<PAGE>

                       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, 1996

            [ ] 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

                       Advanced Technology Materials, Inc.
                       -----------------------------------
             (Exact name of registrant as specified in its charter)

          Delaware                                     06-1236302
          --------                                     ----------
(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 [ x ]

     The aggregate  market value of the voting stock held by  non-affiliates  of
the registrant at February 28, 1997, was  approximately  $158,750,510,  based on
the closing price of $19.00 per share.

     The number of shares  outstanding  of the  registrant's  common stock as of
February 28, 1997 was 8,793,345.
<PAGE>

<PAGE>
<TABLE>
<CAPTION>

                       ADVANCED TECHNOLOGY MATERIALS, INC.
                           Annual Report on Form 10-K
                   For the Fiscal Year Ended December 31, 1996

                                TABLE OF CONTENTS

<S>             <C>                                                        <C>

Part I                                                                     Page
------                                                                     ----
Item 1.         Business..................................................    3

Item 2.         Properties................................................   15

Item 3.         Legal Proceedings.........................................   15

Item 4.         Submission of Matters to a Vote of Security Holders.......   15

Part II
-------
Item 5.         Market for Registrant's Common Equity and Related
                Stockholder Matters.......................................   16

Item 6.         Selected Financial Data...................................   17

Item 7.         Management's Discussion and Analysis of Financial
                Condition and Results of Operations.......................   18

Item 8.         Financial Statements and Supplementary Data...............   22

Item 9.         Changes In and Disagreements with Accountants on
                Accounting and Financial Disclosure.......................   22

Part III
--------
Item 10.        Directors and Executive Officers of the Registrant........   23

Item 11.        Executive Compensation....................................   25

Item 12.        Security Ownership of Certain Beneficial Owners
                and Management............................................   28

Item 13.        Certain Relationships and Related Transactions............   29


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>
                                       2
<PAGE>

<PAGE>
                                     PART I


Item 1.   Business.

     Advanced Technology Materials, Inc. ("ATMI" or the "Company") is a supplier
of  enabling  materials,   products,  and  technologies  for  the  semiconductor
industry. The Company's products are primarily based on proprietary and patented
chemical vapor deposition ("CVD")  technologies used for semiconductor thin film
manufacture.

     ATMI's strategy is to use these  technologies to develop  products for high
growth niche markets of the semiconductor industry and to sequentially introduce
these products into these high growth markets with industry collaborators. Using
its phased commercial  introduction strategy,  ATMI has been able to develop its
CVD  core   technologies   and   establish   businesses   to   support   further
commercialization of its new products.

     ATMI's   enabling   products   and   technologies    include   point-of-use
environmental  equipment,  next-generation  thin  film  materials  and  delivery
systems,  and high performance  semiconductor  devices based on wide bandgap and
III-V materials.

     Semiconductor Industry Background

     The semiconductor  industry  achieved  worldwide sales in 1995 of over $140
billion.  While industry  revenues  decreased in 1996, the Company  believes the
decrease  was  primarily  a result of a decline  in memory  chip  prices,  not a
reduction in the number of  semiconductor  devices  produced  and shipped.  Even
during  this  downturn,  the  industry  is adding  substantial  capacity to meet
increasing  demand  for a  multitude  of end uses  from  personal  computers  to
wireless communications.

     From a wafer  substrate,  usually  made of  silicon,  a  complex  series of
process steps creates  semiconductor  devices.  Important  process steps include
deposition,  patterning,  and  etching.  During  deposition,  several  layers of
conducting,  semi-conducting,  or  insulating  thin films are formed on a wafer.
Controlling  the deposition of these films is vital to the ultimate  performance
of an individual device.

     There are two principal  methods of film  deposition.  One,  physical vapor
deposition ("PVD") is now primarily used for depositing conductive metal layers.
The other, CVD, is used for depositing  semiconducting and insulating thin films
as well as some conductors.  In the CVD process,  wafers are usually placed in a
sophisticated  reaction chamber, ready for the injection of a specially designed
gas or  vaporized  liquid.  Simultaneously,  energy  is  added  to  the  reactor
resulting in thin film deposition on the surface of the wafer.

     The CVD process offers the following production advantages:
     *  conformality--the  ability  to coat  evenly,  especially  in holes and
           trenches designed into the device
     * purity
     * ability to coat over large areas
     * cost efficiency
                                       3
<PAGE>
     Thin film deposition  technology is migrating to CVD for many films because
of these  advantages.  This  migration  increased CVD equipment  sales from $500
million in 1989 to over $1.5 billion in 1996.  It also created  rapid growth for
suppliers  of CVD  equipment  such as Applied  Materials,  Tokyo  Electron,  and
Novellus Systems.

