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, 1997

[ ]  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     (I.R.S. Employer Identification No.)
       incorporation or organization)

      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:
                                                          Name of each exchange
             Title of each class                           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 [ ]

     The aggregate  market value of the voting stock held by  non-affiliates  of
the registrant at March 2, 1998,  was  approximately  $295,790,000  based on the
closing price of $28.47 per share.

     The number of shares  outstanding  of the  registrant's  common stock as of
March 2, 1998 was 18,177,901.

     DOCUMENTS INCORPORATED BY REFERENCE: 

     Proxy  Statement for the Annual Meeting of  Stockholders  to be held on May
20, 1998 (Part III).

<TABLE>
<CAPTION>
                                   ATMI, INC.
                           Annual Report on Form 10-K
                   For the Fiscal Year Ended December 31, 1997

                                TABLE OF CONTENTS
<S>      <C>                                                             <C>
Part I                                                                   Page

Item 1   Business ....................................................    3

Item 2   Properties ..................................................   16

Item 3   Legal Proceedings ...........................................   17
 
Item 4   Submission of Matters to a Vote of Security Holders .........   17

Item 4A  Executive Officers of the Registrant ........................   17

Part II

Item 5   Market for Registrant's Common Equity and Related
         Stockholder Matters .........................................   19

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 ..   29

Item 8   Financial Statements and Supplementary Data ..................  29

Item 9   Changes In and Disagreements with Accountants on
         Accounting and Financial Disclosure .........................   29

Part III

Item 10  Directors and Executive Officers of the Registrant ..........   30

Item 11  Executive Compensation ......................................   30

Item 12  Security Ownership of Certain Beneficial Owners and
         Management ..................................................   30

Item 13  Certain Relationships and Related Transactions ..............   30

Part IV

Item 14  Exhibits, Financial Statement Schedule, and Reports
         on Form 8-K .................................................   30

Index to Consolidated Financial Statements and Financial
Statement Schedule ...................................................   F-1

Signatures ...........................................................   S-1
</TABLE>


                                     PART I

Item 1.   Business.

     ATMI,  Inc.  ("ATMI" or the  "Company") is a leading  supplier of thin film
materials,   equipment  and  services  used  worldwide  in  the  manufacture  of
semiconductor  devices. The Company targets high growth consumable and equipment
markets within the semiconductor industry with proprietary and patented products
based on chemical vapor deposition  ("CVD")  technology.  The Company  currently
provides:  (i) a broad range of ultrahigh purity thin film materials and related
delivery systems; (ii) a full line of point-of-use  semiconductor  environmental
equipment and  services;  and (iii)  specialty  epitaxial  thin film  deposition
services.  Over the last three  years,  the  Company has  achieved a  leadership
position  in each of its target  markets by  providing a more  complete  line of
products than its competitors. ATMI's strategy is to continue its growth through
product line expansion in each of its existing  markets and to leverage its core
technology to create new high growth businesses. The Company's customers include
most of the leading semiconductor manufacturers in the world.


     ATMI  has  capitalized  on the  growth  of the  semiconductor  industry  in
general,  and CVD processing in particular,  by providing  leading edge products
and services in each of its target markets. The Company's ADCS division develops
and  markets  ultrahigh  purity thin film  materials  and  proprietary  delivery
systems. ADCS is also the developer of the "Safe Delivery System," or SDS, which
stores  dangerous gases as solids in cylinders,  providing  increased safety and
substantially  greater operating  efficiencies.  The Company believes its EcoSys
division is the only provider of point-of-use  environmental  equipment offering
all of the key technologies for semiconductor effluent abatement.  The Company's
Epitronics division is a world leader in specialty epitaxial services, providing
high quality  processing of silicon and  next-generation  III-V and wide bandgap
wafers.  The Company's  business mix consists  predominantly  of consumables and
services  which track wafer starts,  or the volume of silicon  wafers  processed
into fully functional  semiconductor devices.  Consequently,  ATMI believes that
its  overall  business  is less  volatile  than that of a typical  semiconductor
capital equipment supplier.

     ATMI  is  a  holding  company  which  performs  executive,   financial  and
administrative functions for its subsidiaries. ATMI was incorporated in Delaware
in April 1997 and is the successor registrant to Advanced Technology  Materials,
Inc. ("ATM"),  which was incorporated in Connecticut in 1986 and  reincorporated
in Delaware in 1987 and which is now a wholly-owned  subsidiary of ATMI. As used
in this report,  "ATMI" means either  ATMI,  Inc.  itself or ATMI,  Inc. and its
consolidated  subsidiaries,  including its predecessor  registrant,  ATM, as the
context may indicate.

     In October 1997, ATMI acquired Advanced Delivery & Chemical Systems Nevada,
Inc. and its affiliates  (collectively,  the "ADCS Group"),  a manufacturer  and
distributor of ultrahigh  purity  semiconductor  thin film materials and related
delivery  systems,  in  exchange  for  5,468,747  shares  of Common  Stock.  The
operations  of the ADCS  Group have been  combined  with the  Company's  NovaMOS
business  to create the ADCS  division.  Also in  October  1997,  ATMI  acquired
Lawrence  Semiconductor  Laboratories,  Inc.  and its  affiliate  (collectively,
"LSL"),  a provider  of silicon  epitaxial  thin film  deposition  services,  in
exchange for 3,671,349  shares of Common Stock.  The operations of LSL have been
combined  with  the  Company's  Epitronics  division,  which  now  offers a wide
spectrum of epitaxial services. Both transactions were accounted for as poolings
of interest.




<PAGE>
    On February  20,  1998,  the Company  announced  that it had entered into a
definitive  merger agreement with NOW  Technologies,  Inc. ("NOW  Technologies")
pursuant to which NOW Technologies would become a wholly-owned subsidiary of the
Company.  The closing of the merger  agreement is subject to the approval of the
shareholders of NOW Technologies and appropriate  government agencies and to the
satisfaction of other customary conditions.  While the exact number of shares of
Common Stock to be issued by the Company to the shareholders of NOW Technologies
will not be  determined  until the third  trading day prior to the closing,  the
number of shares to be issued  will  range  from 1.32  million  to 1.59  million
(excluding shares issuable upon exercise of outstanding options).  The merger is
intended to be treated as a tax-free reorganization and to be accounted for as a
pooling of interests.  NOW  Technologies  is a manufacturer  and  distributor of
semiconductor materials packaging systems, particularly for advanced photoresist
materials.

     Semiconductor Industry Background

     The  semiconductor  industry  has grown  substantially  in recent  years as
semiconductor  devices  have  proliferated  in a wide  variety of  consumer  and
industrial  products,  especially in computing,  networking  and  communications
equipment.  According to Dataquest  Inc., the  semiconductor  industry  achieved
worldwide  sales in 1996 of $142 billion and is  estimated to achieve  worldwide
sales of over $300 billion in 2001.  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 the 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 have sought to streamline their vendor relationships
and reduce the number of vendors upon which they rely,  which in turn has driven
significant consolidation among the providers of semiconductor capital equipment
and 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 deposition, patterning and etch. During deposition, 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 initial method of thin film
deposition was physical vapor deposition ("PVD"), which has in recent years been
largely  supplanted by CVD for the deposition of  semiconducting  and insulating
thin films. In the CVD process,  wafers are placed in a  sophisticated  reaction
chamber (a "reactor"), and a specially designed gas or vaporized liquid material
is introduced.  Simultaneously, a form of energy (e.g., 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 include the relative thinness of the films applied to
the wafer, as well as their conformality (ability to coat evenly,  especially in
holes and trenches  designed into the device),  purity and 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.  Related  equipment  also  includes  specially  designed  environmental
equipment that is used to abate the toxic or otherwise  hazardous  effluent from
CVD reactors.


    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 such 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  epitaxial  thin film
deposition services, or essentially contract manufacture of epi wafers using CVD
processes.

     Materials and Delivery Systems

     The market for  semiconductor  thin film  consumables has expanded with the
growth of the  market  for  semiconductor  devices.  The design of new thin film
deposition  materials  and  equipment  to  transport  these  materials  around a
semiconductor plant and to reactors has experienced ongoing innovation 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. Tetraethylorthosilicate ("TEOS") is a principal liquid precursor material
used in the  deposition of silicon  dioxide  layers,  which  generally  serve as
insulators  between  the  conductive  layers in a  semiconductor  device.  Other
important  materials  include  trimethylphosphite   ("TMP"),   triethylphosphate
("TEPO"), trimethylborate ("TMB") and triethylborate ("TEB"), which are used for
the deposition of phosphorous and boron containing materials.

     Because  thin  film  precursors  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  characterized by segmentation into a wide variety
of material types and forms. For example, most 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 CVD precursors and the adoption of gas handling technologies and
delivery  systems that  minimize the danger of a  catastrophic  release of toxic
gas. The Company  estimates that the total annual market for thin film precursor
materials and delivery  systems exceeds $500 million and is growing at a rate in
excess of 15% per year.

     Environmental Equipment

     The use of CVD processes has also required the development of environmental
equipment  designed to abate the effluent  from CVD reactors.  In general,  less
than 25% 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,  growing  variations  in the  processes  utilized  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 environmental systems. The Company believes the market
for this type of point-of-use  environmental  equipment exceeds $200 million per
year.
    Specialty Epitaxial Deposition 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.  Because  epitaxy  involves  a high  degree of  expertise  and
requires  significant  capital  expenditures,  a merchant  market for  epitaxial
wafers,  primarily silicon  epitaxial wafers,  has in recent years grown to more
than $1.2 billion.  This market is  subdivided  into  "generic"  wafers for high
volume   applications   such  as  dynamic  random  access  memory  ("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  Company
believes that specialty epi products  currently account for approximately 15% of
the total epi wafer  market and will  constitute  a  significant  portion of the
overall growth of the merchant market for epitaxial wafers.

     The continued  drive for improved device  performance and new  applications
for integrated  circuits has led to the  development  and  commercialization  of
alternative  semiconductor  technologies.  A newer  generation  of  devices  has
emerged that utilize epitaxial wafers made of III-V and wide bandgap  materials,
as  opposed  to  silicon,   to  achieve   this   improved   performance.   III-V
semiconductors,  including  gallium arsenide and indium  phosphide,  are finding
increasing   use  in  wireless   communication   devices  where  high  frequency
performance  is  critical,  in  optoelectronic   devices  where  the  electronic
structure of the III-V  semiconductors  allows energy efficient light generation
and in solar cells for  satellite  applications  where  efficient  generation of
electricity is critical. Wide bandgap semiconductors such as silicon carbide and
gallium  nitride  offer  advantages  in  high  power,  optoelectronic  and  high
temperature devices.

     ATMI Business Strategy

     ATMI is a leading  supplier of thin film  materials  and  related  delivery
systems, a full line of point-of-use  semiconductor  environmental equipment and
specialty  epitaxial  deposition  services for the semiconductor  industry.  The
Company's objective is to establish and enhance leadership  positions in each of
the markets it serves.  The  Company's  strategy  consists of the  following key
elements:

     Leverage CVD Technology Leadership. The Company has invested extensively in
developing  proprietary and patented CVD thin film technology which it leverages
to commercialize new products to meet customer requirements.  Its CVD technology
is based on a  multidisciplinary  approach  that  draws upon the  experience  of
ATMI's  personnel  in the areas of  chemistry,  physics,  materials  science and
electrical engineering.  ATMI dedicates significant resources to maintaining its
expertise in CVD technology and protecting its intellectual property,  which now
includes 86 issued U.S.  patents and  numerous  counterparts  outside the United
States. The Company intends to continue to develop new products and new lines of
business that leverage its core competencies.

     Target  High  Growth  Semiconductor  Markets.  ATMI  targets  semiconductor
markets where technology-driven  paradigm shifts are occurring or are enabled by
the use of ATMI's core  technologies.  The Company  typically focuses on markets
with high  growth  rates and that  require  products  that are  consumed  in the
production process, such as thin film materials. For example, ATMI believes that
the market for low pressure gas delivery systems and related consumables, served
by the Company's  SDS gas delivery  product line, is growing at a rate in excess
of the overall growth rate of the semiconductor equipment industry.


   Accelerate Product  Introduction  Through 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.  Most of ATMI's strategic
alliances  are with leading  semiconductor  manufacturers,  such as IBM,  Lucent
Technologies,  Micron Technology,  Siemens and Texas Instruments,  each of which
has participated in advanced  materials  development  programs with the Company.
Such programs  enhance ATMI's core technology base and promote the  introduction
of targeted  products  while  reducing the  Company's  need to make research and
development  and  capital  expenditures.   In  addition,   since  the  Company's
inception, the United States government has provided approximately $62.0 million
in research  funding  directed  towards the costly  development of new thin film
processes and materials for complex electronic devices.

     Provide   Full   Market-Basket    Solutions.   To   address   semiconductor
manufacturers'  desire to streamline their vendor  relationships,  ATMI seeks to
provide a full market-basket  solution,  or "one-stop  shopping," in each of its
target markets. To provide such capability, ATMI pursues internal development of
new products and seeks to acquire  complementary  product  lines and services to
continually expand its capabilities. For example, the Company acquired "wet" and
"combustion" scrubber product lines to complement its internally developed "dry"
scrubber  product line in order to expand its  capabilities  to abate  effluents
from all major semiconductor front-end processes. This approach allows EcoSys to
serve a wide spectrum of the semiconductor industry's environmental needs and to
provide comprehensive worldwide service.

     ATMI Businesses and Products

     ATMI conducts its operations through three primary divisions:  ADCS, EcoSys
and Epitronics.  ADCS designs,  manufactures  and markets  ultrahigh purity thin
film materials and their related delivery systems  equipment for CVD,  diffusion
and  etch  applications  in  the   semiconductor  and  semiconductor   equipment
manufacturing industries.  EcoSys manufactures,  sells and services point-of-use
environmental  equipment for the  semiconductor  industry.  Epitronics  provides
specialty epitaxial deposition services to the semiconductor industry for a wide
variety of end-use applications.

     Consistent with its corporate  strategy,  the Company actively explores new
opportunities to commercialize its core technology. In January 1998, the Company
announced the formation of its Emosyn  division.  Emosyn  intends to develop and
commercialize smart card devices employing the Company's ferroelectric materials
and process integration  technology.  The Company developed this technology in a
consortium with IBM, Micron  Technology and Texas  Instruments.  Emosyn recently
entered into a strategic  alliance with a subsidiary of SMH Swatch,  the largest
watch maker in  Switzerland,  to design,  develop,  manufacture  and  distribute
integrated  circuits for use in smart cards. In addition,  the Company currently
has two other  ventures in  development  that it believes  may  comprise  future
business units for the Company.  The first is focused on the  development of gas
sensing  devices that will allow for the detection and  measurement  of the many
gases used in thin film processing, and the second is focused on the development
of metrology tools that will detect thin film  properties  during the deposition
process.

     ADCS: Semiconductor Materials and Delivery Systems

     The  Company  believes  ADCS is one of the  fastest  growing  suppliers  of
ultrahigh purity thin film materials and associated  delivery systems  equipment
to the semiconductor industry. The Company has taken advantage of the changes in
the market for thin film  materials and delivery  systems by: (i) developing and
commercializing  a wide range of CVD  liquid  precursors;  (ii)  commercializing
innovative bulk delivery systems which  automatically  deliver  materials of the
highest  purity and  consistency  to the reactor;  (iii)  developing  innovative
delivery systems that allow for the  introduction of low volatility  liquids and
even solids to the reactor;  and (iv)  developing and  commercializing  patented
low-pressure  gas delivery  systems for safe  handling and delivery of toxic and
hazardous gases to semiconductor process equipment.

     ADCS strives to ensure that its materials and related delivery systems meet
and exceed the requirements of its customers, which include semiconductor device
manufacturers and OEMs located throughout the world. In developing its business,
ADCS seeks:  (i) to offer the most  complete  line of  consumable  and  delivery
system  products;  (ii) to offer the most  consistent,  highest purity thin film
materials  available;  (iii) to offer the most  reliable,  innovative  equipment
products; (iv) to improve the level of customer service and response offered and
to  remain  cost-effective  to its  customers;  (v) to meet  customer  needs for
statistical quality control and dock-to-stock  programs; and (vi) to continue to
meet the  industry's  needs  for  advanced  thin  film  materials  required  for
next-generation devices and beyond.
    Products and Services

     ADCS has three primary product lines: thin film materials,  liquid delivery
systems and gas delivery  systems.  ADCS also provides services relating to each
of these product lines.

     Thin Film  Materials.  ADCS  produces a broad range of thin film  materials
that are used in making  semiconductor  devices.  In addition to the widely used
CVD precursors-TEOS,  TMP, TEPO, TMB and TEB-ADCS also sells thin film materials
used in other semiconductor  manufacturing processes,  including phosphorous and
boron halides used for doping by diffusion  processing.  ADCS also  manufactures
and sells  source  reagents  that  allow CVD of  advanced  materials,  including
titanium nitride,  platinum,  copper,  tantalum oxide, lead zirconate  titanate,
strontium bismuth tantalate and barium strontium titanate thin films.

     All of these thin films  must be of very high  purity in order to  function
properly  within the device,  particularly  with  respect to  unwanted  metallic
contamination.  The purity of the  starting  chemicals  used in the  process is,
therefore,  critical.  ADCS  ULTRAPUR  chemicals  have  purities  in  excess  of
99.99999% to 99.999999% with respect to unwanted metal impurities. A proprietary
DOUBLE  DISTILLATION  purification  process is used to produce these high-purity
specifications.  In order to  preserve  this  high  purity,  the  chemicals  are
packaged  and  delivered  in high  quality,  carefully  constructed  and cleaned
containers.   ADCS  has  developed  a  proprietary   COYOTE  CLEAN  process  for
preparation  of its  containers,  which  range from quartz and  stainless  steel
ampules to much larger  MINIBULK  and  SKINNIBULK  canisters.  Coupled  with its
Quality  Control  Program,  ADCS  believes  that  this  cleaning  and  container
technology  produces  the  most  consistent,  highest  purity  chemicals  in the
industry and ensures their quality as delivered into the reactor. Continuing its
commitment to quality, ADCS achieved ISO 9001 certification in 1997.

     Liquid Delivery Systems.  ADCS designs,  manufactures and sells proprietary
continuous refill and delivery systems and their related hardware. These systems
and  hardware  products  are  designed  to deliver  ultrahigh  purity  thin film
materials  to the CVD  reactor  under the  desired  physical  conditions.  ADCS'
delivery  hardware  products  include  stainless steel ampules,  stainless steel
MINIBULK canisters,  stainless steel SKINNIBULK canisters, quartz bubblers, bulk
chemical delivery cabinets,  level sensing systems, manual and continuous refill
systems and other application-specific equipment.

     The  Company  believes  that its  continuous  refill  systems  enhance  the
performance  of the process tools they support by eliminating  process  downtime
resulting from canister changes.  Typically,  process tools must cease operation
when canister changes are made to replenish  source material.  ADCS' bulk refill
systems  allow  continuous  delivery  of source  material.  In  addition  to the
elimination of the downtime associated with canister changes, this configuration
also minimizes the atmospheric and moisture  contamination that can occur during
these change-outs.

