delivery
systems.

Semiconductor devices are manufactured by repeating a complex series of
process steps on a wafer substrate, usually made of silicon. The primary
process steps include various kinds of materials deposition (physical vapor
deposition, chemical vapor deposition, electrochemical deposition, ion implant
and spin-on), etch, wafer preparation (chemical mechanical polishing) and
patterning (photolithography).

During deposition processes, several layers of conducting, semiconducting
or insulating thin films are formed on a wafer. Precise and reliable control
of the deposition of these films is vital to the ultimate performance of an
individual device.

The most mature processes for thin film deposition and modification are
physical vapor deposition, also known as PVD or sputtering, ion implantation
and spin-on deposition. In PVD, which is used primarily for the deposition of
conducting or metal layers, a high energy beam is directed at a high purity
metal target which in turn causes the displacement of metal atoms that are
showered over the wafer, coating it with a thin metallic film. Ion
implantation is a gas-based process used principally to modify (or dope)
semiconducting layers with a high energy beam of material that is implanted
into an existing thin film. In spin-on deposition, a spinning wafer is treated
with a

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solution of materials and solvent. The solvent is vaporized, leaving the
material in place which is usually further heat treated to form the desired
thin film.

Chemical vapor deposition, or CVD, is a process used in the deposition of
semiconducting and insulating thin films. In the CVD process, wafers are
placed in a sophisticated reaction chamber and a specially designed gas or
vaporized liquid material is introduced. Simultaneously, a form of energy,
such as heat or plasma, is added to the reactor to cause the decomposition of
the material being introduced. As a result of this decomposition, a thin film
of material is deposited on the surface of the wafer. The advantages of CVD
over PVD based processes include:



| |  |  | the relative thinness of the films applied to the wafer;                                         
| | - |  | -------------------------------------------------------------------------------------------------
|
| |  |  | conformality (ability to coat evenly, especially in holes and trenches designed into the device);
|
| |  |  | purity; and                                                                                      
|
| |  |  | the ability to coat large areas.                                                                 

These advantages have led to rapid growth in sales of reactors and related CVD
process consumables and equipment. Consumables and related equipment include
the raw materials used in the CVD process and the delivery systems required to
transport the materials around a semiconductor plant and to a reactor.

Electrochemical deposition, or ECD, is growing rapidly as a result of the
industrys desire to use copper as the conducting layer in certain devices. In
ECD, the wafer is submerged in a bath of copper electroplating solution which,
when appropriately charged, deposits a thin film of copper on the wafer.

Etch is a process that selectively erodes away certain thin film
materials. It is carried out either dry with corrosive gases or wet with
energized liquids.

Chemical mechanical polishing, or CMP, is used to prepare a wafer for
photolithography. As wafers are processed, thin film thicknesses inevitably
vary across the surface of the wafer. Due to the fine line widths used in
photolithography, present-day wafers need to be perfectly flat. CMP flattens
the processed wafer by polishing the wafer using a mechanical polishing pad and
a slurry, which is an abrasive solution containing solid materials and
chemicals which selectively erodes away the appropriate excess materials.

Photolithography is the process whereby patterns are developed on the
wafer surface. The process is begun by spinning a photosensitive material
called photoresist or resist onto the wafer surface and shining light
through a patterned photomask to selectively harden the resist. The resist is
then developed by stripping or otherwise removing excess resist material and
allowing for the fabrication of the wafers circuitry.

Materials and Delivery Systems

The market for semiconductor thin film materials has expanded and
contracted with the growth and contractions of the market for semiconductor
devices. The design of new thin film deposition materials and equipment to
transport these materials around a semiconductor plant has experienced ongoing
innovation. This innovation has been driven by the demand for expanding
semiconductor device capabilities and corresponding decreases in circuit
dimensions. Safe and effective thin film deposition requires dedicated systems
designed to deliver and vaporize precursor materials for deposition in reactors
without contamination or inadvertent release of toxic gases.

Because thin film materials are consumables, the market for these
materials and delivery systems generally tracks wafer starts, as opposed to the
market for equipment, which generally tracks investment in new plants. The
thin film materials market is also segmented into a wide variety of material
types and forms. For example, many thin film precursors are now sold as
pressurized gases, which allows for easy transport around a typical
semiconductor manufacturing plant. However, many of these gases are toxic
and/or hazardous, leading to the development of safer alternatives including
the use of liquid or solid materials and the adoption of gas handling
technologies and delivery systems that minimize the danger of a
catastrophic release of toxic gas.

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Materials Packaging

Semiconductor materials have exceptional purity requirements due to the
extremely low tolerances for impurities and particulates in semiconductor
processing. Liquids and solids used in making devices require special packaging
to minimize exposure to air, airborne contamination and particulates.

Materials Sensing and Monitoring

Semiconductor gases pose unique toxicity and environmental difficulties.
As a result, the need for devices to sense and warn personnel of leaks or
possible catastrophic releases of these gases is compelling. To that end, a
market for toxic gas sensing devices and systems has grown up in tandem with
the semiconductor industry. Semiconductor fabs are now outfitted with a high
level of sensing technology to protect the workplace and the environment.
Furthermore, this technology is being integrated with factory operations to
prevent and/or minimize damage or productivity of the plant and its personnel.

Sensors are also required to monitor materials purity and concentration.
The ability to integrate sensors to control processing equipment is also
critical to the productivity of the high capital-intensive semiconductor fabs.
So-called in-process sensing is growing rapidly with the increasing
complexity of semiconductor processing.

Environmental Equipment

The use of gas and vapor based processes has led to the development of
environmental equipment designed to abate gaseous effluent. For example, less
than 40% of the materials entering a CVD reactor are deposited as a thin film.
The remainder of the source materials, and certain by-products, constitute an
effluent stream containing toxic and hazardous material that must be abated to
meet increasingly strict worldwide environmental, safety and health
regulations. Traditionally, abatement has been accomplished by the use of
whole-plant environmental systems, which aggregate the effluents from an
entire facility. However, variations in the processes used and the drive for
increased productivity have led to the growth of point-of-use environmental
systems in which a single environmental unit is attached to a single reactor.
This approach provides for superior abatement because the system can be tuned
to the unique hazards of a particular effluent stream. In addition,
point-of-use environmental systems can improve plant productivity by reducing
downtime associated with servicing whole-plant environmental systems.

Epitaxial Services

The demand for higher performance integrated circuits and discrete
semiconductor devices has driven the use of epitaxial wafers in a wide variety
of applications. Epitaxial, or epi, wafers are wafers on which thin films
have been deposited using the CVD process. A merchant market for epitaxial
wafers, primarily silicon epitaxial wafers, has developed due to the high
degree of expertise and significant capital expenditures required by epitaxy.
This market is subdivided into generic wafers for high volume applications
such as dynamic random access memory, or DRAM, and specialty wafers for use
in applications such as automotive electronics and sensors, silicon-based low
power telecommunications circuits, analog power controls and robust
application-specific integrated circuits.

The continued drive for improved device performance and new applications
for integrated circuits has led to the development and commercialization of
alternative semiconductor technologies. ATMI provides commercial epitaxial
deposition services for silicon and silicon germanium materials. ATMI is
developing a silicon germanium epitaxial process for use in silicon-based
heterojunction devices and enhanced mobility channels for exceptionally high
speed, lower power CMOS integrated circuits for communication and computation
integrated circuits. ATMIs efforts to establish a viable commercial business
involving gallium arsenide epitaxial services were abandoned in 2002.

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Outsourced Parts Cleaning and Tool Maintenance

With device manufacturers increasing their desire for optimally efficient
manufacturing processes, there is a growing trend for outsourcing services,
which are non-essential to the production of devices. Services such as parts
cleaning and tool maintenance, when performed as an outsourced activity, can
significantly increase the up-time of manufacturing equipment and lower the
cost of ownership of these process tools.

ATMIs Strategy

ATMIs objective is to establish and enhance leadership positions in each
of the market segments it serves. ATMIs strategy of being the source of
semiconductor process efficiency consists of the following key elements:



| |  |  | Target high growth, high margin specialty markets that use ATMIs
core materials technologies and require products that are consumed in
the production process.                                                                                       
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Seek to provide full market-basket solutions, or one-stop
shopping, by surrounding the tool through innovation and
acquisitions in each of ATMIs target markets to help its customers
streamline supplier relationships.                         
|
| |  |  | Provide added value through advanced packaging and dispensing
systems designed to meet the demands of users for greater levels of
purity, productivity, safety and environmental responsiveness.                                                      
|
| |  |  | Leverage ATMIs technology leadership by investing extensively in
developing proprietary and patented materials and materials handling
technology which the Company uses to commercialize new products and new
services to meet customer requirements.
|
| |  |  | Form strategic alliances, including joint development programs and
collaborative marketing efforts, to accelerate the introduction of
ATMIs products into markets that have manufacturing and/or
distribution barriers.                              

In summary, ATMIs strategy does not envision a traditional materials
supplier-to-customer relationship. In those relationships, suppliers tend to
provide materials to customers based on the cost, quantity and quality of the
materials being supplied. Instead, ATMI has worked to establish partnerships
with its customers based on ATMIs ability to improve the efficiency of our
customers manufacturing and supply chain processes - thereby lowering the
integrated costs of materials, related equipment and services to our customers.
As a result, ATMI describes itself not simply as a semiconductor materials
supplier, but as the source of semiconductor process efficiency.

Businesses and Products

ATMI conducts its operations through two primary business segments:
Materials and Technologies.

Materials

ATMI believes its Materials segment is one of the fastest growing and
among the most innovative suppliers of ultrahigh purity semiconductor materials
and related packaging and delivery systems to the semiconductor industry. ATMI
has taken advantage of the changes in the market for materials and delivery
systems by:



| |  |  | developing and commercializing a wide range of front-end
semiconductor materials;                                                       
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | commercializing innovative bulk delivery systems which
automatically deliver materials of the highest purity and consistency
to a process;
|
| |  |  | developing innovative packaging systems that allow for the
introduction of low volatility liquids and solids to semiconductor
processes;  

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| |  |  | developing and commercializing patented low-pressure gas delivery
systems for safe handling and delivery of toxic and hazardous gases to
semiconductor process equipment; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | developing manufacturing processes to meet the critical purity and
integrity requirements of the microelectronics industry.                                                  

In meeting the needs of its customers, which include semiconductor device
manufacturers, chemical suppliers and original equipment manufacturers, or
OEMs, located throughout the world, and anticipating their future requirements,
ATMI seeks:



| |  |  | to offer the most complete line of consumable and delivery and packaging system products;              
| | - |  | -------------------------------------------------------------------------------------------------------
|
| |  |  | to offer the most consistent, highest purity materials available;                                      
|
| |  |  | to offer the most reliable, innovative equipment products;                                             
|
| |  |  | to provide a high level of customer service and technical support;                                     
|
| |  |  | to meet customer needs for statistical quality and process control and dock-to-stock programs; and     
|
| |  |  | to continue to meet the industrys needs for advanced materials required for future generation devices.

Products and Services.Materials has four primary product lines, which
consist of gas delivery systems, liquid materials, liquid delivery systems and
advanced packaging and delivery systems. Materials also provides services
relating to each of these product lines.

Gas
Delivery Systems (the SDS® or Safe Delivery System).ATMIs patented
SDS® product line uses a standard gas cylinder containing an adsorbent
material. The cylinder is filled with gas under conditions such that the gas
is adsorbed onto the adsorbent material at sub-atmospheric pressure.
Sub-atmospheric storage of hazardous gases eliminates or minimizes potential
leaks of gas during transportation and use, thus providing significant safety
and environmental improvements over the traditional high-pressure cylinders. In
addition, SDS® products allow more gas to be stored in the cylinder, providing
significantly higher rates of productivity than traditional methods of gas
delivery used in ion implant manufacturing processes. Since ion implantation
processes operate at reduced pressures, the gas can be desorbed or released
from the SDS® gas sources using the ion
implanters vacuum pumps. SDS® gas
sources can be installed and operated like conventional high-pressure gas
cylinders. These advantages have led major chip manufacturers to adopt this
technology.

ATMI is a market leader in materials used in Ion Implant applications with
its SDS® brand of implant gases. SDS® materials include primarily arsine,
phosphine and boron trifluoride. ATMI introduced several new implant gases in
2002 including indium and antimony sources. These products are manufactured by
ATMI and ATMIs exclusive distributor, Matheson Tri-Gas. ATMI has also
successfully adopted the carbon adsorption technology and introduced new
products for semiconductor deposition processes marketed under the SAGE brand.
These applications include: Low-k plasma-enhanced deposition, or PE-CVD,
processes using Low-k materials, pre-metal dielectric high-density plasma, or
HDP-CVD, films utlilizing phosphine gases and thermal deposition processes
using germane gases. ATMI has also introduced a silane product used in
processes such as HDP-CVD packaged in a novel vacuum-actuated cylinder for
improved safety.

Liquid Materials.ATMI is also a leader in deposition products used for
thin films in semiconductor manufacturing. ATMI markets these materials under
the UltraPur tetraethylorthosilicate TEOS, related dopants, and other
thin films for creating dielectric, barrier and etch-stop films in PE-CVD,
HDP-CVD and thermal processes. In 2002, ATMI introduced several new products
in this area for Low-k PE-CVD applications including UltraPur 4MS
(tetramethylsilane), and Super Dry TMCTS (tetramethylcyclotetrasiloxane) and
other materials. The low-k dielectric application is one of the fastest growing
applications for dielectric deposition and is expected to become a mainstream
technology at 90 nanometer device generations.

8



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ATMIs AP and ST brand wafer cleaning materials are proprietary
chemistries used for applications such as semiconductor post-etch residue
removal, wafer etching, organics removal, negative resist removal, etch bead
removal and corrosion prevention. The ST-250 material is recognized as a
leading material for the high-growth copper residue removal application. This
proprietary and patented material is used for copper interconnects in advanced
wafer fabs. Copper wiring in semiconductor devices is a very rapid-growth
segment with most major logic segment semiconductor companies in production at
130 nanometers.

ATMIs chemical mechanical planarization CMP products include the
PlanarChem brand of materials. ATMI supplies materials for silicon oxide
based film polishing for many different applications including shallow-trench
isolation STI, HDP-CVD and TEOS based films. The PlanarChem brand of
slurries offers improved polishing performance through the use of tightly
controlled colloidial silica materials. CMP is one of the fastest growing
markets in the semiconductor materials industry. ATMI is also developing
copper polishing materials for the application of polishing copper-based dual
damascene structures.

Liquid Delivery Systems.ATMI manufactures and markets chemical delivery
systems under the Bulkfill, Unichem and RPM brands. These delivery systems
are used for storing, replacing and delivering many of ATMIs gas and liquid
based materials. ATMIs patented canister level monitoring technology and
proprietary piping manifold purge technology make these systems a preferred
solution, which reliably and safely manage materials in semiconductor fabs.
These systems are designed to enable process tool efficiency through continuous
refill of deposition tools.

ATMI is a leader in process tool spare parts cleaning services and
refurbishment. ATMI has five regional service locations to supply the major
semiconductor manufacturing regions in the US, Asia and Europe.

Advanced Packaging and Delivery Systems.ATMI manufactures three
different types of NOWPak® container assemblies: Bag-in-a-Bottle;
Bag-in-a-Can; and Bag-in-a-Drum, each with its own companion dispense
connection system. Each features a pre-cleaned collapsible inner liner, or
bag, inside a rugged, high-density polyethylene or stainless steel overpack.
The standard liner film is made of polytetrafluoroethylene, which allows
virtually all chemicals to be delivered to the manufacturing process without
compromising their inherent purity. The empty inner liner is easily removed
for waste consolidation, and the outer shell is recyclable or returnable for
insertion of a new replacement liner. The dispense system insures full
utilization of the chemical and improved safety during dispense by sealing and
isolating the chemical from the environment to further protect the chemical and
the operator.

The largest market for NOWPaks packaging is photoresist and related
chemicals used to pattern integrated circuits. These materials are typically
packaged in Bag-in-a-Bottle containers that range in size from 1 to 10 liters.
The NOWPak® is also widely used to package photoresist and related materials
for the manufacture of flat panel displays. Here, larger 18-20 liter
Bag-in-a-Bottle or Bag-in-a-Can containers are used. Other markets for the
larger volume containers include the pharmaceutical, biotech and laboratory
markets. Additionally, applications have recently expanded beyond
photolithography chemicals in the semiconductor niche to include ancillary
chemicals, CMP slurries and process chemicals for which the new 200 liter
Bag-in-a-Drum is well suited.

ATMI also produces packages for high-purity solids under the Newform brand
name. The Company makes high-purity flexible Ultra Clean packaging for the
semiconductor and pharmaceutical industries. With its Newform products, ATMI
packages critical materials and components such as sputtering targets, wafer
and disc shippers and cleanroom components as well as container overwraps.
With the NOWPak® liquid packaging system and Newform solids packaging, ATMI is
addressing an increasing number of critical packaging needs for the
microelectronics market.

9



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##### Table of Contents



Technologies

ATMI has taken advantage of its expertise in semiconductor materials
technology to build a comprehensive product portfolio around this core
technology. Materials business ends with the delivery of a specialty material
to a semiconductor industry process tool. Through its common core technical
understanding of these materials, Technologies delivers products and services
that allow its customers to manage materials flow through the remainder of the
semiconductor factory as well as manage the efficiency of their process tool.
Technologies addresses its customers needs by providing:



| |  |  | a full range of abatement products that remove potential
environmental threats from the process exhaust stream;                         
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | sensing products that protect both the workplace and the
environment;                                                                   
|
| |  |  | monitoring products for certain processes that ensure the quality
of the thin film product being produced;                              
|
| |  |  | specialty thin film deposition services for those customers who do
not desire to perform this operation within their own facilities; and
|
| |  |  | parts cleaning and tool maintenance services to ensure cost
effective operation of the customers process tools.                        

ATMI believes its Technologies segment is a leading supplier of sensing
products, analytical monitoring systems, point-of-use abatement systems,
specialty epitaxial deposition services and parts cleaning and maintenance
services to the worldwide semiconductor industry. The Technologies segment
also includes ATMIs ventures portfolio, which includes the Emosyn smart card
device product line and ATMIs optoelectronic materials activities, while these
ventures remain in the start-up phase.

Products and Services.Technologies includes four primary product lines
and services, which consist of point-of-use semiconductor environmental
equipment, analytical tools and sensing and monitoring products, thin film
deposition services, and outsourcing of process tool parts cleaning and
refurbishing for the semiconductor industry.

Point-of-Use Environmental Equipment.ATMIs point-of-use process tool
effluent treatment systems are used to safely and reliably treat residual
materials after wafer processing. The CDO®,
Vector®, Novapure® and
Guardian®
brand abatement systems provide a complete solution for most applications in
semiconductor manufacturing. ATMI introduced several new products in 2002
including the CDO® 865 for the high-growth, Low-k applications, and also
introduced several upgrades to the Vector®,
Guardian® and Novapure® products.

Vector® wet scrubbers are designed for cost effective removal of acidic
and high particulate bearing gases commonly used in the wafer fabrication
process. Vector® scrubbers recirculate scrubbing water, minimizing overall
water use, and are effective in removing high particulate effluent and, with
its optional air-oxidation inlet, pyrophoric gases. The
Vector® scrubber is
typically used in CVD and etch applications. It is the leading treatment
system for multi-wafer chamber CVD tools.

CDO® oxidation and water treatment scrubbers use a combination of thermal
oxidation and wet scrubbing to treat solid particulate and acid gas
applications in a single unit. This system can also be used to treat PFCs
(perfluorinated compounds) believed to be responsible for global warming. This
system is the industrys leading treatment solution for single wafer chamber
CVD tools.

Novapure® dry chemical scrubbers adsorb and concentrate hazardous effluent
through the use of consumable resins at rates many times that of conventional
effluent treatment methods. ATMI believes that, through its patented
adsorption materials, the Company is a market leader for point-of-use
semiconductor effluent dry scrubbing throughout the world. This technology is
typically used for ion implant applications, in conjunction with the
SDS®
product line. It is also used for etch and certain CVD applications.

10



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Guardian® active oxidation scrubbers treat a variety of combustible
materials used in semiconductor processing. The Guardian® product line is
designed for high reliability and very high flow rates of combustible gases
typically used in CVD and flat panel display applications.

Analytical Tools and Sensing and Monitoring Products.ATMI is a leader in
in-situ liquid material process analysis. ATMIs SemiChem and CuChem brand
analyzers allow semiconductor fabs to accurately control material assay in
dynamic production environments. The Semichem is used in CMP and wafer
cleaning applications to optimize materials performance. The CuChem is used
in the high-growth copper electro-chemical deposition ECD market for reliable
and accurate control of multiple component organic and inorganic materials used
for copper plating. Sensors are required to monitor materials purity and
concentration. The ability to integrate sensors to control processing
equipment is critical to the productivity of the highly capital-intensive
semiconductor fabs. So-called in-process sensing is growing rapidly with the
increasing complexity of semiconductor processing.

ATMI provides life safety systems to the semiconductor industry. ATMIs
Life Safety System has the capability to monitor most dangerous situations in a
semiconductor fab. Pressure, flow, heat, gas leaks, liquid leaks, seismic
sensors and critical inputs can be detected. The Life Safety System is
programmed to control tool shut downs, activate critical alarms to evacuate
personnel from hazardous locations and provide alerts to emergency response
personnel. Combined with its worldwide systems integration capabilities, ATMI
is able to provide customers with a single contact for design, installation,
commissioning and sustaining service on complete life safety systems.
Satellite® series products provide distributed sensors located at each point
requiring gas detection. Electrochemical sensor cells provide cost effective
and reliable detection of many gases used in semiconductor fabrication. The
Satellites self-check feature provides excellent reliability and ease of use
and is a leading sensor technology for acid gases in a fab. Air Composition
Monitors (ACM 100) use infrared technology to allow the fab to determine the
presence and composition of many gases that might be emitted in the fab. This
system can detect up to fifteen different gases per point at one time and
provide both qualitative and quantitative analysis. This system can also be
used to identify the source of various unknown odors in the fab.

Thin Film Deposition Services.In addition to deposition on patterned
wafers, CVD thin film processes are used to prepare bare wafers prior to the
fabrication of integrated circuits to provide the wafer surfaces with the
desired uniformity of electrical and physical properties. Such CVD thin film
deposition is referred to as epitaxial deposition, and these wafers, when
processed, are referred to as epitaxial, or epi wafers. The complexity,
sensitivity, and capital-intensive nature of the CVD processes used for epitaxy
have created a market for outsourcing services, or contract manufacture of epi
wafers using CVD processes.

Technologies operates a service business providing specialty epitaxial
deposition services for silicon and emerging silicon germanium processes.
Desired electrical and physical properties of the epitaxial layers are
specified by the customer and developed in collaboration with ATMI. The
properties of the epitaxial layers are selected to maximize the performance of
the customers integrated circuit or device while maximizing yield and
minimizing cost. With over 400 epi recipes in its data banks and 200+
man-years of epi expertise, ATMIs fundamental competitive advantages include
the manufacture of high quality epitaxial layers with high yield. In addition,
ATMI differentiates itself by offering quality epitaxial deposition services
with fast turnaround and in flexible volumes. In addition to silicon epitaxy,
the epitaxial services business unit offers silicon germanium and strained
silicon deposition services. Silicon germanium heterojunction bipolar
transistor (HBT) products are now replacing gallium arsenide devices in many
wireless applications such as cellular telephone receivers, global positioning
satellite receivers and wireless local area network transceivers. Strained
silicon provides unique material characteristics, which reduce the power
consumption of complex CMOS devices such as microprocessors. Several leading
semiconductor manufacturers, including Intel, IBM and AMD, have announced their
intention to use strained silicon materials for CMOS device manufacturing in
the near term.

ATMIs strategy is to maximize market share through the continued
development and acquisition of new customers through outsourcing services. A
key element of the business strategy is to work with the customer in the early
stages of product development to ensure that proven epitaxial processes are in
place when the decision is made to expand into manufacturing, thus decreasing
their time to market and making ATMI the natural choice for production services
through an outsourcing contract.

11



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##### Table of Contents



Outsourced Parts Cleaning and Tool Maintenance.ATMI specializes in
outsourcing process tool parts cleaning and refurbishing for the semiconductor
industry. Through a developed expertise in proprietary wet and dry chemical
process cleaning, ATMI takes delivery of various process tool parts and cleans
them for reuse in semiconductor manufacturing, thereby significantly reducing
the spare parts cost for the customer and reducing the cost of running certain
manufacturing processes. As part of this service, ATMI will coordinate and
manage schedules with the fab, change out parts, take parts to offsite
facilities, clean and refurbish the parts, and bring the parts back to the fab.
The focus is currently on implant, diffusion and etch tools as well as
abatement tools.

Ventures.ATMI maintains an active in-house venture program. The primary
goal of this program is to develop next-generation semiconductor materials
technology that is beyond the product development scope of the Companys
existing core businesses. The research and development funding that ATMI
applies to this program is enhanced through federal government contract or
partner funding in nearly all cases.

Smart Card Device Venture.Emosyn was formed in 1997 to take advantage of
certain non-volatile memory materials advances made by ATMI. Management
believed that this technology, coupled with an emerging market in smart cards
and some novel design concepts, would be the ultimate differentiator for the
chip suppliers of these types of devices. ATMIs initial foray into smart card
products was meant to prepare the way for next generation products, where ATMI
had this unique materials differentiator as a marketplace advantage. Smart
cards are credit card-like devices that operate through a chip on the card as
opposed to the more familiar magnetic strip. The smart card market is growing
rapidly, primarily in three key markets: wireless communication, ID cards, and
finance and banking applications.

The world has crossed the divide from analog to digital devices, such that
today documents, records, correspondence, e-mail, voicemail, audio, video,
graphics, and photography are available to transport and share around the globe
in seconds. However, this transition has outpaced the technology to ensure
security and control access to information, which can easily be copied,
altered, stolen, and distributed. There is also significant societal concern
about protecting civil liberties with any proposed solution, causing
individuals, enterprises, and content providers to seek a portable, secure, and
cost-efficient storage solution. The solution they seek requires implementation
of a Trusted Environment. The Trusted Environment 1) certifies the identity
of the user; 2) establishes a 100% secure relationship between a user and
information; and 3) creates a sphere of security where the user and information
can safely reside.

ATMIs first smart card products were targeted at the fast-growing markets
for wireless telecommunication subscriber identification module (SIM) cards and
micro-controller-based smart card integrated circuits (IC). In 2001, the
first device family of Theseus Gold was launched, which provided high
density, speed, power and memory partitioning. The Companys approach to
memory technology design provides a smart card solution that significantly
reduces the major problem of time-to-market for the card manufacturers with no
increase in device size. ATMI is now focusing on marketing its
second-generation product Theseus Platinum, while enhancing performance and
providing flexible memory solutions combined with high security in a Trusted
Environment on a single low cost chip.