     ATMI's focus on developing  high  performance and  ferroelectric  thin film
fabrication  revolves around its core CVD technology.  From that core technology
development,  ATMI introduces related commercial  technologies  serving existing
silicon device  fabrication  needs.  First is gas abatement  technologies  using
ATMI's unique  adsorbent  materials.  These adsorbents allow for nearly complete
adsorption of the reactive gases flowing from a CVD reactor  exhaust.  ATMI also
sells  new  commercial  CVD  raw  materials  that  enable  the   manufacture  of
semiconducting thin films for use in next-generation silicon devices.

     ATMI Business Strategy

     ATMI was founded in 1986 to develop and commercialize products based on its
core CVD technology. The Company has the following key strategies:

     Core Technology Development

     Proprietary  and  patented  CVD  thin  film  technology   underlies  ATMI's
development and  commercialization of new products.  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.

     Focus on High Growth Markets

     ATMI targets  semiconductor  market  segments with growth rates expected to
exceed the industry's  overall growth rate. For example,  ATMI believes that the
market for  point-of-use  abatement  equipment is growing at a rate in excess of
the overall growth rate of the semiconductor  equipment  industry.  In addition,
the Company  focuses on segments  where  technology-driven  paradigm  shifts are
occurring  or are enabled by the use of ATMI's core  technologies.  For example,
the Company believes semiconductor manufacturers are moving strongly towards the
use of new thin film materials, driven by device performance considerations.

     Phased Product Commercialization

     ATMI  has  a  history  of  commercializing  products  using  its  core  CVD
technology.  The Company's  strategy is to focus initially on products with less
technological  complexity and capital risk and in later phases focus on products
with a higher degree of sophistication and financial risk. In its first phase of
commercialization,  the Company  introduced new products through its subsidiary,
ATMI EcoSys Corporation ("EcoSys") (and its predecessor, Novapure), to abate CVD
effluent  streams.  EcoSys  is now a  leader  in the  manufacture  and  sale  of
point-of-use  environmental  equipment  to the  semiconductor  industry.  In its
second phase of  commercialization,  ATMI  introduced  several new materials and
delivery   systems  through  its  NovaMOS   division  for  use  in  the  silicon
semiconductor industry. In the third phase of commercialization, ATMI intends to
use its core technology to manufacture  and sell devices based on  ferroelectric
and  other  high  performance   semiconductor  thin  films.   Certain  of  these
third-phase  products are now in development and are expected by ATMI to account
for a significant portion of its long-term growth.
                                       4
<PAGE>
     Strategic Alliances

     ATMI has formed  many  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.
As it grows,  ATMI  expects to  continue  to  accelerate  product  introductions
through  acquisitions and collaborations  with customers,  vendors and companies
with significant capabilities outside of ATMI's current markets.

     Externally Funded Research and Development

     Developing  new thin film  processes and  materials for complex  electronic
devices is very  expensive.  By entering  into research  contracts  with federal
government  agencies,  and with selected  private industry  collaborators,  ATMI
offsets a  significant  portion of its  research  and  development  costs.  ATMI
primarily solicits research contracts that provide  opportunities to enhance its
core  technology  base,  or promote  the  commercial  introduction  of  targeted
products.

     ATMI Businesses

     ATMI  operates  three  primary  business  units:   EcoSys,   NovaMOS,   and
Epitronics.

     EcoSys, a wholly-owned subsidiary,  manufactures and services environmental
equipment for the  semiconductor  industry.  ATMI believes EcoSys is a leader in
the rapidly growing market for point-of-use abatement equipment.

     ATMI's NovaMOS division  manufactures  and sells CVD raw materials  (source
reagents) used to manufacture  semiconducting  thin films. ATMI believes NovaMOS
is a leading  provider of source  reagents for  next-generation  silicon  device
manufacture.

     ATMI's Epitronics division, develops, manufactures,  distributes, and sells
advanced high performance  substrates and thin films for the  optoelectronic and
wireless communications markets.

           EcoSys: Point of Use Semiconductor Environmental Equipment

     EcoSys  Market  Background
     Manufacturing   semiconductors  involves  many  processes  with  thin  film
deposition  steps that use toxic or hazardous  materials.  These  materials were
once abated through large systems  servicing  multiple process effluent streams.
Because of the many thin film processes  used, the industry is migrating  toward
dedicated  point-of-use  environmental  equipment  for  individual  reactors and
processes.

     Demand for  environmental  equipment  reflects the  dramatic  growth in CVD
processing.  Only  about a quarter  of the  original  materials  entering  a CVD
reactor end up deposited as a thin film.  The rest,  combined with  by-products,
becomes the effluent  stream  requiring  abatement  that must meet  increasingly
strict environmental, safety, and health regulations.