     Gas Delivery Systems (SDS). The SDS, or "Safe Delivery System,  patented by
ATMI, uses a standard gas cylinder  containing an adsorbent  material.  When the
cylinder is filled with gas, the gas is adsorbed by the material and essentially
"fixed" so that it behaves like a solid.  The SDS cylinder  is,  therefore,  not
under pressure, minimizing any potential leak of hazardous gas and allowing more
gas to be introduced into the cylinder. Consequently,  material delivery via SDS
is both  safer  and  provides  higher  rates of  productivity  than  traditional
methods. Since most semiconductor  processes operate at reduced pressure and the
gas can be desorbed or released from the SDS under  vacuum,  it can be installed
and operated like a conventional  high-pressure  gas cylinder.  These advantages
have led major chip manufacturers to adopt this technology.

     To  date,  four  gases-arsine,  phosphine,  boron  trifloride  and  silicon
tetrafloride-using  the SDS  technology  have been  introduced.  Each is used to
"dope"  silicon  wafers  using ion  implant  processes.  All of these  gases are
available in different size cylinders,  and some have different  adsorbents that
allow  for  additional  gas  capacity  within a  cylinder.  These  products  are
manufactured  by the  Company  and, on a toll basis,  by Matheson  Gas  Products
("Matheson"), the Company's exclusive distributor for ion implant.

     The Company also  believes that  significant  markets for SDS exist outside
ion  implant.  The  Company is now  conducting  beta site  tests  with  selected
semiconductor manufacturers and OEMs for CVD applications using SDS. The Company
believes that commercial introduction of SDS products for this market will occur
in the  second  half of 1998.  ATMI also has  undertaken  extensive  development
efforts to identify new markets and products for the SDS technology. The Company
believes that certain etch gases used in the semiconductor  industry and certain
gases employed in the medical field are possible candidates for SDS.

     Services.  In addition to its thin film materials and  associated  delivery
systems equipment,  ADCS offers custom services,  such as custom stainless steel
and quartz delivery hardware fabrication,  custom bulk refill systems, container
cleaning, hardware repair and total chemical supply management services.

     EcoSys: Point-of-Use Semiconductor Environmental Equipment

     ATMI  believes  EcoSys is the only provider of  point-of-use  environmental
equipment offering all of the key technologies for effluent gas abatement to the
semiconductor  industry: dry chemical,  liquid and active oxidation. As a result
of this broad  product line,  ATMI believes  EcoSys is a global market leader in
the  manufacture  and  sale of  point-of-use  semiconductor  effluent  abatement
equipment. ATMI's strategy is to grow EcoSys' market share through the continued
development  and  acquisition of new  semiconductor  environmental  products and
services.   The  Company   believes   that  this  full  line  of   semiconductor
environmental  products,  coupled with a comprehensive  service  strategy,  will
allow for continued market penetration by its EcoSys business.

     Products and Services

     EcoSys has three primary product lines and several developmental  products.
Each of the three major point-of-use  products has cost of ownership  advantages
for semiconductor customers in certain applications such as CVD, ion implant and
etch.

     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 EcoSys,  through its patented
adsorption materials, is a market leader for point-of-use semiconductor effluent
dry scrubbing  throughout the world.  Additionally,  demand for consumable resin
material is increasing as the installed base of dry scrubbers increases.

     Vector liquid  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.

     Guardian  active  oxidation   scrubbers  treat  a  variety  of  combustible
materials  used  in  semiconductor  processing.  The  Guardian  product  line is
designed for low cost of ownership  by  operating  on  inexpensive  methane fuel
while achieving very high removal  efficiencies.  These combustion  systems also
abate certain  global  warming  gases such as  perfluorinated  carbon  compounds
("PFCs") at high efficiency with near zero nitrous oxide generation.

     EcoSys  is  engaged  in the  development  of  additional  product  lines to
complement   its  existing  ones  in  order  to  meet  the  evolving   needs  of
semiconductor  manufacturers.  Developmental  products  include ReCAT  catalytic
oxidation scrubbers which use proprietary  catalysts to destroy volatile organic
compounds ("VOCs"). VOCs arise from the use of solvents in applying photoresists
and other organic materials during device fabrication.  EcoSys is also marketing
and  continuing  to  develop  effluent  treatment  systems  for the  capture  of
semiconductor  process  gases in emergency and cylinder  change-out  situations.
Such  situations  might  arise at the  point of  delivery  of a gas to a reactor
through gas cylinder rupture or similar catastrophic event. In addition,  EcoSys
is  investigating  the potential  for recycling the materials  used in thin film
deposition  processes in the belief that recycling is ultimately  preferred over
destructive abatement. PFCs, for example, are used in various wafer cleaning and
etch  processes.  As suspected  ozone  depleting  materials,  their use is being
limited by  production  cutbacks and the need for strict  environmental  control
systems.  In conjunction  with Praxair  Corporation,  EcoSys has developed a PFC
recycling  system that captures the gas and repurifies it for subsequent  reuse.
In 1997, the first unit was installed at a test site.

     Epitronics: Specialty Epitaxial Deposition Services

     Epitronics is primarily a service business  providing  specialty  epitaxial
deposition  services  for  silicon,  III-V  and  wide  bandgap  wafers.  Desired
electrical and physical  properties of the epitaxial layers are specified by the
customer and developed in collaboration  with Epitronics.  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.
Epitronics'  fundamental  competitive advantages include the manufacture of high
quality epitaxial layers with high yield. In addition, Epitronics differentiates
itself by offering quality  epitaxial  deposition  services with fast turnaround
and in flexible volumes.

     ATMI believes that  Epitronics is the only provider  offering CVD thin film
deposition services for each of the key materials used in semiconductor  devices
today  and  that it is now a world  leader  in  specialty  epitaxial  deposition
services. Epitronics' strategy is to maximize market share through the continued
development  and  acquisition  of  new  semiconductor  thin  film  products  and
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.

     Products and Services

     Epitronics  provides  epitaxial  deposition  services  for  silicon,  III-V
materials and wide bandgap materials. The Company also distributes certain wafer
products that are manufactured by third parties to provide  "one-stop  shopping"
for  its  customers.  Several  new  products  are  also  in  varying  stages  of
commercialization.

     Silicon Epitaxial Wafers.  Epitronics currently processes silicon epitaxial
wafers in Mesa,  Arizona.  Epitronics  has experience in a wide range of silicon
epitaxial  processes  and selects the process that provides the highest value to
the customer. Processes include deposition from trichlorosilane,  dichlorosilane
and silane which can be operated at atmospheric or reduced pressure.  Epitronics
is  particularly  skilled at: (i) the  deposition of epitaxial  layers on wafers
that already have patterns or buried circuits created by selective  implantation
and  diffusion;  (ii) the  deposition  of  lattice  matched  silicon  thin films
containing  high  amounts  of boron  and  germanium  that can be used in  sensor
applications; and (iii) the selective deposition of silicon on sapphire or other
oxide-patterned substrates.

     III-V Epitaxial  Wafers.  Epitronics  processes  III-V epitaxial  wafers in
Phoenix,  Arizona.  III-V epi  products are finding  increasing  use in wireless
communications,  satellites and optoelectronics  for data and  telecommunication
markets.  In particular,  there is an increased  demand for III-V epi wafers for
heterojunction  bipolar  transistors  for use in  power  amplifiers.  Epitronics
markets its epitaxial  services and sells the product of the service,  epitaxial
wafers,  directly to industry and government customers according to their design
specifications.

     Wide Bandgap Epitaxial Wafers. Epitronics is developing epitaxial processes
for silicon  carbide and gallium  nitride on one- to two-inch  diameter  silicon
carbide and sapphire wafers in Danbury,  Connecticut. The silicon carbide wafers
are manufactured  in-house and are also offered for sale to external  customers.
The  Company  believes  that  these  substrate  sales  will  promote  additional
collaborations,  addressing  technology  development  and  commercial  epitaxial
product  introduction issues associated with future  optoelectronic,  sensor and
power device products.

     Distribution Products. Consistent with its marketing strategy of offering a
complete line of specialty epitaxial wafers and advanced substrates,  Epitronics
is a distributor  of SIMOX  (Separation  by IMplanted  OXygen) wafers for Nippon
Steel  Corporation   ("NSC")  (Japan)  and  specialty  III-V  wafers  for  Wafer
Technology (United Kingdom).  These distributed materials complement Epitronics'
epitaxial  services  and  leverage the  development  of the sales and  marketing
organization required to execute its customer service driven marketing plan. NSC
SIMOX wafers are used for fabricating  high speed and  radiation-hard  circuits.
Specialty  III-V wafers from Wafer  Technology  include  indium  phosphide-based
materials  for  optical   fiber-based   communications,   gallium  arsenide  for
optoelectronic devices and indium antimonide for infrared detectors.

     Developmental  Products.  Epitronics is developing  both substrate and thin
film technology for solid-state  blue light emitting diodes ("LEDs") and lasers.
Blue LEDs will be primarily  used in full color  displays  while blue lasers are
valuable for  increasing  optical data  storage  capabilities  and in full color
printers.  Gallium nitride substrate  technology under development by Epitronics
and others may be essential  to high yield LED  manufacturing  processes  and to
developing  long  lifetime  blue  lasers.   Epitronics  is  collaborating   with
Hewlett-Packard,  Xerox,  SDL and others to  develop  substrate  technology  for
commodity blue lasers and is rs and is developing  proprietary device designs to
enable penetration of specialty laser markets.  Epitronics is the preferred high
performance  materials supplier for a consortium which is developing blue lasers
for improved data storage.

     Customers, Sales, and Marketing

     ATMI sells and  distributes  its  products  worldwide,  both  directly  and
through   manufacturers'   representatives.   Many  of  ATMI's   customers  have
relationships  with more than one  division  of the  Company,  or are  acting as
collaborators on ATMI's development  programs.  A number of ATMI's customers are
listed below:

<TABLE>
<S>                         <C>                      <C>
Advanced Micro Devices      IBM                      Samsung Electronics
Applied Materials           Intel                    SGS Thomson
Atmel                       Lucent Technologies      Siemens
GEC Plessey Semiconductor   Motorola                 Sony
Goldstar Electronics        National Semiconductor   Texas Instruments
Hewlett-Packard             Novellus                 Tokyo Electron
Hyundai Electronics         Philips                  TSMC
</TABLE>

     ADCS primarily  distributes  its materials and delivery  system products to
end-use customers through its direct sales force in North America and Europe and
through  regional  manufacturing  representatives  in Asia. ADCS distributes its
products   in  South  Korea   through   ADCS-Korea   Co.  Ltd.   ("ADCS-Korea").
Additionally, the equipment product lines are marketed and sold to semiconductor
equipment  OEMs,  who in turn resell to end users.  The SDS product is currently
being  marketed and sold solely into the ion implant market through an exclusive
distribution agreement with Matheson.

     EcoSys  distributes  its  point-of-use   environmental   equipment  through
manufacturers'  representatives  throughout  the world.  Direct sales  personnel
serve as regional managers who coordinate the  representatives'  activity within
their respective regions. Additionally, EcoSys markets directly to semiconductor
end-user facility managers to provide full-fab  environmental  solutions as well
as installation and on-going service.

     Epitronics  markets  and  sells  its  thin  film  deposition  services  and
epitaxial wafers primarily on a direct basis. In particular,  silicon epi wafers
and  services are sold  directly  throughout  the world.  Wide bandgap and III-V
epitaxial wafers are sold directly in North America and through distributors and
agents in Europe and Asia.

     Manufacturing

     ADCS  manufactures  its thin film  materials  and  delivery  systems at its
Burnet, Texas and Danbury,  Connecticut  facilities.  In addition,  ADCS-Korea's
facility  in  Anseong,  South  Korea  manufactures  thin  film  materials  to be
distributed in the South Korean market.  The  manufacturing  facility for SDS in
Danbury is complemented by contracted  manufacturing  from Matheson's  facility.
The Company  believes that these  facilities are adequate for its current needs,
but expects to expand to meet anticipated demand.

     EcoSys   manufactures  the  majority  of  its  point-of-use   environmental
equipment  in  San  Jose,   California.   EcoSys  manufactures  its  proprietary
adsorbents  for  its  gas  treatment   products  at  ATMI's  Danbury   facility.
Manufacture of the Guardian product line had been subcontracted to a third party
which  manufactured  these  products  prior to the  acquisition  of the Guardian
product line by ATMI in 1995. The Company commenced  manufacture of this product
line at its San Jose facility in 1997.

     Epitronics  processes its specialty  silicon  epitaxial wafers at its Mesa,
Arizona facility and processes III-V  semiconductor  wafers for the wireless and
optoelectronic  industries at its Phoenix,  Arizona facility.  It processes wide
bandgap wafers and produces high performance thin films in Danbury.

     Raw materials for ATMI's products and processes are available from multiple
domestic sources.

     Competition

     The semiconductor  thin film materials and delivery systems,  environmental
equipment and epitaxial deposition services markets are characterized by rapidly
evolving technology and products.  Both large and small companies offer products
in these  markets,  and  many of  these  companies  have  significantly  greater
financial  and other  resources  than ATMI.  The Company  attempts to compete by
leveraging  its  substantial  investment  in CVD thin film  technology to expand
product  offerings in  combination  with tactical  acquisitions  to provide full
market-basket solutions to customers that are increasingly seeking to streamline
their vendor relationships.

     ADCS' primary  competitors in the United States are the Schumacher Division
of Air Products  Corporation  and the  Diffusion  Systems  Division of Olin Hunt
Specialty  Products,  Inc.  Outside of North  America,  ADCS competes with these
companies  and also with  Yamanaka  Hutech  Corporation  and Kojundo in Asia and
Merck in Europe.  There are several other smaller participants in these markets.
There are currently no direct  competitors to the patented SDS product.  Several
companies,  however, provide gases in high-pressure containers that compete with
the process capability of SDS.

     EcoSys'  primary  competition  in effluent gas treatment is from  companies
focused on water and combustion  treatment  methods.  The primary water scrubber
competitor is Delatech,  while combustion scrubber  competitors include Delatech
and Alzeta. Dry scrubber  competitors  include CS GmbH, Ebara, Japan Pionics and
the Edwards Division of British Oxygen Corporation.

     As a  supplier  of  a  broad-based  line  of  epi  services  and  products,
Epitronics  has  competitors  in each of its three  primary  product  areas.  In
silicon  epi,  Epitronics  competes  with  Moore  Technologies  and a number  of
specialty wafer  manufacturers  with their own epi  capabilities.  In III-V epi,
Epitronics  competes with Kopin,  Epi  Products,  Emcore and a number of smaller
manufacturers.  In wide bandgap epi,  competitors include Cree Research (silicon
carbide) and IBIS Technology (SIMOX wafers).

     Research and Development and Strategic Alliances

     ATMI's  research  and  development  expenditures  are  partially  funded by
external sources, including semiconductor manufacturers, semiconductor equipment
OEMs and various  agencies of the federal  government.  Total sums  expended for
research and  development  in the years ended  December 31, 1997,  1996 and 1995
were $18.5  million,  $18.2 million and $13.2  million,  respectively.  Of those
amounts,  $7.9  million,  $8.3  million  and $7.5  million,  respectively,  were
externally  funded and are  classified  as cost of  contract  revenues on ATMI's
Consolidated  Financial  Statements,  and $10.6  million,  $9.8 million and $5.7
million,  respectively,  were internally funded  expenditures by the Company and
are  classified  as research  and  development  expenses on ATMI's  Consolidated
Financial  Statements.  Over the last three years, a significant  portion of the
Company's  research and development has focused on  ferroelectric  materials and
SDS gas delivery systems.

     Ferroelectric  Materials.  The Company believes that further  reductions in
circuit dimensions will require changes in the materials used for the thin films
required to store,  transmit and switch  electricity in the complex circuitry of
semiconductor  devices. As a result, in August 1992, the Company entered into an
agreement with IBM, Micron Technology and Texas Instruments (the  "Collaborating
Group")  to develop  advanced  thin film  capacitor  materials  and CVD  process
technology delivery equipment for next-generation memory devices. This agreement
focused on developing  CVD process  technology to fabricate  ferroelectric  thin
films, such as barium strontium  titanate,  for high performance memory devices.
Barium  strontium  titanate can store over 30 times more electrical  charge than
conventional  thin films.  Use of this material could  significantly  reduce the
manufacturing complexity of advanced memory devices. In April 1993, the Advanced
Research  Projects  Agency awarded a $5 million  contract for the development of
thin film materials  technology to the Collaborating  Group, with the Company as
prime contractor.  This program was successfully  completed in 1996 with a total
cost of over $20 million. The Company,  through its Emosyn division,  intends to
use the  technology  developed  under the program to develop  and  commercialize
smart card devices  pursuant to a strategic  alliance  with a subsidiary  of SMH
Swatch. In addition, ATMI's ferroelectric thin film technology has also expanded
to  other   ferroelectric   materials  that  have   applications   ranging  from
non-volatile memory devices to wireless components. This in turn has led ATMI to
enter into  strategic  alliances  with  Lucent  Technologies,  Siemens and Texas
Instruments to develop these materials for commercial markets.

     SDS Gas Delivery Systems. Simultaneously with the development of these thin
film  materials,  the Company  developed  and  patented a novel  approach to the
delivery of gases to semiconductor reactors. Historically, semiconductor process
gases have only been  available in  high-pressure  cylinders  that can create an
immediate danger over a large area if inadvertently released. Through the use of
in-cylinder adsorbents, SDS reduces cylinder pressures below atmospheric levels.
This  lowered  pressure  allows  controllable,   on-demand  release  of  certain
semiconductor  process  gases.  The  Company  began a  strategic  alliance  with
Matheson in January 1994, under which Matheson  exclusively  distributes the SDS
product to ion implant users in the worldwide semiconductor industry.

     Government Contracts.  ATMI participates in United States government funded
research and  development  contracts.  As of December 31, 1997,  the Company had
received  aggregate  awards since its inception of  approximately  $62.0 million
from United States government  agencies,  including  approximately $54.9 million
recognized as revenue by ATMI through  December 31, 1997.  These  contracts fund
continued  CVD  technology   development,   development   of  high   performance
semiconductor  devices,  ferroelectric  thin  films  and  devices  for  specific
applications, while offsetting the cost of research and development.  Government
contract  revenues  totaled  approximately  $9.1 million,  $9.8 million and $8.7
million for the years ended December 31, 1997, 1996 and 1995, respectively. This
represents  approximately  9.0%,  11.1% and 14.5% of ATMI's  total  revenues for
those  respective  periods.  The  government  may terminate  contracts  with the
Company at its convenience.  The government may also exercise  "march-in" rights
in the event that the  Company  fails to  continue  to develop  the  technology,
whereby the government may exercise a non-exclusive,  royalty-free, irrevocable,
worldwide  license to any technology  developed  under  contracts  funded by the
government.  ATMI  will  continue  to submit  proposals  to  various  government
entities  for  additional  research  and  development  funding  as  long as such
proposals are consistent with its commercialization strategy.