Other Venture Activities  GaN Materials.ATMI has oriented much of its
effort in the ventures program area toward the development of electronic and
optoelectronic materials, especially gallium nitride and related nitride
alloys. ATMI believes that its unique technology in this area, in both
substrate and epi layer manufacture, will allow it to enter new rapidly growing
markets as either a supplier of these materials or as a partner in the
development of advanced electronic and optoelectronic devices such as blue
laser diodes, high performance light emitting diodes and high electron mobility
transistors.

Customers, Sales and Marketing

ATMI sells and distributes its products worldwide primarily through a
direct global sales and service organization. For a breakdown of revenue by
geography, see Note 14 to the consolidated Financial Statements.

ATMI distributes its materials and delivery system products to end-use
customers, chemical suppliers and equipment suppliers through its direct sales
force in North America, Europe, Taiwan, Korea, Japan, China and Singapore, with
limited use of regional manufacturing representatives in certain remote parts
of Asia and Europe.

12



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##### Table of Contents



Additionally, ATMIs equipment product lines are marketed
and sold to semiconductor equipment OEMs, who in turn resell to end users.
NOWPak® containers are generally sold to chemical suppliers. The chemical
companies then sell their high purity chemicals in
NOWPak® containers at the
request of end-users. Newform packaging products have historically been sold
directly to semiconductor and pharmaceutical companies, predominately in
Europe. ATMI sells its SDS® product into the ion implant market through an
exclusive distribution agreement with Matheson Tri-Gas.

ATMI distributes its point-of-use environmental equipment and life safety
monitoring equipment to end-use customers and equipment suppliers through its
direct sales force in North America, Europe and Asia, with limited use of
regional manufacturing representatives in certain remote parts of Europe and
Asia. ATMI markets directly to semiconductor end-user facility managers to
provide full-fab environmental and monitoring solutions, as well as
installation and on-going service.

ATMI markets and sells its thin film deposition services and epitaxial
wafers primarily on a direct basis. In particular, silicon and silicon
germanium epi wafers and services are sold directly throughout the world.

Substantially all of ATMIs sales are to customers in the worldwide
semiconductor industry. Results of operations, therefore, are materially
dependent upon economic and business conditions in the semiconductor industry.
The semiconductor industry has historically experienced significant growth;
however, periods of reduced semiconductor unit demand and manufacturing
overcapacity have resulted and could result again in significantly reduced
demand for semiconductor materials, capital equipment and wafer processing
services.

13



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##### Table of Contents



Manufacturing

The following table summarizes the location, products manufactured and
size of ATMIs various manufacturing facilities as of December 31, 2002.

|                                                                                             |                |                           |  |                                                     |  |                |        | 
|-------------------------------------------------------------------------------------------- | -------------- | ------------------------- |  | --------------------------------------------------- |  | -------------- | ------ | 
|                                                                                             |                | Location                  |  | Products                                            |  | Square Footage
|                                                                                             |                |                           |  |                                                     |  |               
|Materials                                                                                    |                | Bloomington, MN           |  |  chemical
containers and
dispensing systems        |  |                | 96,000 | 
|                                                                                             |                |                           |  |                                                     |  |                |        | 
|                                                                                             |                | Burnet, TX (1)            |  |  liquid materials
 delivery systems               |  |                | 35,000 | 
|                                                                                             |                |                           |  |                                                     |  |                |        | 
|                                                                                             |                | Carrollton, TX (1)        |  |  liquid materials                                  |  |                | 30,000 | 
|                                                                                             |                |                           |  |                                                     |  |                |        | 
|                                                                                             |                | Burnet, TX                |  |  liquid materials                                  |  |                | 75,000 | 
|                                                                                             |                |                           |  |                                                     |  |                |        | 
|                                                                                             |                | Danbury, CT               |  |  liquid materials
 delivery systems
 SDS®        |  |                | 50,000 | 
|                                                                                             |                |                           |  |                                                     |  |                |        | 
|                                                                                             |                | Anseong, South Korea      |  |  liquid materials                                  |  |                | 9,000  | 
|                                                                                             |                |                           |  |                                                     |  |                |        | 
|                                                                                             |                | Hoegaarden, Belgium       |  |  packaging products                                |  |                | 70,000 | 
|                                                                                            
|--------------------------------------------------------------------------------------------
|Technologies                                                                                 |                | Schaumburg, IL            |  |  monitoring
 equipment                             |  |                | 10,000 | 
|                                                                                             |                |                           |  |                                                     |  |                |        | 
|                                                                                             |                | Danbury, CT               |  |  proprietary
adsorbents for gas
treatment products |  |                | 25,000 | 
|                                                                                             |                |                           |  |  electronic and
optoelectronic
materials           |  |                |        | 
|                                                                                             |                |                           |  |  high-performance
thin films                       |  |                |        | 
|                                                                                             |                |                           |  |                                                     |  |                |        | 
|                                                                                             |                | Mesa, AZ                  |  |  specialty silicon
epitaxial wafers                |  |                | 34,000 | 
|                                                                                             |                |                           |  |                                                     |  |                |        | 
|                                                                                             |                | Napa, CA                  |  |  point-of-use
environmental
equipment              |  |                | 39,000 | 
|                                                                                             |                |                           |  |                                                     |  |                |        | 
|                                                                                             |                | Phoenix, AZ (2)           |  |  III-V epitaxial
wafers                            |  |                | 50,000 | 
|                                                                                             |                |                           |  |                                                     |  |                |        | 
|                                                                                             |                | Chandler, AZ              |  |  liquid process
analysis                           |  |                | 10,000 | 
|                                                                                             |  fab
services |                           |  |                                                     | 
|                                                                                             |                |                           |  |                                                     |  |                |        | 
|                                                                                             |                | Dallas, TX                |  |  fab services                                      |  |                | 39,000 | 
|                                                                                             |                |                           |  |                                                     |  |                |        | 
|                                                                                             |                | Hillsboro, OR             |  |  fab services                                      |  |                | 24,000 | 
|                                                                                             |                |                           |  |                                                     |  |                |        | 
|                                                                                             |                | Gresham, OR (3)           |  |  fab services                                      |  |                | 5,000  | 
|                                                                                             |                |                           |  |                                                     |  |                |        | 
|                                                                                             |                | Albuquerque, NM           |  |  fab services                                      |  |                | 11,000 | 
|                                                                                             |                |                           |  |                                                     |  |                |        | 
|                                                                                             |                | Colorado Springs, CO      |  |  fab services                                      |  |                | 50,000 | 
|                                                                                             |                |                           |  |                                                     |  |                |        | 
|                                                                                             |                | Bonn, Germany             |  |  monitoringequipment                               |  |                | 21,000 | 
|                                                                                             |                |                           |  |                                                     |  |                |        | 
|                                                                                             |                | Newall, Ireland           |  |  fab services                                      |  |                | 32,000 | 
|                                                                                             |                |                           |  |                                                     |  |                |        | 
|                                                                                             |                | Hohenschaeftlarn,
Germany |  |  monitoring
equipment                              |  |                | 32,000 | 
|                                                                                             |                |                           |  |                                                     |  |                |        | 
|                                                                                             |                | Bundang, South Korea      |  |  point-of-use
environmental
equipment              |  |                | 3,000  | 
|                                                                                             |                |                           |  |                                                     |  |                |        | 



| | (1) |  | The operations of this facility will be moved to ATMIs new Burnet,
Texas advanced chemistry manufacturing facility in 2003. The lease for
the Carrollton facility will not be renewed.
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | (2) |  | ATMI abandoned this facility as part of the 2002 GaAs writedown.
The lease on this facility has been assumed by a third party under the
terms of an asset purchase agreement and related lease assignment dated
January 31, 2003.
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |  |                                                                                                                                                                                                                                  
| | (3) |  | The operations of this facility will be moved to the new Hillsboro,
Oregon facility in 2003. The lease on this facility will not be
renewed.                                                                                     

Competition

Materials

ATMIs primary competition in certain markets in the Materials segment of
the business is the Schumacher Division of Air Products and Chemicals, Inc.,
the EKC Division of DuPont, and the ACT division of Ashland Chemical (in
photolithography ancillaries). There are several additional companies outside
the United States that compete with ATMIs Materials business.

ATMIs
SDS® brand product currently has no direct competition. Several
companies compete with high-pressure gas cylinders and solid sources. There
are numerous domestic and foreign companies that offer products that compete
with ATMIs packaging and chemical dispensing system products. However, ATMI
believes that its ability to compete in the markets for containers and
dispensing systems is dependent largely upon its patented
NOWPak® technology
and its proven ability to enhance and improve its products and technologies.

Technologies

ATMIs competitors in treatment applications include BOC Edwards, Ebara,
and other smaller companies. ATMIs competitors in analytical tools include
ECI, Inc. ATMIs competitors in parts management and cleaning include BOC
Edwards, Ashland Chemical, Quantum Clean and other smaller companies.

The Companys primary competitors in sensing products include the MDA
division of Zellweger Analytics in the United States and Europe and Riken in
Japan.

In its deposition services product lines, ATMI competes with Episil,
Precision Silicon, IQE, Globitech and a number of specialty wafer manufacturers
with their own epi capabilities. In some product areas, ATMI competes with the
major silicon wafer manufacturers including Wacker, Sumco, MEMC and Okmetic.

ATMIs Emosyn business is evolving as a commercial presence in a large
smart card IC marketplace. Several large companies are also working to provide
semiconductor devices into that marketplace, including Philips, Atmel,
Infineon, Hitachi and ST Microelectronics.

Research and Development

The Companys research and development expenses consist of personnel and
other direct and indirect costs for internally funded project development.
ATMIs external funding is almost exclusively from various agencies of the
federal government. ATMI also participates in joint development efforts with
certain semiconductor manufacturers and semiconductor equipment OEMs. Total
expenses for research and development for the years ended December 31, 2002,
2001 and 2000 were $30.5 million, $31.7 million and $28.2 million,
respectively, excluding amounts reimbursed by external parties through contract
funding and cost share agreements of $3.5 million, $2.4 million and $6.0
million in 2002, 2001 and 2000, respectively. Total research and development
expenditures represented 14.4%, 14.9% and 9.4% of consolidated revenues in
2002, 2001 and 2000, respectively.

15



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Strategic Alliances

ATMI forms strategic alliances, including joint development programs and
collaborative marketing efforts, to accelerate the introduction of its products
into markets that have manufacturing and/or distribution barriers. These
programs have led to significant technological advances, including the
development of proprietary advanced materials and semiconductor manufacturing
processes. Most of ATMIs strategic alliances are with leading semiconductor
manufacturers or OEMs, such as Applied Materials, IBM, Lucent Technologies,
Micron Technology, Novellus, Siemens and Texas Instruments, each of which has
participated with the Company in advanced materials and process development
programs. These programs enhance ATMIs core technology base, promote the
introduction of targeted products and reduce ATMIs need to make research and
development and capital expenditures.

Backlog

Neither our liquid materials business, which conducts significant portions
of its business with open-ended, long-term supply contracts which do not
specify quantities, nor our specialty thin film deposition services business,
which generally operates with fast turnaround, maintain significant backlog.
Also, the SDS® gas delivery source product, marketed through Matheson Tri-Gas
as an exclusive distributor for the ion implant market, carries no backlog.
We believe that only a small portion of our order backlog related to our
equipment product lines is noncancellable and that the dollar amount associated
with the noncancellable portion is not material. Therefore, we do not believe
that backlog as of any particular date is indicative of future results.

Patents and Proprietary Rights

ATMI has made a significant investment in securing intellectual property
protection for its technology and products. ATMI seeks to protect its
technology by, among other things, filing patent applications for technology
considered important to the development of its business. The Company also
relies upon trade secrets, unpatented know-how, continuing technological
innovation and the aggressive pursuit of licensing opportunities to help
develop and maintain its competitive position.

As of February 15, 2003, ATMI had been awarded 333 United States patents
and had 194 United States patent applications pending. Foreign counterparts of
certain of these applications have been filed, or may be filed at an
appropriate time. ATMI decides on a case-by-case basis whether, and in what
countries, it will file counterparts of a United States patent application
outside the United States. ATMIs United States patents expire between 2003
and 2022. ATMI also holds 33 United States registered trademarks.

ATMIs ability to compete effectively with other companies will depend, in
part, on its ability to maintain the proprietary nature of its technology.
Although the Company has been awarded, has filed applications for, or has been
licensed under numerous patents in the United States and other countries, there
can be no assurance concerning the degree of protection afforded by these
patents or the likelihood that pending patents will be issued.

ATMI requires all employees and most consultants, outside scientific
collaborators, sponsored researchers and other advisors to execute
confidentiality agreements upon the commencement of employment or consulting
relationships with the Company. These agreements provide that all confidential
information developed or made known to the entity or individual during the
course of the entitys or individuals relationship with ATMI is to be kept
confidential and not disclosed to third parties except in specific
circumstances. All of ATMIs employees have entered into agreements providing
for the assignment of rights to inventions made by them while employed by the
Company.

Environmental Regulation

ATMI uses, generates and discharges toxic, volatile or otherwise hazardous
chemicals and wastes in its manufacturing, processing, and research and
development activities. As a result, the Company is subject to a variety of
governmental regulations related to the storage, use and disposal of these
materials. ATMIs failure to comply with present or future laws could result
in fines or other liabilities being imposed on the Company, suspension of
production or a cessation of operations.

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The various premises that ATMI occupies may have been contaminated prior
to occupancy. ATMI is not aware of any material environmental investigation or
action by government agencies involving these premises. However, under federal
and state statutes and regulations, a government agency may seek to recover its
response costs and/or require future remedial measures from both operators and
owners of property where releases of hazardous substances have occurred or are
ongoing. The Company has secured indemnifications for remediation costs in
connection with certain potential pre-existing, on-site contamination or
environmental conditions. However, these indemnifications may not prove
adequate to cover any liability imposed on the Company related to the
environmental condition of the premises or the cost of defending an
environmental action, either of which could be substantial.

ATMIs activities may also result in the Companys being subject to
additional regulation. Such regulations could require ATMI to acquire
significant additional equipment or to incur other substantial expenses to
comply with environmental laws. ATMIs failure to control the use of hazardous
substances could subject the Company to substantial financial liabilities.

Employees

As of December 31, 2002, ATMI employed a total of 1,046 individuals,
including 351 in sales and administration, 513 in operations and 182 in
research and development. Of these employees, 46 hold Ph.D. degrees and 64
hold other advanced degrees in electrical engineering, materials science,
chemistry, physics or related fields. None of the Companys employees are
covered by collective bargaining agreements. ATMI has never experienced any
work stoppages and considers its relations with its employees to be good.

Company Information

ATMI was incorporated under the laws of Delaware in 1997, and our
predecessor company was incorporated under the laws of Delaware in 1987.
ATMIs headquarters is located at 7 Commerce Drive, Danbury, Connecticut 06810,
and our telephone number is (203) 794-1100.

ATMIs website can be found on the Internet at www.atmi.com. The website
contains information about the Company and its operations. Copies of each the
Companys filings with the SEC on Form 10-K, Form 10-Q and Form 8-K and all
amendments to those reports can be viewed and downloaded free of charge as soon
as reasonably practicable after the reports and amendments are electronically
filed with or furnished to the SEC by accessing www.atmi.com and clicking on
Investorand then clicking on SEC Filing.

Any of our reports on Form 10-K, Form 10-Q and Form 8-K and all amendments
to those reports can also be obtained in print by any stockholder who requests
them from our Investor Relations Department:



|Investor Relations
ATMI, Inc.
7 Commerce Drive
Danbury, CT 06810
|----------------------------------------------------------------

17



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##### Table of Contents






Item 2.  Properties

The following table summarizes the location and size of ATMIs various
properties as of December 31, 2002 other than headquarters.

|             |  |                           |  |                |        |             |  |      
|------------ |  | ------------------------- |  | -------------- | ------ | ----------- |  | -----
|             |  | Location                  |  | Square Footage |        | Lease / Own
|             |  |                           |  |                |        |            
|             |  | Bloomington, MN           |  |                | 96,000 |             |  | Lease
|             |  | Danbury, CT               |  |                | 50,000 |             |  | Lease
|Materials    |  | Burnet, TX                |  |                | 35,000 |             |  | Own  
|             |  | Burnet, TX                |  |                | 75,000 |             |  | Own  
|             |  | Carrollton, TX            |  |                | 30,000 |             |  | Lease
|             |  | Hoegaarden, Belgium       |  |                | 70,000 |             |  | Own  
|             |  | Anseong, South Korea      |  |                | 9,000  |             |  | Own  
|             |  | Hsin-chu, Taiwan          |  |                | 40,000 |             |  | Lease
|            
|            
|             |  | Schaumburg, IL            |  |                | 10,000 |             |  | Lease
|             |  | Danbury, CT               |  |                | 25,000 |             |  | Lease
|             |  | Dallas, TX                |  |                | 39,000 |             |  | Lease
|             |  | Mesa, AZ                  |  |                | 34,000 |             |  | Own  
|             |  | Napa, CA                  |  |                | 39,000 |             |  | Own  
|             |  | Phoenix, AZ               |  |                | 50,000 |             |  | Lease
|Technologies |  | Chandler, AZ              |  |                | 10,000 |             |  | Lease
|             |  | Hillsboro, OR             |  |                | 24,000 |             |  | Lease
|             |  | Gresham, OR               |  |                | 5,000  |             |  | Lease
|             |  | Albuquerque, NM           |  |                | 11,000 |             |  | Lease
|             |  | Albuquerque, NM           |  |                | 4,000  |             |  | Lease
|             |  | Colorado Springs, CO      |  |                | 50,000 |             |  | Lease
|             |  | San Jose, CA              |  |                | 55,000 |             |  | Lease
|             |  | Bonn, Germany             |  |                | 21,000 |             |  | Lease
|             |  | Newall, Ireland           |  |                | 32,000 |             |  | Lease
|             |  | Hohenschaeftlarn, Germany |  |                | 32,000 |             |  | Lease
|             |  | Bundang, South Korea      |  |                | 3,000  |             |  | Own  

ATMIs corporate headquarters is located in Danbury, Connecticut, in a
31,000 square foot leased facility. A five-year lease for that property was
executed in early 2001.

ATMI has a U.S. sales office located in Austin, Texas (3,000 square foot
leased facility), and Asian sales offices located in Singapore (3,000 square
foot leased facility), Tokyo, Japan (1,000 square foot leased facility), and
Shanghai, China (1,000 square foot leased facility)

As part of the restructuring initiatives announced during 2001, the
Company has vacated approximately 10,000 square feet of office space in San
Jose, CA and has renegotiated and extended the lease on all remaining occupied
space.

The operations of the Carrollton, Texas facility will be moved to ATMIs
new Burnet, Texas advanced chemistry manufacturing facility in 2003 and the
lease on the Carrollton facility, which is set to expire in 2003, will not be
renewed.

ATMI abandoned the Phoenix, Arizona facility as part of the 2002 GaAs
write-down. The lease on this facility has been assumed by a third party under
the terms of an asset purchase agreement, dated January 31, 2003.

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The operations of the Gresham, Oregon facility will be moved to the new
Hillsboro, Oregon facility in 2003. The lease on the Gresham facility will not
be renewed.




Item 3.  Legal Proceedings

ATMI has been notified by the Internal Revenue Service of an assessment of
$2.1 million for certain tax matters related to its Advanced Delivery and
Chemical Systems subsidiary. Although ATMI believes that this assessment is
without merit and intends to vigorously defend its position on these tax
matters, the Company cannot predict whether it will be successful in defending
against the assessment or the amount of any final assessment against the
Company.

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

In addition, in the normal course of business, ATMI is involved in various
lawsuits and claims. Although the Company cannot determine the ultimate
outcome of any of these legal proceedings 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 ATMIs
financial position or results of operations.




Item 4.    Submission of Matters to a Vote of Security Holders.

No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year ended December 31, 2002.

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PART II.




Item 5. Market for Registrants Common Equity and Related Stockholder Matters.

The Common Stock of ATMI has traded on the Nasdaq National Market under
the symbol ATMI since October 13, 1997, and the common stock of our predecessor
traded under that symbol from 1993 until October 12, 1997. The following table
sets forth for the periods indicated the high and low sales price for the
Common Stock as reported on the Nasdaq National Market:

|                                    |             |  |      |       |     |  |   |       | 
|----------------------------------- | ----------- |  | ---- | ----- | --- |  | - | ----- | 
|                                    |             |  | High |       | Low
|                                    |             |  |      |       |    
|Fiscal year ended December 31, 2001 |             |  |      |       |     |  |   |      
|                                    | 1st Quarter |  | $    | 26.44 |     |  | $ | 15.88 | 
|                                    | 2nd Quarter |  |      | 32.73 |     |  |   | 16.88 | 
|                                    | 3rd Quarter |  |      | 29.30 |     |  |   | 14.73 | 
|                                    | 4th Quarter |  |      | 26.75 |     |  |   | 14.50 | 
|Fiscal year ended December 31, 2002 |             |  |      |       |     |  |   |      
|                                    | 1st Quarter |  | $    | 32.63 |     |  | $ | 23.64 | 
|                                    | 2nd Quarter |  |      | 37.10 |     |  |   | 19.47 | 
|                                    | 3rd Quarter |  |      | 24.15 |     |  |   | 11.75 | 
|                                    | 4th Quarter |  |      | 25.00 |     |  |   | 11.93 | 

As of February 18, 2003, there were approximately 301 holders of record of
the Common Stock.

The Company has never declared or paid any cash dividends on its capital
stock. The Company currently intends to retain all available earnings for use
in its business and does not anticipate paying any cash dividends in the
foreseeable future. Certain financing agreements of the Companys subsidiaries
contain limitations or prohibitions on the payment of dividends without the
lenders consent.

The Transfer Agent and Registrar for ATMI Common Stock is Boston Equiserve
LP.

20



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Item 6.    Selected Financial Data.

The following selected consolidated statements of operations for the years
ended December 31, 2002, 2001, 2000, 1999, and 1998 and the consolidated
balance sheet data as of December 31, 2002, 2001, 2000, 1999 and 1998 are
derived from ATMIs audited consolidated financial statements. The data set
forth below should be read in conjunction with the consolidated financial
statements and notes thereto and other financial information included elsewhere
in this Form 10-K.

|                                       |                                                         |                                     |                          |         |        |         |      |         |                                       |         |      |         |        |         |   |         |        |        |   |         |        |        | 
|-------------------------------------- | ------------------------------------------------------- | ----------------------------------- | ------------------------ | ------- | ------ | ------- | ---- | ------- | ------------------------------------- | ------- | ---- | ------- | ------ | ------- | - | ------- | ------ | ------ | - | ------- | ------ | ------ | 
|                                       |                                                         |                                     |                          |         |        |         |      |         | Fiscal Year Ended December 31,        |         |      |         |       
|                                       |                                                         |                                     |                          |         | 2002   |         | 2001 |         | 2000                                  |         | 1999 | 1998    |       
|                                       |                                                         |                                     |                          |         |        |         |      |         |                                       |         |      |         |       
|                                       |                                                         |                                     |                          |         |        |         |      |         | (in thousands, except per share data) |         |      |         |       
|Consolidated Statements of Operations: |                                                         |                                     |                          |         |        |         |      |         |                                       |         |      |         |        |         |   |         |        |        |   |        
|                                       | Revenues                                                |                                     | $                        | 212,635 |        |         | $    | 213,456 |                                       |         | $    | 299,960 |        |         | $ | 202,506 |        |        | $ | 168,061 |       
|                                       | Cost of revenues                                        |                                     |                          | 131,260 | (1)    |         |      | 120,877 | (3)                                   |         |      | 142,711 |        |         |   | 95,456  |        |        |   | 84,864  |       
|                                       |                                                         |                                     |                          |         |        |         |      |         |                                       |         |      |         |        |         |   |         |        |        |   |         |       
|                                       | Gross profit                                            |                                     |                          | 81,375  |        |         |      | 92,579  |                                       |         |      | 157,249 |        |         |   | 107,050 |        |        |   | 83,197  |       
|                                       | Operating expenses:                                     |                                     |                          |         |        |         |      |         |                                       |         |      |         |        |         |   |         |        |        |   |         |       
|                                       |                                                         | Research and development            |                          |         | 30,538 |         |      |         | 31,731                                |         |      |         | 28,211 |         |   |         | 18,359 |        |   |         | 16,630 |       
|                                       |                                                         | Selling, general and administrative |                          |         | 66,666 |         |      |         | 73,511                                | (4)     |      |         | 71,928 |         |   |         | 63,820 | (9)    |   |         | 59,093 |       
|                                       |                                                         | Merger and related costs            |                          |         |       |         |      |         |                                      |         |      |         | 1,500  | (7)     |   |         | 9,914  | (10)   |   |         | 1,700  | (11)  
|                                       |                                                         | Restructuring and other charges     |                          |         | 31,522 | (2)     |      |         | 14,011                                | (5)     |      |         |       |         |   |         |       |        |   |         |       |       
|                                       |                                                         |                                     |                          |         |        |         |      |         |                                       |         |      |         |        |         |   |         |        |        |   |        
|                                       |                                                         |                                     | Total operating expenses |         |        | 128,726 |      |         |                                       | 119,253 |      |         |        | 101,639 |   |         |        | 92,093 |   |         |        | 77,423 | 
|                                       |                                                         |                                     |                          |         |        |         |      |         |                                       |         |      |         |        |         |   |         |        |        |   |         |       
|                                       | Operating income (loss)                                 |                                     |                          | (47,351 | )      |         |      | (26,674 | )                                     |         |      | 55,610  |        |         |   | 14,957  |        |        |   | 5,774   |       
|                                       | Interest income (expense), net                          |                                     |                          | (1,802  | )      |         |      | 3,464   |                                       |         |      | 6,599   |        |         |   | 3,117   |        |        |   | 2,487   |       
|                                       | Other income, net                                       |                                     |                          | 390     |        |         |      | 7,669   | (6)                                   |         |      | 8,313   | (8)    |         |   | 733     |        |        |   | 539     |       
|                                       |                                                         |                                     |                          |         |        |         |      |         |                                       |         |      |         |        |         |   |         |        |        |   |        
|                                       | Income (loss) before income taxes and minority
interest |                                     |                          | (48,763 | )      |         |      | (15,541 | )                                     |         |      | 70,522  |        |         |   | 18,807  |        |        |   | 8,800   |       
|                                       | Provision (benefit) for income taxes                    |                                     |                          | (18,042 | )      |         |      | (5,845  | )                                     |         |      | 26,486  |        |         |   | 7,720   |        |        |   | 4,412   |       
|                                       |                                                         |                                     |                          |         |        |         |      |         |                                       |         |      |         |        |         |   |         |        |        |   |        
|                                       | Income (loss) before minority interest                  |                                     |                          | (30,721 | )      |         |      | (9,696  | )                                     |         |      | 44,036  |        |         |   | 11,087  |        |        |   | 4,388   |       
|                                       | Minority interest                                       |                                     |                          |        |        |         |      |        |                                       |         |      | (351    | )      |         |   | (263    | )      |        |   | (111    | )     
|                                       |                                                         |                                     |                          |         |        |         |      |         |                                       |         |      |         |        |         |   |         |        |        |   |        
|                                       | Net income (loss)                                       |                                     | $                        | (30,721 | )      |         | $    | (9,696  | )                                     |         | $    | 43,685  |        |         | $ | 10,824  |        |        | $ | 4,277   |       
|                                       |                                                         |                                     |                          |         |        |         |      |         |                                       |         |      |         |        |         |   |         |        |        |   |        
|                                       | Net income (loss) per share  assuming dilution         |                                     | $                        | (1.03   | )      |         | $    | (0.33   | )                                     |         | $    | 1.44    |        |         | $ | 0.38    |        |        | $ | 0.15    |       
|                                       |                                                         |                                     |                          |         |        |         |      |         |                                       |         |      |         |        |         |   |         |        |        |   |        
|                                       | Weighted average shares outstanding  assuming
dilution |                                     |                          | 29,896  |        |         |      | 29,611  |                                       |         |      | 30,290  |        |         |   | 28,689  |        |        |   | 27,793  |       
|Consolidated Balance Sheet Data:       |                                                         |                                     |                          |         |        |         |      |         |                                       |         |      |         |        |         |   |         |        |        |   |        
|                                       | Cash, cash equivalents and marketable securities        |                                     | $                        | 166,178 |        |         | $    | 210,494 |                                       |         | $    | 131,505 |        |         | $ | 92,328  |        |        | $ | 86,253  |       
|                                       | Working capital                                         |                                     |                          | 223,529 |        |         |      | 255,322 |                                       |         |      | 202,960 |        |         |   | 121,289 |        |        |   | 104,177 |       
|                                       | Total assets                                            |                                     |                          | 416,482 |        |         |      | 459,056 |                                       |         |      | 350,805 |        |         |   | 228,849 |        |        |   | 210,617 |       
|                                       | Long-term obligations                                   |                                     |                          | 115,523 |        |         |      | 118,476 |                                       |         |      | 9,775   |        |         |   | 8,461   |        |        |   | 17,458  |       
|                                       | Minority interest                                       |                                     |                          |        |        |         |      |        |                                       |         |      |        |        |         |   | 1,109   |        |        |   | 846     |       
|                                       | Total stockholders equity                              |                                     |                          | 256,390 |        |         |      | 280,014 |                                       |         |      | 286,567 |        |         |   | 176,356 |        |        |   | 154,306 |       