     Whole  plant  environmental   systems  become  inefficient  with  multiple,
different effluent streams. As process variations grow in the industry,  so does
the need for  point-of-use  environmental  equipment.  The Company  believes the
market for this type of point-of-use equipment exceeds $150 million per year and
that the current growth rate exceeds that of the semiconductor equipment market.
                                       5
<PAGE>
     EcoSys Business  Background
     Currently ATMI's primary commercial business,  generating about half of the
Company's  consolidated  revenues,  is EcoSys,  which  manufactures,  sells, and
services semiconductor environmental equipment.

     ATMI  first  entered  this  market  in 1989  with the  introduction  of its
Novapure(r)  point-of-use  dry chemical  scrubber.  This product was  originally
designed under contract to the Environmental Protection Agency ("EPA"). In 1991,
this  product  and  several  others  resulting  from early  stage  research  and
development  efforts at ATMI were contributed to Novapure,  a joint venture with
Millipore.  In 1994,  Novapure was dissolved,  with ATMI retaining rights to the
effluent  treatment  product line. Also in 1994, ATMI acquired Vector  Technical
Group,  Inc.  ("Vector"),  a manufacturer of liquid and combustion  point-of-use
semiconductor  environmental  equipment, and merged it with its Novapure line of
products to form EcoSys.

     In 1995,  ATMI  acquired the Guardian  Systems  product line of  combustion
point-of-use  semiconductor  environmental  equipment  to  broaden  its  product
offerings. ATMI believes EcoSys is the only company in the world offering all of
the key technologies for effluent gas scrubbing to the  semiconductor  industry:
dry chemical,  liquid, flame oxidation and catalytic  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  maximize  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
     EcoSys   provides  three  major  product  lines.   These  products   reduce
consumption,  offer new  recycling  techniques,  and  allow new waste  treatment
methods.  Typical  selling prices for these  products range between  $20,000 and
$100,000 per unit.

     Dry  Chemical  Scrubbers
     Novapure(r)  dry  chemical  scrubbers  adsorb  and  concentrate   hazardous
effluent up to 20,000 times that of  conventional  effluent  treatment  methods.
ATMI believes that EcoSys, through its unique and patented adsorption materials,
is a  market  leader  for  point-of-use  semiconductor  effluent  dry  scrubbing
throughout the world.

     Liquid  Scrubbers
     Vector  Technology(r)  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  highly  effective  in  removing  high  particulate
effluent.

     Oxidation Scrubbers
     Guardian(r)  active oxidation  scrubbers treat combustible  materials.  The
Guardian  product  line,  acquired at the end of 1995,  is an industry  standard
designed  for  low  cost  of  ownership.   Next-generation  systems  operate  on
inexpensive methane fuel while achieving exceptional 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  offers  other  developmental  environmental,   safety,  and  health
products to the semiconductor industry, including:
                                       6
<PAGE>
     Catalytic Oxidizers
     ReCAT(tm)  catalytic  oxidation  scrubbers  use  proprietary  catalysts  to
destroy volatile organic compounds ("VOCs"). VOCs come from the solvents used in
applying  photoresists and other organic materials during chip manufacture.  The
ReCAT  product  line  adopts  the  EcoSys   point-of-use   approach  to  organic
destruction, replacing the large plant-scale oxidizer systems most semiconductor
companies  use.  It uses a  fraction  of the  energy  required  by  conventional
systems, and has the potential to create a true point-of-use  effluent treatment
device.

     Emergency Release Scrubbers
     ATMI is marketing and continuing to develop effluent  treatment systems for
the  capture  of  semiconductor  process  gases in  emergency  situations.  Such
situations  might arise at the point of  delivery of a gas to a reactor  through
gas cylinder rupture or similar catastrophic event.

     Vent Gas Scrubbers
     Cylinders of hazardous  gases are typically  used for the delivery of gases
to  reactors.  Changing  these  cylinders  causes  small  amounts  of  hazardous
materials to be vented.  EcoSys has  developed a vent gas scrubber  based on its
dry scrubber  technology for use in such  applications.  EcoSys is collaborating
with Air Products  Corporation in the  development  and current  distribution of
this product.

     Recycling
     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, as an example,  are used in some
wafer  cleaning  and  etching  processes.  They are under  strict  environmental
controls and  production  cutbacks,  because  they are  suspected to deplete the
ozone layer.  With Praxair  Corporation,  EcoSys has  developed a PFC  recycling
system that captures the gas and  repurifies it for subsequent  reuse.  In 1996,
the first unit was installed at a test site.

     Total Effluent Abatement Management
     EcoSys has  expanded  its  product  and  service  offerings  in response to
semiconductor  companies'  trend  towards  wanting their  abatement  supplier to
provide a full range of abatement  equipment and provide on-going  management of
their total  effluent  abatement  needs.  EcoSys has invested in  organizational
infrastructure  to provide this  capability  and began to receive  contracts for
this service in 1996.