     Backlog

     Neither  ADCS,  which  conducts  significant  portions of its business with
open-ended,  long-term  supply  contracts which do not specify  quantities,  nor
Epitronics, which generally operates with fast turnaround,  maintain significant
backlog.  Because orders  comprising  the Company's  backlog may be canceled and
delivery schedules may be changed,  the Company's backlog at any particular date
may not be indicative of actual sales for any succeeding period.

     ATMI  considers  orders  for  products  shippable  within six months of the
backlog date and fully executed and funded  research  contract  awards as of the
backlog date as firm backlog.  As of December 31, 1997, ATMI had firm backlog of
approximately  $17.0  million,  consisting  of  approximately  $10.6  million of
product orders and  approximately  $6.4 million of executed and funded  research
contracts.  This compares to a firm backlog level of approximately $16.5 million
as of December  31,  1996,  which  consisted  of  approximately  $8.2 million of
product orders and  approximately  $8.3 million of executed and funded  research
contracts.  SDS product backlog is not included  because the product is sold and
shipped to Matheson for distribution to the ultimate end user.

     Patents and Proprietary Rights

     The  Company has made a  significant  investment  in securing  intellectual
property  protection  for  its  technology  and  products.   ATMI  protects  its
technology  by, among other things,  filing patent  applications  for technology
considered  important to the  development  of its business.  It 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.

     ATMI has been awarded 86 United States  patents and currently has 86 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 holds  licenses to 12 United States  patents.  ATMI's United States patents
expire between 2006 and 2014. The United States patents  licensed to ATMI expire
during the period from 2006 through 2013.

     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 ATMI 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.

     The Company 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  ATMI.  These  agreements  provide  that  all  confidential
information  developed or made known to the individual  during the course of the
individual's  relationship  with the Company 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 in the employ of the Company.

     Environmental Regulation

     The Company uses,  generates and  discharges  toxic,  volatile or otherwise
hazardous chemicals and wastes in its manufacturing, processing and research and
development  activities.  Therefore,  the  Company  is  subject  to a variety of
federal,  state and local governmental  regulations related to the storage,  use
and disposal of these materials. The Company believes that it has, or is seeking
to obtain,  all the permits  necessary  to conduct its  business.  However,  the
failure to comply  with  present or future  laws,  rules or  regulations  or the
failure of the  Company to obtain the  permits  it is  currently  seeking  could
result in fines or other liabilities being imposed on the Company, suspension of
production or a cessation of operations.  While the Company believes that it has
properly  handled its hazardous  materials and wastes and has not contributed to
any on-site contamination or environmental condition at any of its premises, the
various premises,  particularly the premises in Danbury,  Connecticut,  may have
been contaminated prior to the Company's occupancy.  The Company is not aware of
any  environmental  investigation,  proceeding  or  action by  federal  or state
agencies  involving  these  premises.  However,  under certain 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 prior occupant of the Danbury,  Connecticut premises has agreed to indemnify
the Company for remediation costs in connection with any  pre-existing,  on-site
contamination or  environmental  condition.  However,  there can be no assurance
that this  indemnification will 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.  The
Company's  activities  may  also  result  in its  being  subject  to  additional
regulation.  Such regulations  could require the Company to acquire  significant
additional  equipment  or to incur  other  substantial  expenses  to comply with
environmental laws, rules or regulations.  Any failure by the Company to control
the use of, or to restrict  adequately  the discharge of,  hazardous  substances
could subject it to substantial  financial liabilities and could have a material
adverse  effect on the  Company's  business,  operating  results  and  financial
condition.

     Employees

     As of  December  31,  1997,  ATMI  employed  a  total  of 376  individuals,
including 124 in sales and administration,  199 in operations and 53 in research
and  development.  Of these employees,  44 hold Ph.D.  degrees and 31 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 not experienced any work stoppages
and considers its relations with its employees to be strong.

Item 2.  Properties.

     ATMI's  headquarters are located in Danbury,  Connecticut where it leases a
72,000 square foot  facility.  The Company  occupies this facility under a lease
which  expires on August 30,  2005.  ATMI  believes  its  existing  facility  is
adequate and suitable for its current and anticipated needs.

     ADCS'  headquarters  and general  corporate  offices are located in Austin,
Texas, where it leases  approximately  4,000 square feet. This lease expires May
31, 2000. ADCS also owns  approximately six acres of property in Burnet,  Texas,
on which its 12,000 square foot manufacturing facility is located.  Although the
Company  believes the existing  headquarters  and  manufacturing  facilities are
adequate for the current level of demand, the Company expects to expand the ADCS
manufacturing facilities within the next 18 months to meet anticipated demand.

     ADCS-Korea owns  approximately  1.4 acres in an industrial park in Anseong,
South Korea, where its approximately  9,000 square foot  manufacturing  facility
and office are located.

     EcoSys leases a 24,000 square foot facility in San Jose, California,  which
lease expires in March 2003.  EcoSys has recently  leased an  additional  21,000
square foot facility in the same San Jose office park, which lease expires March
2003.  ATMI  believes  these  facilities  are  adequate and suitable for EcoSys'
current and anticipated needs.

     Epitronics owns its corporate  headquarters located in Mesa, Arizona.  This
facility  measures  33,000  square feet, is expandable to 50,000 square feet and
houses the specialty silicon epitaxial service business.  Epitronics also leases
a 15,000 square foot  facility in Phoenix,  Arizona,  where the III-V  epitaxial
business is located, which lease expires August 1999. The wide bandgap epitaxial
business is housed in ATMI's  corporate  facility in Danbury,  Connecticut.  The
Company obtains certain of its manufacturing  equipment by entering into capital
leases while other  equipment is held subject to liens on the related  equipment
securing notes payable. ATMI believes these facilities are adequate and suitable
for Epitronics' current and anticipated needs.

Item 3. Legal Proceedings.

     The Company is not a party to any material  litigation  and is not aware of
any pending or threatened  litigation that could have a material  adverse effect
either upon the Company's business, operating results or financial condition.

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

     The Annual Meeting of  Stockholders  of the Company was held on October 10,
1997. At the annual meeting, the stockholders  approved and adopted an Agreement
and Plan of Merger and Exchange by and among the Company, ATM and the ADCS Group
pursuant to which ATM became a  wholly-owned  subsidiary  of the Company and the
Company  acquired the ADCS Group.  There were 5,087,394  votes for, 12,875 votes
against, and 29,642 abstentions with respect to the Agreement and Plan of Merger
and Exchange.  In addition,  the stockholders  approved and adopted an Agreement
and Plan of Merger, as amended,  by and among the Company,  ATM and LSL pursuant
to which the Company  acquired LSL. There were 5,084,794 votes for, 15,200 votes
against,  and  29,917  abstentions  with  respect to the  Agreement  and Plan of
Merger.

     The  stockholders  also  elected  the  following  persons  to the  Board of
Directors of the Company:  Eugene G. Banucci,  Mark A. Adley, John A. Armstrong,
Robert S. Hillas and Stephen H. Mahle. There were 6,894,822 votes for and 23,405
votes  withheld for each of the  nominees,  except Mr.  Hillas and Mr. Adley who
received  6,894,642 votes for and 23,585 votes withheld.  Dr.  Armstrong and Mr.
Hillas  were  elected  for a term which  expires at the 1998  Annual  Meeting of
Stockholders, Dr. Banucci and Mr. Adley were elected for a term which expires at
the 1999 Annual  Meeting of  Stockholders,  and Mr. Mahle was elected for a term
which  expires at the 2000 Annual  Meeting of  Stockholders.  Subsequent  to the
annual meeting,  the Company's Board of Directors  appointed Lamonte H. Lawrence
as a director of the Company for a term  expiring at the 1999 Annual  Meeting of
Stockholders and appointed Stephen H. Siegele as a director of the Company for a
term expiring at the 2000 Annual Meeting of Stockholders.

     The  stockholders  also  approved  an  amendment  to ATM's  Certificate  of
Incorporation  to increase the number of authorized  shares of Common Stock from
15,000,000 shares to 16,000,000  shares.  There were 5,186,871 votes for, 24,300
votes against,  and 30,667 abstentions with respect to such amendment.  Finally,
the stockholders approved ATM's 1997 Stock Plan. There were 5,066,644 votes for,
42,835 votes against and 40,967 abstentions with respect to the 1997 Stock Plan.
Because the  stockholders  also  approved the  Agreement  and Plan of Merger and
Exchange, pursuant to which ATM became a wholly-owned subsidiary of the Company,
neither the amendment to ATM's Certificate of Incorporation nor ATM's 1997 Stock
Plan became effective.

Item 4A.  Executive Officers of the Registrant.

<TABLE>
     The executive officers of ATMI are as follows:
<CAPTION>
        Name            Age                       Position
<S>                     <C>  <C>
Eugene G. Banucci,Ph.D. 54   President, Chief Executive Officer, Chairman of the
                             Board and Director
Peter S. Kirlin, Ph.D   37   Executive Vice President
Daniel P. Sharkey       41   Vice President, Chief Financial Officer and
                             Treasurer
Ward C. Stevens, Ph.D   43   Vice President - Administration and Secretary
Nicholas J. Wood        33   Vice President and General Manager - Emosyn
                             Division
Duncan W. Brown, Ph.D   45   President - Epitronics Division
James M. Burns          51   President - EcoSys Division
Stephen H. Siegele      37   President - ADCS Division and Director
</TABLE>

     Eugene G. Banucci, Ph.D., a founder of ATMI, has served as President, Chief
Executive  Officer,  Chairman of the Board and director since 1986.  Previously,
Dr. Banucci served in a variety of executive and managerial positions. From 1984
to 1986,  he was a director of American  Cyanamid  Company's  Chemical  Research
Division,  with  responsibility  for the  research,  development  and  technical
service activities of the Chemicals Group.

     Peter S. Kirlin, Ph.D. has served as Executive Vice President of ATMI since
1995. From 1991 to 1995, Dr. Kirlin served as Vice President of Microelectronics
and General  Manager of the former NovaMOS  division of ATMI. From 1988 to 1991,
Dr. Kirlin served as Director of  Superconductor  Materials and  Electronics for
ATMI.  Prior to  joining  ATMI,  Dr.  Kirlin was a Project  Leader and  Research
Engineer for American Cyanamid Company.

     Daniel P. Sharkey has served as Chief Financial  Officer since joining ATMI
in 1990 and has served as Vice President and Treasurer  since 1993. From 1987 to
1990, Mr. Sharkey was Vice  President of Finance and  Administration  for Adage,
Inc., a manufacturer of high-performance  computer graphics terminals. From 1983
to 1987,  he was  Corporate  Controller  for CGX  Corporation.  Previously,  Mr.
Sharkey served as Audit Supervisor for KPMG Peat Marwick.

     Ward C. Stevens,  Ph.D.,  a founder of ATMI, has served as a Vice President
since 1986 and served as a director  from 1986 to 1990.  Prior to joining  ATMI,
Dr. Stevens was a Materials  Scientist and Project  Leader at American  Cyanamid
Company and a Materials Scientist at Celanese Research Company.

     Nicholas J. Wood has served as Vice President and General  Manager - Emosyn
Division  since  January 1998.  From 1995 through 1997,  Mr. Wood served as Vice
President  -  Marketing  of ATMI.  From 1985 to 1995,  he served in a variety of
sales and marketing positions with Intel Corporation.  Most recently,  from 1992
to 1995, he served as Northern European Marketing Manager of Intel.

     Duncan  W.  Brown,  Ph.D.,  a founder  of ATMI,  has  served as  President,
Epitronics  Division  since March 1996.  From 1986 to October  1997,  Dr.  Brown
served as Vice  President of ATMI and from 1990 to October  1997, he also served
as a director of ATMI.  From 1983 to 1986,  Dr. Brown was a Research  Chemist at
American Cyanamid Company.  Previously,  Dr. Brown was a Postdoctoral  Fellow in
the  Departments of Chemistry at the  Massachusetts  Institute of Technology and
Harvard University, and an Academic Associate at IBM's Research Division.

     James M. Burns has served as President - EcoSys Division since joining ATMI
in January 1997.  Previously,  Mr. Burns served as Executive  Vice President and
General  Manager at Genus,  Inc. from 1995 to 1996, as Assistant Vice President,
Operations  at  Hughes  Network  Systems  from  1992 to 1995,  and as  Director,
Customer Satisfaction and Quality at Trimble Navigation, Ltd. from 1991 to 1992.
Prior to that time, Mr. Burns served in a variety of managerial positions in the
high technology electronics industry.

     Stephen  H.  Siegele  has  served as  President  - ADCS  Division  and as a
director of ATMI since  October  1997.  Mr.  Siegele,  a co-founder  of the ADCS
Group,  served as the  President and Chief  Executive  Officer of the ADCS Group
from  February  1994 until  October 1997 and has served as a director  since its
inception in 1988.  From 1988 to 1994,  Mr.  Siegele served as Vice President of
the ADCS Group.  Prior to that time, Mr. Siegele served in sales and engineering
positions at Intel Corporation and Olin Hunt Specialty Products, Inc.

     Executive officers serve at the discretion of the Board of Directors. There
are no family relationships among any of the executive officers or directors.

                                    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 prior thereto the Common Stock of ATM,
the  Company's  predecessor,  was  traded on the  Nasdaq  National  Market  from
November  1993 under the same  symbol.  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:

<TABLE>
<CAPTION>
                                                       High            Low
                                                      ------          ------
<S>                                                  <C>             <C>
Fiscal year ended December 31, 1996
     1st Quarter                                     $ 12.75         $  9.63
     2nd Quarter                                       15.88           10.38
     3rd Quarter                                       13.88           10.75
     4th Quarter                                       18.50           12.25
Fiscal year ended December 31, 1997
     1st Quarter                                       22.00           16.00
     2nd Quarter                                       29.75           15.75
     3rd Quarter                                       39.25           25.00
     4th Quarter                                       42.25           18.13
</TABLE>

     As of March 2, 1998, there were  approximately 200 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 or in conjunction  with a subsidiary's  failure to comply with
various financial covenants.

     The Transfer Agent and Registrar for ATMI Common Stock is BankBoston, N.A.

     On September  23, 1997,  the Company sold 20,000  shares of Common Stock to
the  Connecticut  Development  Authority  pursuant to the partial  exercise of a
warrant for aggregate consideration of $222,500.

     On October 6, 1997,  the  Company  sold  65,625  shares of Common  Stock to
Advest,  Inc. pursuant to the exercise of a warrant for aggregate  consideration
of $738,281.25.

     On October 10,  1997,  the Company  issued to Lamonte H.  Lawrence  and The
Arizona State  University  Foundation an aggregate of 3,671,349 shares of Common
Stock in connection with the merger of a wholly-owned  subsidiary of the Company
into LSL.

     On October 17,  1997,  the Company  sold 65,625  shares of Common  Stock to
Needham & Company,  Inc.  pursuant to the  exercise  of a warrant for  aggregate
consideration of $738,281.25.

     The foregoing  issuances of the Company's  securities were made in reliance
upon the exemption from the  registration  requirements of the Securities Act of
1933,  as amended  (the  "Securities  Act"),  set forth in  Section  4(2) of the
Securities  Act. In claiming the Section 4(2)  exemption,  the Company relied on
the following facts: (i) each of the purchasers (a) had the requisite  knowledge
and experience in financial and business matters to evaluate the merits and risk
of an  investment  in the Company;  (b) was able to bear the economic risk of an
investment in the Company;  (c) had access to or was furnished with the kinds of
information that registration under the Securities Act would have provided;  (d)
acquired  the shares  for the  purchaser's  own  account  in a  transaction  not
involving any general solicitation or general  advertising,  and not with a view
to the distribution  thereof;  and (ii) a restrictive  legend was placed on each
certificate or other instrument evidencing the shares of other securities.

Item 6.   Selected Financial Data.

     The following selected consolidated statements of income data for the years
ended  December 31, 1997,  1996,  1995 and 1994 and the balance sheet data as of
December  31,  1997,  1996 and 1995 are derived  from the  audited  consolidated
financial  statements of the Company. The statements of income data for the year
ended  December 31, 1993 and the balance  sheet data as of December 31, 1994 and
1993 are derived from unaudited consolidated financial statements. The unaudited
consolidated financial statements include all adjustments,  consisting of normal
recurring   accruals,   which  the  Company  considers   necessary  for  a  fair
presentation  of the financial  position and the results of operations for these
periods.  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.

<TABLE>
<CAPTION>
                                            Fiscal Year Ended December 31,
                                      -----------------------------------------
                                      1997     1996     1995     1994     1993
                                      -----------------------------------------
                                         (in thousands, except per share data)
<S>                                <C>      <C>       <C>     <C>      <C>
Consolidated Statements of
Income Data:
   Product revenues                $ 92,757 $ 78,815  $51,460 $ 27,537 $ 16,998
   Contract revenues                  9,120    9,846    8,712    7,223    6,070
                                      -----    -----    -----    -----    -----
   Total revenues                   101,877   88,661   60,172   34,760   23,068
   Cost of revenues                  48,684   41,231   29,723   17,739    2,655
                                     ------   ------   ------   ------    -----
   Gross profit                      53,193   47,430   30,449   17,021   10,413
   Operating expenses:
     Research and development        10,581    9,838    5,697    3,981    1,864
     Selling, general and
       administative                 23,153   20,590   15,886    9,308    6,415
   Non-recurring expenses             9,000(2) 2,000(1)     0        0        0
                                     -------  -------  ------   ------   ------
       Total operating expenses      42,734   32,428   21,583   13,289    8,270
                                     ------   ------   ------   ------   ------
   Operating income                  10,459   15,002    8,866    3,732    2,134
   Interest income (expense), net      (328)       4     (357)    (250)    (338)
   Other income (expense), net          233       18     (543)   3,769      123
                                     ------   ------    ------  -------   -----
   Income before income taxes
     and minority interest           10,364   15,024    7,966    7,251    1,919
   Income taxes                       5,941    3,158    2,888    1,728    1,138
                                      -----    -----    -----    -----    -----
   Income before minority
     interest                         4,423   11,866    5,078    5,523      781
   Minority interest                     (2)     151       10       12      269
                                     ------   ------    -----    -----     ----
   Net income                        $4,421 $ 12,017(4)$5,088  $ 5,535(3)$1,050
                                     ====== ========== ======  ========= ======
   Net income per share-
     assuming dilution               $ 0.24   $ 0.65(4)$  .30  $  0.33(3)$ 0.07
                                     ======   ======== ======  ========= ======
   Weighted average shares
     outstanding-assuming
     dilution                        18,660   18,394   17,127   16,637   14,610

<CAPTION>
                                                   December 31,
                                      -----------------------------------------
                                      1997     1996     1995     1994     1993
                                      -----------------------------------------
                                                  (in thousands)
<S>                                <C>      <C>      <C>       <C>     <C>
Consolidated Balance Sheet Data:
   Cash, cash equivalents and
     marketable securities         $ 29,011 $ 30,812 $ 33,818  $16,474 $ 14,765
   Working capital                   39,933   36,586   34,221   17,124   15,404
   Total assets                     103,146   93,191   78,590   40,995   29,518
   Long-term debt, less current
     portion                         14,526   15,769   11,975    7,811    2,022
   Minority interest                    595      545      535        6    3,179
   Total stockholders' equity        61,872   55,473   45,118   22,410   16,825

<FN>
(1)  Represents a one-time  charge of $2.0 million ($1.2 million,  net of taxes)
     accrued in connection with patent litigation  involving LSL, which resulted
     in a settlement payment in May 1997.