|(1)  |  | Includes charges of $4.2 million to write down inventory balances in the
Emosyn and gallium arsenide epitaxial services businesses.                                                                                                                                                                                                                                
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(2)  |  | Represents an asset impairment charge related to the Companys gallium
arsenide epitaxial services business.                                                                                                                                                                                                                                                       
|    
|(3)  |  | Includes charges of $1.7 million to write down certain inventory
balances.                                                                                                                                                                                                                                                                                         
|    
|(4)  |  | Includes a special charge for accounts receivables write down of $2.5
million, as a reserve against the possible effects that the weakened
economic environment and semiconductor industry downturn had on ATMIs
customers.                                                                                                                                       
|    
|(5)  |  | Represents costs incurred in connection with ATMIs restructuring efforts
announced in the first and third quarters of 2001.                                                                                                                                                                                                                                       
|    
|(6)  |  | Includes a gain on settlement of certain patent litigation, net of
related expenses, and a $2.6 million gain on the sale of certain
available-for-sale securities, offset by an asset impairment charge of
approximately $0.4 million on available-for-sale securities.                                                                                            
|    
|(7)  |  | Represents cost incurred in connection with completing the ESCA, Inc.
acquisition.                                                                                                                                                                                                                                                                                 
|    
|(8)  |  | Includes $9.5 million gain on sale of certain marketable securities in
the first quarter of 2000, offset by a loss of $1.3 million in the same
quarter on certain other investments.                                                                                                                                                                               
|    
|(9)  |  | Includes $2.3 million of severance expense for several former executives.                                                                                                                                                                                                                                                                                          
|    
|(10) |  | Represents $3.3 million incurred in connection with the completion of the
acquisitions of MST Analytics, Inc. and NewForm N.V., and $7.2 million
incurred in connection with the acquisitions of Delatech, Inc., Advanced
Chemical Systems International, Inc., and Telosense Corporation offset by
a reversal of $0.6 million for previously accrued merger costs.
|    
|(11) |  | Represents costs incurred in connection with completing the NOW
Technologies, Inc. acquisition.                                                                                                                                                                                                                                                                    

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Item 7.    Managements Discussion and Analysis of Financial Condition and Results of Operations.

Overview

ATMI is a leading supplier of materials, equipment and related services
used worldwide in the manufacture of semiconductor devices. ATMI specifically
targets the front-end semiconductor materials market. This market includes
the processes used to convert a bare silicon wafer into a fully functional
wafer that contains many copies of a semiconductor device or chip. ATMIs
customers include many of the leading semiconductor manufacturers in the world.

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

The semiconductor industry, in general, and the semiconductor equipment
industry, in particular, have been highly cyclical and have experienced periods
of overcapacity at various times, resulting in significantly reduced demand for
semiconductor materials, capital equipment and wafer processing services. In
the past two years, the semiconductor industry has experienced a severe
downturn of unprecedented magnitude. According to industry research, wafer
starts at the end of 2002 had recovered to approximately 90% of peak November
2000 levels after having fallen to 70% of peak levels during 2001, while
equipment orders at the end of 2002 were approximately 34% of peak September
2000 levels. ATMIs operating results have been impacted by the industry
downturn, especially with regard to its product lines that track industry
capacity. Revenues in the Materials segment, which tends to track wafer starts,
have increased 21.6% in 2002 compared to 2001, while revenues in the
Technologies segment have decreased 24.2% in the same period. Although the
decline in wafer starts throughout the industry stopped late in 2001, there has
only been modest incremental quarterly improvement in wafer starts data during
2002. However, the level of recovery in the near term is uncertain. With
regard to capital equipment spending, there remains substantial over-capacity
on a global basis. Management believes that the likelihood of significant
advanced technology capital equipment spending due to capacity expansion is low
in the near term.

Due to deteriorating market conditions in the Companys gallium arsenide
epitaxial services product line, the Company recognized an asset impairment
charge of $34.6 million in the third quarter of 2002, of which $3.1 million is
included in cost of revenues related to a write-down of inventory. The
remainder of the charge relates to long-lived assets, including deposits on
fixed assets. The assets in this line of business were written down to their
estimated fair value, less costs of disposal.

ATMI completed one acquisition during the three years ended December 31,
2002, which has been accounted for as a pooling of interests. As a result, the
Companys consolidated financial statements have been restated to reflect the
results of this acquired company. The 2000 acquisition of the minority
interest of ATMIs ADCS Korea joint venture was accounted for using the
purchase method of accounting.

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Critical Accounting Policies and Estimates

General

Managements discussion and analysis of ATMIs financial condition and
results of operations are based upon the Companys consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States. The preparation of these financial
statements requires ATMI to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities. On an on-going basis, the
Company evaluates its estimates, including those related to bad debts,
inventories, marketable securities and investments, intangible assets, income
taxes, restructuring charges, and contingencies and litigation. The Company
bases its estimates on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or
conditions.

The Company believes the following critical accounting policies affect its
more significant judgments and estimates used in the preparation of its
consolidated financial statements.

Revenue Recognition

The Company recognizes revenue in accordance with SEC Staff Accounting
Bulletin No. 101, Revenue Recognition in Financial Statements(SAB 101), as
amended by SAB 101A and 101B. SAB 101 requires that four basic criteria must
be met before revenue can be recognized: (1) persuasive evidence of an
arrangement exists; (2) delivery has occurred or services rendered; (3) the fee
is fixed and determinable; and (4) collectibility is reasonably assured.
Determination of criteria (3) and (4) are based on managements judgments
regarding the fixed nature of the fee charged for products delivered and
services rendered and collectibility of those fees. The Companys revenues
from product sales are recognized upon title transfer, which generally occurs
upon shipment. In instances where final acceptance of the system is specified
by the customer, revenue is deferred until all acceptance criteria have been
met. Service revenue is generally recognized ratably over the period of the
related contract, or if not under contract, when service is provided. Should
changes in conditions cause management to determine these criteria are not met
for certain future transactions, revenue recognized for any reporting period
could be adversely affected. The Company accrues for warranty costs, sales
returns, and other allowances based on its historical experience. Should actual
product failure rates or customer return experience differ from the Companys
estimates, revisions to the estimated accruals would be required.

Bad Debt

The Company maintains allowances for doubtful accounts for estimated
losses resulting from the inability of its customers to make required payments.
Past due status of accounts receivable is determined primarily based upon
contractual terms. ATMI grants extended payment terms, which vary based on the
geographic location of the customer and range from 30 to 90 days. There are no
material collectibility issues with these extended-term receivables. If the
financial condition of the Companys customers were to deteriorate, resulting
in an impairment of their ability to make payments, additional allowances may
be required.

Inventories

The Company provides inventory allowances for estimated excess,
obsolescence and unmarketable inventory equal to the difference between the
cost of inventory and estimated market value based upon future demand forecasts
and market conditions. If actual market conditions are less favorable than
those projected by management, additional inventory write-downs may be
required.

Marketable Securities and Investments

The Company holds minority interests in companies having operations or
technology in areas within or related to its strategic focus, some of which are
in publicly traded companies whose share prices are highly volatile and

23



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some of which are in private companies whose value is difficult to determine.
Investments in private companies are included in the consolidated balance
sheets under the caption other long-term assets, net. ATMI records an
impairment charge when it believes an investment has experienced a decline in
value that is other than temporary. Future adverse changes in market conditions
or poor operating results of underlying investments could result in losses or
an inability to recover the carrying value of the investments that may not be
reflected in an investments current carrying value, thereby possibly requiring
an impairment charge in the future.

Goodwill

The Company accounts for goodwill in accordance with Statement of
Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible
Assets. SFAS No. 142 changed the way companies account for goodwill in that
goodwill is no longer amortized. Instead, goodwill is tested for impairment at
least annually, or when certain indicators exist which could cause management
to believe that goodwill could be impaired.

Other Identifiable Intangible Assets

Other identifiable intangible assets, such as acquired patents and
trademarks and covenants not to compete, are currently amortized on the
straight-line method over their estimated useful lives ranging from 2 to 5
years. These assets are currently reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable.

Stock-Based Compensation

At December 31, 2002, the Company has five stock-based employee
compensation plans, which are described more fully in Note 9 to the
consolidated financial statements. The Company accounts for these plans under
the recognition and measurement principles of Accounting Principles Board
(APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related
Interpretations. No stock-based employee compensation cost is reflected in net
income, as all options granted under those plans had an exercise price equal to
market value of the underlying common stock on the date of grant. See Note 1
to the consolidated financial statements for the effect on net income (loss)
and earnings (loss) per share if the Company had applied the fair value
recognition provisions of SFAS No. 123, Accounting For Stock-Based
Compensation, to stock-based employee compensation.

Restructuring

During the fiscal year ended December 31, 2001, the Company recorded
significant charges in connection with restructuring initiatives. These
charges include costs related to employee separation costs, plant closing
costs, early lease termination expenses and various other asset and working
capital write-offs or write-downs. Although management does not anticipate
significant changes, the actual costs may differ from these estimates.

Income Taxes

The carrying value of the Companys net deferred tax assets assumes that
the Company will be able to generate sufficient future taxable income in
certain tax jurisdictions, based on estimates and assumptions. If these
estimates and related assumptions change in the future, the Company may be
required to record additional valuation allowances against its deferred tax
assets resulting in additional income tax expense in the Companys consolidated
statement of operations. Management evaluates the realizability of the deferred
tax assets and assesses the adequacy of the valuation allowance quarterly.
Likewise, in the event that the Company was to determine that it would be able
to realize its deferred tax assets in the future in excess of its net recorded
amount, an adjustment to the deferred tax assets would increase income in the
period such determination was made.

Recent Accounting Pronouncements

See Note 1 to the consolidated financial statements for information
concerning recent accounting pronouncements.

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##### Table of Contents



Results of Operations

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

|                                                        |                                     |                          |       |                                |      |      |       |      |      |  |       |      |      | 
|------------------------------------------------------- | ----------------------------------- | ------------------------ | ----- | ------------------------------ | ---- | ---- | ----- | ---- | ---- |  | ----- | ---- | ---- | 
|                                                        |                                     |                          |       | Fiscal Year Ended December 31,
|                                                        |                                     |                          |       | 2002                           |      | 2001 |       | 2000
|                                                        |                                     |                          |       |                                |      |      |       |     
|Revenues                                                |                                     |                          | 100.0 | %                              |      |      | 100.0 | %    |      |  | 100.0 | %   
|Cost of revenues                                        |                                     |                          | 61.7  |                                |      |      | 56.6  |      |      |  | 47.6  |     
|                                                        |                                     |                          |       |                                |      |      |       |      |      |  |       |     
|Gross profit                                            |                                     |                          | 38.3  |                                |      |      | 43.4  |      |      |  | 52.4  |     
|Operating expenses:                                     |                                     |                          |       |                                |      |      |       |      |      |  |       |     
|                                                        | Research and development            |                          |       | 14.4                           |      |      |       | 14.9 |      |  |       | 9.4  |     
|                                                        | Selling, general and administrative |                          |       | 31.4                           |      |      |       | 34.4 |      |  |       | 24.0 |     
|                                                        | Merger and related costs            |                          |       |                               |      |      |       |     |      |  |       | 0.5  |     
|                                                        | Restructuring and other charges     |                          |       | 14.8                           |      |      |       | 6.6  |      |  |       |     |     
|                                                        |                                     |                          |       |                                |      |      |       |      |      |  |       |     
|                                                        |                                     | Total operating expenses |       |                                | 60.6 |      |       |      | 55.9 |  |       |      | 33.9 | 
|                                                        |                                     |                          |       |                                |      |      |       |      |      |  |       |     
|Operating income (loss)                                 |                                     |                          | (22.3 | )                              |      |      | (12.5 | )    |      |  | 18.5  |     
|Interest income (expense), net                          |                                     |                          | (0.8  | )                              |      |      | 1.6   |      |      |  | 2.2   |     
|Other income, net                                       |                                     |                          | 0.2   |                                |      |      | 3.6   |      |      |  | 2.8   |     
|                                                        |                                     |                          |       |                                |      |      |       |      |      |  |       |     
|Income (loss) before income taxes
and minority interest |                                     |                          | (22.9 | )                              |      |      | (7.3  | )    |      |  | 23.5  |     
|Provision (benefit) for income taxes                    |                                     |                          | (8.5  | )                              |      |      | (2.7  | )    |      |  | 8.8   |     
|                                                        |                                     |                          |       |                                |      |      |       |      |      |  |       |     
|Income (loss) before minority interest                  |                                     |                          | (14.4 | )                              |      |      | (4.6  | )    |      |  | 14.7  |     
|Minority interest                                       |                                     |                          |      |                                |      |      |      |      |      |  | (0.1  | )   
|                                                        |                                     |                          |       |                                |      |      |       |      |      |  |       |     
|Net income (loss)                                       |                                     |                          | (14.4 | %)                             |      |      | (4.6  | %)   |      |  | 14.6  | %   
|                                                        |                                     |                          |       |                                |      |      |       |      |      |  |       |     

Segment Data

The Company has two reportable operating segments: Materials and
Technologies. The Company evaluates performance and allocates resources based
on segment operating profit or loss, excluding non-recurring expenses,
interest, other income or expense, and income taxes. The accounting policies of
the reportable operating segments are the same as those described in the
summary of significant accounting policies in the Companys Consolidated
Financial Statements. Intercompany sales are not material between operating
segments. The general corporate assets include primarily cash, cash
equivalents, marketable securities, goodwill and other long-lived assets. See
Note 14 to the consolidated financial statements for additional segment
information.

The following tables provide reported results for each of these segments
for the periods indicated (in thousands):

|                                     |  |                                |         |      |  |      |         |   |  |   |         |  
|------------------------------------ |  | ------------------------------ | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                                     |  | Fiscal Year Ended December 31,
|                                     |  | 2002                           |         | 2001 |  | 2000
|                                     |  |                                |         |      |  |     
|Revenues                             |  |                                |         |      |  |      |         |   |  |   |         |  
|Materials                            |  | $                              | 135,007 |      |  | $    | 110,996 |   |  | $ | 138,191 |  
|Technologies                         |  |                                | 77,628  |      |  |      | 102,460 |   |  |   | 161,769 |  
|                                     |  |                                |         |      |  |      |         |   |  |   |         |  
|Consolidated revenues                |  | $                              | 212,635 |      |  | $    | 213,456 |   |  | $ | 299,960 |  
|                                     |  |                                |         |      |  |      |         |   |  |   |         |  
|Operating Income (loss)              |  |                                |         |      |  |      |         |   |  |   |         |  
|Materials                            |  | $                              | 24,427  |      |  | $    | 15,952  |   |  | $ | 36,655  |  
|Technologies                         |  |                                | (40,256 | )    |  |      | (28,615 | ) |  |   | 20,455  |  
|Merger and related costs             |  |                                |        |      |  |      |        |   |  |   | (1,500  | )
|Restructuring and other charges      |  |                                | (31,522 | )    |  |      | (14,011 | ) |  |   |        |  
|                                     |  |                                |         |      |  |      |         |   |  |   |         |  
|Consolidated operating income (loss) |  | $                              | (47,351 | )    |  | $    | (26,674 | ) |  | $ | 55,610  |  
|                                     |  |                                |         |      |  |      |         |   |  |   |         |  

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The following table provides reported balance sheet data for each of the
segments (in thousands):

|                          |                          |   |              |         |      |   |         |         | 
|------------------------- | ------------------------ | - | ------------ | ------- | ---- | - | ------- | ------- | 
|                          |                          |   | December 31,
|                          |                          |   |             
|                          |                          |   | 2002         |         | 2001
|                          |                          |   |              |         |     
|Identifiable Assets       |                          |   |              |         |      |   |         |        
|                          | Materials                |   | $            | 122,452 |      |   | $       | 98,893  | 
|                          | Technologies             |   |              | 90,682  |      |   |         | 134,920 | 
|                          | General Corporate Assets |   |              | 203,348 |      |   |         | 225,243 | 
|                          |                          |   |              |         |      |   |         |        
|Total Consolidated Assets |                          | $ | 416,482      |         |      | $ | 459,056 |        
|                          |                          |   |              |         |      |   |         |        

Comparison of Years Ended December 31, 2002, 2001 and 2000

Revenues. Revenues decreased less than 1% to $212.6 million in 2002 from
$213.5 million in 2001, and decreased 28.8% to $213.5 million in 2001 from
$300.0 million in 2000. Materials revenues increased 21.6% to $135.0 million in
2002 compared to $111.0 million in 2001 due to the increase in wafer starts in
2002 compared to 2001 and the related effect on liquid chemistries and SDS®
product lines. The increase in Materials was more than offset by the decline
in Technologies revenues of 24.2% to $77.6 million in 2002 compared to $102.5
million in 2001, as the semiconductor equipment sector continued to suffer from
the effects of reduced industry capital spending. The large declines in the
Technologies segment were experienced in the abatement, sensing and thin film
deposition services product lines. The 2001 decrease in revenues was primarily
attributable to the overall downturn in the semiconductor industry, which
affected both segments of ATMIs business  Materials and Technologies. In
2001, the Materials segment experienced a revenue decline of 19.7%, while
Technologies revenues declined 36.7% from 2000 levels. In 2001, Materials
revenues were down significantly in certain liquid chemistry, gases, and
delivery equipment product lines based on wafer start declines. During 2001,
the Technologies segment experienced steep revenue declines in the
environmental treatment equipment product lines and in thin film deposition
services product lines, with modest declines experienced in gas monitoring
systems product lines and parts cleaning.

Gross Profit. Gross profit decreased 12.1% to $81.4 million in 2002 from
$92.6 million in 2001. Gross margin decreased to 38.3% in 2002 from 43.4% in
2001. Gross profit includes charges related to inventory write-downs of $4.2
million and $1.7 million in 2002 and 2001, respectively. The decline in gross
profit was primarily attributable to volume declines in the equipment and thin
film deposition services product lines of the Technologies segment, leading to
lower fixed overhead cost absorption in these product lines. As part of ATMIs
business realignment efforts that it announced and executed during 2001, ATMI
consolidated several of its formerly autonomous business units, and certain
engineering and support activities were redirected to provide field service,
warranty and other customer and maintenance services which are classified as
cost of revenues instead of research and development. If the engineering and
support activities had been redirected to cost of revenues in 2001, gross
margin would have been 41.0% rather than 43.4%. Alternatively, had these costs
not been redirected, gross margin would have been 40.7% in 2002 rather than
38.3%, as reported. Gross profit decreased 41.1% to $92.6 million in 2001 from
$157.2 million in 2000. Gross margin decreased to 43.4% in 2001 compared to
52.4% in 2000. The decrease in gross profit was primarily attributable to
steep volume declines in the environmental treatment equipment, thin film
deposition services, and liquid chemistry and delivery equipment product lines.

Research and Development Expenses. Research and development expenses
decreased 3.8% to $30.5 million in 2002 from $31.7 million in 2001. As a
percentage of revenues, research and development expenses decreased to 14.4% in
2002 compared to 14.9% in 2001. The reduction is mainly the result of the
redirection of certain engineering and support activities in 2002, as discussed
above, compared to 2001. If these engineering and support activities had not
been redirected in 2002, research and development expense would have increased
12.8% compared to 2001. Research and development expenses increased 12.5% to
$31.7 million in 2001 from $28.2 million in 2000. As a percentage of revenues,
research and development expenses increased to 14.9% in 2001 from 9.4% in 2000,
driven primarily by the significant revenue decline in 2001 compared to 2000.
Despite the semiconductor industry downturn and weakened business performance
in both the Materials and Technologies segments, ATMI continued R&D spending on
targeted programs to seek to ensure that the Company has theproducts its customers
need for future generation chip manufacturing processes,with a particular emphasis
on advanced interconnect production processes.

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Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased 9.3% to $66.7 million in 2002 compared to
$73.5 million, including a $2.5 million charge for the write-down of accounts
receivable balances, in 2001. As a percentage of revenues, selling, general
and administrative expenses decreased to 31.4% in 2002 compared to 34.4% in
2001. The reduction in spending reflects the full year of benefit from the
2001 restructuring efforts in 2002 as compared to 2001. Selling, general and
administrative expenses increased 2.2% to $73.5 million in 2001, compared to
$71.9 million in 2000. Due to the restructuring efforts undertaken in 2001,
selling, general and administrative costs in the fourth quarter of 2001 were
significantly lower than in the beginning of the year. In 2001, selling,
general and administrative expenses were 34.4% of revenues, compared to 24.0%
in 2000. The increase as a percentage of revenues was primarily the result of
the significant decline in revenues in 2001 compared to 2000.

Merger and Related Costs. The 2000 operating results include $1.5 million
of merger and related costs incurred in connection with professional fees and
transaction costs related to the July 2000 ESCA acquisition.

Restructuring and Other Charges. Operating results for 2002 include a
$31.5 million charge to recognize the impairment of assets in the Companys
gallium arsenide epitaxial services business in Phoenix, Arizona. The
impairment charge of $31.5 million is related to long-lived assets, including
deposits on fixed assets. An additional $3.1 million charge related to a
write-down of gallium arsenide inventories is included in cost of revenues.
All of the impaired assets are in the Technologies segment. Effective January
31, 2003, certain assets of this business have been sold pursuant to an asset
purchase agreement, and the lease of the related facility, in Phoenix, Arizona,
has been assumed by the buyer pursuant to a lease assignment agreement at that
date. Operating results for 2001 include a $14.0 million charge for severance
and other costs associated with restructuring initiatives. The 2001 charge
includes costs related to plant closings, lease termination fees, and various
other assets and working capital write-offs or write-downs. An additional $0.6
million charge related to a write down of inventory is included in cost of
revenues. All restructuring costs have been paid by December 31, 2002, except
for ongoing lease costs for exited facilities, which management expects to pay
over the course of the remaining lease terms through September 2003.

Operating Income (Loss).In 2002, the Company incurred an operating loss
of $47.4 million, compared to an operating loss of $26.7 million in 2001. The
2002 operating loss includes a $31.5 million impairment charge and inventory
write-downs of $4.2 million discussed above. The 2001 operating loss includes
a restructuring charge of $14.0 million and other charges related to inventory
and accounts receivable write-downs of $1.7 million and $2.5 million,
respectively. The increased operating loss in 2002 reflects the continuing
effects of the semiconductor industry downturn in 2002, particularly as it
relates to capital spending, compared to 2001, and our continued investment in
our Emosyn venture. Materials operating income increased 53.1% to $24.4
million in 2002 compared to $16.0 million on increased sales
volumes in SDS®
and liquid chemistries product lines and a full years cost benefit from the
2001 restructuring activities. The Technologies segment incurred an operating
loss of $40.3 million in 2002, including a $3.1 million write-down related to
inventories in our gallium arsenide epitaxial services business, compared to an
operating loss of $28.6 million in 2001. The increase in the operating loss for
Technologies is largely driven by the continued depression in semiconductor
industry capital equipment spending and its effect on the equipment product
lines and overcapacity in the thin film deposition services product line. For
2001, the Company incurred an operating loss of $26.7 million, including the
charges discussed above, compared to operating income of $55.6 million in 2000,
including merger and related costs of $1.5 million. The decrease reflects the
effects of the significant semiconductor industry downturn in 2001 and its
effect on coverage of ATMIs increased fixed cost base. Materials operating
income decreased 56.5% to $16.0 million in 2001 compared to $36.7 million in
2000. The Technologies segment incurred an operating loss of $28.6 million in
2001, compared to operating income of $20.5 million in 2000, representing a
decrease of $49.1 million. Both segments were severely impacted by reduced
volumes in most product lines, which drove lower gross margins.