           NovaMOS-Next-Generation CVD Materials and Delivery Systems

     NovaMOS Market Background
     As  semiconductor  device  capabilities  in  memory,  logic and speed  have
expanded exponentially,  circuit dimensions have correspondingly  decreased. The
Company believes that further  reductions will require a change in the materials
used for the many functional  thin films required to store,  transmit and switch
electricity  in the complex  circuitry of  semiconductor  devices.  For example,
while existing memory and other very large scale  integrated  ("VLSI")  circuits
may  be  fabricated  using  standard  silicon  dioxide   capacitor  thin  films,
deficiencies  in the electrical  properties of ultra-thin  silicon  dioxide will
limit its use in the extremely small dimensions of next-generation,  ultra large
scale  integrated  ("ULSI")  devices.  Alternate  ("next-generation")  capacitor
materials, including tantalum oxide and barium titanate, are expected to be used
in the fabrication of ULSI circuits,  e.g. 256 Mb and 1 Gb dynamic random access
memory chips ("DRAMs"). As these new materials are adopted, the Company believes
that a strategy of collaborative  development with a total systems approach will
allow for  significant  penetration  into the $350  million  overall  market for
semiconductor thin film precursors.
                                       7
<PAGE>
     These  next-generation  materials will be manufactured  primarily using CVD
processes.  Because many of the raw  materials for these new thin films will not
be available in gaseous form,  the Company  believes that a market is developing
for  liquid  chemical  precursors  (specialty  chemicals)  that  allow  for  the
manufacture of  next-generation  thin films, as well as for equipment  (delivery
systems) that convert liquids to gases before entry into a CVD reactor.  CVD raw
materials are  consumables,  and demand for such materials  generally tracks the
number of  silicon  wafers  that are used in  semiconductor  device  manufacture
("wafer starts"),  while demand for CVD equipment generally tracks investment in
new plants.

     NovaMOS Business Background
     ATMI formed NovaMOS in February 1992 to serve markets for CVD semiconductor
thin film  manufacture.  NovaMOS' two primary  product lines are liquid chemical
precursors and delivery systems.

     In August 1992, ATMI entered into an agreement with IBM, Texas  Instruments
and Micron Technology (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.  Using
this  material  should  significantly  reduce the  manufacturing  complexity  of
advanced memory devices.  In April 1993, the Advanced  Research  Projects Agency
("ARPA")  awarded  a $5  million  contract  for the  development  of  thin  film
materials  technology to the Collaborating Group, with ATMI as prime contractor.
The total cost of the program is approximately $15 million,  approximately  half
of which will be borne by the  Collaborating  Group.  In February  1994,  Varian
Associates joined the Collaborating Group, providing CVD manufacturing hardware.

     ATMI's  ferroelectric  thin film technology has also expanded to non-barium
strontium  titanate  materials  that have  broad  application  in a  variety  of
applications  ranging from non-volatile  memory devices to wireless  components.
This in turn has led ATMI to expand  its  device  development  effort to include
these materials in the belief that these particular market segments may prove to
be an attractive device market opportunity for the Company.

     Products
     NovaMOS generates  approximately  one-third of ATMI's consolidated revenues
with  approximately  half of NovaMOS  revenues  coming from product sales.  This
division  offers a bundled  product line of  materials,  equipment,  and process
experience  which  represents  a total  solution to the  controlled  delivery of
liquid precursors to CVD reactors.

     Safe Delivery Systems
     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.  ATMI's Safe Delivery System ("SDS")  reduces  cylinder
pressures below atmospheric levels. This allows controllable,  on-demand release
of certain  semiconductor  process  gases.  ATMI has a strategic  alliance  with
Matheson  Gas Products  ("Matheson"),  a subsidiary  of Nippon  Sanso,  begun in
January 1994, and renewed with amended  provisions in 1996. Under a license from
ATMI, Matheson markets and distributes the SDS product to specific semiconductor
niche process applications.

     CVD Materials
     ATMI develops  thin film  precursors  for  semiconductor  devices.  NovaMOS
manufactures  and sells source  reagents  allowing CVD  fabrication  of advanced
materials,  including titanium nitride,  platinum,  copper, tantalum oxide, lead
zirconate titanate,  bismuth strontium tantalate,  and barium strontium titanate
thin films.  The Company  believes  these films will have broad  application  in
advanced  semiconductor  devices.  NovaMOS  EpiGrade(r)  source reagents sell at
prices ranging from $2 to $200 per gram.
                                       8
<PAGE>
     Liquid Delivery Systems
     NovaMOS  manufactures  and sells its proprietary LDS and Sparta(tm)  Liquid
Delivery  Systems.  These vaporize liquid  precursors  before injection into CVD
reactors.  The liquid delivery systems' principal  advantage is their ability to
deliver   multiple   materials   as   well   as   handling   thermally-sensitive
next-generation  materials with minimal  decomposition.  They are typically used
for both  conventional  material  thin film  fabrication  and advanced  material
deposition.  NovaMOS is a supplier to the  advanced  dielectric,  ferroelectric,
barrier layer,  and conductor thin film markets of the  semiconductor  industry.
The liquid delivery systems sell at prices ranging from $35,000 to $200,000.