(2)  Represents a one-time  charge of $9.0 million  accrued in  connection  with
     costs  incurred in  investigating,  analyzing and completing the ADCS Group
     and LSL acquisitions.

(3)  Net income and net income per  share-assuming  dilution  in 1994  include a
     non-recurring   gain  of   approximately   $3.6   million,   or  $0.22  per
     share-assuming  dilution,  related to the  restructuring of a joint venture
     and costs incurred in the acquisition of Vector (as defined herein).

(4)  Net income and net income per  share-assuming  dilution in 1996 include the
     effect of the ADCS Group's  treatment as an S-Corporation  for a portion of
     the year.  If the ADCS Group had been taxed as a  C-Corporation  for all of
     1996, the Company's net income and net income per  share-assuming  dilution
     would have been approximately  $10.5 million and $0.57,  respectively,  for
     the year ended December 31, 1996.
</FN>
</TABLE>

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

     Overview

     ATMI was  incorporated in Delaware in 1997 and is the successor  registrant
to ATM, which was  incorporated  in Connecticut  in 1986 and  reincorporated  in
Delaware in 1987.  The  Company is a leading  supplier  of  specialty  thin film
materials  and  delivery  systems,   point-of-use  environmental  equipment  and
epitaxial processing services for the semiconductor  industry.  Product revenues
include  revenues from the sale of consumable  thin film materials and materials
delivery  systems,  environmental  equipment,  consumable  resins  for  effluent
abatement and processed  epitaxial wafers.  Product revenues are recognized upon
the shipment of those products.  The Company also derives revenues from contract
research and development  activities  related to high performance  semiconductor
materials  and  devices  and from  royalties  generated  under  various  license
agreements.  Contract  revenues are recognized using a  percentage-of-completion
method based upon costs incurred and estimated future costs.

     A substantial  majority of ATMI's  revenues track "wafer starts" within the
semiconductor  industry,  or the volume of silicon  wafers  processed into fully
functional  semiconductor  devices. These include revenues derived from the sale
of  speciality  thin  film  materials  that  are used in CVD  processes  and the
delivery  systems for these  materials.  Manufacturers  seek to replenish  these
consumable  materials on a continuing  basis.  Furthermore,  once the  Company's
specialty  materials  are  qualified  for  a  specific  process,  the  Company's
customers  typically  source  materials from the Company for the lifetime of the
process, generating a recurring revenue stream. Similarly, the Company derives a
recurring revenue stream from the sale of resins that are used in certain of its
environmental  equipment products.  Additionally,  the Company's epitaxial wafer
processing services revenues are directly tied to the number of wafers processed
for the Company's customers.  A smaller portion of ATMI's revenues,  principally
those derived from environmental  equipment sales, track new semiconductor plant
construction.  In 1997, approximately 73% of the Company's product revenues were
from  product  lines  that  were  primarily  related  to "wafer  starts,"  while
approximately 27% of the Company's product revenues were from product lines that
were  primarily  related to "fab starts," or new plant  construction.  Because a
minority of its revenues are tied to fab starts,  the Company  believes that its
overall business is less volatile than that of a typical semiconductor equipment
supplier.

     The Company's  products are based primarily on proprietary and patented CVD
technologies  used in the manufacture of  semiconductor  devices.  The Company's
strategy has been to use these  technologies to develop and, in conjunction with
industry collaborators, sequentially introduce products into high growth markets
of the semiconductor industry. Using this phased commercialization strategy, the
Company  has  been  able to  develop  its core CVD  technologies  and  establish
businesses to support further commercialization of its products. The Company has
also used a targeted  acquisition  strategy to assist in building  critical mass
and market position in each of the markets it serves.

     ADCS comprises the thin film materials and related delivery system products
of the Company and contributed  approximately  45% of  consolidated  revenues in
1997. The Company entered the thin film materials market in February 1992 with a
strategy  targeting  advanced materials for  next-generation  devices.  As those
next-generation  markets were evolving and ATMI's new thin film  materials  were
nearing    commercialization,    the   Company   sought   to   accelerate   this
commercialization  by acquiring  another supplier  currently serving this market
with   established   products   and  strong   distribution   and   manufacturing
capabilities.   In  October  1997,  the  Company  acquired  the  ADCS  Group,  a
manufacturer  and  distributor  of  ultrahigh  purity  semiconductor  thin  film
materials and related  delivery  systems,  and combined the Company's  thin film
materials and delivery systems business with the business of the ADCS Group.

     EcoSys  manufactures,   sells  and  services   point-of-use   semiconductor
environmental  equipment  and  generated  approximately  27%  of  the  Company's
consolidated   revenues  in  1997.   The  Company   entered  the   semiconductor
environmental equipment market in 1989 with the introduction of its Novapure dry
chemical scrubber.  This product was originally  designed pursuant to a contract
with the  Environmental  Protection  Agency.  In 1991,  this product and several
others  resulting  from early  stage  research  and  development  efforts at the
Company were contributed to Novapure Corporation  ("Novapure"),  a joint venture
with Millipore Corporation  ("Millipore").  In 1994, the Company acquired Vector
Technical  Group,  Inc.  ("Vector"),  a  manufacturer  of liquid and  combustion
semiconductor  environmental  equipment. In conjunction with the sale of certain
product  lines of Novapure to Millipore in 1994,  the Company  formed  EcoSys by
combining the retained rights to the effluent treatment product line of Novapure
with Vector's  product lines. In 1995, the Company acquired the Guardian Systems
product  line of  combustion  semiconductor  environmental  equipment to further
broaden EcoSys' product offerings.

     Epitronics  provides  end-use  customers with thin film epitaxial  services
covering a variety of materials  in the  semiconductor  industry  and  generated
approximately 28% of the Company's  consolidated revenues in 1997. The Company's
development of epitaxial  processes  began in 1987,  centered  around novel wide
bandgap  semiconductor  materials such as silicon carbide.  Through  discussions
with its customers and development collaborators, the Company recognized that an
opportunity  existed to create a materials  company  that could offer  epitaxial
services for a wide  spectrum of  semiconductor  materials.  To  complement  its
silicon carbide and gallium nitride epitaxial thin film technology,  the Company
acquired Epitronics  Corporation,  a Phoenix,  Arizona-based  processor of III-V
epitaxial wafers for the wireless and optoelectronics  markets in December 1995.
The Company integrated the operations of Epitronics Corporation with its Diamond
Electronics division in 1996, under the more widely recognized  Epitronics name.
In October 1997,  ATMI acquired LSL, a Mesa,  Arizona-based  provider of silicon
epitaxial wafer processing  services.  ATMI has integrated the operations of LSL
with Epitronics, which now offers a wide spectrum of epitaxial services.

     The acquisitions of Vector,  the ADCS Group and LSL have been accounted for
as  pooling-of-interests  transactions.  As a result, the Consolidated Financial
Statements  of the Company have been  restated to include the results of Vector,
the ADCS Group and LSL for all periods presented.

    On February 20, 1998, the Company announced that it had entered into a
definitive  merger  agreement  with NOW  Technologies,  pursuant  to  which  NOW
Technologies  would become a wholly-owned  subsidiary of the Company.  While the
exact  number  of shares of  Common  Stock to be  issued by the  Company  to the
shareholders of NOW Technologies  will not be determined until the third trading
day prior to the closing, the number of shares to be issued will range from 1.32
million to 1.59 million  (excluding shares issuable upon exercise of outstanding
options). The merger is intended to be treated as a tax-free  reorganization and
to be  accounted  for as a pooling of  interests.  For the twelve  months  ended
December 31, 1997, NOW Technologies  had total revenues of  approximately  $15.0
million. There can be no assurance that this transaction will be completed.


Results of Operations

     The following table sets forth,  for the periods  indicated,  certain items
from the Company's  consolidated  statements of income expressed as a percentage
of total revenues:

<TABLE>
<CAPTION>
                                                 Percentage of Total Revenues
                                                 Fiscal Year Ended December 31,
                                                 ------------------------------
                                                      1997     1996    1995
                                                      ----     ----    ----
<S>                                                  <C>      <C>     <C>
Product revenues                                      91.0%    88.9%   85.5%
Contract revenues                                      9.0     11.1    14.5
                                                       ---     ----    ----
Total revenues                                       100.0    100.0   100.0
Cost of revenues                                      47.8     46.5    49.4
                                                      ----     ----    ----
Gross profit                                          52.2     53.5    50.6
Operating expenses:
   Research and development                           10.4     11.1     9.5
   Selling, general and administrative                22.7     23.2    26.4
   Non-recurring expenses                              8.8      2.3     0.0
                                                       ---      ---     ---
     Total operating expenses                         41.9     36.6    35.9
                                                      ----     ----    ----
Operating income                                      10.3     16.9    14.7
Interest income (expense), net                        (0.3)     0.0    (0.6)
Other income (expense), net                            0.2      0.0    (0.9)
                                                       ---      ---    ----
Income before income taxes and minority interest      10.2     16.9    13.2
Income taxes                                           5.8      3.6     4.8
                                                       ---      ---     ---
Income before minority interest                        4.3     13.4     8.4
Minority interest                                      0.0      0.2     0.0
                                                       ---      ---     ---
Net income                                             4.3%    13.6%    8.5%
                                                       ===     ====     ===
</TABLE>

     Comparison of Fiscal Years Ended December 31, 1997, 1996 and 1995

     Revenues. Total revenues increased 15% to $101.9 million in 1997 from $88.7
million in 1996,  and increased 47% in 1996 from $60.2 million in 1995.  Product
revenues  increased 18% to $92.8 million in 1997 from $78.8 million in 1996, and
increased 53% in 1996 from $51.5 million in 1995.  Commercial  product  revenues
have grown  rapidly,  such that they  comprised  91.0% of total revenues in 1997
compared to 88.9% in 1996 and 85.5% in 1995.

     Over the three year period,  ADCS  revenues grew at a rate in excess of the
growth rate of the semiconductor  industry.  ADCS revenues increased 41% in 1997
when compared to 1996.  This growth was primarily  attributable to a substantial
increase in SDS product  sales as well as the  conversion of SDS revenues in the
fourth quarter of 1996 from a royalty stream to a product revenue  stream.  ADCS
thin film materials  revenues  increased 17% in 1997 when compared to 1996. This
materials  revenue  growth  included sales to new customers as well as increased
sales  to  existing  accounts.  Revenues  from the  sale of  materials  delivery
equipment  increased only 2% when comparing the two periods,  due primarily to a
shift away from an OEM  distribution  channel to a direct sales  channel  where,
particularly  in the second quarter of 1997, the OEM equipment  orders slowed in
advance of any increase in end-user orders.

     Sales of materials and delivery systems increased 42% in 1996 when compared
to 1995.  This growth was primarily due to market share gains in Europe and Asia
along with increased sales to existing  customers.  Increased  acceptance of the
Company's  delivery and refill  hardware  systems also generated  revenue growth
over this period.

     The SDS product line began to have a  significant  impact on the  Company's
revenue  growth in 1996. The revenue from this product line changed in late 1996
from a royalty stream to a product  revenue stream.  As a result,  sales of this
product  represented  5.0% of  total  revenues  in 1996,  up from  1.5% of total
revenues in 1995.

     By leveraging its technology  leadership and full service philosophy in the
market for semiconductor  environmental equipment, EcoSys increased market share
in the face of a  declining  overall  capital  equipment  market in 1996 and the
first half of 1997.  EcoSys revenues  increased 9% in 1997 when compared to 1996
and  increased  48% in 1996  when  compared  to  1995.  The  1997  increase  was
attributable  to a slight  increase in equipment  sales and continued  growth in
sales of  consumable  resins.  The  December  1995  acquisition  of the Guardian
Systems  product line,  which was accounted for as a purchase  transaction,  was
responsible for a portion of the revenue growth in 1996.

     Epitronics  revenues  increased 2% in 1997 when compared to 1996. Growth in
the smaller  gallium  arsenide and wide bandgap  product lines was tempered by a
slight increase in silicon epitaxial services revenues. The relative flatness in
silicon epi revenues was  primarily a result of production  downtime  associated
with the  relocation  of  manufacturing  equipment  to the  Company's  new Mesa,
Arizona facility, which was completed in July 1997. Additionally, a diversion of
management's  attention during early 1997 related to the negotiation and sale of
the silicon epi business to ATMI had a slight  negative effect on revenue growth
during that period. Prior to 1997,  Epitronics revenues had grown significantly,
driven  primarily  by  increased  customer  demand  for the  silicon  processing
services of the Company. Epitronics revenues increased 50% in 1996 when compared
to 1995.

     Contract revenues decreased 7% to $9.1 million,  or 9.0% of total revenues,
in 1997 from $9.8 million,  or 11.1% of total revenues,  in 1996. The decline in
1997  resulted from a general  decrease in  government  funding of the Company's
contract  research  activities,  reflecting the  completion of certain  contract
research  programs and the Company's  decision to focus on research  relating to
specific, commercially relevant efforts. General increases in government funding
of ATMI research  resulted in the growth of contract revenues in previous years.
Government  funding  increased  13% to $9.8 million in 1996 from $8.7 million in
1995. The increased  research funding in 1996 was primarily focused on materials
development,  device  processing  and device design  activities  within ADCS and
Epitronics.

     Gross Profit. Cost of revenues is comprised of material, labor and overhead
in differing  proportions,  depending  on the business  unit within the Company.
EcoSys' cost of revenues consists primarily of material costs, while ADCS' costs
have a higher relative labor content and Epitronics'  costs consist primarily of
indirect costs of maintaining an epi facility.  Additionally,  contract  revenue
costs consist of direct labor and material and indirect  costs  associated  with
the performance of government contracted research activity.

     Gross profit  increased  12% to $53.2 million in 1997 from $47.4 million in
1996. Gross margin decreased to 52.2% of revenues in 1997 from 53.5% of revenues
in 1996. Gross margin on product revenues  decreased to 56.0% in 1997 from 58.3%
in 1996.  The decrease of product  margins was primarily  attributable  to lower
margins in the silicon  epi  business  due to the  relocation  of  manufacturing
equipment during the first half of 1997 and duplicate facility costs during that
period.  Additionally,  margin  decreases were caused by lower selling prices to
end-user  customers  of ADCS and the  fact  that the SDS  revenue  stream  was a
smaller  but  higher  margin  royalty  stream  in 1996.  Margin  decreases  were
partially  offset by the improved  margin profile of the overall  product mix of
EcoSys in 1997.  Gross  margin on contract  revenues  decreased to 13.7% in 1997
from 15.3% in 1996.  Contract  margins  varied  slightly when  comparing the two
periods due to different fee arrangements and indirect cost absorption.

     Gross profit  increased  56% to $47.4 million in 1996 from $30.4 million in
1995 and gross  margin  improved  to 53.5% of  revenues  in 1996  from  50.6% of
revenues in 1995. In 1996,  ATMI's sales mix  continued to shift toward  greater
volumes of high-margin products.  Gross margin on product revenues increased 57%
to $45.9  million  in 1996 from  $29.2  million in 1995.  Product  gross  margin
improved to 58.3% of product revenues in 1996, up from 56.8% of product revenues
in 1995. The improved  product  margins in 1996 were  attributable  primarily to
higher margins on epitaxial processing due to efficiencies gained with increased
volume and to the  significant  increases in royalties  in  connection  with SDS
product line growth.  Gross profit on contract  revenues  increased  23% to $1.5
million in 1996 from  approximately  $1.2 million in 1995, while gross margin on
contract  revenues  increased  to 15.3%  in 1996  from  14.0% in 1995.  Contract
margins  can vary from year to year based on the mix of  cost-type,  fixed-price
and cost sharing  arrangements.  Additionally,  different fee  arrangements  and
indirect cost absorption can result in some margin variability.

     Research  and  Development  Expenses.  Research  and  development  expenses
consist of personnel and other  indirect  costs for  internally  funded  product
development.  These expenses are complemented by the externally  funded research
activities  relating to contract  revenues.  Research and  development  expenses
increased 8% to $10.6  million in 1997 from $9.8 million in 1996,  and increased
73% in 1996 from $5.7 million in 1995.  The 1997  increase was  primarily due to
increased staffing for several  development efforts pertaining to certain of the
Company's  advanced  thin film  technology  and related  applications.  The 1996
increase was primarily due to expansion of product  development  efforts  within
EcoSys and ADCS and increased  spending to expand and protect the SDS technology
portfolio.  Research  and  development  expenses  as a  percentage  of  revenues
decreased to 10.4% in 1997,  compared with 11.1% in 1996,  which was an increase
from 9.5% in 1995.  The  percentage  of  research  and  development  expenses to
revenues is expected to remain relatively constant in the foreseeable future.

     Selling,  General  and  Administrative   Expenses.   Selling,  general  and
administrative  expenses  increased  12% to $23.2  million  in 1997  from  $20.6
million  in 1996,  and  increased  30% in 1996 from $15.9  million in 1995.  The
increases  were  primarily  due to  increased  corporate  administrative  costs,
increased commissions on higher product revenues and increased product marketing
activity.  ATMI's variable selling costs grew in 1996 in line with the Company's
revenue growth. ATMI also added  administrative staff in 1996 to support revenue
growth and incurred increased costs related to the businesses  acquired in 1995.
Selling,  general  and  administrative  expenses  as a  percentage  of  revenues
decreased to 22.7% in 1997, compared with 23.2% in 1996 and 26.4% in 1995.

     Non-Recurring  Expenses.  The 1997 operating  results  included a one-time,
non-recurring   charge  of  $9.0  million  related  to  the  costs  incurred  in
investigating,  analyzing and  completing  the ADCS Group and LSL  acquisitions.
These costs included  legal,  accounting and investment  banking fees as well as
miscellaneous  expenses incurred in connection with the transactions that closed
in the fourth quarter of 1997. The 1996  operating  results  included a one-time
charge of $2.0 million  accrued in connection with patent  litigation  involving
LSL, which resulted in a settlement payment in May 1997.