Interest and Other Income (Expense), Net. Interest and other income
(expense) decreased to $1.4 million of expense in 2002 from $11.1 million of
income in 2001. 2002 interest and other income (expense) includes a $1.0
million gain from the sale of available-for-sale securities, partially offset
by a write-down of $0.4 million for an other-than-temporary
decline in fair value of other available-for-salesecurities. 2001 includes the positive impact of a
settlement of certain patent litigation, net of related expenses, and a $2.6 million gain from the
sale of available-for-sale securities, partially offset by a write-down of $0.4
million for an other-than-temporary decline in fair value

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of other
available-for-sale securities. Interest income increased 4.5% to $4.9 million
in 2002 from $4.7 million in 2001 on higher invested balances, despite
significantly lower market interest rates. Interest expense increased to $6.7
million in 2002 from $1.2 million in 2001, due mainly to a full year of debt
service costs related to the Companys $115.0 million convertible subordinated
notes issued in the fourth quarter of 2001. Interest and other income
(expense) decreased to $11.1 million in 2001 from $14.9 million in 2000. As
noted above, the 2001 results include the positive impact of a settlement of
certain patent litigation, net of related expenses, and a $2.6 million gain
from the sale of available-for-sale securities, offset by a write down of
approximately $0.4 million for a decline in fair value of other
available-for-sale securities. Interest income decreased 40.6% to $4.7 million
in 2001 from $7.8 million in 2000 as a result of the lower average cash
balances on hand and lower market interest rates. Interest expense decreased
4.2% to $1.195 million in 2001 from $1.247 million in 2000, despite the higher
debt balance due to ATMIs fourth quarter convertible debt offering of $115.0
million, mainly as a result of interest capitalization on capital construction
projects.

Income Taxes. In 2002, the income tax benefit was $18.0 million, compared
to an income tax benefit of $5.8 million in 2001. The increase in the tax
benefit was the result of the increased operating losses in 2002 compared to
2001. The effective tax rate for 2002 was 37.0%, compared to an effective tax
rate of 37.6% for the comparable period a year ago. The effective tax rate of
37.0% differs from the Federal statutory rate of 35.0% primarily because of
state and foreign income taxes, extra-territorial income exclusion benefits,
and reduced profitability. As of December 31, 2002, the Company has a net
deferred tax asset on its balance sheet of $9.8 million, primarily due to
temporary differences, tax credits and net operating loss carryforwards, which
are anticipated to be used to offset future taxable income. The
minimum amount of future taxable income that would have to be
generated to realize the net deferred tax assets is approximately
$26.4 million. In 2001, the income tax benefit was $5.8 million, compared to income tax expense of $26.5 million in 2000. The change
was due to the Companys operating losses as a result of the semiconductor
industry downturn and the restructuring efforts undertaken by management during
2001. The effective tax rates for 2001 and 2000 of 37.6% differs from the
Federal statutory rate of 35% primarily because of state and foreign income
taxes, foreign sales corporation benefits and research and development credits.

Minority Interest. Minority interest represented the 30.0% interest held
by K.C. Tech Co., Ltd. in the operations of ADCS-Korea, which was a joint
venture established to manufacture, sell and distribute chemicals to the
semiconductor and related industries in South Korea. In the fourth quarter of
2000, ATMI purchased the 30% interest in the operations of ADCS-Korea from the
former joint venture partner, which eliminated the minority shareholders
interest in earnings.

Net Income (Loss) per Share. Net loss per share, assuming dilution, was
$1.03 for 2002, compared to a net loss per share, assuming dilution, of $0.33
in 2001. Net loss per share, assuming dilution, was $0.33 for 2001, compared
to earnings per share, assuming dilution, of $1.44 for 2000. Weighted average
shares outstanding, assuming dilution. was 29.9 million for 2002 compared to
29.6 million for 2001. The difference in weighted average shares outstanding,
assuming dilution, between 2002 and 2001 is primarily the result of the
exercise of employee stock options and employee stock purchase plan shares.
Weighted-average shares outstanding, assuming dilution, was 29.6 million for
2001 compared to 30.3 million in 2000. The difference in weighted-average
shares outstanding, assuming dilution, between 2001 and 2000 is primarily the
result of excluding the effect of shares held in escrow and common-stock
equivalents due to the antidilutive effect of including those shares.

Liquidity and Capital Resources

Years ended December 31, 2002, 2001 and 2000

To date, ATMI has financed its activities principally through cash from
operations, the sale of equity, the issuance of convertible debt securities,
external research and development funding and various lease and debt
instruments. The Companys working capital decreased to $223.5 million at
December 31, 2002 from $255.3 million at December 31, 2001. The Companys
working capital increased to $255.3 million at December 31, 2001 from $203.0
million at December 31, 2000.

Net cash provided by operations was approximately $15.0 million in 2002,
compared to approximately $24.1 million in 2001. The operating loss incurred
in 2002 included the impairment charge related to the gallium arsenide

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epitaxial services business, which had minimal cash impact during the year.
The reduction in net cash from operations resulted primarily from unfavorable
changes in working capital versus 2001, and the effect of increased deferred
tax assets and income taxes receivable as a result of the increased operating
losses. Net cash provided by operations was approximately $24.1 million in
2001, compared to $9.1 million during 2000. Despite weakened operating results
during 2001, cash flow from operations increased primarily as a result of
increased focus on accounts receivable collections activities. Excluding cash
received from ATMIs convertible debt offering in the fourth quarter of 2001,
management reduced working capital by approximately $59.2 million during 2001,
or 29.2%.

Net cash used by investing activities was $89.1 million, $108.3 million
and $23.9 million in 2002, 2001 and 2000, respectively. Capital expenditures
were $40.9 million, $63.0 million and $29.5 million in 2002, 2001 and 2000,
respectively. 2002 capital spending primarily relates to the construction of
the Companys new liquid materials manufacturing facility in Burnet, Texas, and
continued strategic investments in facilities and equipment for materials
research and development capabilities. 2001 capital expenditures primarily
related to installation of compound semiconductor manufacturing capacity at the
Companys epitaxial services facility in Phoenix, Arizona, which was
subsequently written down in 2002, the start of the construction of the new
liquid materials manufacturing facility in Burnet, Texas, and the expansion of
the Danbury, Connecticut research and development facility. In 2000, the
capital expenditures primarily related to installation of additional
manufacturing capacity in the Companys Danbury, Connecticut operations, and
for the companys enterprise-wide information systems. During 2002, the
Company made strategic investments of $5.0 million to acquire copper delivery
and abatement product lines and rights to a copper electrochemical deposition
management system. During 2001, the Company paid approximately $6.7 million for
equity investments in two strategic partners for the development of advanced
materials. In 2000, the Company purchased K.C. Tech Co., Ltd.s 30% interest in
the operations of ADCS-Korea for approximately $7.2 million, of which $5.0
million was paid in 2000, approximately $2.0 million was paid in 2001, and
approximately $0.1 million was paid in 2002. Management expects to pay the
remaining $0.1 million between 2003 and 2005. For the years ended December 31,
2002, 2001 and 2000, the Company purchased approximately $44.4 million, $40.1
million and $5.3 million, respectively, of marketable securities, consisting
primarily of short-term corporate and municipal debt obligations. During 2002,
2001 and 2000, the Company received net proceeds of $1.1 million, $3.5 million
and $15.9 million, respectively, related to the sale of certain
available-for-sale investments.

Net cash used by financing activities was $16.2 million in 2002, compared
to net cash provided by financing activities of $124.5 million and $64.1
million in 2001 and 2000, respectively. In 2002, the Company paid down the
entire amounts outstanding on its $20.0 million bank financing agreement and
approximately $5.1 million of capital lease obligations, in order to reduce the
weighted average interest rate on its indebtedness, as allowed under the terms
of the agreements. During 2001, the Company completed the sale of $115.0
million of 5.25% convertible subordinated notes due November 2006, and received
net proceeds from the sale of approximately $111.6 million. Also during 2001,
the Company entered into a $20.0 million bank financing agreement for the
purchase of additional silicon epitaxial capacity, which was paid down in 2002
as noted above. As of December 31, 2002, $0.4 million is available under other
credit lines. The Company made payments on capital leases of approximately $2.8
million and $2.7 million in 2001 and 2000, respectively. The Company made
payments on loans, notes and bonds of approximately $5.3 million and $2.9
million in 2001 and 2000, respectively. During 2002, 2001 and 2000, the
Company received net proceeds from the exercise of employee stock options and
employee stock purchase plan shares of $4.4 million, $2.6 million and $6.3
million, respectively. At December 31, 2002, $116.5 million of convertible
notes, loans, bonds, capital lease obligations and financing remained
outstanding.

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Following is a summary of consolidated debt, lease and capital expenditure
obligations at December 31, 2002 (see Notes 4, 5 and 6 of the consolidated
financial statements), in thousands:

|                                                      |                   |       |         |                  |  |           |                        |           |  |            |       |       |  |   |         |         |  |   |       |       | 
|----------------------------------------------------- | ----------------- | ----- | ------- | ---------------- |  | --------- | ---------------------- | --------- |  | ---------- | ----- | ----- |  | - | ------- | ------- |  | - | ----- | ----- | 
|                                                      |                   |       |         |                  |  |           | Payments Due by Period |           |  |            |      
|                                                      |                   |       |        
|Obligation                                            |                   | Total |         | Less than 1 Year |  | 1-3 Years |                        | 4-5 Years |  | Thereafter
|                                                      |                   |       |         |                  |  |           |                        |           |  |           
|Debt:                                                 |                   |       |         |                  |  |           |                        |           |  |            |       |       |  |   |         |         |  |   |       |      
|                                                      | Convertible Notes |       | $       | 115,000          |  |           | $                      |          |  |            | $     |      |  |   | $       | 115,000 |  |   | $     |      | 
|                                                      | Other             |       |         | 1,462            |  |           |                        | 585       |  |            |       | 856   |  |   |         | 21      |  |   |       |      | 
|                                                      |                   |       |         |                  |  |           |                        |           |  |            |       |       |  |   |         |         |  |   |       |      
|Total debt                                            |                   |       | 116,462 |                  |  |           | 585                    |           |  |            | 856   |       |  |   | 115,021 |         |  |   |      |      
|Leases:                                               |                   |       |         |                  |  |           |                        |           |  |            |       |       |  |   |         |         |  |   |       |      
|                                                      | Operating leases  |       |         | 24,478           |  |           |                        | 4,727     |  |            |       | 8,109 |  |   |         | 4,790   |  |   |       | 6,852 | 
|                                                      | Capital leases    |       |         | 55               |  |           |                        | 23        |  |            |       | 32    |  |   |         |        |  |   |       |      | 
|                                                      |                   |       |         |                  |  |           |                        |           |  |            |       |       |  |   |         |         |  |   |       |      
|Total lease obligations                               |                   |       | 24,533  |                  |  |           | 4,750                  |           |  |            | 8,141 |       |  |   | 4,790   |         |  |   | 6,852 |      
|                                                     
|Capital expenditures                                  |                   |       | 3,400   |                  |  |           | 3,400                  |           |  |            |      |       |  |   |        |         |  |   |      |      
|                                                      |                   |       |         |                  |  |           |                        |           |  |            |       |       |  |   |         |         |  |   |       |      
|Total debt, lease and
capital expenditure
obligations |                   | $     | 144,395 |                  |  | $         | 8,735                  |           |  | $          | 8,997 |       |  | $ | 119,811 |         |  | $ | 6,852 |      
|                                                      |                   |       |         |                  |  |           |                        |           |  |            |       |       |  |   |         |         |  |   |       |      

ATMI has agreed not to allow any of its significant subsidiaries or the
subsidiaries of those significant subsidiaries to incur any subordinated debt
while the convertible subordinated notes are outstanding without such
subsidiary first entering into an unconditional guarantee of the notes on a
subordinated basis. This restriction may limit those subsidiaries ability to
obtain subordinated debt on favorable terms and conditions or at all.

ATMI believes that the Companys existing cash and cash equivalents and
marketable securities balances, existing sources of liquidity, available lines
of credit and anticipated funds from operations will satisfy the Companys
projected working capital and other cash requirements through at least the end
of 2003. However, management also believes the level of financing resources
available to the Company is an important competitive factor in its industry and
management may seek additional capital prior to the end of that period.
Additionally, management considers, on a continuing basis, potential
acquisitions of technologies and businesses complementary to the Companys
current business. There are no present agreements with respect to any such
acquisitions. However, any such transactions may affect the Companys future
capital needs.

Operations Outside the United States

For the years ended December 31, 2002, 2001 and 2000, sales outside the
United States, including Asia and Europe, accounted for 46.0%, 47.0% and 45.0%,
respectively, of the Companys revenues. Management anticipates that the
Companys sales outside the United States will continue to account for a
significant percentage of total revenues. The Company has a wholly-owned
subsidiary in Germany where the Company manufactures materials sensing and
monitoring equipment and sells and services the sensing and monitoring
equipment and several other product lines. The Company has a wholly-owned
subsidiary in Belgium where it manufactures and sells high-purity solids
packaging applications. In addition, the Company has wholly-owned subsidiaries
in Taiwan, Singapore, China and Japan where the Company sells and services
several product lines. The Company also has a wholly-owned subsidiary in South
Korea that manufactures, sells and distributes environmental abatement
equipment and thin-film materials to the semiconductor and related industries
in South Korea.

30



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##### Table of Contents



Cautionary Statements Under the
Private Securities Litigation Reform Act of 1995

Forward-Looking Statements

The statements contained in this report which are not historical are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Examples of forward-looking statements include,
without limitation, statements by ATMI regarding financial projections,
expectations for demand and sales of new and existing products, market and
technology opportunities, business strategies, business opportunities,
objectives of management for future operations and semiconductor industry and
market segment growth. In addition, when used in this report, the words
anticipate, plan, believe, estimate, expect and similar expressions
as they relate to the Company or its management are intended to identify
forward-looking statements. All forward-looking statements involve risks and
uncertainties. Actual results may differ materially from those discussed in, or
implied by, the forward-looking statements as a result of certain factors
including, but not limited to, changes in the pattern of semiconductor industry
demand, the markets for or customer interest in the Companys products, product
and market competition, delays or problems in the development and
commercialization of products, technological changes affecting the competencies
of ATMI, problems or delays associated with its restructuring activities,
problems or delays in integrating acquired operations and businesses into ATMI,
and unanticipated internal and/or third-party delays. The cautionary statements
made in this report should be read as being applicable to all related
forward-looking statements wherever they appear in this report.




Item 7A.   Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk

As of December 31, 2002 the Companys cash and cash equivalents and
marketable securities included money market securities, corporate and municipal
bond obligations and commercial paper. Due to the short maturity of the
Companys investment portfolio, an immediate 10% change in interest rates would
not have a material effect on the fair value of the Companys portfolio;
therefore, the Company would not expect its operating results or cash flows to
be affected to any significant degree by the effect of a sudden change in
market interest rates on the Companys securities portfolio. As of December
31, 2002, a majority of the Companys debt carries fixed interest rates;
therefore, the Company would not expect its operating results or cash flows to
be significantly affected by the effect of a sudden change in market interest
rates.

Foreign Currency Exchange Risk

A substantial portion of the Companys sales are denominated in U.S.
dollars and, as a result, the Company has relatively minimal exposure to
foreign currency exchange risk with respect to sales made. This exposure may
change over time as business practices evolve and could have a material impact
on the Companys financial results in the future. The Company does not use
forward exchange contracts to hedge exposures denominated in foreign currencies
or any other derivative financial instruments for trading or speculative
purposes. The effect of an immediate 10% change in exchange rates would not be
expected to have a material impact on the Companys future operating results or
cash flows.




Item 8.   Financial Statements and Supplementary Data.

The Report of Independent Auditors, the consolidated financial statements
and the financial statement schedule that are listed in the Index to
Consolidated Financial Statements and Financial Statement Schedule are included
herein on pages F-1 through F-29.

31



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##### Table of Contents






Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

There have been no changes in or disagreements with accountants required
to be reported herein.




PART III.




Item 10.   Directors and Executive Officers of the Registrant.

Information regarding ATMIs directors and executive officers is
incorporated by reference herein to the Companys Proxy Statement for its
Annual Meeting of Stockholders to be held on May 21, 2003 (the 2003 Proxy
Statement).




Item 11.   Executive Compensation.

Information regarding compensation of ATMI executive officers is
incorporated by reference herein to the 2003 Proxy Statement.




Item 12.   Security Ownership of Certain Beneficial Owners and Management.

Information regarding the beneficial ownership of shares of ATMIs Common
Stock by certain persons is incorporated by reference herein to the 2003 Proxy
Statement.




Item 13.   Certain Relationships and Related Transactions.

Information regarding certain relationships and related transactions of
ATMI is incorporated by reference herein to the 2003 Proxy Statement.




Item 14.   Controls and Procedures.

As of the date of this filing, an evaluation was performed under the
supervision and with the participation of the Companys management, including
its CEO and CFO, of the effectiveness of the design and operation of the
Companys disclosure controls and procedures. Based on that evaluation, the
Companys management, including its CEO and CFO, concluded that the Companys
disclosure controls and procedures were effective as of December 31, 2002.
There have been no significant changes in the Companys internal controls or in
other factors that could significantly affect internal controls subsequent to
December 31, 2002.

Reference is made to the Certifications of the CEO and CFO about these and
other matters following the signature page of this report.

32



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##### Table of Contents






PART IV




Item 15.    Exhibits, Financial Statement Schedule, and Reports on Form 8-K.



|(a) |  | The following documents are filed as part of this Annual Report on Form
10-K:
|--- |  | -----------------------------------------------------------------------------
|   
|(1) |  | Financial Statements:                                                        



| |                                                                                                     
| | ----------------------------------------------------------------------------------------------------
| | Report of Independent Auditors                                                                      
| | Consolidated
Balance Sheets - December 31, 2002 and 2001                                            
| | Consolidated Statements of Operations for the years ended December 31, 2002, 2001 and 2000          
| | Consolidated Statements of Stockholders Equity for the years ended December 31, 2000, 2001 and 2002
| | Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000          
| | Notes to Consolidated Financial Statements                                                          



|(2) |  | Financial Statement Schedule:
|--- |  | -----------------------------



| |                                              
| | ---------------------------------------------
| | Schedule II Valuation and Qualifying Accounts



| |                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Report of Independent Auditors, consolidated financial statements and
financial statement schedule listed in the Index to Consolidated
Financial Statements and Financial Statement Schedule on page F-1 hereof
are filed as part of this report, commencing on page F-2 hereof.



| |                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | All other financial statement schedules are omitted as the required
information is not applicable or the information is shown in the
consolidated financial statements or related notes.



|(3) |  | Exhibits
|--- |  | --------

|            |  |                                                                                                                                                                                                                                                    
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                        
|            |  |                                                                                                                                                                                                                                                    
|3.01(a)     |  | Certificate of Incorporation dated as of April 7, 1997
(Exhibit 3.01 to ATMIs Registration Statement on Form S-4,
dated September 10, 1997, Registration No. 333-35323 (the
1997 Form S-4 Registration Statement)). (1)                         
|            |  |                                                                                                                                                                                                                                                    
|3.01(b)     |  | Certificate of Amendment to Certificate of Incorporation dated
as of September 23, 1997 (Exhibit 4.1(b) to the ATMIs
Post-Effective Amendment No. 1 to Registration Statement on
Form S-8, filed October 10, 1997, Registration No. 33-77060). (1)
|            |  |                                                                                                                                                                                                                                                    
|3.01(c)     |  | Certificate of Amendment to Certificate of Incorporation dated
as of June 16, 1998 (Exhibit 3.01(c) to the ATMIs
Registration Statement on Form S-4/A, dated July 1, 1998, File
No. 333-51333). (1)                                               
|            |  |                                                                                                                                                                                                                                                    
|3.01(d)     |  | Certificate of Designation for Series A Junior Participating
Preferred Stock dated as of October 13, 2000 (Exhibit 4.01 to
ATMIs Current Report on Form 8-K dated October 17, 2000). (1)                                                          
|            |  |                                                                                                                                                                                                                                                    
|3.01(e)     |  | Certificate of Amendment to Certificate of Designation for
Series A Junior Participating Preferred Stock dated December
20, 2001 (Exhibit 3.01(e) to ATMIs Annual Report on Form
10-K, dated March 27, 2002) (the 2001 Form 10-K). (1)          
|            |  |                                                                                                                                                                                                                                                    
|3.02        |  | Bylaws of ATMI (Exhibit 3.02 to the 1997 Form S-4 Registration
Statement). (1)                                                                                                                                                                     

33



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##### Table of Contents



|            |  |                                                                                                                                                                                                                                                                                                                                                                                        
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                            
|            |  |                                                                                                                                                                                                                                                                                                                                                                                        
|4.01        |  | Specimen of ATMIs Common Stock Certificate (Exhibit 4.01 to
the 1997 Form S-4 Registration Statement). (1)                                                                                                                                                                                                                                                                            
|            |  |                                                                                                                                                                                                                                                                                                                                                                                        
|4.02        |  | Rights Agreement, dated as of October 13, 2000, between ATMI,
Inc. and Fleet National Bank, as Rights Agent (Exhibit 4.01 to
ATMIs Current Report on Form 8-K, dated October 17, 2000). (1)                                                                                                                                                                                           
|            |  |                                                                                                                                                                                                                                                                                                                                                                                        
|4.03        |  | Registration Rights Agreement, dated November 13, 2001, among
ATMI, Inc., Goldman, Sachs & Co. and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, relating to ATMIs 5.25%
Convertible Subordinated Notes due 2006 (Exhibit 4.1 to ATMIs
Registration Statement on Form S-3, filed January 7, 2002,
Registration No. 333-76378 (the 2002 Form S-3 Registration
Statement)). (1)
|            |  |                                                                                                                                                                                                                                                                                                                                                                                        
|4.04        |  | Indenture, dated November 13, 2001, between ATMI, Inc. and
State Street Bank and Trust Company, relating to the ATMIs
5.25% Convertible Subordinated Notes due 2006 (Exhibit 4.2 to
the 2002 Form S-3 Registration Statement). (1)                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                                                                                                                                                        
|4.05        |  | Specimen Note for ATMIs 5.25% Convertible Subordinated Notes
due 2006 (included in pages 26 to 40 of the Indenture filed as
Exhibit 4.2 to the 2002 Form S-3 Registration Statement). (1)                                                                                                                                                                                             
|            |  |                                                                                                                                                                                                                                                                                                                                                                                        
|10.01*      |  | Employment Agreement between Eugene G. Banucci, Ph.D. and
Advanced Technology Materials, Inc. dated October 10, 1997
(Exhibit 10.01 to ATMIs Registration Statement on Form S-1,
dated February 20, 1998, File No. 333-46609 (the Form S-1
Registration Statement)). (1)                                                                                                            
|            |  |                                                                                                                                                                                                                                                                                                                                                                                        
|10.02*      |  | Employment Agreement between Daniel P. Sharkey and Advanced
Technology Materials, Inc. dated October 10, 1997 (Exhibit
10.02 to the Form S-1 Registration Statement). (1)                                                                                                                                                                                                              
|            |  |                                                                                                                                                                                                                                                                                                                                                                                        
|10.03*      |  | Employment Agreement between Douglas A. Neugold and Advanced
Technology Materials, Inc. dated April 26, 2000 (Exhibit 10.03
to ATMIs Annual Report on Form 10-K, dated April 2, 2001). (1)                                                                                                                                                                                            
|            |  |                                                                                                                                                                                                                                                                                                                                                                                        
|10.04       |  | Agreement of Lease between Melvyn J. Powers and Mary P. Powers
d/b/a/ M&M Realty and Advanced Technology Materials, Inc.,
dated December 23, 1994 (Exhibit 10.09 to Advanced Technology
Materials, Inc. Annual Report on Form 10-K/A for the year
ended December 31, 1994, File No. 0-22756). (1)                                                                                      
|            |  |                                                                                                                                                                                                                                                                                                                                                                                        
|10.05*      |  | ATMIs 1995 Stock Plan (Exhibit to ATMIs Registration
Statement on Form S-8, File No. 33-93048). (1)                                                                                                                                                                                                                                                                                  
|            |  |                                                                                                                                                                                                                                                                                                                                                                                        
|10.06*      |  | ATMIs 1997 Stock Plan, dated October 10, 1997, (Exhibit 99.1
to ATMIs Registration Statement on Form S-8, dated April 6,
1998, File No. 333-49561). (1)                                                                                                                                                                                                                              
|            |  |                                                                                                                                                                                                                                                                                                                                                                                        
|10.07*      |  | ATMIs 1998 Stock Plan, dated May 20, 1998 (Exhibit 99.1 to
ATMIs Registration Statement on Form S-8, dated June 9, 1998,
File No. 333-56349). (1)                                                                                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                                                                                                                                                        
|10.08       |  | Agreement of Lease between Seymour R. Powers, Leon Griss and
Ruth Griss and Advanced Technology Materials, Inc., dated
November 24, 2000 (Exhibit 10.08 to the 2001 Form 10-K). (1)                                                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                                                                                                                                                        
|10.09*      |  | ATMIs 2000 Stock Plan, dated May 24, 2000 (Exhibit 99.01 to
ATMIs Registration Statement on Form S-8, dated September 20,
2000, File No. 333-46111). (1)                                                                                                                                                                                                                             

34



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##### Table of Contents



|            |  |                                                                                                                                                                      
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                          
|            |  |                                                                                                                                                                      
|10.10*      |  | ATMIs 1998 Employee Stock Purchase Plan, dated May 20, 1998
(Exhibit 99.1 to ATMIs Registration Statement on Form S-8,
dated June 2, 1998, File No. 333-55827). (1)
|            |  |                                                                                                                                                                      
|12.01       |  | Ratio of Earnings to Fixed Charges (2)                                                                                                                               
|            |  |                                                                                                                                                                      
|21.01       |  | Subsidiaries of ATMI (2)                                                                                                                                             
|            |  |                                                                                                                                                                      
|23.01       |  | Consent of Ernst & Young LLP (2)                                                                                                                                     
|            |  |                                                                                                                                                                      
|99          |  | Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (2)                                          

*Management contract or compensatory plan arrangement.



|(1) |  | Incorporated by reference.
|--- |  | --------------------------
|   
|(2) |  | Filed herewith.           



| | (b) |  | Reports on Form 8-K
| | --- |  | -------------------

The Company filed Current Reports on Form 8-K, dated January 31, 2002
(attaching a press release announcing the Companys financial results for the
three months ended December 31, 2001 and for fiscal year 2001) and February 21,
2002 (attaching a press release announcing the effectiveness of the Companys
registration statement for its 5.25% Convertible Subordinated Notes due
November 15, 2006).