              Epitronics - Advanced Wafers and Thin Film Deposition

     Epitronics Market Background
     Demand  for  increased  performance  from  semiconductor  devices  and  the
proliferation  of  optoelectronic  devices  are  leading  designers  and process
engineers to consider  building  electronic  circuits and discrete  devices from
alternative  semiconductors  to  silicon.  Advances in  semiconductor  materials
fabrication  technologies  are promoting device  development  based on materials
such as the III-V semiconductors  (including gallium arsenide, indium phosphide)
and the wide bandgap semiconductors such as silicon carbide and gallium nitride.

     The III-V  semiconductors  are finding  increasing  use in three  different
markets: 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.

     The wide bandgap  semiconductors  offer potential  advantages in two areas;
both silicon  carbide and gallium  nitride-based  devices may have advantages in
high power or high  temperature  operation while gallium  nitride-based  devices
permit  efficient  generation of short wavelength light for use in blue LEDs and
in blue laser diodes.

     Epitronics Business Background
     Through its Epitronics division, ATMI is manufacturing and selling advanced
semiconductor substrates and epitaxial wafers. It is also establishing alliances
and selectively developing devices for emerging market opportunities.

     Commercial  introduction  of wide  bandgap  semiconductor  devices has been
limited to date by several technological barriers, including the availability of
single  crystal  substrates  (wafers).  The  fabrication  of fully operable high
performance  semiconductor  devices,  requires an appropriate wafer as a base to
grow suitable  thin film.  The most  appropriate  substrate has the same crystal
structure as the desired thin film. For silicon  carbide,  ATMI has  proprietary
technology to  manufacture  single  crystal  silicon  carbide  substrates and is
developing technology for single crystal gallium nitride substrates.  Epitronics
has both silicon carbide and gallium nitride  epitaxial thin film technology and
has developed and continues to develop thin film fabrication technology that can
be employed in other  developmental high technology  products,  e. g., displays.
ATMI  recognizes  that it may be  important  to develop  or  acquire  additional
technologies  to meet the demand for high  performance  devices in its  targeted
market areas.

     In  December,  1995,  ATMI  acquired  Epitronics  Corporation,  a  Phoenix,
Arizona-based  manufacturer of III-V  semiconductor  thin films for the wireless
and  optoelectronics  markets.  ATMI  integrated  the  operations  of Epitronics
Corporation with its Diamond Electronics  Division in 1996, under the recognized
Epitronics name. Epitronics III-V semiconductor  manufacturing is in Phoenix and
its wide bandgap semiconductor manufacturing and R&D facilities are in Danbury.
                                       9
<PAGE>
     Epitronics Business Strategy

     Epitronics  specializes in advanced compound  semiconductors and focuses on
materials.  Its core  technology  is chemical  vapor  deposition,  the growth of
epitaxial thin films (epi) on  semiconductor  wafers with  precisely  controlled
structural  and  electronic  properties.  Epitronics  focuses on  materials  for
rapidly growing markets in  optoelectronics,  wireless  communications and power
electronics and provides  materials and device  fabrication  processes for III-V
compound  semiconductors  (gallium  arsenide,  indium  phosphide)  and the  wide
bandgap semiconductors (silicon carbide, gallium nitride).  Epitronics' business
strategy  is to build a business  and  technology  base in the  materials  while
incubating  and  subsequently   launching   value-added   device  businesses  on
proprietary technology.

     The Phoenix  facility is dedicated to the  production of III-V epi products
that are finding  increasing  use in  wireless  communications,  satellites  and
optoelectronics  for data and  telecommunication  market  segments.  There is an
increasing demand for III-V epi wafers in particular for heterojunction  bipolar
transistors (HBTs) for use in power amplifiers.

     The  Danbury   facility   focuses  on  the   development  of  wide  bandgap
semiconductor  materials  (substrates  and epi)  including  silicon  carbide and
gallium nitride.  Wide bandgap  semiconductors  are expected to find use in high
power applications such as motor control, high temperature  applications such as
automotive  electronics,  and in high power high frequency  applications such as
ground  based  radar and  communication  stations.  The R&D group  continues  to
support cathode design and manufacturing by Candescent Technologies  Corporation
who is developing a field emission display or Thin CRT.