     Interest Income  (Expense),  Net. Interest income is primarily derived from
interest  earned  on  the  Company's  cash,  cash   equivalents  and  marketable
securities.  Interest  income  decreased  10% to $1.5  million in 1997 from $1.6
million  in 1996,  and  increased  70% in 1996 from $1.0  million  in 1995.  The
Company's invested cash balances were lower in 1997 than in 1996 due to net cash
outflow  during the year,  primarily from the costs incurred in closing the ADCS
Group and LSL  acquisitions  in the fourth  quarter  of 1997.  The  increase  in
interest  income  in  1996  was  due to the  Company's  invested  cash  balances
throughout  1996 being  significantly  higher than in 1995 due to the  Company's
public offering of common stock in October 1995.  Interest expense increased 11%
to $1.8 million in 1997 from $1.6  million in 1996,  and  increased  24% in 1996
from $1.3 million in 1995.  The 1997  increase  was due to larger debt  balances
outstanding  during 1997, while the 1996 increase was primarily  attributable to
increased  borrowings  under capital lease  commitments at Epitronics as well as
the mortgage on the Mesa, Arizona facility.

     Income Taxes.  ATMI's income tax expense  related to United States  federal
and state taxes on income generated, partially offset by the utilization of loss
carryforwards  and available  federal and state tax credits.  Income tax expense
increased  88% to $5.9 million in 1997 from $3.2 million in 1996,  and increased
9% in 1996 from $2.9 million in 1995. The effective income tax rate increased to
57.3% in 1997  from  21.0%  in 1996  and  decreased  from  36.3%  in  1995.  The
significant increase in 1997 to a level above statutory rates was due in part to
the 1997  operating  results  including  the $9.0 million  non-recurring  charge
related to the ADCS Group and LSL acquisitions for which no tax benefit has been
taken.  The  decline  in the  effective  rate in 1996 was the result of the ADCS
Group's  being  taxed as an  S-Corporation  for a portion of 1996.  The  Company
expects the effective tax rate to approach fully taxed rates in 1998.

     Minority  Interest.  Minority interest  represents the 30% interest held by
K.C. Tech Co., Ltd. ("K.C. Tech") in the operations of ADCS-Korea a South Korean
chusik hoesa,  which is a joint venture  established  to  manufacture,  sell and
distribute chemicals to the semiconductor and related industries in South Korea.

     Earnings Per Share.  Earnings per share, on a diluted basis,  decreased 63%
to $0.24 per share in 1997 from $0.65 per share in 1996,  and increased  117% in
1996 from $0.30 per share in 1995. However,  after adjusting earnings to exclude
the  non-recurring  charges  recognized  in 1997 and 1996,  and to  adjust  1996
earnings on a pro forma basis to treat the ADCS Group as a C-Corporation for all
of 1996,  earnings per share,  on a diluted  basis,  increased  13% to $0.72 per
share in 1997  from  $0.64 per share in 1996,  and  increased  113% in 1996 from
$0.30 per share in 1995.

     Basic  earnings  per  share  under  Financial  Accounting  Standards  Board
Statement  No.  128 ("FAS  128")  decreased  63% to $0.26 per share in 1997 from
$0.70  per share in 1996,  and  increased  119% in 1996 from  $0.32 per share in
1995.

     Liquidity and Capital Resources

     To date,  the  Company  has  financed  its  activities  through the sale of
equity,  external  research  and  development  funding,  various  lease and debt
instruments and  operations.  The Company's  working capital  increased to $39.9
million at December 31, 1997 from $36.6 million at December 31, 1996.

     In 1997,  operations  provided cash of approximately $5.9 million.  Working
capital  increases,  most notably in accounts  receivable,  inventory  and other
assets,  resulted in  significant  uses of cash during 1997. The $9.0 million of
non-recurring transaction costs, expensed in the fourth quarter of 1997, reduced
the  cash  generated  from  operations  by   approximately   $7.0  million,   as
approximately  $2.0  million  remained  unpaid at December  31,  1997.  Net cash
generated  from  operations  in  1996 of  approximately  $13.3  million  was due
principally to the increased profitability of the Company for the year. In 1995,
ATMI  generated net cash from  operations of $7.2 million,  primarily due to the
profitability  of  operations,  which was offset by a  significant  increase  in
accounts receivable because of end-of-the-year product shipments.

     The Company's investing  activities  included capital  expenditures of $6.3
million,  $11.6 million and $6.3 million in 1997,  1996 and 1995,  respectively.
The 1997  expenditures  included  both  the  installation  of SDS  manufacturing
capacity in the  Danbury,  Connecticut  facility  and an  increase in  epitaxial
capacity in Epitronics' Arizona facilities. In addition, the Company anticipates
the purchase of a reactor for $2.5  million in 1998.  Capital  expenditures  for
1996 included final construction of Epitronics'  manufacturing facility in Mesa,
Arizona,  as well as  manufacturing  expansion  for EcoSys and  ADCS-Korea,  and
laboratory  construction  for  customer  application  work for  EcoSys.  Capital
expenditures  in 1995 were for  renovations  and leasehold  improvements  to the
Company's Danbury and San Jose, California facilities, upgrades to the Company's
information systems and purchases of laboratory equipment.

     Among  other  investing  activities,  the  Company  sold  $0.8  million  in
marketable  securities  in 1997,  while in  1996,  ATMI  sold  $3.6  million  in
marketable  securities  and made a $4.0 million  payment in connection  with the
1995 acquisition of the Guardian Systems product line.  During 1995, ATMI made a
$1.0 million investment in Candescent Technologies Corporation (formerly Silicon
Video  Corporation)  in  conjunction  with  a  joint  development  program,  and
purchased $11.2 million of marketable securities with the proceeds received from
the 1995 public offering of common stock.

     As of December 1997, ATMI has financed a significant portion of its capital
equipment  purchases,  particularly the silicon epitaxial  capacity currently in
place,  through capital leases with  approximately $8.9 million of capital lease
obligations    outstanding.    Financial   institutions   have   also   provided
collateral-based  loans for other equipment  purchases,  and approximately  $6.1
million of notes payable to commercial  banks was outstanding as of December 31,
1997. In addition,  the State of Connecticut  has extended loans of $1.8 million
to assist in the renovation of the Company's Danbury  facility.  At December 31,
1997,  $2.0 million  remained  outstanding  on a promissory  note related to the
Company's 1995 acquisition of the Guardian Systems product line. At December 31,
1997,  $19.9 million of loans and  financing  remained  outstanding.  Management
believes that its debt service  obligations can be adequately  satisfied by cash
flows from operations.

     ATMI  believes the proceeds from the sale of Common Stock  currently  being
offered,  in  combination  with existing cash balances,  marketable  securities,
existing sources of liquidity and anticipated  funds from operations,  including
those of the newly  acquired  businesses,  will  satisfy its  projected  working
capital and other cash requirements  through at least the end of 1998.  However,
ATMI believes the level of financing  resources  available to it is an important
competitive  factor in its industry and may seek additional capital prior to the
end of  that  period.  Additionally,  ATMI  considers,  on a  continuing  basis,
potential  acquisitions  of  technologies  and businesses  complementary  to its
current business. Other than the proposed acquisition of NOW Technologies, there
are no present  understandings,  commitments  or agreements  with respect to any
such acquisition. However, any such transaction may affect ATMI's future capital
needs.

     Operations Outside the United States

     In the years ended  December 31,  1997,  1996 and 1995,  sales  outside the
United States, including Asia and Europe, accounted for 21.9%, 28.9%, and 25.5%,
respectively,  of the  Company's  revenues.  The Company  anticipates  its sales
outside the United States will continue to account for significant percentage of
its  revenues.  In  addition,  the  Company  has  entered  into a joint  venture
agreement  with K.C. Tech pursuant to which it has a 70% interest in ADCS-Korea,
a South Korean chusik hoesa, which manufactures, sells and distributes thin film
materials to the semiconductor and related industries in South Korea.

     Year 2000 Compliance

     The Company is aware of the issues  associated with the programming code in
existing  computer systems as the year 2000 approaches.  The "Year 2000" problem
is pervasive and complex, as virtually every computer operation will be affected
in the same way by the  rollover of the two digit year value to 00. The issue is
whether computer systems will properly recognize date sensitive information when
the  year  changes  to  2000.  Systems  that  do  not  properly  recognize  such
information could generate erroneous data or cause a system to fail.

     The Company is utilizing both internal and external  resources to identify,
correct or  reprogram,  and test its  systems  for Year 2000  compliance.  It is
anticipated  that all  reprogramming  efforts  will be complete by December  31,
1998,  allowing  adequate  time for  testing.  This process  includes  obtaining
confirmations  from the Company's primary vendors that plans are being developed
or are already in place to address  processing of transactions in the year 2000.
However,  there can be no assurance that the systems of other companies on which
the  Company's  systems rely also will be converted in a timely  fashion or that
any such failure to convert by another  company would not have an adverse effect
on the  Company's  systems.  Management  is in the  process  of  completing  its
assessment  of the Year  2000  compliance  costs.  However,  based on  currently
available  information  (excluding  the possible  impact of vendor systems which
management  currently  is not in a position to  evaluate),  management  does not
believe that these costs will have a material effect on the Company's earnings.

       Cautionary Statement for Purposes of the "Safe Harbor" Provisions
            of the Private Securities Litigation Reform Act of 1995

     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 growth,  the markets for or customer  interest in the
products  of ATMI,  product  and market  competition,  delays or problems in the
development  and  commercialization  of  products,   and  technological  changes
affecting the  competencies  of ATMI.  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.

     Not applicable.


Item 8.  Financial Statements and Supplementary Data.

     The Report of Independent Auditors,  the consolidated  financial statements
and 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-25.

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.




Item 10.  Directors and Executive Officers of the Registrant.

     Information  regarding ATMI's directors is incorporated by reference herein
to the Company's  Proxy  Statement for its Annual Meeting of  Stockholders to be
held on May 20, 1998 ("1998  Proxy  Statement").  Information  regarding  ATMI's
executive officers is included as Item 4A in Part I of this Form 10-K.


Item 11.  Executive Compensation.

     Information regarding  compensation of ATMI executive officers,  except the
Compensation  Committee Report and the Stock Performance  Graph, is incorporated
by reference herein to the 1998 Proxy Statement.


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

     Information regarding the beneficial ownership of shares of Common Stock of
the Company by certain persons is  incorporated by reference  herein to the 1998
Proxy Statement.

Item 13.  Certain Relationships and Related Transactions.

     Information  regarding  certain  transactions  of ATMI is  incorporated  by
reference herein to the 1998 Proxy Statement.

                                    PART IV

Item 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K.

   (a) (1) and (2) Financial Statements and Schedule

     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-3 hereof.

     All other financial statement schedules not listed in the Index are omitted
     as the required  information is not applicable or the  information is given
     in the financial statements or related notes.

   (a) (3)  Exhibits



Exhibit No.                    Description
-----------                    ------------

     2.01 

     Agreement and Plan of Merger and Exchange by and among Advanced  Technology
Materials,  Inc., ATMI Holdings,  Inc. (now known as ATMI, Inc.),  Alamo Merger,
Inc.,  Advanced  Delivery & Chemical Systems Nevada,  Inc.,  Advanced Delivery &
Chemical Systems Manager,  Inc.,  Advanced Delivery & Chemical Systems Holdings,
LLC, Advanced Delivery & Chemical Systems Operating, LLC and Advanced Delivery &
Chemical  Systems,  Ltd.  dated as of April 7,  1997  (Exhibit  2.01  toAdvanced
Technology  Materials,  Inc.  Quarterly Report on Form 10-Qfor the quarter ended
June 30, 1997, File No. 0-22756 ("June 30, 1997Form 10-Q")). (1)

     2.02(a)

     Agreement and Plan of Merger by and among  Advanced  Technology  Materials,
Inc.,  ATMI  Holdings,   Inc.  (now  known  as  ATMI,  Inc.),  Welk  Acquisition
Corporation, Lawrence Semiconductor Laboratories,Inc. and Lawrence Semiconductor
Laboratories  Marketing and Sales, Inc.dated as of May 17, 1997 (Exhibit 2.02(a)
to June 30, 1997 Form 10-Q).(1)

     2.02(b)

     First  Amendment to  Agreement  and Plan of Merger dated as of June 6, 1997
(Exhibit 2.02(b) to June 30, 1997 Form 10-Q). (1)


     2.02(c)

     Second  Amendment to Agreement and Plan of Merger dated as of July 30, 1997
(Exhibit 2.02(c) to June 30, 1997 Form 10-Q. (1)

      2.03

     Merger Agreement by and among ATMI, Inc., Glide  Acquisition,  Inc. And NOW
Technologies,  Inc.  dated as of  February  19,  1998  (Exhibit  2.03 to  ATMI's
Registration  Statement on Form S-1,  Registration  No. 333-46609 (the "Form S-1
Registration Statement")). (1)

     3.01(a)

     Certificate of Incorporation of the Registrant  (Exhibit 3.01 to the ATMI's
Registration  Statement on Form S-4, filed September 10, 1997,  Registration No.
333-35323 (the "Form S-4 Registration Statement")). (1)

     3.01(b)

     Certificate of Amendment to Certificate of Incorporation  (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)

     3.02

     Bylaws of ATMI (Exhibit 3.02 to the Form S-4 Registration Statement). (1)

     4.01

     Specimen of the ATMI's Common Stock  Certificate  (Exhibit 4.01 to the Form
S-4 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 the Form S-1
Registration Statement). (1)

Exhibit No.                            Description
-----------                            ------------

     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  Duncan  W.  Brown and  Advanced  Technology
Materials,  Inc.  dated  October  10,  1997  (Exhibit  10.03  to  the  Form  S-1
Registration Statement). (1)

     10.04

     Employment  Agreement  between  James  M.  Burns  and  Advanced  Technology
Materials,  Inc.  dated  December  31,  1996  (Exhibit  10.04  to the  Form  S-1
Registration Statement). (1)

     10.05

     Employment  Agreement  between  Stephen H. Siegele and Advanced  Delivery &
Chemical Systems Nevada,  Inc. dated October 13, 1997 (Exhibit 10.05 to the Form
S-1 Registration Statement). (1)

     10.06

     Consulting Agreement between Lawrence Semiconductor  Laboratories,Inc.  and
Lawrence Semiconductor Investments, Inc. dated October 10,1997 (Exhibit 10.06 to
the Form S-1 Registration Statement). (1)

     10.07

     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 for the
year ended December 31, 1994, File No. 0-22756 ("1994 Form 10-K")). (1)

     10.08(a)

     Lease Agreement  between Montague Oaks Associates Phase III and ATMI EcoSys
Corporation dated February 7, 1995 (Exhibit 10.10 to 1994 Form 10-K). (1)

     10.08(b)

     First  Amendment to Lease between  Montague Oaks  Associates  Phase III and
ATMI EcoSys  Corporation  dated September 30, 1997 (Exhibit 10.08(b) to the Form
S-1 Registration Statement). (1)

     10.09

     Lease  Agreement  between  Montague Oaks  Associates  Phase I & II and ATMI
EcoSys  Corporation  dated  September  30,  1997(Exhibit  10.09  to the Form S-1
Registration Statement). (1)

     10.10(a)

     Standard  Industrial  Lease-Net  between  GKZ  Investments  and  Epitronics
Corporation  dated June 20, 1994 (Exhibit  10.10(a) to the Form S-1 Registration
Statement). (1)

     10.10(b)

     Lease extension  letter between GKZ Investments and Epitronics  Corporation
dated  September  18,  1996  (Exhibit  10.10(b)  to the  Form  S-1  Registration
Statement). (1)

     21.01

     Subsidiaries of ATMI (Exhibit 21.01 to Form S-1 Registration Statement).(1)

     23.01

     Consent of Ernst & Young LLP. (2)

     23.02

     Consent of Price Waterhouse LLP. (2)

     27.01

     Financial data schedule. (2)

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

b) Reports on Form 8-K

     On October 10, 1997,  the Company filed a Current  Report on Form 8-K dated
October  10,  1997   reporting  in  Item  2  thereof  the   consummation   of  a
reorganization  of the  Company,  pursuant  to which ATM  became a  wholly-owned
subsidiary of the Company, and the acquisitions of the ADCS Group and LSL.

     On December 18, 1997, the Company filed Form 8-K/A (Amendment No.1) to Form
8-K previously filed on October 10, 1997.




                                       F-3
                                   ATMI, INC.

   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

<TABLE>
<CAPTION>
<S>                                                        <C>
                                                           Page
                                                           ----
Report of Ernst & Young LLP                                 F-2
Report of Price Waterhouse LLP                              F-3

Financial Statements

Consolidated Balance Sheets                                 F-4
Consolidated Statements of Income                           F-5
Consolidated Statements of Stockholders' Equity             F-6
Consolidated Statements of Cash Flows                       F-7
Notes to Consolidated Financial Statements                  F-8
</TABLE>



                         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, 1997 and 1996,  and the related  consolidated  statements  of
income,  stockholders'  equity and cash flows for each of the three years in the
period ended December 31, 1997. Our audits also included the financial statement
schedule  listed in the Index at Item 14 (a).  These  financial  statements  and
schedule are the responsibility of the Company's management.  Our responsibility
is to express an opinion on these financial statements and schedule based on our
audits.  We did not audit the financial  statements or Valuation and  Qualifying
Accounts schedule data of Lawrence  Semiconductor  Laboratories,  Inc., a wholly
owned  subsidiary,  as of  December  31,  1996 and for the two years then ended.
These financial statements reflect total assets constituting 33% at December 31,
1996, and total revenues constituting 23% and 24%, respectively, for each of the
two years in the  period  ended  December  31,  1996 and were  audited  by other
auditors whose report has been  furnished to us, and our opinion,  insofar as it
relates to data included for Lawrence Semiconductor  Laboratories,  Inc. for the
periods indicated above, is based solely on the report of the other auditors.

     We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of other auditors provide a reasonable
basis for our opinion.

     In our opinion,  based on our audits and the report of other auditors,  the
consolidated  financial  statements  referred to above  present  fairly,  in all
material respects, the consolidated financial position of ATMI, Inc. at December
31, 1997 and 1996, and the  consolidated  results of its operations and its cash
flows for each of the three years in the period  ended  December  31,  1997,  in
conformity with generally accepted accounting principles.  Also, in our opinion,
the related  financial  statement  schedule,  when considered in relation to the
basic  financial  statements  taken as a whole,  presents fairly in all material
respects the information set forth therein.


                                                               Ernst & Young LLP
Stamford, Connecticut
February 11, 1998

                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
of Lawrence Semiconductor Laboratories, Inc. and Affiliate

     In our  opinion,  the  combined  balance  sheet  and the  related  combined
statements  of  income  and  retained  earnings  and of cash  flows of  Lawrence
Semiconductor Laboratories, Inc. and Affiliate (not presented separately herein)
present fairly,  in all material  respects,  the financial  position of Lawrence
Semiconductor  Laboratories,  Inc. and  Affiliate at December 31, 1996,  and the
results  of their  operations  and their cash flows for each of the two years in
the period ended  December 31,  1996,  in  conformity  with  generally  accepted
accounting principles.  These financial statements are the responsibility of the
company's  management;  our  responsibility  is to  express  an opinion on these
financial  statements  based on our  audits.  We  conducted  our audits of these
statements  in accordance  with  generally  accepted  auditing  standards  which
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,  assessing the  accounting  principles
used and  significant  estimates made by management,  and evaluating the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for the opinion expressed above.