35



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

|                  |  |            |                                                                                                                      
|----------------- |  | ---------- | ---------------------------------------------------------------------------------------------------------------------
|                  |  | ATMI, Inc.
|                  |  |           
|                  |  |           
|February 28, 2003 |  | By         | /S/ Eugene G.
Banucci   Eugene G. Banucci, Ph.D.,
Chief Executive Officer, Chairman of         the
Board and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

|                                               |  |                                                                                                    |  |                  
|---------------------------------------------- |  | -------------------------------------------------------------------------------------------------- |  | -----------------
|Signature                                      |  | Title                                                                                              |  | Date             
|                                               |  |                                                                                                    |  |                  
|/S/ Eugene G. Banucci
Eugene G. Banucci, Ph.D. |  | Chief Executive Officer, Chairman of the Board
and Director (principal executive officer)          |  | February 28, 2003
|                                               |  |                                                                                                    |  |                  
|/S/ Daniel P. Sharkey
Daniel P. Sharkey        |  | Vice President, Chief Financial
Officer and Treasurer (principal financial and
accounting officer) |  | February 28, 2003
|                                               |  |                                                                                                    |  |                  
|/S/ Mark A. Adley
Mark A. Adley                |  | Director                                                                                           |  | February 28, 2003
|                                               |  |                                                                                                    |  |                  
|/S/ Robert S. Hillas
Robert S. Hillas          |  | Director                                                                                           |  | February 28, 2003
|                                               |  |                                                                                                    |  |                  
|/S/ Stephen H. Mahle
Stephen H. Mahle          |  | Director                                                                                           |  | February 28, 2003
|                                               |  |                                                                                                    |  |                  
|/S/ C. Douglas Marsh
C. Douglas Marsh          |  | Director                                                                                           |  | February 28, 2003
|                                               |  |                                                                                                    |  |                  
|/S/ Michael J. Yomazzo
Michael J. Yomazzo      |  | Director                                                                                           |  | February 28, 2003

36



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##### Table of Contents






CERTIFICATIONS

I, Eugene G. Banucci, certify that:



| | 1. |  | I have reviewed this annual report on Form 10-K of ATMI, Inc. (the
Company);                                                                                                                                                                                                                                                       
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;             
|
| | 3. |  | Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present in
all material respects the financial condition, results of operations,
statement of stockholders equity and cash flows of the Company as of,
and for, the periods presented in this annual report;
|
| | 4. |  | The Companys other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and
have:                                                                                                                     



| |    |  |                                                                                                                                                                                                                                                                                          
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) |  | designed such disclosure controls and procedures to
ensure that material information relating to the Company,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this annual report is being prepared;
| |    |  |                                                                                                                                                                                                                                                                                          
| | b) |  | evaluated the effectiveness of the Companys disclosure
controls and procedures as of the date of this filing (the
Evaluation Date); and                                                                                                                                               
| |    |  |                                                                                                                                                                                                                                                                                          
| | c) |  | presented in this annual report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;                                                                                                                     



| | 5. |  | The Companys other certifying officers and I have disclosed to the
Companys auditors and the audit committee of the Companys board of
directors:
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |    |  |                                                                                                                                                                                                                                                                                                                 
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) |  | all significant deficiencies and material weaknesses in
the design or operation of internal controls which could
adversely affect the Companys ability to record, process,
summarize and report financial data and have identified for the
Companys auditors any material weaknesses in internal controls;
and
| |    |  |                                                                                                                                                                                                                                                                                                                 
| | b) |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
Companys internal controls; and                                                                                                                                                             

37



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##### Table of Contents





| | 6. |  | The Companys other certifying officers and I have indicated in
this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                  |  |                                                                                                                 
|----------------- |  | ----------------------------------------------------------------------------------------------------------------
|February 28, 2003 |  |                                                                                                                 
|                  |  | /s/ Eugene G. Banucci

Eugene G. Banucci, Ph.D.,   Chief
Executive Officer, Chairman of the Board and   Director

38



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##### Table of Contents



I, Daniel P. Sharkey, certify that:



| | 1. |  | I have reviewed this annual report on Form 10-K of ATMI, Inc. (the
Company);                                                                                                                                                                                                                                          
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present in
all material respects the financial condition, results of operations
and cash flows of the Company as of, and for, the periods presented in
this annual report;                      
|
| | 4. |  | The Companys other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and
have:                                                                                                        



| |    |  |                                                                                                                                                                                                                                                                                          
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. |  | designed such disclosure controls and procedures to
ensure that material information relating to the Company,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this annual report is being prepared;
| |    |  |                                                                                                                                                                                                                                                                                          
| | b. |  | evaluated the effectiveness of the Companys disclosure
controls and procedures as of the date of this filing (the
Evaluation Date); and                                                                                                                                               
|
| | c. |  | presented in this annual report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;                                                                                                                     



| | 5. |  | The Companys other certifying officers and I have disclosed to the
Companys auditors and the audit committee of the Companys board of
directors:
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |    |  |                                                                                                                                                                                                                                                                                                                 
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. |  | all significant deficiencies and material weaknesses in
the design or operation of internal controls which could
adversely affect the Companys ability to record, process,
summarize and report financial data and have identified for the
Companys auditors any material weaknesses in internal controls;
and
| |    |  |                                                                                                                                                                                                                                                                                                                 
| | b. |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
Companys internal controls; and                                                                                                                                                             

39



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##### Table of Contents





| | 6. |  | The Companys other certifying officers and I have indicated in
this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                  |  |                                                                                                                           
|----------------- |  | --------------------------------------------------------------------------------------------------------------------------
|February 28, 2003 |  |                                                                                                                           
|                  |  | /s/ Daniel P. Sharkey

Daniel P. Sharkey, Vice President, Chief Financial
Officer and Treasurer (Chief Accounting Officer)

40



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##### Table of Contents



ATMI, INC.




INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULE

|                                                                                                        |  |     
|------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                        |  | Page
|                                                                                                        |  |     
|Report of Ernst & Young LLP                                                                             |  | F-2 
|Audited Financial Statements
Consolidated Balance Sheets - December 31, 2002 and 2001                   |  | F-3 
|Consolidated Statements of Operations for the years ended December 31, 2002,   2001,
and 2000           |  | F-4 
|Consolidated Statements of Stockholders Equity for the years ended   December 31,
2000, 2001, and 2002 |  | F-5 
|Consolidated Statements of Cash Flows for the years ended December 31, 2002,   2001,
and 2000           |  | F-6 
|Notes to Consolidated Financial Statements                                                              |  | F-7 
|Financial Statement Schedule
Schedule II - Valuation and Qualifying Accounts                            |  | F-29

F-1



---



##### Table of Contents



Report of Independent Auditors

The Board of Directors and Stockholders of ATMI, Inc.

We have audited the accompanying consolidated balance sheets of ATMI, Inc. as
of December 31, 2002 and 2001, and the related consolidated statements of
operations, stockholders equity, and cash flows for each of the three years in
the period ended December 31, 2002. Our audits also included the financial
statement schedule listed in the Index at Item 15(a). These financial
statements and schedule are the responsibility of ATMI, Inc.s management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

We conducted our audits in accordance with 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 provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of ATMI, Inc. at
December 31, 2002 and 2001, and the consolidated results of their operations
and their cash flows for each of the three years in the period ended December
31, 2002, in conformity with accounting principles generally accepted in the
United States. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

|                                       |  |                      
|-------------------------------------- |  | ---------------------
|                                       |  | /s/ ERNST & YOUNG LLP
|Stamford, Connecticut
January 24, 2003 |  |                      

F-2



---



##### Table of Contents



ATMI, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

|                                                     |                                                                           |                                                                              |                                                       |                                      |        |              |         |         |        |     |         | 
|---------------------------------------------------- | ------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | ----------------------------------------------------- | ------------------------------------ | ------ | ------------ | ------- | ------- | ------ | --- | ------- | 
|                                                     |                                                                           |                                                                              |                                                       |                                      |        | December 31,
|                                                     |                                                                           |                                                                              |                                                       |                                      |        | 2002         |         | 2001   
|                                                     |                                                                           |                                                                              |                                                       |                                      |        |              |         |        
|                                                     |                                                                           |                                                                              |                                                       | ASSETS                               |        |              |         |         |        |     |         | 
|Current assets:                                      |                                                                           |                                                                              |                                                       |                                      |        |              |         |        
|                                                     | Cash and cash equivalents                                                 |                                                                              | $                                                     | 78,784                               |        |              | $       | 167,677 |       
|                                                     | Marketable securities                                                     |                                                                              |                                                       | 87,394                               |        |              |         | 42,817  |       
|                                                     |                                                                           | Accounts receivable, net of allowances of $1,646 in 2002, and $2,429 in 2001 |                                                       |                                      | 36,756 |              |         |         | 35,842 |    
|                                                     | Inventories, net                                                          |                                                                              |                                                       | 31,467                               |        |              |         | 39,042  |       
|                                                     | Deferred income taxes                                                     |                                                                              |                                                       | 4,955                                |        |              |         | 5,628   |       
|                                                     | Income taxes receivable                                                   |                                                                              |                                                       | 14,096                               |        |              |         | 9,200   |       
|                                                     | Prepaid expenses and other current assets                                 |                                                                              |                                                       | 14,646                               |        |              |         | 15,682  |       
|                                                     |                                                                           |                                                                              |                                                       |                                      |        |              |         |        
|                                                     |                                                                           |                                                                              |                                                       | Total current assets                 |        |              | 268,098 |         |        |     | 315,888 | 
|Property, plant and equipment, net                   |                                                                           |                                                                              | 118,156                                               |                                      |        |              | 123,191 |        
|Goodwill, net                                        |                                                                           |                                                                              | 7,916                                                 |                                      |        |              | 7,620   |        
|Deferred income taxes                                |                                                                           |                                                                              | 4,853                                                 |                                      |        |              |        |        
|Other long-term assets, net                          |                                                                           |                                                                              | 17,459                                                |                                      |        |              | 12,357  |        
|                                                     |                                                                           |                                                                              |                                                       |                                      |        |              |         |        
|Total assets                                         |                                                                           | $                                                                            | 416,482                                               |                                      |        | $            | 459,056 |        
|                                                     |                                                                           |                                                                              |                                                       |                                      |        |              |         |        
|                                                     |                                                                           |                                                                              |                                                       | LIABILITIES AND STOCKHOLDERS EQUITY |        |              |         |         |        |     |         | 
|Current liabilities:                                 |                                                                           |                                                                              |                                                       |                                      |        |              |         |        
|                                                     | Accounts payable                                                          |                                                                              | $                                                     | 13,395                               |        |              | $       | 11,095  |       
|                                                     | Accrued liabilities                                                       |                                                                              |                                                       | 15,330                               |        |              |         | 15,912  |       
|                                                     | Accrued salaries and related benefits                                     |                                                                              |                                                       | 7,524                                |        |              |         | 6,268   |       
|                                                     | Loans, notes and bonds payable, current portion                           |                                                                              |                                                       | 1,285                                |        |              |         | 15,862  |       
|                                                     | Capital lease obligations, current portion                                |                                                                              |                                                       | 19                                   |        |              |         | 5,112   |       
|                                                     | Income taxes payable                                                      |                                                                              |                                                       | 448                                  |        |              |         | 1,733   |       
|                                                     | Other current liabilities                                                 |                                                                              |                                                       | 6,568                                |        |              |         | 4,584   |       
|                                                     |                                                                           |                                                                              |                                                       |                                      |        |              |         |        
|                                                     |                                                                           |                                                                              |                                                       | Total current liabilities            |        |              | 44,569  |         |        |     | 60,566  | 
|Loans, notes and bonds payable, less current portion |                                                                           |                                                                              | 115,177                                               |                                      |        |              | 116,025 |        
|Capital lease obligations, less current portion      |                                                                           |                                                                              | 31                                                    |                                      |        |              |        |        
|Deferred income taxes                                |                                                                           |                                                                              |                                                      |                                      |        |              | 1,849   |        
|Other long-term liabilities                          |                                                                           |                                                                              | 315                                                   |                                      |        |              | 602     |        
|Commitments and contingencies (Notes 4, 6 and 13)    |                                                                           |                                                                              |                                                      |                                      |        |              |        |        
|Stockholders equity:                                |                                                                           |                                                                              |                                                       |                                      |        |              |         |        
|                                                     | Preferred stock, par value $.01: 2,000 shares authorized; none issued     |                                                                              |                                                       |                                     |        |              |         |        |       
|                                                     | Common stock, par value $.01: 50,000 shares authorized; 30,673 and 30,394 |                                                                              |                                                       |                                      |        |              |         |         |       
|                                                     |                                                                           |                                                                              | issued and outstanding in 2002 and 2001, respectively |                                      |        | 307          |         |         |        | 304 |        
|                                                     | Additional paid-in capital                                                |                                                                              |                                                       | 207,412                              |        |              |         | 202,164 |       
|                                                     | Retained earnings                                                         |                                                                              |                                                       | 48,168                               |        |              |         | 78,889  |       
|                                                     | Accumulated other comprehensive income (loss)                             |                                                                              |                                                       | 503                                  |        |              |         | (1,343  | )     
|                                                     |                                                                           |                                                                              |                                                       |                                      |        |              |         |        
|                                                     |                                                                           |                                                                              |                                                       | Total stockholders equity           |        |              | 256,390 |         |        |     | 280,014 | 
|                                                     |                                                                           |                                                                              |                                                       |                                      |        |              |         |        
|Total liabilities and stockholders equity           |                                                                           | $                                                                            | 416,482                                               |                                      |        | $            | 459,056 |        
|                                                     |                                                                           |                                                                              |                                                       |                                      |        |              |         |        

See accompanying notes.

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##### Table of Contents



ATMI, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

|                                                        |                                           |   |                         |        |      |   |         |        |  |   |         |        | 
|------------------------------------------------------- | ----------------------------------------- | - | ----------------------- | ------ | ---- | - | ------- | ------ |  | - | ------- | ------ | 
|                                                        |                                           |   | Year Ended December 31,
|                                                        |                                           |   | 2002                    |        | 2001 |   | 2000   
|Revenues                                                |                                           | $ | 212,635                 |        |      | $ | 213,456 |        |  | $ | 299,960 |       
|Cost of revenues                                        |                                           |   | 131,260                 |        |      |   | 120,877 |        |  |   | 142,711 |       
|                                                        |                                           |   |                         |        |      |   |         |        |  |   |         |       
|Gross profit                                            |                                           |   | 81,375                  |        |      |   | 92,579  |        |  |   | 157,249 |       
|Operating expenses:                                     |                                           |   |                         |        |      |   |         |        |  |   |         |       
|                                                        | Research and development                  |   |                         | 30,538 |      |   |         | 31,731 |  |   |         | 28,211 | 
|                                                        | Selling, general and administrative       |   |                         | 66,666 |      |   |         | 73,511 |  |   |         | 71,928 | 
|                                                        | Merger and related costs                  |   |                         |       |      |   |         |       |  |   |         | 1,500  | 
|                                                        | Restructuring and other charges (Note 12) |   |                         | 31,522 |      |   |         | 14,011 |  |   |         |       | 
|                                                        |                                           |   |                         |        |      |   |         |        |  |   |         |       
|                                                        |                                           |   | 128,726                 |        |      |   | 119,253 |        |  |   | 101,639 |       
|                                                        |                                           |   |                         |        |      |   |         |        |  |   |         |       
|Operating income (loss)                                 |                                           |   | (47,351                 | )      |      |   | (26,674 | )      |  |   | 55,610  |       
|Interest income                                         |                                           |   | 4,868                   |        |      |   | 4,659   |        |  |   | 7,846   |       
|Interest expense                                        |                                           |   | (6,670                  | )      |      |   | (1,195  | )      |  |   | (1,247  | )     
|Other income, net                                       |                                           |   | 390                     |        |      |   | 7,669   |        |  |   | 8,313   |       
|                                                        |                                           |   |                         |        |      |   |         |        |  |   |         |       
|Income (loss) before income taxes and minority interest |                                           |   | (48,763                 | )      |      |   | (15,541 | )      |  |   | 70,522  |       
|Provision (benefit) for income taxes                    |                                           |   | (18,042                 | )      |      |   | (5,845  | )      |  |   | 26,486  |       
|                                                        |                                           |   |                         |        |      |   |         |        |  |   |         |       
|Income (loss) before minority interest                  |                                           |   | (30,721                 | )      |      |   | (9,696  | )      |  |   | 44,036  |       
|Minority interest                                       |                                           |   |                        |        |      |   |        |        |  |   | (351    | )     
|                                                        |                                           |   |                         |        |      |   |         |        |  |   |         |       
|Net income (loss)                                       |                                           | $ | (30,721                 | )      |      | $ | (9,696  | )      |  | $ | 43,685  |       
|                                                        |                                           |   |                         |        |      |   |         |        |  |   |         |       
|Net income (loss) per sharebasic                       |                                           | $ | (1.03                   | )      |      | $ | (0.33   | )      |  | $ | 1.51    |       
|                                                        |                                           |   |                         |        |      |   |         |        |  |   |         |       
|Net income (loss) per shareassuming dilution           |                                           | $ | (1.03                   | )      |      | $ | (0.33   | )      |  | $ | 1.44    |       
|                                                        |                                           |   |                         |        |      |   |         |        |  |   |         |       
|Weighted average shares outstandingbasic               |                                           |   | 29,896                  |        |      |   | 29,611  |        |  |   | 28,928  |       
|                                                        |                                           |   |                         |        |      |   |         |        |  |   |         |       
|Weighted average shares outstandingassuming dilution   |                                           |   | 29,896                  |        |      |   | 29,611  |        |  |   | 30,290  |       
|                                                        |                                           |   |                         |        |      |   |         |        |  |   |         |       

See accompanying notes.

F-4



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##### Table of Contents



ATMI, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

(in thousands)

|                                                                                                                      |  |   |        |  |         |   |            |  |               |   |         |   |       |   |             |   |  |   |         |   | 
|--------------------------------------------------------------------------------------------------------------------- |  | - | ------ |  | ------- | - | ---------- |  | ------------- | - | ------- | - | ----- | - | ----------- | - |  | - | ------- | - | 
|                                                                                                                      |  |   |        |  |         |   |            |  |               |   |         |   |       |   | Accumulated |   |  |   |        
|                                                                                                                      |  |   |        |  |         |   | Additional |  |               |   |         |   | Other |   |             |   | 
|                                                                                                                      |  |   | Common |  | Paid-in |   | Retained   |  | Comprehensive |   |         |   |      
|                                                                                                                      |  |   | Stock  |  | Capital |   | Earnings   |  | Income (Loss) |   | Total  
|                                                                                                                      |  |   |        |  |         |   |            |  |               |   |        
|Balance at December 31, 1999                                                                                          |  | $ | 281    |  |         | $ | 124,574    |  |               | $ | 44,995  |   |       | $ | 6,506       |   |  | $ | 176,356 |  
|Issuance of 497 common shares pursuant to the exercise of employee stock options                                      |  |   | 5      |  |         |   | 4,693      |  |               |   |        |   |       |   |            |   |  |   | 4,698   |  
|Issuance of 10 common shares pursuant to the exercise of warrants                                                     |  |   |       |  |         |   | 112        |  |               |   |        |   |       |   |            |   |  |   | 112     |  
|Issuance of 55 common shares pursuant to the employee stock purchase plan                                             |  |   | 1      |  |         |   | 1,492      |  |               |   |        |   |       |   |            |   |  |   | 1,493   |  
|Sale of 1,500 common shares, net of issuance costs of $4,075                                                          |  |   | 15     |  |         |   | 63,410     |  |               |   |        |   |       |   |            |   |  |   | 63,425  |  
|Compensation from the issuance of common shares                                                                       |  |   |       |  |         |   | 82         |  |               |   |        |   |       |   |            |   |  |   | 82      |  
|Tax benefit related to nonqualified stock options                                                                     |  |   |       |  |         |   | 4,412      |  |               |   |        |   |       |   |            |   |  |   | 4,412   |  
|Adjustment to reflect change in pooled entity fiscal year                                                             |  |   |       |  |         |   |           |  |               |   | (95     | ) |       |   |            |   |  |   | (95     | )
|Net income                                                                                                            |  |   |       |  |         |   |           |  |               |   | 43,685  |   |       |   |            |   |  |   | 43,685  |  
|Reclassification
adjustment for realized gain on vavailable-for-sale securities sold
(net of tax provision of $2,161) |  |   |       |  |         |   |           |  |               |   |        |   |       |   | (3,680      | ) |  |   | (3,680  | )
|Unrealized loss on available-for-sale securities (net of tax benefit of $1,618)                                       |  |   |       |  |         |   |           |  |               |   |        |   |       |   | (2,895      | ) |  |   | (2,895  | )
|Cumulative translation adjustment                                                                                     |  |   |       |  |         |   |           |  |               |   |        |   |       |   | (1,026      | ) |  |   | (1,026  | )
|                                                                                                                      |  |   |        |  |         |   |            |  |               |   |         |   |       |   |             |   |  |   |         |  
|Comprehensive income                                                                                                  |  |   |        |  |         |   |            |  |               |   |         |   |       |   |             |   |  |   | 36,084  |  
|                                                                                                                      |  |   |        |  |         |   |            |  |               |   |         |   |       |   |             |   |  |   |         |  
|Balance at December 31, 2000                                                                                          |  |   | 302    |  |         |   | 198,775    |  |               |   | 88,585  |   |       |   | (1,095      | ) |  |   | 286,567 |  
|Issuance of 102 common shares pursuant to the exercise of employee stock options                                      |  |   | 1      |  |         |   | 1,034      |  |               |   |        |   |       |   |            |   |  |   | 1,035   |  
|Issuance of 97 common shares pursuant to the
employee stock purchase plan                                             |  |   | 1      |  |         |   | 1,544      |  |               |   |        |   |       |   |            |   |  |   | 1,545   |  
|Compensation from the issuance of common shares                                                                       |  |   |       |  |         |   | 88         |  |               |   |        |   |       |   |            |   |  |   | 88      |  
|Tax benefit related to nonqualified stock options                                                                     |  |   |       |  |         |   | 723        |  |               |   |        |   |       |   |            |   |  |   | 723     |  
|Net loss                                                                                                              |  |   |       |  |         |   |           |  |               |   | (9,696  | ) |       |   |            |   |  |   | (9,696  | )
|Reclassification
adjustment for realized gain on available-for-sale securities sold (net of tax provision of $637)    |  |   |       |  |         |   |           |  |               |   |        |   |       |   | (1,039      | ) |  |   | (1,039  | )
|Unrealized gain on available-for-sale securities (net of tax provision of $728)                                       |  |   |       |  |         |   |           |  |               |   |        |   |       |   | 1,187       |   |  |   | 1,187   |  
|Cumulative translation adjustment                                                                                     |  |   |       |  |         |   |           |  |               |   |        |   |       |   | (396        | ) |  |   | (396    | )
|                                                                                                                      |  |   |        |  |         |   |            |  |               |   |         |   |       |   |             |   |  |   |         |  
|Comprehensive loss                                                                                                    |  |   |        |  |         |   |            |  |               |   |         |   |       |   |             |   |  |   | (9,944  | )
|                                                                                                                      |  |   |        |  |         |   |            |  |               |   |         |   |       |   |             |   |  |   |         |  
|Balance at December 31, 2001                                                                                          |  |   | 304    |  |         |   | 202,164    |  |               |   | 78,889  |   |       |   | (1,343      | ) |  |   | 280,014 |  
|Issuance of 179 common shares pursuant to the exercise of employee stock options                                      |  |   | 2      |  |         |   | 2,769      |  |               |   |        |   |       |   |            |   |  |   | 2,771   |  
|Issuance of 82 common shares pursuant to the employee stock purchase plan                                             |  |   | 1      |  |         |   | 1,600      |  |               |   |        |   |       |   |            |   |  |   | 1,601   |  
|Compensation from the issuance of common shares                                                                       |  |   |       |  |         |   | 11         |  |               |   |        |   |       |   |            |   |  |   | 11      |  
|Tax benefit related to nonqualified stock options                                                                     |  |   |       |  |         |   | 868        |  |               |   |        |   |       |   |            |   |  |   | 868     |  
|Net loss                                                                                                              |  |   |       |  |         |   |           |  |               |   | (30,721 | ) |       |   |            |   |  |   | (30,721 | )
|Reclassification
adjustment for realized gain on available-for-sale securities sold (net of tax provision of $366)    |  |   |       |  |         |   |           |  |               |   |        |   |       |   | (598        | ) |  |   | (598    | )
|Unrealized gain on available-for-sale securities (net of tax provision of $560)                                       |  |   |       |  |         |   |           |  |               |   |        |   |       |   | 1,108       |   |  |   | 1,108   |  
|Cumulative translation adjustment                                                                                     |  |   |       |  |         |   |           |  |               |   |        |   |       |   | 1,336       |   |  |   | 1,336   |  
|                                                                                                                      |  |   |        |  |         |   |            |  |               |   |         |   |       |   |             |   |  |   |         |  
|Comprehensive loss                                                                                                    |  |   |        |  |         |   |            |  |               |   |         |   |       |   |             |   |  |   | (28,875 | )
|                                                                                                                      |  |   |        |  |         |   |            |  |               |   |         |   |       |   |             |   |  |   |         |  
|Balance at December 31, 2002                                                                                          |  | $ | 307    |  |         | $ | 207,412    |  |               | $ | 48,168  |   |       | $ | 503         |   |  | $ | 256,390 |  
|                                                                                                                      |  |   |        |  |         |   |            |  |               |   |         |   |       |   |             |   |  |   |         |  

See accompanying notes.