     Products
     Current Products
     Epitronics  currently  manufactures III-V epitaxial wafers in Phoenix,  AZ.
III-V epi  products  are  finding  increasing  use in  wireless  communications,
satellites,  and optoelectronics for data and telecommunication market segments.
In  particular,   there  is  an  increased  demand  for  III-V  epi  wafers  for
heterojunction   bipolar   transistors  (HBTs)  for  use  in  power  amplifiers.
Epitronics  markets its  epitaxial  services  and sells  product of the service,
epitaxial  wafers,  directly to industry and government  customers  according to
their  design  specifications.  In  Danbury,  Epitronics  manufactures  one-  to
two-inch  diameter  silicon carbide wafers.  It is expanding  capacity to ensure
internal and external supplies.  The Company believes that these substrate sales
will promote additional  collaborations,  addressing technology  development and
commercial product  introduction  issues associated with future  optoelectronic,
sensor, and power device products.

     Epitronics  is a  distributor  of SIMOX  (Separation  by IMplanted  OXygen)
wafers  for  Nippon  Steel  Corporation,  Japan and  specialty  wafers for Wafer
Technology  (Milton  Keynes,  UK). These  distributed  materials  complement the
Epitronics  manufactured  product line and leverage the development of the sales
and  marketing  organization  required to execute the  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.

     Technology Development
     In addition to process improvement that the Company believes will allow for
greater market  penetration for its III-V  epitaxial  wafers and silicon carbide
substrates,  Epitronics  is focusing  its R&D efforts on thin film  products for
optoelectronics  including blue solid state devices and novel cathode  materials
for a thin CRT.
                                       10
<PAGE>
     Epitronics is developing substrate and thin film technology for solid-state
blue light emitting diodes 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  demonstrating  long life time blue
lasers. Epitronics is collaborating with Hewlett-Packard,  Xerox, SDL, Inc., and
others to  develop  substrate  technology  for  commodity  blue  lasers,  and is
developing  proprietary  device designs to enable penetration of specialty laser
markets. Epitronics is the preferred high performance materials supplier for the
Blue Band Consortium which is developing blue lasers for improved data storage.

     Epitronics  provides thin film  technology  for cold cathodes under a joint
development  program  to  a  strategic  alliance  with  Candescent  Technologies
Corporation ("CTC"), formerly called Silicon Video Corporation. Traditional CRTs
use a single,  hot cathode (its source of electrons) placed far from the screen.
In a field  emission  display  ("FED"),  multiple  cathodes  replace  the single
cathode,  giving  many  electron  sources  for each  pixel.  Unique  thin  films
fabricated with Epitronics high performance  materials enhance uniform low power
electron emission. Because image uniformity and power consumption are critically
dependent on cathode materials and design,  Epitronics materials are well suited
for inclusion in cold cathodes for FEDs. These cold cathodes enable  full-color,
flat panel displays with  brightness and  resolution  equivalent to CRTs,  hence
thin CRTs.

     Under  its  agreement  with  ATMI,  CTC has an  exclusive  license  to ATMI
technology for FEDs,  and ATMI has license to certain CTC technology  outside of
displays.  CTC will  manufacture  and  distribute  the thin CRTs. As part of the
alliance,  ATMI purchased $1,000,000 of CTC's convertible  preferred stock. ATMI
and CTC receive  significant direct support from the federal government for cold
cathode technology development.


     Customers, Sales, and Marketing

     ATMI sells and  distributes  its  products  worldwide,  both  directly  and
through  manufacturers'  representatives.  The  Company  also  seeks  to  create
strategic  alliances  that allow maximum  global market  penetration  at minimal
cost.

     Many of ATMI's customers have relationships with more than one division, or
are acting as collaborators on ATMI's development  programs.  A number of ATMI's
key customers are listed below:

Advanced Micro Devices         Hyundai Electronics          Samsung Electronics
Atmel                          IBM                          SGS Thomson
Digital Equipment Corp.        Intel                        Siemens
GEC Plessey Semiconductor      Lucent Technologies          Sony
Goldstar Electronics           Motorola                     Texas Instruments
Hewlett-Packard                National Semiconductor       Tokyo Electron

     Manufacturing
     ATMI's research and development  laboratory and prototype  production plant
are  located at its  Danbury,  Connecticut  facility.  In  Danbury,  the Company
fabricates,   tests,   and  assembles   high   performance   semiconductor   and
ferroelectric  thin films and  devices.  Although  ATMI's high  performance  and
ferroelectric  processing  technology is very similar to standard  semiconductor
manufacturing  technology,  ATMI has developed certain proprietary equipment and
processes. ATMI believes its facility is adequate for current needs.
                                       11
<PAGE>
     EcoSys  manufactures  Novapure(r),  Vector  Technology(r),  Phoenix(tm) and
ReCAT(tm) point-of-use  scrubbers in San Jose,  California.  EcoSys manufactures
its  proprietary  adsorbents for its gas treatment  products at ATMI's  Danbury,
Connecticut   facility.   The   Guardian(r)   product  line   manufacturing   is
subcontracted to a third party who had manufactured  these products prior to the
product line acquisition by ATMI in 1995.