Price  Waterhouse LLP
Phoenix, Arizona
May 17, 1997,  except for the last paragraph of 
   Note 3 which is as of July 29, 1997 and the 
   last  paragraph of Note 6 which is as of 
   December 18, 1997



<TABLE>
<CAPTION>
                                   ATMI, INC.
                           CONSOLIDATED BALANCE SHEETS

                                                              December 31,
                                                           1997          1996
                                                           ----          ----
               ASSETS
<S>                                                   <C>            <C>
Current assets:
   Cash and cash equivalents (Note 1)                  $11,550,000   $12,574,000
   Marketable securities (Notes 1 and 2)                17,461,000    18,238,000
   Accounts receivable, net of allowance for
     doubtful accounts of $405,000 in 1997, and
     $361,000 in 1996 (Note 3)                          19,784,000    13,804,000
   Notes and other receivables (Note 3)                  1,197,000     2,933,000
   Inventories (Notes 1 and 4)                           7,717,000     6,503,000
   Other                                                 2,873,000     1,984,000
                                                         ---------     ---------
      Total current assets                              60,582,000    56,036,000
Property and equipment, net (Notes 1 and 5)             36,032,000    30,660,000
Goodwill and other long-term assets, net
   (Notes 1 and 10)                                      6,532,000     6,495,000
                                                         ---------     ---------
                                                      $103,146,000   $93,191,000
                                                      ============   ===========

             LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Notes payable, current portion (Note 6)             $ 2,655,000   $ 2,059,000
   Capital lease obligations, current portion (Note 7)   2,671,000     1,837,000
   Accounts payable                                      4,977,000     5,219,000
   Accrued expenses                                      6,436,000     4,226,000
   Accrued commissions                                   2,113,000     1,379,000
   Accrued litigation settlement (Note 11)                       -     2,000,000
   Income taxes payable (Note 8)                         1,078,000       741,000
   Deferred income taxes (Note 8)                          719,000     1,989,000
                                                           -------     ---------
     Total current liabilities                          20,649,000    19,450,000
Notes payable, less current portion (Note 6)             8,288,000    10,342,000
Capital lease obligations (Note 7)                       6,238,000     5,427,000
Deferred income taxes (Note 8)                           4,829,000     1,873,000
Other long-term liabilities                                675,000        81,000
Minority interest                                          595,000       545,000
Stockholders' equity (Note 9):
   Preferred stock, par value $.01: 2,000,000 shares
     authorized; none issued and outstanding                     -             -
   Common stock, par value $.01: 30,000,000 shares
     authorized; Issued  18,149,676 in 1997, and
     17,873,128 in 1996                                    181,000       179,000
   Additional paid-in capital                           40,451,000    37,431,000
   Cumulative translation adjustment                    (1,099,000)     (55,000)
   Retained earnings                                    22,339,000    17,918,000
                                                        ----------    ----------
          Total stockholders' equity                    61,872,000    55,473,000
                                                        ----------    ----------
                                                      $103,146,000   $93,191,000
                                                      ============   ===========
</TABLE>
                             See accompanying notes.



<TABLE>
<CAPTION>
                                   ATMI, INC.

                        CONSOLIDATED STATEMENTS OF INCOME

                                               Year Ended December 31,
                                   --------------------------------------------
                                        1997            1996            1995
                                   --------------------------------------------
<S>                               <C>             <C>             <C>
Revenues (Note 1):
     Product revenues             $  92,757,000   $  78,815,000   $  51,460,000
     Contract revenues                9,120,000       9,846,000       8,712,000
                                      ---------       ---------       ---------
Total revenues                      101,877,000      88,661,000      60,172,000
Cost of revenues:
     Cost of product revenues        40,817,000      32,890,000      22,232,000
     Cost of contract revenues        7,867,000       8,341,000       7,491,000
                                      ---------       ---------       ---------
Total cost of revenues               48,684,000      41,231,000      29,723,000
                                     ----------      ----------      ----------
Gross profit                         53,193,000      47,430,000      30,449,000
Operating expenses:
     Research and development
        (Note 1)                     10,581,000       9,838,000       5,697,000
     Selling, general and
        administrative               23,153,000      20,590,000      15,886,000
     Non-recurring expenses
       (Notes 10 and 11)              9,000,000       2,000,000              --
                                      ---------       ---------      ----------
                                     42,734,000      32,428,000      21,583,000
                                     ----------      ----------      ----------
Operating income                     10,459,000      15,002,000       8,866,000
Interest income                       1,482,000       1,639,000         963,000
Interest expense (Note 6)            (1,810,000)     (1,635,000)     (1,320,000)
Other income (expense), net             233,000          18,000        (543,000)
                                     ----------      ----------      ----------
Income before taxes and minority
  interest                           10,364,000      15,024,000       7,966,000
Income taxes (Note 8)                 5,941,000       3,158,000       2,888,000
                                      ---------       ---------       ---------
Income before minority interest       4,423,000      11,866,000       5,078,000
Minority interest                        (2,000)        151,000          10,000
                                      ---------      ----------       ---------
Net income                        $   4,421,000   $  12,017,000   $   5,088,000
                                  =============   =============   =============
Net income per share-basic
  (Notes 1 and 9)                 $        0.26   $        0.70   $        0.32
                                  =============   =============   =============

Net income per share-assuming
  dilution (Notes 1 and 9)        $        0.24   $        0.65   $        0.30
                                  =============   =============   =============

Weighted average shares
  outstanding(Notes 1 and 9)         17,288,000      17,266,000      16,040,000
                                     ==========      ==========      ==========

Weighted average shares
  outstanding-assuming dilution
  (Notes 1 and 9)                    18,660,000      18,394,000      17,127,000
                                     ==========      ==========      ==========
</TABLE>

                             See accompanying notes.



<TABLE>
<CAPTION>
                                   ATMI, INC.

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                 Additional  Cumulative
                         Common    Paid-in   Translation  Retained
                         Stock    Capital    Adjustment   Earnings     Total
                       --------  ----------  ----------- ----------  ---------
<S>                    <C>      <C>         <C>         <C>         <C>
Balance at
  December 31, 1994    $161,000 $19,644,000 $       -   $2,605,000  $22,410,000
Issuance of 137,571
  common shares
  pursuant to the
  exercise of
  employee stock
  options                 1,000     183,000         -            -      184,000
Sale of 1,525,000
  common shares, net
  of issuance costs
  of $1,489,000          16,000  17,177,000         -            -   17,193,000
Issuance of 20,000
  common shares
  pursuant to the
  acquisition of
  Epitronics                  -     203,000         -            -      203,000
Compensation from
  the issuance of
  common stock
  options                     -      50,000         -            -       50,000
Cumulative
  translation
  adjustment                  -           -     (10,000)         -      (10,000)
Net income                    -           -         -    5,088,000    5,088,000
                         ------   ---------     -------- ---------    ---------
Balance at
  December 31, 1995     178,000  37,257,000     (10,000) 7,693,000   45,118,000
Issuance of 54,199
  common shares
  pursuant to the
  exercise of employee
  stock options           1,000     174,000         -            -      175,000
Distributions to
  stockholders                -           -         -    (1,792,000) (1,792,000)
Cumulative translation
  adjustment                  -           -     (45,000)          -     (45,000)
Net income                    -           -         -    12,017,000  12,017,000
                        -------  ----------     -------- ----------  ----------
Balance at
  December 31, 1996     179,000  37,431,000     (55,000) 17,918,000  55,473,000
Issuance of 82,520
  common shares
  pursuant to the
  exercise of employee
  stock options               -     411,000         -            -     411,000
Issuance of 151,250
  common shares pursuant
  to the exercise of
  warrants                2,000   1,688,000         -             -   1,690,000
Compensation for the
  issuance of common
  shares                      -     243,000         -             -     243,000
Tax benefit related to
  nonqualified stock
  options                     -     678,000         -             -     678,000
Cumulative translation
  adjustment                  -           -  (1,044,000)          -  (1,044,000)
Net income                    -           -         -     4,421,000   4,421,000
                       --------  ----------   ---------  ----------  -----------
Balance at
  December 31, 1997   $181,000  $40,451,000 $(1,099,000)$22,339,000 $61,872,000
                      ========= ===========  =========== ========== ===========
</TABLE>


                             See accompanying notes.



<TABLE>
<CAPTION>
                                   ATMI, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                              Year Ended December 31,
                                     -----------------------------------------
                                         1997         1996           1995
                                     -----------------------------------------
<S>                                <C>            <C>            <C>
Operating activities
Net income                         $  4,421,000   $ 12,017,000   $  5,088,000
Adjustments to reconcile
  net income to net cash
  provided by operating
  activities:
    Depreciation and
      amortization                    5,274,000      4,678,000      3,179,000
    Stock compensation                  243,000              -         50,000
    Bad debt expense                    365,000        191,000         16,000
    Deferred income taxes             1,686,000      1,205,000      1,160,000
    Loss on sale/leaseback
      of equipment                            -              -        542,000
    Minority interest in
      net earnings of
      subsidiaries                        2,000       (151,000)       (10,000)
    Changes in operating
      assets and liabilities
        Increase in accounts
          and notes receivable       (4,609,000)    (2,031,000)    (5,505,000)
        Increase in inventory        (1,214,000)    (4,415,000)      (830,000)
        Increase in other
          assets                     (1,881,000)      (186,000)      (249,000)
        Increase (decrease)
          in accounts payable          (242,000)       313,000      1,341,000
        Increase in accrued
          expenses                      944,000      3,350,000      1,062,000
        Increase (decrease)
          in other liabilities          931,000     (1,701,000)     1,352,000
                                      ---------     ----------      ---------
            Total adjustments         1,499,000      1,253,000      2,108,000
                                      ---------      ---------      ---------
            Net cash provided by
               operating
               activities             5,920,000     13,270,000      7,196,000
                                      ---------     ----------      ---------
Investing activities
Capital expenditures                 (6,256,000)    (11,591,000    (6,328,000)
Long-term investment                   (250,000)             -     (1,000,000)
Sale (purchase) of marketable
  securities, net                       777,000      3,617,000    (11,213,000)
Advances to LSL stockholder
  on notes receivable                         -       (286,000)      (256,000)
Payments for acquisitions                     -     (4,000,000)      (550,000)
Proceeds from sale of assets                  -        619,000        384,000
                                      ---------      ---------     ----------
            Net cash used by
              investing
              activities             (5,729,000)   (11,641,000)   (18,963,000)
                                     ----------    -----------    -----------
Financing activities
Proceeds from issuance
  of notes payable                      141,000      4,447,000      3,226,000
Principal payments on
  notes payable                      (1,599,000)    (2,553,000)    (1,933,000)
Distribution to ADCS
  stockholders                                -     (1,792,000)             -
Repayment of amounts
  borrowed                                    -       (135,000)      (235,000)
Payments on capital
  lease obligations                  (2,447,000)    (1,274,000)      (995,000)
Proceeds from sale of
  common stock, net                           -              -     17,193,000
Investment by minority
  stockholder                            48,000        161,000        539,000
Tax benefit of nonqualified
  stock options                         678,000              -              -
Proceeds from exercise of
  stock options and warrants          2,101,000        174,000        113,000
                                      ---------        -------        -------
            Net cash provided
             (used) by financing
             activities              (1,078,000)      (972,000)    17,908,000
                                     ----------       --------     ----------
Effects of exchange rate
  changes on cash                      (137,000)       (45,000)       (10,000)
                                       --------        -------        -------
Net increase (decrease)
  in cash and cash equivalents       (1,024,000)       612,000      6,131,000
Cash and cash equivalents,
  beginning of year                  12,574,000     11,962,000      5,831,000
                                     ----------     ----------      ---------
Cash and cash equivalents,
  end of year                      $ 11,550,000   $ 12,574,000   $ 11,962,000
                                   ============   ============   ============
</TABLE>
                             See accompanying notes.



                                   ATMI, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   Summary of Significant Accounting Policies

   Basis of Presentation

     Advanced Technology  Materials,  Inc. underwent a reorganization  involving
the creation of a new holding  company (ATMI, Inc. the successor registrant of
Advanced Technology Materials, Inc.) by means of a merger resulting in the prior
registrant  becoming  a  wholly-owned  subsidiary  of the  holding  company.  In
addition,  these  statements  give  retroactive  effect to the  acquisitions  of
Advanced  Delivery & Chemical  Systems  Nevada,  Inc. and related  entities (the
"ADCS  Group") and  Lawrence  Semiconductor  Laboratories,  Inc.  and  affiliate
("LSL")  which have been  accounted for using the  pooling-of-interests  method.
Both  of  these  acquisitions  occurred  on  October  10,  1997,  as part of the
consummation of the transactions described in Note 10.

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


   Company's Activities

     ATMI,  Inc.  together with its  subsidiaries  (the  "Company") is a leading
supplier of thin film  materials,  equipment and services used  worldwide in the
manufacture of semiconductor devices. The Company targets high growth consumable
and equipment  markets within the  semiconductor  industry with  proprietary and
patented  products  based  on  chemical  vapor  deposition  ("CVD")  technology.
Specifically,  the Company  provides a broad range of ultrahigh purity thin film
materials  and  related   delivery   systems,   a  full  line  of   point-of-use
semiconductor environmental equipment and services, and specialty epitaxial thin
film deposition services.


   Principles of Consolidation

     The consolidated  financial  statements  include the accounts of ATMI, Inc.
and all wholly and majority owned  subsidiaries.  All  significant  intercompany
accounts and transactions have been eliminated in consolidation.


   Revenue Recognition

     Product revenues are recognized upon shipment of goods.  Contract  revenues
under fixed-price contracts and cost-reimbursement-type contracts are recognized
using  the  percentage-of-completion   method  based  upon  costs  incurred  and
estimated future costs. Provisions for expected losses on contracts are recorded
in the period when incurred.  Revenues under fixed-price contracts from the U.S.
Government  were  $3,708,000,  $4,046,000,  and  $4,542,000  for the years ended
December    31,    1997,    1996,    1995,    respectively.    Revenues    under
cost-reimbursement-type  contracts  from the U.S.  Government  were  $5,412,000,
$5,800,000,  and $4,170,000 for the years ended December 31, 1997,  1996,  1995,
respectively.




                                   ATMI, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)



1.   Summary of Significant Accounting Policies (continued)

   Use of Estimates

     The  preparation of the financial  statements in conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the amounts  reported in the financial  statements  and
accompanying notes. Actual results may differ from those estimates.


   Research and Development

     Research and development costs,  including  materials,  labor, and overhead
related to  self-funded  projects and  cost-sharing  arrangements  with the U.S.
Government, are expensed as incurred.


   Cash and Cash Equivalents

     The Company  considers  all highly  liquid  investments  with a maturity of
three months or less when purchased to be cash equivalents.


   Marketable Securities

     Marketable securities are classified as available for sale and are reported
at fair value, which approximates  cost.  Management  determines the appropriate
classification  of debt securities at the time of purchase and reevaluates  such
designation as of each balance sheet date. The cost of securities  sold is based
on the specific  identification method. Interest on these securities is included
in interest income.


   Inventories

     Inventories  are stated at the lower of cost or market using the  first-in,
first-out (FIFO) method.


   Property and Equipment

     Property and equipment is stated at cost.  Depreciation and amortization of
property  and  equipment  is computed  using the  straight-line  method over the
estimated  useful  lives of the  assets,  which vary from  three to  thirty-five
years.




                                   ATMI, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued)


1.   Summary of Significant Accounting Policies (continued)

   Foreign Currency Translation

     Adjustments relating to the translation of foreign currency to U.S. dollars
are reported as a separate  component of stockholders'  equity.  Gains or losses
resulting  from  foreign  currency  transactions  are  included in other  income
(expense) and are immaterial.

   Taxes

     The Company  accounts  for income  taxes in  accordance  with  Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (FAS 109).
Under FAS 109, the  liability  method is used in  accounting  for income  taxes.
Under this method, deferred tax assets and liabilities are determined based upon
differences  between financial reporting and tax basis of assets and liabilities
and are  measured  using the  enacted  tax rates and laws that will be in effect
when the differences are expected to reverse.

   Fair Values of Financial Instruments

     The  Company's  financial  instruments  include cash and cash  equivalents,
accounts receivable,  short-term investments and debt. Marketable securities are
accounted for at fair value.  All other financial  instruments are accounted for
on an  historical  cost basis  which,  due to the  nature of these  instruments,
approximates fair value at the balance sheet dates.

   Long-Lived Assets

     The Company reviews on a periodic basis the value of its long-lived  assets
to  determine  whether an  impairment  exists.  At December  31,  1997,  no such
impairment  existed.  Goodwill  and other  long-term  assets  are  stated net of
accumulated  amortization  of  $585,000,  and  $293,000 at December 31, 1997 and
1996, respectively.

   Stock Based Compensation

     Effective in fiscal year 1996,  the Company  adopted  Financial  Accounting
Statement No. 123,  "Accounting  for Stock-Based  Compensation."  This statement
defines a fair value based method of accounting for employee stock  compensation
plans.  However,  it also allows an entity to  continue to measure  compensation
cost for those plans in accordance with Accounting Principle Board (APB) Opinion
No.  25,  "Accounting  for  Stock  Issued  to  Employees."  Under  APB  No.  25,
compensation cost is the excess, if any, of the quoted market price of the stock
at the grant date over the amount the  employee  must pay to acquire  the stock.
The  Company  has  elected  to  continue  to  account  for  its  employee  stock
compensation  plans under APB No. 25. Pro forma  disclosures of net income,  net
income per share-basic  and net income per  share-assuming  dilution,  as if the
fair value based method of accounting had been applied, are presented in Note 9.




                                   ATMI, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued)



1.   Summary of Significant Accounting Policies (continued)

   Per Share Data

     In 1997, the Financial  Accounting  Standards  Board (FASB) issued SFAS No.
128, "Earnings per Share," which was adopted in the fourth quarter of 1997. This
new  rule  changes  the way  earnings  per  share  is  calculated  and  requires
restatement of all reported prior period  amounts.  Under the new  requirements,
basic  earnings  per  share  is  calculated  by  dividing  net  earnings  by the
weighted-average  number of common  shares  outstanding  during the period.  The
diluted earnings per share computation includes the effect of shares which would
be issuable  upon the  exercise of  outstanding  stock  options,  reduced by the
number of shares  which are  assumed to be  purchased  by the  Company  from the
resulting proceeds at the average market price during the period.


   New Accounting Pronouncements

     During 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income"
and SFAS No.  131.  "Disclosures  about  Segments of an  Enterprise  and Related
Information."  SFAS No. 130 is effective  for the first  quarter of 1998,  while
SFAS No. 131 is effective for the year-end financial reporting in 1998 and on an
interim  basis  thereafter.  Both of  these  pronouncements  require  additional
disclosures, but the Company expects no material impact upon adoption.