F-5



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##### Table of Contents



ATMI, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


|                                                                                         |                                                                |                     |         |                                                  |         |                         |         |        |        |      |          |        |         |   |         |  
|---------------------------------------------------------------------------------------- | -------------------------------------------------------------- | ------------------- | ------- | ------------------------------------------------ | ------- | ----------------------- | ------- | ------ | ------ | ---- | -------- | ------ | ------- | - | ------- | -
|                                                                                         |                                                                |                     |         |                                                  |         | Year Ended December 31,
|                                                                                         |                                                                |                     |         |                                                  |         | 2002                    |         | 2001   |        | 2000
|                                                                                         |                                                                |                     |         |                                                  |         |                         |         |        |        |     
|Operating activities                                                                     |                                                                |                     |         |                                                  |         |                         |         |        |        |      |          |       
|Net income (loss)                                                                        |                                                                | $                   | (30,721 | )                                                |         | $                       | (9,696  | )      |        | $    | 43,685   |       
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |                                                                |                     |         |                                                  |         |                         |         |        |        |      |          |       
|                                                                                         | Depreciation and amortization                                  |                     |         | 19,494                                           |         |                         |         | 17,302 |        |      |          | 12,787 |        
|                                                                                         | Restructuring and other charges                                |                     |         | 31,522                                           |         |                         |         | 9,939  |        |      |          |       |        
|                                                                                         | Provision for bad debt                                         |                     |         | 28                                               |         |                         |         | 2,785  |        |      |          | 431    |        
|                                                                                         | Provision for inventory obsolescence & lower-of-cost
or market |                     |         | 3,753                                            |         |                         |         | 1,918  |        |      |          | 733    |        
|                                                                                         | Deferred income taxes                                          |                     |         | (6,204                                           | )       |                         |         | (1,921 | )      |      |          | 985    |        
|                                                                                         | Tax benefit from nonqualified stock options                    |                     |         | 868                                              |         |                         |         | 723    |        |      |          | 4,412  |        
|                                                                                         | Realized gain on sale of marketable securities                 |                     |         | (958                                             | )       |                         |         | (2,605 | )      |      |          | (9,520 | )      
|                                                                                         | Realized loss on investments                                   |                     |         | 400                                              |         |                         |         | 359    |        |      |          | 1,250  |        
|                                                                                         | Effect of change of fiscal year of pooled entity               |                     |         |                                                 |         |                         |         |       |        |      |          | (95    | )      
|                                                                                         | Minority interest in net earnings of subsidiaries              |                     |         |                                                 |         |                         |         |       |        |      |          | 351    |        
|                                                                                         | Other                                                          |                     |         | 11                                               |         |                         |         | 88     |        |      |          | 82     |        
|                                                                                         | Changes in operating assets and liabilities:                   |                     |         |                                                  |         |                         |         |        |        |      |          |        |        
|                                                                                         |                                                                | Accounts receivable |         |                                                  | (942    | )                       |         |        | 31,655 |      |          |        | (27,755 | )
|                                                                                         |                                                                | Inventories         |         |                                                  | 3,822   |                         |         |        | (2,142 | )    |          |        | (18,365 | )
|                                                                                         |                                                                | Other assets        |         |                                                  | 1,838   |                         |         |        | (8,842 | )    |          |        | (5,934  | )
|                                                                                         |                                                                | Accounts payable    |         |                                                  | 2,300   |                         |         |        | (8,025 | )    |          |        | 11,980  |  
|                                                                                         |                                                                | Accrued expenses    |         |                                                  | (376    | )                       |         |        | (4,628 | )    |          |        | (5,401  | )
|                                                                                         |                                                                | Income taxes        |         |                                                  | (11,493 | )                       |         |        | (4,072 | )    |          |        | 1,034   |  
|                                                                                         |                                                                | Other liabilities   |         |                                                  | 1,697   |                         |         |        | 1,288  |      |          |        | (1,589  | )
|                                                                                         |                                                                |                     |         |                                                  |         |                         |         |        |        |      |          |       
|                                                                                         |                                                                |                     |         | Net cash provided by operating activities        |         |                         | 15,039  |        |        |      | 24,126   |        |         |   | 9,071   |  
|                                                                                         |                                                                |                     |         |                                                  |         |                         |         |        |        |      |          |       
|Investing activities                                                                     |                                                                |                     |         |                                                  |         |                         |         |        |        |      |          |       
|Capital expenditures                                                                     |                                                                |                     | (40,876 | )                                                |         |                         | (63,046 | )      |        |      | (29,520  | )     
|Acquisitions and other equity investments                                                |                                                                |                     | (5,000  | )                                                |         |                         | (8,683  | )      |        |      | (5,000   | )     
|Purchase of marketable securities                                                        |                                                                |                     | (44,350 | )                                                |         |                         | (40,093 | )      |        |      | (5,320   | )     
|Sale of marketable securities                                                            |                                                                |                     | 1,127   |                                                  |         |                         | 3,480   |        |        |      | 15,932   |       
|                                                                                         |                                                                |                     |         |                                                  |         |                         |         |        |        |      |          |       
|                                                                                         |                                                                |                     |         | Net cash used by investing activities            |         |                         | (89,099 | )      |        |      | (108,342 | )      |         |   | (23,908 | )
|                                                                                         |                                                                |                     |         |                                                  |         |                         |         |        |        |      |          |       
|Financing activities                                                                     |                                                                |                     |         |                                                  |         |                         |         |        |        |      |          |       
|Borrowings from loans, notes, and bonds payable                                          |                                                                |                     |        |                                                  |         |                         | 129,977 |        |        |      |         |       
|Payments on loans, notes, and bonds payable                                              |                                                                |                     | (15,425 | )                                                |         |                         | (5,301  | )      |        |      | (2,877   | )     
|Payments on capital lease obligations                                                    |                                                                |                     | (5,117  | )                                                |         |                         | (2,753  | )      |        |      | (2,742   | )     
|Proceeds from sale of common stock, net                                                  |                                                                |                     |        |                                                  |         |                         |        |        |        |      | 63,425   |       
|Proceeds from exercise of stock options, warrants and
employee                           |                                                                |                     |         |                                                  |         |                         |         |        |        |      |          |       
|                                                                                         | stock purchase plan shares                                     |                     |         | 4,372                                            |         |                         |         | 2,580  |        |      |          | 6,303  |        
|                                                                                         |                                                                |                     |         |                                                  |         |                         |         |        |        |      |          |       
|                                                                                         |                                                                |                     |         | Net cash provided (used) by financing activities |         |                         | (16,170 | )      |        |      | 124,503  |        |         |   | 64,109  |  
|                                                                                         |                                                                |                     |         |                                                  |         |                         |         |        |        |      |          |       
|Effects of exchange rate changes on cash                                                 |                                                                |                     | 1,337   |                                                  |         |                         | (396    | )      |        |      | (126     | )     
|                                                                                         |                                                                |                     |         |                                                  |         |                         |         |        |        |      |          |       
|Net increase (decrease) in cash and cash equivalents                                     |                                                                |                     | (88,893 | )                                                |         |                         | 39,891  |        |        |      | 49,146   |       
|Cash and cash equivalents, beginning of year                                             |                                                                |                     | 167,677 |                                                  |         |                         | 127,786 |        |        |      | 78,640   |       
|                                                                                         |                                                                |                     |         |                                                  |         |                         |         |        |        |      |          |       
|Cash and cash equivalents, end of year                                                   |                                                                | $                   | 78,784  |                                                  |         | $                       | 167,677 |        |        | $    | 127,786  |       
|                                                                                         |                                                                |                     |         |                                                  |         |                         |         |        |        |      |          |       

See accompanying notes.

F-6



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##### Table of Contents



ATMI, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|1. |  | Description of Business, Basis of Presentation and Summary of Significant Accounting Policies
|-- |  | ---------------------------------------------------------------------------------------------

Description of Business

ATMI is a leading supplier of materials, equipment and related services used in
the manufacture of semiconductor devices. The Company specifically targets the
front-end semiconductor materials market. 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 contaminants;                                     
| |   |  |                                                                                                    
| |  |  | specialty thin film deposition services that provide coated wafers directly to customers; and      
| |   |  |                                                                                                    
| |  |  | outsourced parts cleaning and semiconductor fabrication tool maintenance.                          

General

The preparation of the consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. On an ongoing basis, the Company evaluates
its estimates, including those related to bad debts, inventories, marketable
securities and investments, intangible assets, income taxes, restructuring
charges, and contingencies and litigation. The Company bases its estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions and such differences could
be material to the financial statements.

Basis of Presentation

The consolidated financial statements include the accounts of ATMI, Inc. and
its majority-owned subsidiaries (ATMI, or the Company), after elimination
of intercompany accounts and transactions.

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

Significant Accounting Policies

Revenue Recognition

The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin
No. 101, Revenue Recognition in Financial Statements(SAB 101), as amended by
SAB 101A and 101B. SAB 101 requires that four basic criteria must be met
before revenue can be recognized: (1) persuasive evidence of an arrangement
exists; (2) delivery has occurred or services rendered; (3) the fee is fixed
and determinable; and (4) collectibility is reasonably assured. Determination
of criteria (3) and (4) are based on managements judgments regarding the fixed
nature of the fee charged for products delivered and services rendered and
collectibility of those fees. The Companys revenues from product sales are
recognized upon title transfer, which generally occurs upon shipment. In
instances where final acceptance of the system is specified by the customer,
revenue is deferred until all acceptance criteria have been met. Service
revenue is generally recognized ratably over the period of the related
contract, or if not under contract, when service is provided. The Company
accrues for warranty costs, sales returns, and other allowances based on its
historical experience. Should actual product failure rates or customer return
experience differ from the Companys estimates, revisions to the estimated
accruals would be required.

F-7



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##### Table of Contents



ATMI, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|1. |  | Description of Business, Basis of Presentation and Summary of Significant Accounting Policies
(continued)
|-- |  | ---------------------------------------------------------------------------------------------------------

Shipping and Handling Fees and Costs

The Company includes all shipping and handling billings within revenues, and
freight costs incurred for product shipments within cost of revenues.

Bad Debt

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
grants extended payment terms, which vary based on the geographic location of
the customer and range from 30 to 90 days. There are no material
collectibility issues with these extended-term receivables. The Company
maintains allowances for doubtful accounts for estimated losses resulting from
the inability of its customers to make required payments. Past due status of
accounts receivable is determined primarily based upon contractual terms.

Risks and Uncertainties

Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist primarily of cash, cash equivalents,
marketable securities, and accounts receivable. The Company places its cash,
cash equivalents, and marketable securities primarily in market rate accounts
and corporate and municipal debt obligations. The Company performs ongoing
credit evaluations of its customers financial condition and generally requires
no collateral from its customers. The Company utilized one vendor to
manufacture and distribute product within the Materials segment that accounted
for approximately 19%, 16% and 14% of consolidated revenues in 2002, 2001 and
2000, respectively. The Company had amounts due from one customer that
accounted for approximately 26% and 15% of accounts receivable at December 31,
2002 and 2001, respectively.

Research and Development

Research and development costs primarily relate to self-funded projects and
include materials, labor, and overhead, and are expensed as incurred. The
Company also incurs research and development costs, which are funded by
external sources. Contract funding amounts are classified within cost of
revenues and cost share agreement funding is classified within research and
development expense.

Cash, Cash Equivalents, Marketable Securities and Investments

Highly liquid investments with maturities of three months or less, when
purchased, are classified as cash and cash equivalents. Investments in publicly
traded securities with maturities greater than three months are classified as
marketable securities.

The Company holds minority interests in companies having operations or
technology in areas within or related to its strategic focus, some of which are
in publicly traded companies whose share prices are highly volatile and some of
which are in private companies whose value is difficult to determine.
Investments in private companies are included in the consolidated balance
sheets under the caption other long-term assets, net, and are accounted for at
aggregate cost. ATMI records an impairment charge when it believes an
investment has experienced a decline in value that is other than temporary.

F-8



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##### Table of Contents



ATMI, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|1. |  | Description of Business, Basis of Presentation and Summary of Significant Accounting Policies
(continued)
|-- |  | ---------------------------------------------------------------------------------------------------------

The Company accounts for marketable securities in accordance with Statement of
Financial Accounting Standards (SFAS) No. 115, Accounting for Certain
Investments in Debt and Equity Securities. 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 (loss), 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. The 2002 results include a gain of approximately $1.0 million from the
sale of available-for-sale securities, offset by write-downs of approximately
$0.4 million for other-than-temporary declines in fair value of other
available-for-sale securities. The 2001 results include a gain of
approximately $2.6 million from the sale of available-for-sale equity
securities, offset by a write-down of approximately $0.4 million for an
other-than-temporary decline in fair value of other available-for-sale equity
securities. During 2000, the Company realized a $9.5 million gain on the sale
of available-for-sale securities, offset by a loss of $1.3 million on a
cost-basis investment. These amounts are included in other income for the years
ended December 31, 2002, 2001 and 2000.

Inventories

Inventories are stated at the lower of cost or market using the first-in,
first-out method. The Company provides inventory allowances for estimated
excess, obsolescence and unmarketable inventory equal to the difference between
the cost of inventory and estimated market value based upon future demand
forecasts and market conditions.

Property, Plant and Equipment

Property, plant 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 as follows: buildings, 15 to 35
years; machinery and equipment, 3 to 10 years; furniture and fixtures, 5 years;
and leasehold improvements are amortized over the lesser of lease term or
estimated useful life. Interest cost capitalized in 2002, 2001 and 2000 was
$0.9 million, $1.0 million and $0, respectively.

Foreign Currency Translation

The Companys foreign subsidiaries operate primarily using local currencies.
Accordingly, all assets and liabilities of these subsidiaries are translated
using exchange rates in effect at the end of the period, and revenues and
expenses are translated using average exchange rates for the period. The
resulting translation adjustments are included in a separate component of
accumulated other comprehensive income (loss). Gains or losses resulting from
foreign currency transactions are included in other income (expense) and have
not been significant.

Income 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 the financial reporting and the tax basis of assets
and liabilities and are measured using the enacted tax rates expected to apply
to taxable income in the periods in which the deferred tax assets or
liabilities are expected to be realized or settled. The Company evaluates the
realizability of the deferred tax assets on a quarterly basis. If a portion or
all of the valuation allowance is unnecessary, then the related tax benefits
will reduce the future income tax provision anticipated at that time.

F-9



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##### Table of Contents



ATMI, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|1. |  | Description of Business, Basis of Presentation and Summary of Significant Accounting Policies
(continued)
|-- |  | ---------------------------------------------------------------------------------------------------------

Fair Values of Financial Instruments

The Companys financial instruments consist primarily of cash, cash
equivalents, marketable securities, accounts receivable, accounts payable,
accrued liabilities and debt. Marketable securities are accounted for at fair
value using quoted market prices for those securities. All other financial
instruments are accounted for on a historical cost basis, which due to the
nature of these instruments, approximates fair value at the balance sheet
dates.

Long-Lived Assets

Effective January 1, 2002, ATMI has adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets, which supersedes SFAS No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of. There was no material impact on ATMIs financial position or
results of operations at the date of adoption. However, see Note 12 for a
discussion of the impairment charge taken in 2002. Long-lived assets and
certain identifiable intangible assets to be held and used are reviewed for
impairment whenever indicators of impairment are present. If indicators of
impairment are present, management determines whether the sum of the estimated
undiscounted future cash flows attributable to the long-lived asset in question
is less than its carrying amount. Measurement of an impairment loss for
long-lived assets is based on the excess of the carrying amount over its
respective fair value. Long-lived assets to be disposed of are reported at the
lower of carrying amount or fair value less costs to sell.

Goodwill

The Company accounts for goodwill in accordance with SFAS No. 142, Goodwill
and Other Intangible Assets. SFAS No. 142 changed the way companies account
for goodwill in that goodwill is no longer amortized. Instead, goodwill is
tested for impairment at least annually, or when certain indicators exist which
could cause management to believe that goodwill could be impaired. Goodwill of
$7.9 million and $7.6 million at December 31, 2002 and 2001 is stated net of
accumulated amortization of $3.5 million at December 31, 2002 and 2001,
respectively.

The Statement of Operations for the year ended December 31, 2002 includes the
effect of adopting this new standard. The effect on reported net income (loss)
for the years ended December 31, 2001 and 2000 is shown in the following table
(in thousands, except per share data):

|                                  |  |                         |        |      |  |   |        | 
|--------------------------------- |  | ----------------------- | ------ | ---- |  | - | ------ | 
|                                  |  | Year Ended December 31,
|                                  |  | 2001                    |        | 2000
|                                  |  |                         |        |     
|Net income (loss), as reported    |  | $                       | (9,696 | )    |  | $ | 43,685 | 
|Goodwill amortization, net of tax |  |                         | 465    |      |  |   | 374    | 
|                                  |  |                         |        |      |  |   |        | 
|Pro forma net income (loss)       |  | $                       | (9,231 | )    |  | $ | 44,059 | 
|Earnings (loss) per share:        |  |                         |        |      |  |   |        | 
|Basic-as reported                 |  | $                       | (0.33  | )    |  | $ | 1.51   | 
|Basic-pro forma                   |  | $                       | (0.31  | )    |  | $ | 1.52   | 
|                                 
|Diluted-as reported               |  | $                       | (0.33  | )    |  | $ | 1.44   | 
|Diluted-pro forma                 |  | $                       | (0.31  | )    |  | $ | 1.45   | 

F-10



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##### Table of Contents



ATMI, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|1. |  | Description of Business, Basis of Presentation and Summary of Significant Accounting Policies
(continued)
|-- |  | ---------------------------------------------------------------------------------------------------------

Intangibles consisted of the following (in thousands):

|                           |  |              |        |      |  |   |        |  
|-------------------------- |  | ------------ | ------ | ---- |  | - | ------ | -
|                           |  | December 31,
|                           |  | 2002         |        | 2001
|                           |  |              |        |     
|Goodwill, gross            |  | $            | 11,415 |      |  | $ | 11,156 |  
|Accumulated amortization   |  |              | (3,499 | )    |  |   | (3,536 | )
|                           |  |              |        |      |  |   |        |  
|Goodwill, net              |  | $            | 7,916  |      |  | $ | 7,620  |  
|                           |  |              |        |      |  |   |        |  
|Debt issuance costs, gross |  | $            | 4,257  |      |  | $ | 4,257  |  
|Accumulated amortization   |  |              | (1,012 | )    |  |   | (171   | )
|                           |  |              |        |      |  |   |        |  
|Debt issuance costs, net   |  | $            | 3,245  |      |  | $ | 4,086  |  
|                           |  |              |        |      |  |   |        |  
|Other intangibles, gross   |  | $            | 6,314  |      |  | $ | 2,485  |  
|Accumulated amortization   |  |              | (1,882 | )    |  |   | (1,303 | )
|                           |  |              |        |      |  |   |        |  
|Other intangibles, net     |  | $            | 4,432  |      |  | $ | 1,182  |  
|                           |  |              |        |      |  |   |        |  

Amortization expense on intangible assets was $1.4 million, $1.2 million and
$1.2 million for the years ended December 31, 2002, 2001 and 2000,
respectively. Amortization of debt issuance costs of $0.8 million, $0.2 million
and $0 for the years ended December 31, 2002, 2001 and 2000, respectively, is
included as a component of interest expense on the Statement of Operations.
The approximate amortization expenses to be recognized related to intangible
assets for the following years ended are (in thousands):

|           |  |   |       | 
|---------- |  | - | ----- | 
|2003       |  | $ | 2,142 | 
|2004       |  |   | 2,125 | 
|2005       |  |   | 1,840 | 
|2006       |  |   | 1,234 | 
|2007       |  |   | 299   | 
|Thereafter |  |   | 37    | 
|           |  |   |       | 
|           |  | $ | 7,677 | 
|           |  |   |       | 

Other Intangible Assets

Other intangible assets, such as acquired patents and trademarks and covenants
not to compete, are currently amortized on the straight-line method over their
estimated useful lives ranging from 2 to 5 years. These assets are currently
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.

F-11



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##### Table of Contents



ATMI, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|1. |  | Description of Business, Basis of Presentation and Summary of Significant Accounting Policies
(continued)
|-- |  | ---------------------------------------------------------------------------------------------------------

Stock-Based Compensation

At December 31, 2002, the Company has five stock-based employee compensation
plans, which are described more fully in Note 9. The Company accounts for
these plans under the recognition and measurement principles of Accounting
Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees, and related Interpretations. No stock-based employee compensation
cost is reflected in net income, as all options granted under those plans had
an exercise price equal to market value of the underlying common stock on the
date of grant. In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation-Transition and Disclosure. SFAS No. 148 amends SFAS
No. 123, Accounting for Stock-Based Compensation, to provide alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, the Statement
amends the disclosure requirements of SFAS No. 123 to require prominent
disclosures in both annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of the method
used on reported results. The Company has adopted the disclosure requirements
of this Statement as of December 31, 2002. The following table sets forth the
effect on net income and earnings per share if the Company had applied the fair
value recognition provisions of SFAS No. 123, Accounting For Stock-Based
Compensation, to stock-based employee compensation (in thousands, except per
share data):

|                                                                                                                                            |  |                         |         |      |  |      |         |   |  |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ------- | ---- |  | ---- | ------- | - |  | - | ------ | -
|                                                                                                                                            |  | Year Ended December 31,
|                                                                                                                                            |  | 2002                    |         | 2001 |  | 2000
|                                                                                                                                            |  |                         |         |      |  |     
|Net income (loss), as reported                                                                                                              |  | $                       | (30,721 | )    |  | $    | (9,696  | ) |  | $ | 43,685 |  
|Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards,
net of related tax effects |  |                         | (11,704 | )    |  |      | (11,032 | ) |  |   | (9,032 | )
|                                                                                                                                            |  |                         |         |      |  |      |         |   |  |   |        |  
|Pro forma net income (loss)                                                                                                                 |  | $                       | (42,425 | )    |  | $    | (20,728 | ) |  | $ | 34,653 |  
|Earnings (loss) per share:                                                                                                                  |  |                         |         |      |  |      |         |   |  |   |        |  
|Basic-as reported                                                                                                                           |  | $                       | (1.03   | )    |  | $    | (0.33   | ) |  | $ | 1.51   |  
|Basic-pro forma                                                                                                                             |  | $                       | (1.42   | )    |  | $    | (0.70   | ) |  | $ | 1.20   |  
|                                                                                                                                           
|Diluted-as reported                                                                                                                         |  | $                       | (1.03   | )    |  | $    | (0.33   | ) |  | $ | 1.44   |  
|Diluted-pro forma                                                                                                                           |  | $                       | (1.42   | )    |  | $    | (0.70   | ) |  | $ | 1.14   |  

Recent Accounting Pronouncements

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

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. SFAS No. 146 requires that a liability for
a cost associated with an exit or disposal activity be recognized when the
liability is incurred, rather than on the date of commitment to an exit plan.
The provisions of this Statement are effective for exit or disposal activities
that are initiated after December 31, 2002. ATMI anticipates that adoption of
this standard will not materially impact the Companys financial position or
results of operations.

F-12



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##### Table of Contents



ATMI, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|1. |  | Description of Business, Basis of Presentation and Summary of Significant Accounting Policies
(continued)
|-- |  | ---------------------------------------------------------------------------------------------------------

In November 2002, the FASB issued Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others. This Interpretation elaborates on the
disclosures to be made by a guarantor in its interim and annual financial
statements about its obligations under certain guarantees that it has issued.
The Interpretation also clarifies that a guarantor is required to recognize, at
the inception of a guarantee, a liability for the fair value of the obligation
undertaken in issuing a guarantee. The initial recognition and measurement
provisions are applicable on a prospective basis to guarantees issued or
modified after December 31, 2002. The disclosure requirements are effective
for the year ended December 31, 2002 and are provided in the table below (in
thousands):

|                                             |  |                     |        |  
|-------------------------------------------- |  | ------------------- | ------ | -
|                                             |  | Accrual for Product
|                                             |  | Warranty Costs     
|                                             |  |                    
|Balance December 31,1999                     |  | $                   | 697    |  
|Charged to expense                           |  |                     | 940    |  
|Warranty service costs deducted from accrual |  |                     | (993   | )
|                                             |  |                     |        |  
|Balance December 31, 2000                    |  |                     | 644    |  
|Charged to expense                           |  |                     | 695    |  
|Warranty service costs deducted from accrual |  |                     | (562   | )
|                                             |  |                     |        |  
|Balance December 31, 2001                    |  |                     | 777    |  
|Charged to expense                           |  |                     | 1,770  |  
|Warranty service costs deducted from accrual |  |                     | (1,531 | )
|                                             |  |                     |        |  
|Balance December 31, 2002                    |  | $                   | 1,016  |  
|                                             |  |                     |        |  



|2. |  | Marketable Securities
|-- |  | ---------------------

Marketable securities are comprised of the following at December 31, (in thousands):

|                            |  |      |        |             |  |            |       |           |  |             |        |       |  |            |        |           |  |   |       |  |  |   |        | 
|--------------------------- |  | ---- | ------ | ----------- |  | ---------- | ----- | --------- |  | ----------- | ------ | ----- |  | ---------- | ------ | --------- |  | - | ----- |  |  | - | ------ | 
|                            |  |      |        |             |  | 2002       |       |           |  |             |        |       |  |            |        | 2001      |  |   |       | 
|                            |  |      |        |             |  |            |       |           |  |             |        |       |  |            |        |           |  |   |       | 
|                            |  |      |        |             |  | Gross      |       | Estimated |  |             |        |       |  | Gross      |        | Estimated
|                            |  |      |        |             |  | Unrealized |       | Fair      |  |             |        |       |  | Unrealized |        | Fair     
|                            |  | Cost |        | Gain (loss) |  | Value      |       | Cost      |  | Gain (loss) |        | Value
|                            |  |      |        |             |  |            |       |           |  |             |        |      
|Common stock                |  | $    | 679    |             |  | $          | 1,474 |           |  | $           | 2,153  |       |  | $          | 1,248  |           |  | $ | 1,448 |  |  | $ | 2,696  | 
|Corporate debt obligations  |  |      | 30,841 |             |  |            | 137   |           |  |             | 30,978 |       |  |            | 20,412 |           |  |   | 7     |  |  |   | 20,419 | 
|Government obligations      |  |      | 53,848 |             |  |            | 415   |           |  |             | 54,263 |       |  |            | 19,649 |           |  |   | 53    |  |  |   | 19,702 | 
|                            |  |      |        |             |  |            |       |           |  |             |        |       |  |            |        |           |  |   |       |  |  |   |        | 
|Total marketable securities |  | $    | 85,368 |             |  | $          | 2,026 |           |  | $           | 87,394 |       |  | $          | 41,309 |           |  | $ | 1,508 |  |  | $ | 42,817 | 
|                            |  |      |        |             |  |            |       |           |  |             |        |       |  |            |        |           |  |   |       |  |  |   |        | 

The amortized cost and estimated fair value of available-for-sale securities,
by contractual maturity, as of December 31, 2002 are shown below. Expected
maturities may differ from contractual maturities because the issuers of the
securities may exercise the right to prepay obligations without prepayment
penalties.

|                                       |  |      |        |            |  |           |        | 
|-------------------------------------- |  | ---- | ------ | ---------- |  | --------- | ------ | 
|                                       |  |      |        |            |  | Estimated
|                                       |  | Cost |        | Fair Value
|                                       |  |      |        |           
|Due in one year or less                |  | $    | 33,186 |            |  | $         | 33,270 | 
|Due after one year through three years |  |      | 51,503 |            |  |           | 51,971 | 
|                                       |  |      |        |            |  |           |        | 
|                                       |  |      | 84,689 |            |  |           | 85,241 | 
|Common stock                           |  |      | 679    |            |  |           | 2,153  | 
|                                       |  |      |        |            |  |           |        | 
|                                       |  | $    | 85,368 |            |  | $         | 87,394 | 
|                                       |  |      |        |            |  |           |        | 

F-13



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##### Table of Contents



ATMI, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|3. |  | Inventories
|-- |  | -----------

Inventories are comprised of the following at December 31, (in thousands):

|                                |  |      |        |      |  |   |        |  
|------------------------------- |  | ---- | ------ | ---- |  | - | ------ | -
|                                |  | 2002 |        | 2001
|                                |  |      |        |     
|Raw materials                   |  | $    | 20,305 |      |  | $ | 25,093 |  
|Work in process                 |  |      | 4,210  |      |  |   | 5,120  |  
|Finished goods                  |  |      | 11,000 |      |  |   | 11,918 |  
|                                |  |      |        |      |  |   |        |  
|                                |  |      | 35,515 |      |  |   | 42,131 |  
|Excess and obsolescence reserve |  |      | (4,048 | )    |  |   | (3,089 | )
|                                |  |      |        |      |  |   |        |  
|                                |  | $    | 31,467 |      |  | $ | 39,042 |  
|                                |  |      |        |      |  |   |        |  



|4. |  | Property, Plant and Equipment
|-- |  | -----------------------------

Property, plant and equipment is comprised of the following (in thousands):

|                                          |  |              |         |      |  |   |         |  
|----------------------------------------- |  | ------------ | ------- | ---- |  | - | ------- | -
|                                          |  | December 31,
|                                          |  | 2002         |         | 2001
|                                          |  |              |         |     
|Land                                      |  | $            | 2,618   |      |  | $ | 2,576   |  
|Buildings                                 |  |              | 13,475  |      |  |   | 11,660  |  
|Machinery and equipment                   |  |              | 121,978 |      |  |   | 109,481 |  
|Furniture and fixtures                    |  |              | 6,434   |      |  |   | 5,516   |  
|Leasehold improvements                    |  |              | 18,639  |      |  |   | 27,506  |  
|Construction in progress                  |  |              | 36,001  |      |  |   | 31,711  |  
|                                          |  |              |         |      |  |   |         |  
|                                          |  |              | 199,145 |      |  |   | 188,450 |  
|Accumulated depreciation and amortization |  |              | (80,989 | )    |  |   | (65,259 | )
|                                          |  |              |         |      |  |   |         |  
|                                          |  | $            | 118,156 |      |  | $ | 123,191 |  
|                                          |  |              |         |      |  |   |         |  

Depreciation and amortization expense for property, plant and equipment for the
years ended December 31, 2002, 2001, and 2000 was $18.9 million, $16.1 million
and $11.9 million, respectively.