     ATMI's NovaMOS division produces and integrates its liquid delivery systems
in Danbury, along with chemical manufacture and purification. ATMI manufacturing
facility  for the SDS  Safe  Delivery  Source  in  Danbury  is  complemented  by
contracted  manufacturing  from Matheson's  facility.  The Company believes that
these two facilities are adequate for current and anticipated demand.

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

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

     Competition
     The semiconductor  environmental  equipment,  materials, and device markets
have 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.

     EcoSys
     EcoSys's  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 are Delatech and
Alzeta. Dry scrubber competitors include CS-GmbH,  Ebara, Japan Pionics, and the
Edwards Division of British Oxygen Corporation.

     NovaMOS
     NovaMOS's primary  competitors in CVD materials and delivery systems in the
U.S. are the Schumacher  Division of Air Products,  Advanced Delivery & Chemical
Systems,  Inc., the Diffusion Systems Division of Olin Hunt Specialty  Products,
Inc., and MKS Instruments,  Inc. There are several other smaller participants in
this market.

     There are no immediate competitors to the patented SDS Safe Delivery Source
product.  Several gas companies provide product in high pressure containers that
compete with the process capability of SDS.

     Epitronics
     High  performance  semiconductors  are a new and rapidly  emerging  area of
technology.  The technology has attracted the interest of a wide variety of both
large and small companies. Potential competitors include Kobe Steel, which has a
high  performance  electronics  subsidiary,   and  Westinghouse,   which  has  a
substantial silicon carbide  electronics  effort.  Several smaller companies are
also developing high performance semiconductor products, including Cree Research
(silicon  carbide)  and IBIS  Technology  (SIMOX  wafers).  Nichia  Chemical,  a
Japanese  company,  sells very bright blue LEDs and is  developing a solid-state
blue laser. Cree Research is selling blue LEDs based on silicon carbide,  and is
trying to produce  commercial  quantities  of bright  blue LEDs based on gallium
nitride.  Other groups,  including  Hewlett-Packard,  APA Optics, Inc., and SDL,
Inc. are also working on blue optoelectronics, using similar technology.
                                       12
<PAGE>
     PixTech,  Inc, SI Diamond Technology Inc., FED Corporation,  and others are
attempting to develop  alternative field emission flat panel display products in
competition with CTC.


     Government Contracts
     ATMI  participates  in U.S.  government  funded  research  and  development
contracts.  As of December 31, 1996, the Company had received  aggregate  awards
since its inception of approximately $55 million from U.S. government  agencies,
including  approximately  $46  million  recognized  as revenue  by ATMI  through
December 31, 1996.  These  contracts fund continued CVD technology  development,
development of high  performance  semiconductor,  ferroelectric  thin films, and
devices for specific  applications,  while  offsetting  the cost of research and
development.  Government  contract  revenues  were  about  $9,846,000  in  1996,
$8,712,000 in 1995, and  $7,018,000 in 1994.  This is about 21%, 29%, and 36% of
ATMI's total revenues in those years. The government may terminate  contracts at
its convenience.

     In April 1993, the Collaborating Group of IBM, Texas Instruments and Micron
Technology  was awarded a $5 million  contract  (subsequently  increased to $5.7
million) from ARPA to develop  next-generation  capacitor  thin films for DRAMs.
The  Collaborating  Group  contributed  matching  funds  and  agreed to make any
technology developed under the contract available to the other group members.

     ATMI has numerous  contracts from the U.S. Air Force, the Ballistic Missile
Defense  Organization  ("BMDO"),  and the National Science  Foundation  ("NSF"),
supporting  development of CVD core  technology for the deposition of dielectric
materials and their uses in alternative applications,  such as optical switching
and infrared sensing.

     ATMI  receives  funding for research  into high  performance  semiconductor
programs.  Funds come from the U.S. Navy,  BMDO, the U.S. Army,  ARPA,  NSF, the
Department  of  Energy,  and NASA in each of the four  primary  technical  areas
required for device development: substrate manufacture, thin film deposition and
characterization, device processing and device design.