2.   Marketable Securities

<TABLE>
<CAPTION>
     Marketable securities are comprised of the following:

                                                December 31,
                                      -------------------------------
                                          1997               1996
                                      -----------       -------------
<S>                                   <C>                <C>
     Corporate obligations            $10,590,000        $ 7,431,000
     U.S. Government obligations        6,407,000          9,538,000
     Certificates of deposit              464,000          1,269,000
                                      -----------        -----------
                                      $17,461,000        $18,238,000
                                      ===========        ===========
</TABLE>

     All of the Company's marketable securities have maturities of less than two
years.




                                   ATMI, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS0-(Continued)



3.   Accounts and Notes Receivable

     Amounts due from various agencies of the U.S. Government were approximately
$2,619,000, and $2,063,000 of accounts receivable at December 31, 1997 and 1996,
respectively.  Unbilled accounts receivable were $1,019,000,  and $757,000,  and
customer advances, included in other liabilities, were $612,000, and $276,000 at
December 31, 1997 and 1996, respectively.

     Notes  receivable  from  a  stockholder  assumed  in  the  LSL  transaction
represents  advances  which bear  interest  at 8% and are due upon  demand.  The
balances  at  December  31,  1997,  and 1996 were  $1,197,000,  and  $1,099,000,
respectively   and  included   accrued   interest  of  $196,000,   and  $126,000
respectively. Interest income on the notes totaled $70,000, $56,000, and $32,000
in the years ended December 31, 1997, 1996, and 1995, respectively.

     Credit is extended to commercial  customers based on an evaluation of their
financial condition, and collateral is not generally required. The evaluation of
financial condition is performed to reduce the risk of loss. The Company has not
experienced any material losses due to uncollectible  accounts  receivable since
inception.  Certain transactions with foreign customers are supported by letters
of credit.  The Company  maintains an allowance for doubtful accounts at a level
that management believes is sufficient to cover potential credit losses.


4.   Inventories

<TABLE>
<CAPTION>
     Inventories are comprised of the following:

                                                          December 31,
                                               --------------------------------
                                                   1997                 1996
                                               -----------          -----------
<S>                                            <C>                  <C>
Raw materials                                  $ 6,682,000          $ 5,538,000
Work in process                                    946,000              687,000
Finished goods                                   1,074,000              937,000
                                                 ---------            ---------
                                                 8,702,000            7,162,000
Obsolescence reserve                              (985,000)            (659,000)
                                                 ---------            ---------
                                               $ 7,717,000          $ 6,503,000
                                               ===========          ===========
</TABLE>


                                   ATMI, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)



5.   Property and Equipment

<TABLE>
<CAPTION>
     Property and equipment is comprised of the following:

                                                           December 31,
                                               --------------------------------
                                                    1997              1996
                                               ------------        ------------
<S>                                            <C>                 <C>
Land                                           $  1,323,000        $  1,751,000
Buildings                                         7,243,000           4,947,000
Machinery and equipment                          40,963,000          33,646,000
Furniture and fixtures                            1,590,000           1,157,000
Leasehold improvements                            4,494,000           3,788,000
                                               ------------         -----------
                                                 55,613,000          45,289,000
Accumulated depreciation and
 amortization                                   (19,581,000)        (14,629,000)
                                                -----------         -----------
                                               $ 36,032,000        $ 30,660,000
                                               ============        ============
</TABLE>

     Depreciation  expense for the years ended December 31, 1997, 1996 and 1995,
was $4,976,000, $4,277,000, and $3,104,000, respectively.


6.   Notes Payable

<TABLE>
<CAPTION>
     Notes payable consist of the following:

                                                             December 31,
                                                    ---------------------------
                                                        1997             1996
                                                    -----------    ------------
<S>                                                <C>             <C>
Note payable in conjunction with acquisition
of Guardian Systems, bearing interest at
8.5%, due in three annual installments
beginning January 1, 1999                          $ 2,000,000     $ 2,000,000

Term loans with Connecticut state agency,
bearing interest ranging between 5%-6%,
due between April 2001-June 2002                     1,713,000       1,800,000

Equipment credit line with a commercial bank,
bearing interest at 9%, due through
June 2000                                            1,128,000       1,701,000

Notes payable with commercial banks and leasing
companies, bearing interest ranging
between 7.3%-12.42%, due between
April 1997- February 2009                            6,102,000        6,835,000

Other notes payable                                          -           65,000
                                                     ----------      ----------
                                                     10,943,000      12,401,000
Less current portion                                 (2,655,000)     (2,059,000)
                                                     ----------      ----------
                                                   $  8,288,000    $ 10,342,000
                                                   ============    ============
</TABLE>



                                   ATMI, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)



6.   Notes Payable (continued)

<TABLE>
<CAPTION>
     The approximate aggregate debt maturities are as follows as of December 31,
1997:


<S>                  <C>                        <C>
                     1998                       $ 2,655,000
                     1999                         2,113,000
                     2000                         1,111,000
                     2001                         1,442,000
                     2002                           340,000
                     Thereafter                   3,282,000
                                                 ----------
                                                $10,943,000
                                                ===========
</TABLE>

     The term loans of  $1,713,000  are  collateralized  by  various  equipment,
leasehold improvements and renovations in the Company's Connecticut facility.

     The Company's  equipment  credit line bears interest at prime plus 0.5% per
annum and is collateralized by certain assets. The Company is in compliance with
or has obtained  waivers for the credit line  covenants,  including  maintaining
certain liquidity, leverage, and tangible net worth levels.

     The majority of the Company's notes payable are secured by the related real
property or equipment.  Certain of the notes payable contain covenants requiring
the Company to maintain compliance with debt to tangible net worth, debt service
coverage  and  current  assets to current  liabilities  ratios as defined in the
related  agreements.  The  Company  is in  compliance  with  the  notes  payable
covenants.

     Interest paid was $1,808,000,  $1,631,000,  and  $1,318,000,  for the years
ended December 31, 1997, 1996, and 1996, 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.  Certain of the Company's  subsidiaries'  financing  agreements  contain
limitations  or  prohibitions  on the payment of dividends  without the lender's
consent or in conjunction with the  subsidiary's  failure to comply with various
financial covenants.




                                   ATMI, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)



7.   Leases

<TABLE>
<CAPTION>
     The Company is obligated  under  capital  leases for certain  machinery and
equipment  that expire at various  dates  during the next five years.  The gross
amount of  machinery  and  equipment  under the  capital  leases and the related
accumulated depreciation were as follows:

                                                              December 31,
                                                    ---------------------------
                                                          1997            1996
                                                    ------------   ------------
<S>                                                 <C>            <C>
     Machinery and equipment                        $ 14,060,000   $ 10,151,000
     Accumulated depreciation                         (3,346,000)    (2,230,000)
                                                      ----------     ----------
                                                    $ 10,714,000   $  7,921,000
                                                    ============   ============
</TABLE>


<TABLE>
<CAPTION>
     The following is a schedule of future  minimum  lease  payments for capital
leases as of December 31, 1997:

                                                      Capital Leases
                                                      --------------
<S>  <C>                                              <C>
     1998                                             $  3,337,000
     1999                                                2,934,000
     2000                                                2,147,000
     2001                                                1,560,000
     2002                                                  366,000
                                                       -----------
     Total lease payments                               10,344,000
     Less amount representing interest                  (1,435,000)
                                                        ----------
     Present value of net capital lease payments         8,909,000
     Less current portion                               (2,671,000)
                                                        ----------
     Long-term portion                                $  6,238,000
                                                      ============
</TABLE>

     The  Company  leases  office  and  manufacturing  facilities,  and  certain
manufacturing  equipment  under  several  operating  leases.  The  lease for its
Danbury,  Connecticut facility expires in August 2005 while the EcoSys San Jose,
California  facility  leases  expire in March 2003 and the  Epitronics  Phoenix,
Arizona  facility lease expires in August 1999. ADCS leases office space under a
lease which expires in May 2000. The  manufacturing  equipment  leases expire in
years  1998  through  2002.  Rental  expense  was  $2,507,000,  $2,322,000,  and
$1,018,000, for the years ended December 31, 1997, 1996 and 1995, respectively.

<TABLE>
<CAPTION>
     The following is a schedule of future  minimum lease payments for operating
leases  as of  December  31,  1997:  

<S>         <C>                                        <C>
                                                       Operating  Leases
                                                       -----------------
               1998                                    $  2,636,000
               1999                                       2,516,000
               2000                                       1,742,000
               2001                                       1,268,000
               2002                                         878,000
               Thereafter                                 1,392,000
                                                          ---------
            Total minimum lease payments               $ 10,432,000
                                                       ============
</TABLE>


                                   ATMI, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)



8.   Income Taxes

<TABLE>
<CAPTION>
     Significant  components  of the  provision for income taxes for the periods
presented are as follows:

                                                      December 31,
                                     ------------------------------------------
                                        1997             1996            1995
                                     ---------        ---------        ---------
          <S>                       <C>              <C>              <C>
          Current:
            Federal                 $3,845,000       $1,421,000       $1,254,000
            State                      410,000          532,000          305,000
                                     ---------        ---------        ---------
          Total current              4,255,000        1,953,000        1,559,000
          Deferred:
            Federal                  1,433,000          914,000        1,092,000
            State                      253,000          291,000          237,000
                                     ---------        ---------        ---------
          Total deferred             1,686,000        1,205,000        1,329,000
                                     ---------        ---------        ---------
                                    $5,941,000       $3,158,000       $2,888,000
                                    ==========       ==========       ==========
</TABLE>

     Significant components of the Company's deferred tax assets and liabilities
are as follows:

<TABLE>
<CAPTION>
                                                     December 31,
                                            ------------------------------
                                               1997               1996
                                            ---------         ------------
<S>                                       <C>                 <C>
Deferred tax assets:
   Accrued liabilities                    $   392,000         $ 1,063,000
   Net operating loss carryforwards
              and tax credits                       -             829,000
   Inventory reserves                         382,000             577,000
   Other, net                                  86,000             702,000
                                           ----------           ---------
                                              860,000           3,171,000
   Valuation allowance                              -          (1,706,000)
Net deferred tax assets                       860,000           1,465,000
                                           ----------           ---------
Deferred tax liabilities:
   Depreciation                             2,068,000           1,136,000
   Capital leases                           1,182,000           1,033,000
   Other, net                               3,158,000           3,158,000
                                            ---------           ---------
                                           (6,408,000)         (5,327,000)
                                           ----------          ----------
Net deferred tax liabilities              $(5,548,000)        $(3,862,000)
                                          ===========         ===========
</TABLE>

     For financial  reporting  purposes,  a valuation allowance of $1,706,000 at
December 31, 1996 was  established  primarily to recognize the  cumulative  loss
status of the  Company's  predecessor.  As a result of the  Company's  continued
profitability  and the  acquisitions  of the ADCS Group and LSL, such  valuation
allowance was no longer required.

     Income taxes paid for the years ended  December 31,  1997,  1996,  and 1995
were $3,566,000, $3,170,000, and $273,000.


                                   ATMI, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)



8.   Income Taxes (continued)

<TABLE>
<CAPTION>
     The reconciliation of income tax computed at the U.S. federal statutory tax
rates to the Company's tax expense is:

                                             For the Year Ended December 31,
                                         --------------------------------------
                                             1997         1996          1995
                                          -------------------------------------
<S>                                     <C>           <C>           <C>
U.S. statutory rate                     $ 3,524,000   $ 5,160,000   $ 2,712,000
State income taxes                          415,000       669,000       407,000
Effect of nondeductible
  acquisition expenses                    3,420,000             -             -
Income not subject to
  federal income taxation                         -    (1,483,000)            -
Net operating loss carryforward
  and tax credit utilization
                                           (237,000)   (1,263,000)     (263,000)
Reversal of valuation allowance          (1,163,000)            -             -
Other, net                                  (18,000)       75,000        32,000
                                          ----------    ---------      --------
                                        $ 5,941,000   $ 3,158,000   $ 2,888,000
                                        ===========   ===========   ===========
</TABLE>

     Prior to ATMI's acquisition of the ADCS Group, the stockholders of Advanced
Delivery & Chemical Systems Nevada,  Inc. ("ADCS Nevada") elected  S-Corporation
status  effective  April 1, 1996.  In October 1996, as a result of a transfer of
shares to an ineligible S-Corporation shareholder,  the S status was terminated.
During the period that ADCS Nevada was an  S-Corporation,  its earnings were not
subject to federal corporate income tax. Additional federal corporate income tax
of  $1,483,000  would  have  resulted  if  ADCS  Nevada  had  been  taxed  as  a
C-Corporation for all of 1996, and the pro forma consolidated net income and net
income per share-assuming dilution for ATMI for the year ended December 31, 1996
would have been $10,534,000 and $0.57, respectively.

     South Korea has  granted the Company a five year full income tax  exemption
from the year in which  ADCS-Korea Co., Ltd.  ("ADCS-Korea")  has taxable income
and an  additional  three  year  50%  exemption.  Since  ADCS-Korea  has not yet
generated any taxable income, the expiration date is not currently determinable.

     The former  securityholders  of the ADCS Group have agreed to indemnify the
Company against losses arising out of certain tax matters. As security for these
tax matters, the former securityholders of the ADCS Group have delivered 700,000
shares of the Company's common stock which they received into escrow.  Any claim
for such tax matters adversely determined against the Company, regardless of the
escrow, would result in a charge to the Company's results of operations.


9.   Stockholders' Equity

     In October  1995,  the  Company  completed a public  offering of  1,600,000
shares of common  stock at $12.25  per share.  Net  proceeds  to the  Company of
$17,193,000  were from 1,525,000  shares sold by the Company while 75,000 shares
were sold for various  selling  stockholders.  Costs of the offering,  including
underwriting commissions, were $1,489,000.




             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)



9.   Stockholders' Equity (continued)

   Stock Plans

     In May 1997, the Company's  stockholders  approved the adoption of the 1997
Stock Plan  ("1997  Plan"),  which  provides  for the  granting of up to 900,000
nonqualified  stock  options,  "incentive  stock  options"  ("ISOs")  and  stock
appreciation rights to employees, directors and consultants of the Company.

     In May 1995, the Company's  stockholders  approved the adoption of the 1995
Stock Plan  ("1995  Plan"),  which  provides  for the  granting of up to 500,000
nonqualified  stock options,  ISOs and stock  appreciation  rights to employees,
directors and  consultants  of the Company.  The Company's  1987 Stock Plan (the
"1987  Plan"),  as  amended,  provided  for  the  granting  of up  to  1,115,833
nonqualified stock options and ISOs. The 1987 Plan expired in 1997.

     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, 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.

     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 and one  month  from the date of grant,  and ISOs  expire
five to ten years from the date of grant.

<TABLE>
<CAPTION>
                                                   Number of      Option Price
                                                     Shares         Per Share
                                                   ---------     ---------------
<S>                                                <C>           <C>
Options outstanding at December 31, 1994             833,596     $ 0.28 - $ 7.00
     Granted                                         305,950     $ 6.88 - $13.88
     Canceled                                        (27,670)    $ 0.53 - $ 6.38
     Exercised                                      (137,571)    $ 0.28 - $ 5.50
                                                    --------     ---------------
Options outstanding at December 31, 1995             974,305     $ 0.28 - $13.88
     Granted                                          92,500     $ 9.88 - $17.63
     Canceled                                        (54,390)    $ 0.53 - $12.50
     Exercised                                       (54,199)    $ 0.28 - $12.50
                                                     -------     ---------------
Options outstanding at December 31, 1996             958,216     $ 0.28 - $17.63
     Granted                                         900,490     $16.88 - $40.13
     Canceled                                       (348,250)    $ 0.53 - $40.13
     Exercised                                       (82,520)    $ 0.28 - $13.50
                                                     -------     --------=------
Options outstanding at December 31, 1997           1,427,936     $ 0.28 - $29.38
                                                   =========     ===============
</TABLE>

     At December 31, 1997,  1996,  and 1995  options for 657,396,  567,066,  and
498,204 shares, respectively, were exercisable, and at December 31, 1997 options
for 586,803 shares were available for grant. Exercise prices for 447,086 options
outstanding ranged from $0.28-$5.00; for 351,850 options outstanding ranged from
$5.01-$13.00;  and for 629,000 options  outstanding ranged from $13.01-$29.38 as
of December 31, 1997.



                                   ATMI, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)



9.   Stockholders' Equity (continued)

     The weighted  average  exercise  price and  remaining  contractual  life of
options outstanding at December 31, 1997 was $11.97 and 7.3 years, respectively.

     If compensation expense for the Company's plans had been determined for all
stock option  grants based on the fair value at the grant dates for awards under
those plans, consistent with the method described in SFAS No. 123, the Company's
net  income,  net income  per  share-basic  and net  income  per  share-assuming
dilution would have been reduced to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                1997           1996      1995
                                            ----------   -----------   ---------
<S>                                        <C>          <C>           <C>
Net income                                 $ 3,687,000  $ 11,695,000  $5,022,000
Net income per share-basic                 $      0.21  $       0.68  $     0.31
Net income per share-assuming dilution     $      0.20  $       0.64  $     0.29
</TABLE>


     During the initial  phase-in  period,  as required by SFAS No. 123, the pro
forma amounts were  determined  based on the stock option  grants  subsequent to
January  1,  1995.  Therefore,  the  pro  forma  amounts  presented  may  not be
indicative  of the effects of  compensation  cost on net income,  net income per
share-basic  and net income per  share-assuming  dilution in future years due to
the timing of grants and  considering  that options  generally  vest over a five
year period.

     The fair value of each option grant, for pro forma disclosure purposes, was
estimated on the date of grant using the Black-Scholes option pricing model with
the following weighted average assumptions for 1997, 1996 and 1995:

<TABLE>
<CAPTION>
                                               1997         1996         1995
                                               ----         ----         ----
<S>                                            <C>          <C>        <C>
     Expected dividend yield                   None         None         None
     Risk free interest rate                   6.00%        6.25%        6.10%
     Expected volatility                       56.0%        54.6%       58.2%
     Expected life of options                  7.5 years    7.5 years  7.5 years
</TABLE>

     The weighted  average fair value of  non-canceled  stock options granted in
1997, 1996 and 1995 was $17.04, $8.21 and $6.72, respectively.


   Warrants

     Warrants  have been  granted to  agencies  of the State of  Connecticut  in
connection with certain loan agreements with those agencies.  These warrants are
for an aggregate of 50,000 shares at an exercise  prices  ranging from $11.13 to
$11.75, of which 20,000 were exercisable as of December 31, 1997.