As of December 31, 2002, the Company had commitments for capital expenditures of $3.4 million.

F-14



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##### Table of Contents



ATMI, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|5. |  | Loans, Notes and Bonds Payable
|-- |  | ------------------------------

Loans, notes and bonds payable consist of the following (in thousands):

|                                                                                                                                                                                                     |  |              |         |      |  |   |         |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | ---- |  | - | ------- | -
|                                                                                                                                                                                                     |  | December 31,
|                                                                                                                                                                                                     |  | 2002         |         | 2001
|                                                                                                                                                                                                     |  |              |         |     
|City of Bloomington, Minnesota Industrial Revenue Bonds, interest rate is
variable (3.0% at December 31, 2002 and 3.1% at December 31, 2001), quarterly
payments of $0.1 million, due September 2005 |  | $            | 1,100   |      |  | $ | 1,500   |  
|Term loans with a Connecticut state agency                                                                                                                                                           |  |              |        |      |  |   | 741     |  
|Notes payable primarily with commercial banks and leasing companies, bearing
interest of 4.55%, due November 2003                                                                                    |  |              | 100     |      |  |   | 13,551  |  
|5.25% Convertible Subordinated Notes due November 15, 2006                                                                                                                                           |  |              | 115,000 |      |  |   | 115,000 |  
|Commercial credit lines and other                                                                                                                                                                    |  |              | 262     |      |  |   | 1,095   |  
|                                                                                                                                                                                                     |  |              |         |      |  |   |         |  
|                                                                                                                                                                                                     |  |              | 116,462 |      |  |   | 131,887 |  
|Less current portion                                                                                                                                                                                 |  |              | (1,285  | )    |  |   | (15,862 | )
|                                                                                                                                                                                                     |  |              |         |      |  |   |         |  
|                                                                                                                                                                                                     |  | $            | 115,177 |      |  | $ | 116,025 |  
|                                                                                                                                                                                                     |  |              |         |      |  |   |         |  

The balance of loans and notes payable at December 31, 2002 and 2001,
respectively, include amounts due in Euros as follows: 345,000 and 1,308,000
(equivalent to $354,000 and $1,161,000, respectively, in U.S. Dollars). The
approximate aggregate debt maturities are as follows as of December 31, 2002
(in thousands):

|           |  |   |         | 
|---------- |  | - | ------- | 
|2003       |  | $ | 585     | 
|2004       |  |   | 478     | 
|2005       |  |   | 378     | 
|2006       |  |   | 115,021 | 
|2007       |  |   |        | 
|Thereafter |  |   |        | 
|           |  |   |         | 
|           |  | $ | 116,462 | 
|           |  |   |         | 

During the first quarter of 2001, the Company entered into a $20.0 million
financing agreement for use in the expansion of the Phoenix, Arizona facility.
During 2002, the Company paid down the entire $13.5 million outstanding under
the $20.0 million financing agreement. Therefore, the entire $13.5 million was
classified as a current liability at December 31, 2001. The majority of the
Companys notes payable are secured by the related real property or equipment,
which the notes were used to finance. Approximately $0.3 million of assets are
secured by the Companys other credit lines. Available borrowing capacity under
the other credit lines is approximately $0.4 million at December 31, 2002. The
weighted average interest rate on the Companys short-term borrowings is 3.3%
at December 31, 2002.

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. However, for purposes of displaying the
approximate debt maturities above, the bond payments are shown in the years
they are expected to be paid.

F-15



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##### Table of Contents



ATMI, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|5. |  | Loans, Notes and Bonds Payable (continued)
|-- |  | ------------------------------------------

On November 13, 2001, the Company sold $115.0 million of convertible
subordinated notes, due in 2006, in a private offering. The notes bear interest
at 5.25% per annum and are convertible by the holders into approximately 5.2
million shares of the Companys common stock, at a conversion price of
approximately $22.19 per share. The notes and related shares issuable upon
conversion of the notes were registered with the Securities and Exchange
Commission on February 19, 2002. The notes are redeemable at the Companys
option beginning on November 15, 2004, in whole or in part, at certain premiums
decreasing through the maturity date. Interest is payable semi-annually.

Certain of the financing agreements of the Companys subsidiaries contain
limitations or prohibitions on the payment of dividends without the lenders
consent. Interest paid was $6.1 million, $0.8 million, and $1.2 million, for
the years ended December 31, 2002, 2001 and 2000, respectively. 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.



|6. |  | Leases
|-- |  | ------

The Company is obligated under capital leases for machinery and equipment that
expire in 2005. During 2002, the Company paid down the entire $5.1 million of
capital lease obligations outstanding at December 31, 2001, therefore, the
entire balance was classified as a current liability at December 31, 2001. The
gross amount of machinery and equipment and leasehold improvements under
capital leases and the related accumulated depreciation were as follows (in
thousands):

|                         |  |              |     |      |  |   |        |  
|------------------------ |  | ------------ | --- | ---- |  | - | ------ | -
|                         |  | December 31,
|                         |  | 2002         |     | 2001
|                         |  |              |     |     
|Machinery and equipment  |  | $            | 61  |      |  | $ | 13,015 |  
|Leasehold improvements   |  |              |    |      |  |   | 2,118  |  
|Accumulated depreciation |  |              | (14 | )    |  |   | (4,740 | )
|                         |  |              |     |      |  |   |        |  
|                         |  | $            | 47  |      |  | $ | 10,393 |  
|                         |  |              |     |      |  |   |        |  

The following is a schedule of future minimum lease payments for capital leases
as of December 31, 2002 (in thousands):

|                                               |  |   |    |  
|---------------------------------------------- |  | - | -- | -
|2003                                           |  | $ | 23 |  
|2004                                           |  |   | 23 |  
|2005                                           |  |   | 9  |  
|                                               |  |   |    |  
|Total lease payments                           |  |   | 55 |  
|Less amount representing interest              |  |   | (5 | )
|                                               |  |   |    |  
|Present value of future minimum lease payments |  |   | 50 |  
|Less current portion                           |  |   | 19 |  
|                                               |  |   |    |  
|Long-term portion                              |  | $ | 31 |  
|                                               |  |   |    |  

The Company leases office and manufacturing facilities, and certain
manufacturing equipment under several operating leases expiring between 2003
and 2026. Rental expense was $5.8 million, $5.7 million and $4.9 million for
the years ended December 31, 2002, 2001 and 2000, respectively. As part of the
2001 restructuring initiatives (Note 12), certain facilities under operating
leases are being exited, with the resulting lease termination fees being
included in the 2001 restructuring charge.

F-16



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##### Table of Contents



ATMI, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|6. |  | Leases (continued)
|-- |  | ------------------

The following is a schedule of future minimum lease payments for operating
leases as of December 31, 2002 (in thousands):

|                             |  |           |        | 
|---------------------------- |  | --------- | ------ | 
|                             |  | Operating
|                             |  | Leases   
|                             |  |          
|2003                         |  | $         | 4,727  | 
|2004                         |  |           | 4,241  | 
|2005                         |  |           | 3,868  | 
|2006                         |  |           | 2,495  | 
|2007                         |  |           | 2,295  | 
|Thereafter                   |  |           | 6,852  | 
|                             |  |           |        | 
|Total minimum lease payments |  | $         | 24,478 | 
|                             |  |           |        | 



|7. |  | Income Taxes
|-- |  | ------------

Pretax income (loss) was taxed in the following jurisdictions (in thousands):

|                           |  |                         |         |      |  |      |         |   |  |   |        | 
|-------------------------- |  | ----------------------- | ------- | ---- |  | ---- | ------- | - |  | - | ------ | 
|                           |  | Year Ended December 31,
|                           |  | 2002                    |         | 2001 |  | 2000
|                           |  |                         |         |      |  |     
|Domestic                   |  | $                       | (51,003 | )    |  | $    | (13,817 | ) |  | $ | 64,807 | 
|Foreign                    |  |                         | 2,240   |      |  |      | (1,724  | ) |  |   | 5,364  | 
|                           |  |                         |         |      |  |      |         |   |  |   |        | 
|Total pretax income (loss) |  | $                       | (48,763 | )    |  | $    | (15,541 | ) |  | $ | 70,171 | 
|                           |  |                         |         |      |  |      |         |   |  |   |        | 

Significant components of the provision (benefit) for income taxes for the
periods presented are as follows (in thousands):

|               |         |   |         |         |      |   |              |        |   |   |        |        |  
|-------------- | ------- | - | ------- | ------- | ---- | - | ------------ | ------ | - | - | ------ | ------ | -
|               |         |   |         |         |      |   | December 31, |        |   |   |       
|               |         |   | 2002    |         | 2001 |   | 2000        
|               |         |   |         |         |      |   |             
|Current:       |         |   |         |         |      |   |              |        |   |   |        |       
|               | Federal |   | $       | (13,163 | )    |   | $            | (6,113 | ) |   | $      | 20,340 |  
|               | State   |   |         | (154    | )    |   |              | 232    |   |   |        | 2,606  |  
|               | Foreign |   |         | 1,479   |      |   |              | 1,957  |   |   |        | 2,555  |  
|               |         |   |         |         |      |   |              |        |   |   |        |        |  
|Total current  |         |   | (11,838 | )       |      |   | (3,924       | )      |   |   | 25,501 |       
|               |         |   |         |         |      |   |              |        |   |   |        |        |  
|Deferred:      |         |   |         |         |      |   |              |        |   |   |        |       
|               | Federal |   |         | (4,235  | )    |   |              | 636    |   |   |        | 946    |  
|               | State   |   |         | (1,771  | )    |   |              | (1,641 | ) |   |        | 282    |  
|               | Foreign |   |         | (198    | )    |   |              | (916   | ) |   |        | (243   | )
|               |         |   |         |         |      |   |              |        |   |   |        |        |  
|Total deferred |         |   | (6,204  | )       |      |   | (1,921       | )      |   |   | 985    |       
|               |         |   |         |         |      |   |              |        |   |   |        |        |  
|               |         | $ | (18,042 | )       |      | $ | (5,845       | )      |   | $ | 26,486 |       
|               |         |   |         |         |      |   |              |        |   |   |        |        |  

F-17



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ATMI, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|7. |  | Income Taxes (continued)
|-- |  | ------------------------

Significant components of the Companys deferred tax assets and liabilities are
as follows (in thousands):

|                                                |  |              |        |      |  |   |        |  
|----------------------------------------------- |  | ------------ | ------ | ---- |  | - | ------ | -
|                                                |  | December 31,
|                                                |  | 2002         |        | 2001
|                                                |  |              |        |     
|Deferred tax assets:                            |  |              |        |      |  |   |        |  
|Accrued liabilities                             |  | $            | 3,234  |      |  | $ | 3,741  |  
|Inventory adjustments                           |  |              | 2,590  |      |  |   | 2,297  |  
|Net operating loss and tax credit carryforwards |  |              | 11,711 |      |  |   | 3,580  |  
|Other, net                                      |  |              | 464    |      |  |   | 682    |  
|                                                |  |              |        |      |  |   |        |  
|                                                |  |              | 17,999 |      |  |   | 10,300 |  
|Valuation allowance                             |  |              | (1,457 | )    |  |   | (1,158 | )
|                                                |  |              |        |      |  |   |        |  
|                                                |  |              | 16,542 |      |  |   | 9,142  |  
|Deferred tax liabilities:                       |  |              |        |      |  |   |        |  
|Depreciation and amortization                   |  |              | (5,971 | )    |  |   | (4,382 | )
|Unrealized gain on marketable securities        |  |              | (763   | )    |  |   | (577   | )
|Other, net                                      |  |              |       |      |  |   | (404   | )
|                                                |  |              |        |      |  |   |        |  
|                                                |  |              | (6,734 | )    |  |   | (5,363 | )
|                                                |  |              |        |      |  |   |        |  
|Net deferred tax assets                         |  | $            | 9,808  |      |  | $ | 3,779  |  
|                                                |  |              |        |      |  |   |        |  

The valuation allowance relates to realizability of net operating losses of foreign entities.

As of December 31, 2002, the Company has federal net operating loss
carryforwards for income tax purposes of $5.1 million. $2.0 million of the
federal net operating loss carryforwards is attributable to certain acquired
companies. As of December 31, 2002, the Company has a deferred tax asset
related to state net operating loss carryforwards of $1.8 million.
Additionally, the Company has federal and state tax credit carryforwards of
$6.2 million and $0.5 million, respectively. The net operating loss and tax
credit carryforwards will expire at various dates in 2005 through 2022, if not
used. Use of the net operating losses and credits may be subject to a
substantial annual limitation because of the change in ownership provisions
of the Internal Revenue Code of 1986 and similar state provisions.

Income taxes paid in the years ended December 31, 2002, 2001, and 2000 were
$3.0 million, $4.9 million, and $20.5 million, respectively. The Company
received refunds of $9.3 million and $5.8 million in 2002 and 2001,
respectively.

The reconciliation of income tax expense (benefit) computed at the U.S. federal
statutory tax rate to the Companys tax expense (benefit) is (in thousands):

|                                                     |  |                                 |         |      |  |      |        |   |  |   |        |  
|---------------------------------------------------- |  | ------------------------------- | ------- | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                                     |  | For the Year Ended December 31,
|                                                     |  | 2002                            |         | 2001 |  | 2000
|                                                     |  |                                 |         |      |  |     
|U.S. statutory rate                                  |  | $                               | (17,067 | )    |  | $    | (5,439 | ) |  | $ | 24,559 |  
|State income taxes                                   |  |                                 | (1,251  | )    |  |      | (925   | ) |  |   | 1,831  |  
|Foreign income taxes                                 |  |                                 | 384     |      |  |      | 734    |   |  |   | 43     |  
|Effect of nondeductible acquisition expenses         |  |                                 |        |      |  |      |       |   |  |   | 525    |  
|ETI/Foreign sales corporation benefit                |  |                                 | (582    | )    |  |      | (512   | ) |  |   | (1,737 | )
|Change in valuation allowance of deferred tax assets |  |                                 | 299     |      |  |      | 841    |   |  |   | 317    |  
|Tax liabilities accrued                              |  |                                 |        |      |  |      |       |   |  |   | 506    |  
|Other, net                                           |  |                                 | 175     |      |  |      | (544   | ) |  |   | 442    |  
|                                                     |  |                                 |         |      |  |      |        |   |  |   |        |  
|                                                     |  | $                               | (18,042 | )    |  | $    | (5,845 | ) |  | $ | 26,486 |  
|                                                     |  |                                 |         |      |  |      |        |   |  |   |        |  

F-18



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##### Table of Contents



ATMI, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|7. |  | Income Taxes (continued)
|-- |  | ------------------------

The former security holders of the ADCS Group have agreed to indemnify the
Company against losses arising out of possible tax liabilities of ADCS. As
security for these tax matters, the former security holders of ADCS have
deposited 700,000 shares of the Companys common stock, which they received in
connection with the Companys acquisition of ADCS, into escrow. While the
possible exposures are difficult to quantify, the Company believes that,
regardless of the probability that liabilities will arise, the potential
exposures range from $0 to $22 million depending on the resolution of the tax
matter. Although the former security holders of ADCS have agreed to indemnify
the Company against losses arising out of such tax matters, any assessments, if
ultimately determined against the Company, would result in a charge to the
Companys results of operations. During the second quarter of 1999, the Company
was notified by the Internal Revenue Service of an assessment of $2.1 million
for certain of these tax matters. The current value of the shares held in
escrow provides indemnity towards the middle range of the potential exposure.
In 2002, the Company defended its position in these tax matters in U.S. Tax
Court and awaits a final ruling.



|8. |  | Profit Sharing Plan
|-- |  | -------------------

The Company maintains a 401(k) profit sharing plan covering substantially all
of its domestic employees that 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 $0.7 million, $0.7 million, and $0.6
million for 2002, 2001, and 2000, respectively.



|9. |  | Stockholders Equity
|-- |  | --------------------

On April 4, 2000, the Company completed a public offering of 2,800,000 shares
of the Companys common stock. 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 $63.4 million. The cost of the
offering was approximately $4.1 million.

Stock Plans

The Company has certain stock plans, which provide for the granting of up to
6,515,833 nonqualified stock options, incentive stock options (ISOs), stock
appreciation rights and restricted stock awards to employees, directors and
consultants of the Company.

F-19



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##### Table of Contents



ATMI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|9. |  | Stockholders Equity (continued)
|-- |  | --------------------------------

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.

The following table provides a summary of the status of the Companys stock
option plans as of December 31, 2002, 2001 and 2000, and changes during the
years ending on those dates:

|                                                               |  |        |           |       |  |           |       |       |  |        |           |           |  |   |       |  |  |           |           |   |  |   |       | 
|-------------------------------------------------------------- |  | ------ | --------- | ----- |  | --------- | ----- | ----- |  | ------ | --------- | --------- |  | - | ----- |  |  | --------- | --------- | - |  | - | ----- | 
|                                                               |  | 2002   |           | 2001  |  | 2000     
|                                                               |  |        |           |       |  |          
|                                                               |  |        |           |       |  | Weighted- |       |       |  |        |           | Weighted- |  |   |       |  |  | Weighted-
|                                                               |  |        |           |       |  | Average   |       |       |  |        |           | Average   |  |   |       |  |  | Average  
|                                                               |  |        |           |       |  | Exercise  |       |       |  |        |           | Exercise  |  |   |       |  |  | Exercise 
|                                                               |  | Shares |           | Price |  | Shares    |       | Price |  | Shares |           | Price    
|                                                               |  |        |           |       |  |           |       |       |  |        |           |          
|Outstanding at beginning of year                               |  |        | 3,925,144 |       |  | $         | 23.72 |       |  |        | 3,432,098 |           |  | $ | 25.34 |  |  |           | 2,844,555 |   |  | $ | 19.20 | 
|Granted                                                        |  |        | 953,010   |       |  | $         | 24.02 |       |  |        | 1,149,270 |           |  | $ | 19.06 |  |  |           | 1,524,665 |   |  | $ | 32.79 | 
|Exercised                                                      |  |        | (179,447  | )     |  | $         | 14.64 |       |  |        | (103,737  | )         |  | $ | 8.46  |  |  |           | (496,711  | ) |  | $ | 9.44  | 
|Terminated or Cancelled                                        |  |        | (565,540  | )     |  | $         | 25.41 |       |  |        | (552,487  | )         |  | $ | 27.23 |  |  |           | (440,411  | ) |  | $ | 28.06 | 
|                                                               |  |        |           |       |  |           |       |       |  |        |           |           |  |   |       |  |  |           |           |   |  |   |       | 
|Outstanding at end of year                                     |  |        | 4,133,167 |       |  | $         | 23.85 |       |  |        | 3,925,144 |           |  | $ | 23.72 |  |  |           | 3,432,098 |   |  | $ | 25.34 | 
|                                                               |  |        |           |       |  |           |       |       |  |        |           |           |  |   |       |  |  |           |           |   |  |   |       | 
|Options exercisable at end of year                             |  |        | 1,754,129 |       |  | $         | 22.72 |       |  |        | 1,407,124 |           |  | $ | 21.02 |  |  |           | 956,060   |   |  | $ | 16.88 | 
|Weightedaverage fair value of
options granted during the year |  | $      | 15.35     |       |  |           |       |       |  | $      | 13.36     |           |  |   |       |  |  | $         | 21.29     |   |  |   |       | 

The following table summarizes information about the Companys stock options
outstanding at December 31, 2002:

|                         |  |                   |           |                  |  |                     |     |                   |  |                |       |                     |  |  |           |  |  |   |       | 
|------------------------ |  | ----------------- | --------- | ---------------- |  | ------------------- | --- | ----------------- |  | -------------- | ----- | ------------------- |  |  | --------- |  |  | - | ----- | 
|                         |  |                   |           |                  |  | Options Outstanding |     |                   |  |                |       | Options Exercisable
|                         |  |                   |           |                 
|                         |  | Number of Options |           | Weighted-        |  | Weighted-           |     |                   |  |                |       |                     |  | 
|                         |  | Outstanding at    |           | Average          |  | Average             |     | Number of Options |  | Weighted-     
|                         |  | December 31,      |           | Remaining        |  | Exercise            |     | Exercisable at    |  | Average       
|Range of Exercise Prices |  | 2002              |           | Contractual Life |  | Price               |     | December 31, 2002 |  | Exercise Price
|                         |  |                   |           |                  |  |                     |     |                   |  |               
|$  1.11 to $ 12.00       |  |                   | 273,287   |                  |  |                     | 2.6 |                   |  | $              | 8.99  |                     |  |  | 272,887   |  |  | $ | 9.00  | 
|$12.01 to $18.00         |  |                   | 431,990   |                  |  |                     | 6.1 |                   |  | $              | 16.51 |                     |  |  | 240,810   |  |  | $ | 16.55 | 
|$18.01 to $24.00         |  |                   | 1,623,411 |                  |  |                     | 8.2 |                   |  | $              | 21.14 |                     |  |  | 276,253   |  |  | $ | 20.53 | 
|$24.01 to $36.00         |  |                   | 1,487,049 |                  |  |                     | 6.3 |                   |  | $              | 27.67 |                     |  |  | 831,779   |  |  | $ | 26.61 | 
|$36.01 to $48.00         |  |                   | 305,150   |                  |  |                     | 7.3 |                   |  | $              | 42.25 |                     |  |  | 127,440   |  |  | $ | 42.07 | 
|$48.01 to $60.00         |  |                   | 12,280    |                  |  |                     | 7.2 |                   |  | $              | 51.13 |                     |  |  | 4,960     |  |  | $ | 51.11 | 
|                         |  |                   |           |                  |  |                     |     |                   |  |                |       |                     |  |  |           |  |  |   |       | 
|                         |  |                   | 4,133,167 |                  |  |                     | 6.9 |                   |  | $              | 23.85 |                     |  |  | 1,754,129 |  |  | $ | 22.72 | 
|                         |  |                   |           |                  |  |                     |     |                   |  |                |       |                     |  |  |           |  |  |   |       | 

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##### Table of Contents



ATMI, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|9. |  | Stockholders Equity (continued)
|-- |  | --------------------------------

The fair value of each option grant, for pro forma disclosure purposes (see
Note 1), was estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted average assumptions:

|                         |  |           |      |           |  |           |      |   |  |  |      |  
|------------------------ |  | --------- | ---- | --------- |  | --------- | ---- | - |  |  | ---- | -
|                         |  | 2002      |      | 2001      |  | 2000     
|                         |  |           |      |           |  |          
|Expected dividend yield  |  | None      |      | None      |  | None     
|Risk free interest rate  |  |           | 3.5  | %         |  |           | 4.5  | % |  |  | 6.0  | %
|Expected volatility      |  |           | .713 |           |  |           | .710 |   |  |  | .615 |  
|Expected life of options |  | 5.6 years |      | 5.8 years |  | 6.5 years

Option valuation models require the input of highly subjective assumptions,
including the expected stock price volatility. Because changes in the
subjective assumptions can materially affect the fair value estimate, in the
opinion of management, the existing models do not necessarily provide a
reliable single measure of the fair value of the Companys employee stock
options.

Employee Stock Purchase Plan

The Employee Stock Purchase Plan (ESPP Plan) was approved in May 1998
authorizing 500,000 shares for subscription and enabling all employees to
subscribe at six-month intervals to purchase shares of common stock at the
lower of 85% of the lowest average of high and low prices of the shares on the
first day or last day of each six-month period. At December 31, 2002, 201,886
shares remain available under the ESPP Plan.

Earnings Per Share

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

|                                              |                                                                                             |                         |       |         |        |      |       |        |        |   |      |        |        | 
|--------------------------------------------- | ------------------------------------------------------------------------------------------- | ----------------------- | ----- | ------- | ------ | ---- | ----- | ------ | ------ | - | ---- | ------ | ------ | 
|                                              |                                                                                             |                         |       | 2002    |        | 2001 |       | 2000  
|                                              |                                                                                             |                         |       |         |        |      |       |       
|Numerator:                                    |                                                                                             |                         |       |         |        |      |       |        |        |   |      |       
|                                              | Net income (loss)                                                                           |                         | $     | (30,721 | )      |      | $     | (9,696 | )      |   | $    | 43,685 |       
|                                              |                                                                                             |                         |       |         |        |      |       |        |        |   |      |       
|Denominator:                                  |                                                                                             |                         |       |         |        |      |       |        |        |   |      |       
|                                              | Denominator for basic earnings per share-                                                   |                         |       |         |        |      |       |        |        |   |      |        |       
|                                              |                                                                                             | Weighted-average shares |       |         | 29,896 |      |       |        | 29,611 |   |      |        | 28,928 | 
|                                              | Dilutive
effect of contingent shares related to acquisitions subject to escrow arrangements |                         |       |        |        |      |       |       |        |   |      | 737    |       
|                                              | Dilutive effect of employee stock options                                                   |                         |       |        |        |      |       |       |        |   |      | 625    |       
|                                              |                                                                                             |                         |       |         |        |      |       |        |        |   |      |       
|                                              | Denominator for diluted earnings per share                                                  |                         |       | 29,896  |        |      |       | 29,611 |        |   |      | 30,290 |       
|                                              |                                                                                             |                         |       |         |        |      |       |        |        |   |      |       
|Net income (loss) per sharebasic             |                                                                                             | $                       | (1.03 | )       |        | $    | (0.33 | )      |        | $ | 1.51 |       
|                                              |                                                                                             |                         |       |         |        |      |       |        |        |   |      |       
|Net income (loss) per shareassuming dilution |                                                                                             | $                       | (1.03 | )       |        | $    | (0.33 | )      |        | $ | 1.44 |       
|                                              |                                                                                             |                         |       |         |        |      |       |        |        |   |      |       

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ATMI, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|9. |  | Stockholders Equity (continued)
|-- |  | --------------------------------

Options to purchase 723,580 shares of common stock, outstanding as of December
31, 2000 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. Options
to purchase 4,133,167 and 3,925,144 shares of common stock, outstanding as of
December 31, 2002 and 2001, respectively, and 5,183,096 shares issuable upon
conversion of the 5.25% Convertible Subordinated Notes Due 2006 were not
included in the computation of diluted loss per share for the years ended
December 31, 2002 and 2001, respectively, because their inclusion would be
antidilutive.

As of December 31, 2002 and 2001, there were 20,000 warrants outstanding at an
exercise price of $11.75 that are fully exercisable and expire on September 1,
2005. These warrants were not included in the computation of diluted loss per
share for the years ended December 31, 2002 and 2001, because their inclusion
would be antidilutive. As of December 31, 2002 and 2001, there were 700,000
shares of common stock held in escrow pending the outcome of the tax case (Note
7), which were not included in the computation of diluted loss per share for
the years ended December 31, 2002 and 2001, because their inclusion would be
antidilutive.

At December 31, 2002, there were 5,922,356 shares of common stock reserved for
the conversion of subordinated notes and further grants under the Companys
various stock plans.



|10. |  | Mergers and Acquisitions
|--- |  | ------------------------

In July 2000, the Company issued 370,000 shares as consideration for the
acquisition of ESCA, Inc., which was accounted for as a pooling of interests.
In connection with this acquisition, the Company has reduced retained earnings
by $95,000 in 2000 to adjust retained earnings for the different fiscal year
end of ESCA, Inc. In connection with the investigation, analysis and closing
of the aforementioned transaction, the Company recorded merger costs and
related expenses of $1.5 million in 2000.

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##### Table of Contents



ATMI, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|10. |  | Mergers and Acquisitions (continued)
|--- |  | ------------------------------------

For the year ended December 31, 2000, prior to the acquisitions, revenues and
net income of the acquired company included in the financial statements is as
follows (in thousands):

|            |                         |      |         |         | 
|----------- | ----------------------- | ---- | ------- | ------- | 
|Revenues:   |                         | 2000
|            |                         |     
|ATMI        |                         | $    | 296,383 |        
|ESCA        |                         |      | 3,577   |        
|            |                         |      |         |        
|            | Consolidated revenues   |      | $       | 299,960 | 
|            |                         |      |         |        
|Net Income: |                         | 2000
|            |                         |     
|ATMI        |                         | $    | 43,563  |        
|ESCA        |                         |      | 122     |        
|            |                         |      |         |        
|            | Consolidated net income |      | $       | 43,685  | 
|            |                         |      |         |        

On December 28, 2000, ATMI purchased K.C. Tech Co., Ltd.s 30% interest in the
operations of ADCS-Korea for approximately $7.2 million, of which $5.0 million
was paid in 2000. The operations of ADCS-Korea have historically been included
in the consolidated statements of income of ATMI. The 30% portion not
historically owned by ATMI had been accounted for as minority interest. The
transaction was accounted for as a purchase and the excess cost over fair value
of the net assets acquired was being amortized over a period of 20 years in
2001. However, the goodwill associated with this acquisition is no longer
being amortized in accordance with SFAS No. 142.



|11. |  | Other Comprehensive Income (Loss)
|--- |  | ---------------------------------

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

|                                                 |                                                                     |   |             |   |                      |   |       |        |   |   |        |        |  
|------------------------------------------------ | ------------------------------------------------------------------- | - | ----------- | - | -------------------- | - | ----- | ------ | - | - | ------ | ------ | -
|                                                 |                                                                     |   | Currency    |   | Unrealized Gain      |   |       |        |  
|                                                 |                                                                     |   | Translation |   | (Loss) on Available- |   |       |        |  
|                                                 |                                                                     |   | Adjustments |   | for-Sale Securities  |   | Total
|                                                 |                                                                     |   |             |   |                      |   |      
|Balance at December 31, 1999                     |                                                                     |   | (854        | ) |                      |   | 7,360 |        |   |   | 6,506  |       
|Reclassification adjustment for realized gain on |                                                                     |   |             |   |                      |   |       |        |   |   |        |       
|                                                 | available-for-sale securities sold (net of tax provision of $2,161) |   |             |  |                      |   |       | (3,680 | ) |   |        | (3,680 | )
|Unrealized loss on available-for-sale            |                                                                     |   |             |   |                      |   |       |        |   |   |        |       
|                                                 | securities (net of tax benefit of $1,618)                           |   |             |  |                      |   |       | (2,895 | ) |   |        | (2,895 | )
|Cumulative translation adjustment                |                                                                     |   | (1,026      | ) |                      |   |      |        |   |   | (1,026 | )     
|                                                 |                                                                     |   |             |   |                      |   |       |        |   |   |        |       
|Balance at December 31, 2000                     |                                                                     | $ | (1,880      | ) |                      | $ | 785   |        |   | $ | (1,095 | )     
|Reclassification adjustment for realized gain on |                                                                     |   |             |   |                      |   |       |        |   |   |        |       
|                                                 | available-for-sale securities sold (net of tax provision of $637)   |   |             |  |                      |   |       | (1,039 | ) |   |        | (1,039 | )
|Unrealized gain on available-for-sale            |                                                                     |   |             |   |                      |   |       |        |   |   |        |       
|                                                 | securities (net of tax provision of $728)                           |   |             |  |                      |   |       | 1,187  |   |   |        | 1,187  |  
|Cumulative translation adjustment                |                                                                     |   | (396        | ) |                      |   |      |        |   |   | (396   | )     
|                                                 |                                                                     |   |             |   |                      |   |       |        |   |   |        |       
|Balance at December 31, 2001                     |                                                                     | $ | (2,276      | ) |                      | $ | 933   |        |   | $ | (1,343 | )     
|Reclassification adjustment for realized gain on |                                                                     |   |             |   |                      |   |       |        |   |   |        |       
|                                                 | available-for-sale securities sold (net of tax provision of $366)   |   |             |  |                      |   |       | (598   | ) |   |        | (598   | )
|Unrealized gain on available-for-sale            |                                                                     |   |             |   |                      |   |       |        |   |   |        |       
|                                                 | securities (net of tax provision of $560)                           |   |             |  |                      |   |       | 1,108  |   |   |        | 1,108  |  
|Cumulative translation adjustment                |                                                                     |   | 1,336       |   |                      |   |      |        |   |   | 1,336  |       
|                                                 |                                                                     |   |             |   |                      |   |       |        |   |   |        |       
|Balance at December 31, 2002                     |                                                                     | $ | (940        | ) |                      | $ | 1,443 |        |   | $ | 503    |       
|                                                 |                                                                     |   |             |   |                      |   |       |        |   |   |        |       

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ATMI, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|12. |  | Restructuring and Other Charges
|--- |  | -------------------------------

The operating results for 2002 include an asset impairment charge of $34.6
million to recognize the impairment of assets in the Companys gallium arsenide
epitaxial services business in Phoenix, Arizona, due to deteriorating market
conditions in this product line, of which $3.1 million is included in cost of
revenues related to a write-down of inventory. Assets in the line of business
have been written down to their fair value, less estimated costs of disposal,
using estimated prices for similar assets as the basis for determining fair
value. Excluding the inventory write-down, the impairment charge of $31.5
million is related to long-lived assets, including deposits on fixed assets.
All of the impaired assets are in the Technologies segment. Management expects
disposition of the impaired assets will occur during 2003.

The operating results for 2001 include two restructuring charges: the first was
a $12.8 million charge for severance and other costs associated with a
restructuring initiative, of which $0.6 million is included in cost of revenues
related to a write-down of inventory. The second charge occurred in the third
quarter of 2001 for $1.8 million for severance related costs associated with a
restructuring charge. The second initiative became necessary as a result of the
severe decline in end-use semiconductor device demand.

The restructuring initiatives include severance costs of $5.4 million,
including the third quarter 2001 initiative of $1.8 million, and represent a
reduction of approximately 21% of the Companys worldwide workforce, including
operations, sales and marketing, and other administrative employees. All of
the affected employees had left their positions by June 30, 2002. These
initiatives involve a number of actions intended to improve productivity and
align the Companys organization more closely with its customers. The
restructuring initiatives and other charges also include $9.2 million for plant
closings, lease termination fees, and various other asset write-offs or
write-downs. All restructuring costs have been paid by December 31, 2002,
except for ongoing lease costs for exited facilities, which management expects
to pay over the course of the remaining lease terms through September 2003.

F-24



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##### Table of Contents



ATMI, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|12. |  | Restructuring and Severance Charges (continued)
|--- |  | -----------------------------------------------

The following tables set forth the activity in the restructuring accruals,
which are included in accrued liabilities, as of December 31, 2002 (in
thousands):

|                                     |  |           |        |               |  |               |        |   |  |   |        |  
|------------------------------------ |  | --------- | ------ | ------------- |  | ------------- | ------ | - |  | - | ------ | -
|Accrual  Restructuring              |  | Severance |        | Other Charges |  | Total Accrual
|                                     |  |           |        |               |  |              
|Balance January 1, 2001              |  | $         |       |               |  | $             |       |   |  | $ |       |  
|Restructuring charge  First Quarter |  |           | 3,599  |               |  |               | 9,198  |   |  |   | 12,797 |  
|Cash payments                        |  |           | (3,299 | )             |  |               | (280   | ) |  |   | (3,579 | )
|Write offs & write downs             |  |           |       |               |  |               | (7,994 | ) |  |   | (7,994 | )
|                                     |  |           |        |               |  |               |        |   |  |   |        |  
|Balance December 31, 2001            |  | $         | 300    |               |  | $             | 924    |   |  | $ | 1,224  |  
|Cash payments                        |  |           | (300   | )             |  |               | (631   | ) |  |   | (931   | )
|Write offs & write downs             |  |           |       |               |  |               | (40    | ) |  |   | (40    | )
|                                     |  |           |        |               |  |               |        |   |  |   |        |  
|Balance December 31, 2002            |  | $         |       |               |  | $             | 253    |   |  | $ | 253    |  
|                                     |  |           |        |               |  |               |        |   |  |   |        |  
|                                    
|Accrual  Restructuring              |  | Severance |        | Other Charges |  | Total Accrual
|                                     |  |           |        |               |  |              
|Balance January 1, 2001              |  | $         |       |               |  | $             |       |   |  | $ |       |  
|Restructuring charge  Third Quarter |  |           | 1,800  |               |  |               |       |   |  |   | 1,800  |  
|Cash payments                        |  |           | (1,080 | )             |  |               |       |   |  |   | (1,080 | )
|                                     |  |           |        |               |  |               |        |   |  |   |        |  
|Balance December 31, 2001            |  | $         | 720    |               |  | $             |       |   |  | $ | 720    |  
|Cash payments                        |  |           | (720   | )             |  |               |       |   |  |   | (720   | )
|                                     |  |           |        |               |  |               |        |   |  |   |        |  
|Balance December 31, 2002            |  | $         |       |               |  | $             |       |   |  | $ |       |  
|                                     |  |           |        |               |  |               |        |   |  |   |        |  



|13. |  | Commitments and Contingencies
|--- |  | -----------------------------

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.

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ATMI, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|14. |  | Segment and Geographic Data
|--- |  | ---------------------------

The Company has two reportable operating segments: Materials and Technologies.
The reportable operating 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, excluding restructuring and merger and related costs,
interest, other income or expense, and income taxes. Intercompany sales are not
material between operating segments. The general corporate assets primarily
include cash, cash equivalents, marketable securities, goodwill and other
long-lived assets. Depreciation and amortization expense related to general
corporate assets is allocated to the operating segments based on its segments
relative proportion of revenues to total revenues.

The following tables provide reported financial information for each of these
reportable segments (in thousands):

|                                     |  |                                 |         |      |  |      |         |   |  |   |         |  
|------------------------------------ |  | ------------------------------- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                                     |  | For the year ended December 31,
|                                     |  |                                
|                                     |  | 2002                            |         | 2001 |  | 2000
|                                     |  |                                 |         |      |  |     
|Revenues                             |  |                                 |         |      |  |      |         |   |  |   |         |  
|Materials                            |  | $                               | 135,007 |      |  | $    | 110,996 |   |  | $ | 138,191 |  
|Technologies                         |  |                                 | 77,628  |      |  |      | 102,460 |   |  |   | 161,769 |  
|                                     |  |                                 |         |      |  |      |         |   |  |   |         |  
|Consolidated revenues                |  | $                               | 212,635 |      |  | $    | 213,456 |   |  | $ | 299,960 |  
|                                     |  |                                 |         |      |  |      |         |   |  |   |         |  
|Operating Income (loss)              |  |                                 |         |      |  |      |         |   |  |   |         |  
|Materials                            |  | $                               | 24,427  |      |  | $    | 15,952  |   |  | $ | 36,655  |  
|Technologies                         |  |                                 | (40,256 | )    |  |      | (28,615 | ) |  |   | 20,455  |  
|Merger and related costs             |  |                                 |        |      |  |      |        |   |  |   | (1,500  | )
|Restructuring and other charges (1)  |  |                                 | (31,522 | )    |  |      | (14,011 | ) |  |   |        |  
|                                     |  |                                 |         |      |  |      |         |   |  |   |         |  
|Consolidated operating income (loss) |  | $                               | (47,351 | )    |  | $    | (26,674 | ) |  | $ | 55,610  |  
|                                     |  |                                 |         |      |  |      |         |   |  |   |         |  
|Depreciation Expense                 |  |                                 |         |      |  |      |         |   |  |   |         |  
|Materials                            |  | $                               | 7,559   |      |  | $    | 6,799   |   |  | $ | 4,937   |  
|Technologies                         |  |                                 | 11,343  |      |  |      | 9,299   |   |  |   | 6,962   |  
|                                     |  |                                 |         |      |  |      |         |   |  |   |         |  
|Total depreciation expense           |  | $                               | 18,902  |      |  | $    | 16,098  |   |  | $ | 11,899  |  
|                                     |  |                                 |         |      |  |      |         |   |  |   |         |  
|Capital Expenditures                 |  |                                 |         |      |  |      |         |   |  |   |         |  
|Materials                            |  | $                               | 27,858  |      |  | $    | 13,122  |   |  | $ | 8,489   |  
|Technologies                         |  |                                 | 9,065   |      |  |      | 44,143  |   |  |   | 15,909  |  
|Corporate                            |  |                                 | 3,953   |      |  |      | 5,781   |   |  |   | 5,122   |  
|                                     |  |                                 |         |      |  |      |         |   |  |   |         |  
|Total Capital Expenditures           |  | $                               | 40,876  |      |  | $    | 63,046  |   |  | $ | 29,520  |  
|                                     |  |                                 |         |      |  |      |         |   |  |   |         |  
|Goodwill, net                        |  |                                 |         |      |  |      |         |   |  |   |         |  
|Materials                            |  | $                               | 5,296   |      |  | $    | 5,258   |   |  |   |         |  
|Technologies                         |  |                                 | 2,620   |      |  |      | 2,362   |   |  |   |         |  
|Corporate                            |  |                                 |        |      |  |      |        |   |  |   |         |  
|                                     |  |                                 |         |      |  |      |         |   |  |   |         |  
|Total goodwill, net                  |  | $                               | 7,916   |      |  | $    | 7,620   |   |  |   |         |  
|                                     |  |                                 |         |      |  |      |         |   |  |   |         |  
|Identifiable Assets                  |  |                                 |         |      |  |      |         |   |  |   |         |  
|Materials                            |  | $                               | 122,452 |      |  | $    | 98,893  |   |  |   |         |  
|Technologies                         |  |                                 | 90,682  |      |  |      | 134,920 |   |  |   |         |  
|General corporate assets             |  |                                 | 203,348 |      |  |      | 216,043 |   |  |   |         |  
|                                     |  |                                 |         |      |  |      |         |   |  |   |         |  
|Total consolidated assets            |  | $                               | 416,482 |      |  | $    | 449,856 |   |  |   |         |  
|                                     |  |                                 |         |      |  |      |         |   |  |   |         |  



|(1) |  | The entire 2002 charge relates to the Technologies segment.
Approximately $6.0 million and $8.0 million of the 2001 restructuring charge
relate to the Materials and Technologies segments, respectively.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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ATMI, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|14. |  | Segment and Geographic Data (continued)
|--- |  | ---------------------------------------

The Companys geographic data for the years ended December 31, 2002, 2001 and
2000 are as follows:

|                  |                   |               |   |         |  |             |   |        |  |       |       |        |            |  |   |        |  |  |   |         | 
|----------------- | ----------------- | ------------- | - | ------- |  | ----------- | - | ------ |  | ----- | ----- | ------ | ---------- |  | - | ------ |  |  | - | ------- | 
|                  |                   |               |   |         |  |             |   |        |  |       | Other |        | Europe and |  |   |        | 
|(In thousands)    |                   | United States |   | Taiwan  |  | Pacific Rim |   | Other  |  | Total
|                  |                   |               |   |         |  |             |   |        |  |      
|December 31, 2002 |                   |               |   |         |  |             |   |        |  |       |       |        |            |  |   |        |  |  |   |        
|                  | Revenues          |               | $ | 115,710 |  |             | $ | 23,137 |  |       | $     | 44,488 |            |  | $ | 29,300 |  |  | $ | 212,635 | 
|                  | Long-lived assets |               |   | 138,153 |  |             |   | 899    |  |       |       | 2,496  |            |  |   | 6,836  |  |  |   | 148,384 | 
|                 
|December 31, 2001 |                   |               |   |         |  |             |   |        |  |       |       |        |            |  |   |        |  |  |   |        
|                  | Revenues          |               | $ | 113,817 |  |             | $ | 28,918 |  |       | $     | 32,200 |            |  | $ | 38,521 |  |  | $ | 213,456 | 
|                  | Long-lived assets |               |   | 133,057 |  |             |   | 1,022  |  |       |       | 2,097  |            |  |   | 6,992  |  |  |   | 143,168 | 
|                 
|December 31, 2000 |                   |               |   |         |  |             |   |        |  |       |       |        |            |  |   |        |  |  |   |        
|                  | Revenues          |               | $ | 165,216 |  |             | $ | 38,716 |  |       | $     | 54,108 |            |  | $ | 41,920 |  |  | $ | 299,960 | 
|                  | Long-lived assets |               |   | 82,617  |  |             |   | 322    |  |       |       | 1,368  |            |  |   | 6,000  |  |  |   | 90,307  | 

Revenues are attributed to countries based on the location of the customer.
Long-lived assets are located in the respective geographic regions, as shown
above. Other than Taiwan, no one specific country within the Pacific Rim or
within Europe accounted for greater than 10% of consolidated revenues in 2002,
2001 and 2000. Given that a majority of foreign customer orders are fulfilled
from the United States, revenues and net income of the foreign subsidiaries are
not material to the consolidated operations of the Company for each of the
three years in the period ended December 31, 2002.

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##### Table of Contents



ATMI, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

|15. |  | Quarterly Results of Operations
(Unaudited)
|--- |  | -------------------------------------------

Summarized quarterly results of operations data is as follows (in thousands,
except per share amounts):

|                                              |  |       |        |        |  |       |         |        |  |   |         |      |  |   |        |   | 
|--------------------------------------------- |  | ----- | ------ | ------ |  | ----- | ------- | ------ |  | - | ------- | ---- |  | - | ------ | - | 
|                                              |  |       |        |        |  |       | Quarter |        |  |   |        
|                                              |  |       |       
|2002                                          |  | First |        | Second |  | Third |         | Fourth
|                                              |  |       |        |        |  |       |         |       
|Revenues                                      |  | $     | 48,373 |        |  | $     | 57,790  |        |  | $ | 52,051  |      |  | $ | 54,421 |  
|Gross profit                                  |  |       | 19,336 |        |  |       | 23,608  |        |  |   | 16,521  |      |  |   | 21,910 |  
|Net loss                                      |  |       | (2,732 | )(a)   |  |       | (992    | )      |  |   | (25,159 | )(b) |  |   | (1,838 | )
|Net loss per sharebasic                      |  | $     | (0.09  | )      |  | $     | (0.03   | )      |  | $ | (0.84   | )    |  | $ | (0.06  | )
|Net loss per shareassuming dilution          |  | $     | (0.09  | )      |  | $     | (0.03   | )      |  | $ | (0.84   | )    |  | $ | (0.06  | )
|                                              |  |       |        |        |  |       |         |        |  |   |        
|                                              |  |       |        |        |  |       | Quarter |        |  |   |        
|                                              |  |       |       
|2001                                          |  | First |        | Second |  | Third |         | Fourth
|                                              |  |       |        |        |  |       |         |       
|Revenues                                      |  | $     | 77,280 |        |  | $     | 55,027  |        |  | $ | 39,727  |      |  | $ | 41,422 |  
|Gross profit                                  |  |       | 38,899 |        |  |       | 23,890  |        |  |   | 13,319  |      |  |   | 16,471 |  
|Net income (loss)                             |  |       | 3,041  | (c)    |  |       | 861     | (d)    |  |   | (9,025  | )(e) |  |   | (4,573 | )
|Net income (loss) per sharebasic             |  | $     | 0.10   |        |  | $     | 0.03    |        |  | $ | (0.30   | )    |  | $ | (0.15  | )
|Net income (loss) per
shareassuming dilution |  | $     | 0.10   |        |  | $     | 0.03    |        |  | $ | (0.30   | )    |  | $ | (0.15  | )



|(a) |  | Includes a $0.5 million gain (net of tax provision of $0.3
million) from the sale of available-for-sale securities, offset by a
write-down of approximately $0.2 million (net of tax benefit of $0.1
million) for an other-than-temporary decline in fair value of other
available-for-sale securities.                                                                                                                                                                             
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(b) |  | Includes an asset impairment charge of $21.8 million (net of tax
benefit of $12.8 million) to recognize the impairment of assets in the
Companys gallium arsenide epitaxial services business in Phoenix,
Arizona.                                                                                                                                                                                                                                                                 
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(c) |  | Includes a charge of approximately $8.0 million (net of tax
benefit of $4.8 million) for severance and other costs associated with
a restructuring initiative. In addition to severance costs, the
restructuring charge includes costs related to plant closings, lease
termination fees, and various other assets and working capital
write-offs or write-downs. Net income also includes the impact of a
gain on settlement of certain patent litigation, net of related
expenses.
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(d) |  | Includes a $0.9 million gain (net of tax provision of $0.6
million) from the sale of available-for-sale securities.                                                                                                                                                                                                                                                                                                                                                                 
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(e) |  | Includes a $0.7 million gain (net of tax provision of $0.4
million) from the sale of available-for-sale securities, offset by a
write down of approximately $0.3 million (net of tax benefit of $0.1
million) for an other-than-temporary decline in fair value of other
available-for-sale securities. Also includes a charge of $1.1 million
(net of tax benefit of $0.7 million) for severance costs associated
with a restructuring initiative.                                 

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##### Table of Contents



Schedule II

ATMI, INC.
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)

|                  |                                                                                     |           |            |              |            |            |  |           |  |  |     |       |  |  |  |  |  |  |   |        |            |  |   |       | 
|----------------- | ----------------------------------------------------------------------------------- | --------- | ---------- | ------------ | ---------- | ---------- |  | --------- |  |  | --- | ----- |  |  |  |  |  |  | - | ------ | ---------- |  | - | ----- | 
|                  |                                                                                     |           | Balance at |              |            |            |  |           |  |  |     |       |  |  |  |  |  |  |   |        | Balance at
|                  |                                                                                     |           | Beginning  |              | Charged to |            |  |           |  |  | End
|Year Ended        |                                                                                     | of Period |            | Cost/Expense |            | Deductions |  | of Period
|                  |                                                                                     |           |            |              |            |            |  |          
|December 31, 2002 |                                                                                     |           |            |              |            |            |  |           |  |  |     |       |  |  |  |  |  |  |   |        |            |  |   |      
|                  | Allowance for bad debts and returns                                                 |           | $          | 2,429        |            |            |  |           |  |  | $   | 28    |  |  |  |  |  |  | $ | (811   | )(a)       |  | $ | 1,646 | 
|                  | Reserve for excess and obsolete
inventories and lower of cost or
market adjustments |           |            | 3,089        |            |            |  |           |  |  |     | 3,753 |  |  |  |  |  |  |   | (2,794 | )(b)       |  |   | 4,048 | 
|                 
|December 31, 2001 |                                                                                     |           |            |              |            |            |  |           |  |  |     |       |  |  |  |  |  |  |   |        |            |  |   |      
|                  | Allowance for bad debts and returns                                                 |           | $          | 1,725        |            |            |  |           |  |  | $   | 2,785 |  |  |  |  |  |  | $ | (2,081 | )(a)       |  | $ | 2,429 | 
|                  | Reserve for excess and obsolete
inventories and lower of cost or
market adjustments |           |            | 1,781        |            |            |  |           |  |  |     | 1,918 |  |  |  |  |  |  |   | (610   | )(b)       |  |   | 3,089 | 
|                  | Severance accrual                                                                   |           |            | 309          |            |            |  |           |  |  |     |      |  |  |  |  |  |  |   | (309   | )(c)       |  |   |      | 
|                 
|December 31, 2000 |                                                                                     |           |            |              |            |            |  |           |  |  |     |       |  |  |  |  |  |  |   |        |            |  |   |      
|                  | Allowance for bad debts and returns                                                 |           | $          | 1,366        |            |            |  |           |  |  | $   | 431   |  |  |  |  |  |  | $ | (72    | )(a)       |  | $ | 1,725 | 
|                  | Reserve for excess and obsolete
inventories                                         |           |            | 1,529        |            |            |  |           |  |  |     | 733   |  |  |  |  |  |  |   | (481   | )(b)       |  |   | 1,781 | 
|                  | Severance accrual                                                                   |           |            | 2,300        |            |            |  |           |  |  |     |      |  |  |  |  |  |  |   | (1,991 | )(c)       |  |   | 309   | 

(a)  Reflects uncollectible accounts written off, net of recoveries.

(b)  Reflects disposals of obsolete inventory in 2002, 2001 and 2000 and
reductions to lower-of-cost or market reserve in 2002.

(c)  Reflects payments made during the year on severance related to 1999 merger
activity.

F-29