                                   ATMI, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)



9.   Stockholders' Equity (continued)

   Earnings Per Share

<TABLE>
<CAPTION>
     The following table presents the computation of basic and diluted  earnings
per share:

                                         1997           1996          1995
                                    -----------------------------------------
<S>                                 <C>            <C>            <C>
Numerator:
    Net income                      $ 4,421,000    $12,017,000    $ 5,088,000
                                    ===========    ===========    ===========
Denominator:
    Denominator for basic
       earnings per share-
       weighted-average share        17,288,000     17,266,000     16,040,000
    Dilutive effect of contingent
       shares related to the
       ADCS Group acquisition           700,000        700,000        700,000
    Dilutive effect of employee
       stock options and warrants       672,000        428,000        387,000
                                      ---------      ---------      ---------
    Denominator for diluted
       earnings per share            18,660,000     18,394,000     17,127,000
                                     ----------     ----------     ----------
Net income per share-basic          $      0.26    $      0.70    $      0.32
                                    ===========    ===========    ===========
Net income per share-assuming
  dilution                          $      0.24    $      0.65    $      0.30
                                    ===========    ===========    ===========
</TABLE>

     Options to  purchase  16,000,  32,000 and 138,000  shares of common  stock,
outstanding  as of December  31,  1997,  1996 and 1995,  respectively,  were not
included in the computation of diluted earnings per share because their exercise
prices were  greater  than the average  market  price of the common  shares and,
therefore, their inclusion would be antidilutive.


10.   Mergers, Acquisitions and Joint Ventures

     On  October  10,  1997,  pursuant  to an  Agreement  and Plan of Merger and
Exchange dated April 7, 1997 (the "Merger and Exchange Agreement"),  the Company
issued  5,468,747  shares of its Common Stock in exchange for all the  ownership
interests of the ADCS Group.  The ADCS Group  manufactures,  markets and designs
ultrahigh purity  specialty thin film materials and related  delivery  equipment
for the semiconductor and semiconductor equipment manufacturing industries.  The
Company  is  continuing  the  business  of the ADCS  Group and  integrating  its
semiconductor  thin  film and  delivery  systems  product  lines of the  NovaMOS
division into the business of the ADCS Group.

     In order to  accomplish  the tax-free and pooling of interest  treatment of
the  transaction  contemplated  by the Merger and Exchange  Agreement,  Advanced
Technology Materials,  Inc. underwent a reorganization involving the creation of
a  new  holding  company  (ATMI,   Inc. the  successor  registrant  of  Advanced
Technology  Materials,  Inc.)  by  means  of a  merger  resulting  in the  prior
registrant becoming a wholly-owned  subsidiary of the holding company.  Pursuant
to the  reorganization,  each  outstanding  share of  common  stock of  Advanced
Technology Materials, Inc. ("ATM") was converted into one share of the Company's
Common  Stock.  The  reorganization  has  been  accounted  for as a  pooling  of
interests.



                                   ATMI, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)



10.   Mergers, Acquisitions and Joint Ventures (continued)

     Also on October  10,  1997,  pursuant to an  Agreement  and Plan of Merger,
dated as of May 17, 1997,  as amended (the  "Lawrence  Merger  Agreement"),  the
Company issued  3,671,349  shares of the Company's  Common Stock in exchange for
all of the outstanding common stock of LSL in a merger transaction. As a result,
LSL became a  wholly-owned  subsidiary  of the Company.  LSL is an outsourcer of
epitaxial   processing  of  silicon  wafers  using  chemical  vapor   deposition
technology  to meet  customer  specifications.  The  Company is  continuing  the
business of LSL by integrating  it with the  Epitronics  division of the Company
which develops, manufactures,  distributes and sells high performance substrates
and thin film deposition services to the semiconductor industry. The acquisition
of LSL has been accounted for as a pooling of interests.

     The  former  securityholders  of the  ADCS  Group  and LSL have  agreed  to
indemnify the Company and certain of its  subsidiaries  and affiliates  from and
against certain losses arising out of breaches of representations and warranties
made by the respective  securityholders and for certain tax matters. As security
for  these  obligations,  the  former  securityholders  of the ADCS  Group  have
delivered  750,000 shares of the Company's  Common Stock which they received and
the  former  securityholders  of LSL  have  delivered  five  percent  of the LSL
consideration  received into escrow in connection  with the  acquisitions by the
Company of the ADCS Group and LSL.

     Non-recurring costs of approximately $9,000,000, primarily related to legal
costs, accounting costs, investment banker fees and a break-up fee in connection
with another transaction between LSL and another investor, have been recorded as
a one-time charge in 1997 in conjunction  with the  investigation,  analysis and
October 1997 closings of the ADCS Group and LSL transactions.

     The  acquisitions  of the ADCS  Group and LSL were  treated as a pooling of
interests.  For the nine month period ended  September  30, 1997 and years ended
December 31, 1996 and 1995, prior to the acquisition, revenues and net income of
ATM, the ADCS Group and LSL included in the financial statements are as follows:

<TABLE>
<CAPTION>
                                 Nine Months Ended
<S>                              <C>                  <C>           <C>
Revenues:                        September 30, 1997       1996          1995
                                 ------------------   -----------   -----------
    ATM                          $41,286,000          $46,350,000   $30,048,000
    ADCS and LSL                 $32,262,000          $42,311,000   $30,124,000

                                 Nine Months Ended
Net Income:                      September 30, 1997      1996           1995
                                 ------------------   -----------   -----------
    ATM                          $ 3,979,000          $ 3,321,000   $   554,000
    ADCS and LSL                 $ 5,134,000          $ 8,696,000   $ 4,534,000
</TABLE>

     On December 30, 1995, the Company acquired certain assets pertaining to the
Guardian Systems ("Guardian") product line of Messer Greisheim Industries,  Inc.
for  $6,000,000.   In  connection  with  this  purchase,  the  Company  recorded
approximately  $4,900,000  in goodwill to be amortized  over twenty  years.  The
Guardian product line consists of flame oxidation units used in the treatment of
effluent in the semiconductor  industry. The product line has become part of the
Company's EcoSys operation.



                                   ATMI, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)



10.   Mergers, Acquisitions and Joint Ventures (continued)

     On May 8, 1995, the ADCS Group entered into a joint venture  agreement with
K.C. Tech Co., Ltd., an unrelated  corporation  organized  under the laws of the
Republic  of Korea,  whereby the ADCS Group  obtained a 70%  interest in a South
Korean  chusik  hoesa,  ADCS-Korea.  The  purpose  of the  joint  venture  is to
manufacture,  sell and  distribute  chemicals to the  semiconductor  and related
industries in South Korea.

     During 1995,  the Company also  acquired  the assets of two  businesses  in
exchange for 20,000 shares of its Common Stock,  $550,000 in cash and a $700,000
promissory  note bearing  interest at prime plus 1%, payable in equal  quarterly
installments  beginning in September 1995. In 1996, one of those  businesses was
subsequently  sold,  the  $700,000  promissory  note was paid in full and a note
receivable of  approximately  $498,000 was recorded.  This note receivable bears
interest at 8% and is payable on October 31, 1999.

     The pro forma  unaudited  results of operations for the year ended December
31, 1995, for the purchase business combinations indicated above, consummated as
of the beginning of the period presented, is as follows:

<TABLE>
<CAPTION>
                                                        1995
                                                  --------------
          <S>                                     <C>
          Revenues                                $   65,590,000
          Net income                              $    5,347,000
          Net income per share-basic              $      0.33
          Net income per share-assuming dilution  $      0.31
</TABLE>


11.   Commitments and Contingencies

     On May  15,  1997,  LSL  settled  patent  infringement  litigation  with an
equipment manufacturer, related to equipment used by LSL that was purchased from
another manufacturer.  Under the terms of the related settlement agreement,  LSL
agreed to pay the  manufacturer  $2,000,000  and to purchase  reactors  from the
manufacturer assuming LSL's business conditions justify such purchases.  LSL has
committed  to  purchase  a  reactor  at an  approximate  fair  market  value  of
$2,500,000.  LSL  accrued the  $2,000,000  relating  to this  settlement  in the
accompanying  financial  statements  for the year ended  December 31, 1996.  The
amount was paid to the manufacturer during the year ended December 31, 1997.


12.   Geographic Data

     During 1997,  1996, and 1995 the Company had export sales of  approximately
22%, 29%, and 25%,  respectively.  Sales to Asia,  primarily  South Korea,  were
approximately 17%, 23%, and 19%, respectively,  of the Company's revenues during
those same periods.




                                   ATMI, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)



13.   Year 2000 Compliance (unaudited)

     The Company is aware of the issues  associated with the programming code in
existing computer systems as the year 2000 approaches.  The Company is utilizing
both internal and external resources to identify, correct or reprogram, and test
its systems for Year 2000 compliance. Management is in the process of completing
its assessment of the Year 2000 compliance  costs.  However,  based on currently
available  information  (excluding  the possible  impact of vendor systems which
management  currently  is not in a position to  evaluate),  management  does not
believe that these costs will have a material effect on the Company's earnings.


14.   Subsequent Events (unaudited)

     On February 20, 1998, the Company announced that it had entered into a
definitive  merger agreement with NOW  Technologies,  Inc. ("NOW  Technologies")
pursuant to which NOW Technologies would become a wholly-owned subsidiary of the
Company.  The closing of the merger  agreement is subject to the approval of the
shareholders of NOW Technologies and appropriate  government agencies and to the
satisfaction of other customary conditions.  While the exact number of shares of
Common Stock to be issued by the Company to the shareholders of NOW Technologies
will not be  determined  until the third  trading day prior to the closing,  the
number of shares to be issued  will  range  from 1.20  million  to 1.64  million
(excluding shares issuable upon exercise of outstanding options).  The merger is
intended to be treated as a tax-free reorganization and to be accounted for as a
pooling of interests.  NOW  Technologies  is a manufacturer  and  distributor of
semiconductor materials packaging systems, particularly for advanced photoresist
materials.

     On February 20, 1998, the Company filed a Registration Statement on Form
S-1 with the  Securities  and Exchange  Commission  with respect to the proposed
underwritten  public offering of 4,000,000 shares of the Company's Common Stock.
Of such shares,  2,000,000  shares will be offered by the Company and  2,000,000
shares will be offered by certain stockholders of the Company. In addition, such
stockholders  will grant to the underwriters an option to purchase up to 600,000
additional shares of Common Stock to cover over-allotments, if any.




<TABLE>
<CAPTION>
                   Quarterly Results of Operations (unaudited)
                (Thousands of Dollars, except per share amounts)

                                            Quarter                        Year
                            ----------------------------------------    -------
<S>                         <C>         <C>        <C>      <C>         <C>
1997                          First     Second     Third    Fourth         1997
----                        ----------------------------------------    -------
Revenues                    $ 22,513  $ 23,521  $ 27,514  $ 28,329      $101,877
Gross profit                  11,026    12,107    14,973    15,087        53,193
Net income (loss)              2,516     2,616     3,981    (4,692)(1)     4,421
Net income (loss)
  per share-basic           $   0.15  $   0.15  $   0.23  $  (0.27)(1)  $   0.26
Net income (loss)
  per share-assuming
  dilution                  $   0.13  $   0.14  $   0.21  $  (0.27)(1)  $   0.24

                                            Quarter                        Year
                           -----------------------------------------    -------
1996                          First   Second    Third      Fourth          1996
----                       -----------------------------------------    -------
Revenues                    $ 21,185  $ 22,835  $ 23,056   $ 21,585     $ 88,661
Gross profit                  12,472    11,628    12,110     11,220       47,430
Net income                     2,915     3,258     4,390      1,454(2)    12,017
Net income per
  share-basic               $   0.17  $  0.19   $  0.26    $  0.08(2)   $   0.70
Net income per
  share-assuming dilution   $   0.16  $  0.18   $  0.23    $  0.08(2)   $   0.65

<FN>
(1)  Includes a non-recurring  charge of $9.0 million accrued in connection with
     costs  incurred in  investigating,  analyzing and completing the ADCS Group
     and LSL acquisitions.

(2)  Includes a  non-recurring  charge of $2.0  million  ($1.2  million,  net of
     taxes) accrued in connection  with patent  litigation  involving LSL, which
     resulted in a settlement payment in May 1997.
</FN>
</TABLE>







                                   Schedule II

<TABLE>
<CAPTION>
                                   ATMI, INC.
                         VALUATION & QUALIFYING ACCOUNTS

                                    Balance at                       Balance at
                                    Beginning  Charged to                and
Year Ended                          of Period Cost/Expense Deduction  of Period
                                   ---------- ------------ --------- ----------
<S>                                <C>        <C>         <C>        <C>
December 31, 1997
  Allowance for doubtful accounts  $ 361,000  $  365,000  $ 321,000  $  405,000
  Obsolescence reserve               659,000   1,134,000    808,000     985,000

December 31, 1996
  Allowance for doubtful accounts    109,000     280,000     28,000     361,000
  Obsolescence reserve               276,000     380,000          0     659,000

December 31, 1995
  Allowance for doubtful accounts     82,000      78,000     51,000     109,000
  Obsolescence reserve               276,000     127,000    124,000     279,000
</TABLE>

<PAGE>
                                   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.

March 25, 1998

                                                By    /S/ Eugene G. Banucci
                                                  ------------------------------
                                                       Eugene G. Banucci, Ph.D.,
                                             President, Chief Executive Officer,
                                              Chairman of the Board and Director

     Pursuant  to the  requirements  of  Section  13 or 15(d) 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
---------                                -----                          ----

                       President, Chief Executive
                       Officer, Chairman of the Board
/S/ Eugene G. Banucci  and Director (principal executive officer)       3/25/98
----------------------
Eugene G. Banucci, Ph.D
                       Vice President, Chief Financial
                       Officer and Treasurer (principal financial and
/S/ Daniel P. Sharkey  accounting officer)                              3/25/98
---------------------
Daniel P. Sharkey


/S/ Mark A. Adley           Director                                    3/25/98
-----------------
Mark A. Adley


/S/ John A. Armstrong       Director                                    3/25/98
---------------------
John A. Armstrong, Ph.D.


/S/ Robert S. Hillas        Director                                    3/25/98
--------------------
Robert S. Hillas


/S/ Stephen H. Mahle        Director                                    3/25/98
--------------------
Stephen H. Mahle


/S/ Stephen H. Siegele      Director                                    3/25/98
--------------------
Stephen H. Siegele

/S/ Lamonte H. Lawrence     Director                                    3/25/98
-----------------------
Lamonte H. Lawrence


                                  EXHIBIT INDEX



         Exhibit No.                        Description
         -----------                        -----------

     2.01

     Agreement and Plan of Merger and Exchange by and among Advanced  Technology
Materials,  Inc.,  ATMI Holdings,  Inc. (now known as ATMI,Inc.),  Alamo Merger,
Inc.,  Advanced  Delivery & Chemical Systems Nevada,  Inc.,  Advanced Delivery &
Chemical Systems Manager,  Inc.,  Advanced Delivery & Chemical Systems Holdings,
LLC, Advanced Delivery & Chemical Systems Operating,  LLC and Advanced Delivery&
Chemical  Systems,  Ltd.  dated as of April 7, 1997  (Exhibit  2.01 to  Advanced
Technology  Materials,  Inc. Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997, File No. 0-22756 ("June 30, 1997Form 10-Q")). (1)

     2.02(a)

     Agreement and Plan of Merger by and among  Advanced  Technology  Materials,
Inc.,  ATMI  Holdings,   Inc.  (now  known  as  ATMI,  Inc.),  Welk  Acquisition
Corporation, Lawrence Semiconductor Laboratories,Inc. and Lawrence Semiconductor
Laboratories  Marketing and Sales, Inc.dated as of May 17, 1997 (Exhibit 2.02(a)
to June 30, 1997 Form 10-Q).(1)

     2.02(b)

     First  Amendment to  Agreement  and Plan of Merger dated as of June 6, 1997
(Exhibit 2.02(b) to June 30, 1997 Form 10-Q). (1)

     2.02(c)

     Second  Amendment to Agreement and Plan of Merger dated as of July 30, 1997
(Exhibit 2.02(c) to June 30, 1997 Form 10-Q. (1)

     2.03

     Merger Agreement by and among ATMI, Inc., Glide  Acquisition,  Inc. And NOW
Technologies,  Inc.  dated as of  February  19,  1998  (Exhibit  2.03 to  ATMI's
Registration  Statement on Form S-1,  Registration  No. 333-46609 (the "Form S-1
Registration Statement")). (1)

     3.01(a)

     Certificate of Incorporation of the Registrant  (Exhibit 3.01 to the ATMI's
Registration  Statement on Form S-4, filed September 10, 1997,  Registration No.
333-35323 (the "Form S-4 Registration Statement")). (1)

     3.01(b)

     Certificate of Amendment to Certificate of Incorporation  (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)

     3.02

     Bylaws of ATMI (Exhibit 3.02 to the Form S-4 Registration Statement). (1)

     4.01

     Specimen of the ATMI's Common Stock  Certificate  (Exhibit 4.01 to the Form
S-4 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 the Form S-1
Registration Statement). (1)










    Exhibit No.                                Description
    -----------                                -----------

     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  Duncan  W.  Brown and  Advanced  Technology
Materials,  Inc.  dated  October  10,  1997  (Exhibit  10.03  to  the  Form  S-1
Registration Statement). (1)

     10.04

     Employment  Agreement  between  James  M.  Burns  and  Advanced  Technology
Materials,  Inc.  dated  December  31,  1996  (Exhibit  10.04  to the  Form  S-1
Registration Statement). (1)

     10.05

     Employment  Agreement  between  Stephen H. Siegele and Advanced  Delivery &
Chemical Systems Nevada,  Inc. dated October 13, 1997 (Exhibit 10.05 to the Form
S-1 Registration Statement). (1)

     10.06

     Consulting Agreement between Lawrence Semiconductor  Laboratories,Inc.  and
Lawrence Semiconductor Investments, Inc. dated October 10,1997 (Exhibit 10.06 to
the Form S-1 Registration Statement). (1)

     10.07

     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 for the
year ended December 31, 1994, File No. 0-22756 ("1994 Form 10-K")). (1)

     10.08(a)

     Lease Agreement  between Montague Oaks Associates Phase III and ATMI EcoSys
Corporation dated February 7, 1995 (Exhibit 10.10 to 1994 Form 10-K). (1)

     10.08(b)

     First  Amendment to Lease between  Montague Oaks  Associates  Phase III and
ATMI EcoSys  Corporation  dated September 30, 1997 (Exhibit 10.08(b) to the Form
S-1 Registration Statement). (1)

     10.09

     Lease  Agreement  between  Montague Oaks  Associates  Phase I & II and ATMI
EcoSys  Corporation  dated  September  30,  1997(Exhibit  10.09  to the Form S-1
Registration Statement). (1)

     10.10(a)

     Standard  Industrial  Lease-Net  between  GKZ  Investments  and  Epitronics
Corporation  dated June 20, 1994 (Exhibit  10.10(a) to the Form S-1 Registration
Statement). (1)

     10.10(b)

     Lease extension  letter between GKZ Investments and Epitronics  Corporation
dated  September  18,  1996  (Exhibit  10.10(b)  to the  Form  S-1  Registration
Statement). (1)

     21.01

     Subsidiaries  of ATMI (Exhibit 21.01 to Form S-1  Registration  Statement).
(1)

     23.01

     Consent of Ernst & Young LLP. (2)

     23.02

     Consent of Price Waterhouse LLP. (2)

     27.01

     Financial data schedule. (2)

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