     The Office of Naval Research ("ONR"),  supports efforts to grow and prepare
surfaces of high  performance and silicon carbide thin films.  The Army supports
the development of high  performance  contacting  technology,  a key step in any
manufacturing  process  for high  performance  devices.  High  performance  cold
cathode technology has received  significant support from both BMDO (ATMI, prime
contractor)  and ARPA (CTC,  prime  contractor).  ATMI will  continue  to submit
proposals to various government entities for additional research and development
funding.

     Backlog
     As of December  31,  1996,  ATMI had firm  backlog of  approximately  $16.5
million  consisting  of  approximately  $8.2 million of product  orders and $8.3
million of  executed  and funded  research  contracts.  This  compares to a firm
backlog  level of  approximately  $14.8  million as of December 31, 1995,  which
consisted  of  approximately  $4.5 million of product  orders and  approximately
$10.3 million of executed and funded research contracts.

     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.  SDS product  backlog is not  included  since the
product is sold and shipped to Matheson  for  distribution  to the  ultimate end
user.
                                       13
<PAGE>
     Patents and Proprietary Rights
     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 and its divisions have been awarded 68 U.S. patents and currently have
72 U.S. 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
foreign  counterparts  of a U.S. patent  application.  ATMI holds licenses to 12
U.S. patents.  ATMI's U.S.  patents expire between  September 2006 and February
2015. The U.S. patents licensed to ATMI expire during the period from March 2006
through February 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 foreign countries,  there can be
no assurance as to the degree of  protection  afforded by these patents or as to
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.

     Epigrade, Scram, Novapure, EcoSys, EcoSys (logo), Vector Technology, Vector
(logo), Advanced Technology Materials (logo),  Phoenix, ReCAT, NovaMOS,  Sparta,
Guardian,  Epitronics,  NovaSource,  VaporSource,  and SDS are trademarks of the
Company.

     Research and Development
     ATMI's research and development  expenditures are  substantially  funded by
external sources,  including various agencies of the federal  government.  Total
sums expended for research and development in the years ended December 31, 1996,
1995  and 1994  were  approximately  $15,968,000,  $11,697,000  and  $9,566,000,
respectively.  Of  those  amounts,  approximately  $8,341,000,   $7,491,000  and
$6,151,000,  respectively,  were externally funded and are classified as cost of
contract revenues on ATMI's Consolidated Financial Statements, and approximately
$7,627,000,  $4,206,000 and $3,415,000,  respectively,  were  internally  funded
expenditures  by the Company and are  classified  as  research  and  development
operating expenses on ATMI's Consolidated Financial Statements.


     Environmental Regulation
     The Company uses,  generates and  discharges  toxic,  volatile or otherwise
hazardous chemicals and wastes in its research and development and manufacturing
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 all the permits necessary to conduct
its business.  However, the failure to comply with present or future regulations
could result in fines 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
premises  in  Danbury,  CT may have  been  contaminated  prior to the  Company's
occupancy.
                                       14
<PAGE>
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
governmental agency may seek recovery and response costs from both operators and
owners of property where releases of hazardous  substances  have occurred or are
ongoing.  The prior occupant of the 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 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, 1996 ATMI employed a total of 188 individuals, including
80 in sales and  administration,  51 in  operations  and 51 who are  principally
employed in research and development.  Thirty-eight employees hold Ph.D. degrees
and twenty-one 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 is located in  Danbury,  Connecticut  where it leases a 72,000  square
foot facility in Commerce Park. 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 needs,  although it plans to significantly
expand its production capability, and potential manufacturing space as needed.

     EcoSys  leases a 25,000  square  foot  facility  in San  Jose,  California,
expiring  March 2002.  ATMI  believes this facility is adequate and suitable for
current and anticipated EcoSys' needs.

     Epitronics  leases a 15,000  square  foot  facility  in  Phoenix,  Arizona,
expiring  August 1999.  ATMI believes this facility is adequate and suitable for
current and anticipated Epitronics' needs.



Item 3.  Legal Proceedings.

     ATMI 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 upon
its business, operating results, or financial condition.


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

     No  matter  was  submitted  to a vote  of  security  holders,  through  the
solicitation  of proxies or otherwise,  during the fourth  quarter of the fiscal
year ended December 31, 1996.
                                       15
<PAGE>

<PAGE>
                                    PART II.

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

     ATMI's  common  stock is traded on The  Nasdaq  National  Market  under the
symbol ATMI.  The  following  table sets forth the high and low sales prices for
the common stock as reported on the Nasdaq for the periods indicated.
<TABLE>
           <S>                                            <C>        <C>
                                                            High        Low
                                                            ----        ---
           1995
           ----
           January 1 - March 31                           $  8.13    $  5.13
           April 1 - June 30                                10.50       6.63
           July 1 - September 30                            16.00      10.00
           October 1 - December 31                          14.38       9.25

           1996
           ----
           January 1 - March 31                            $12.75    $  9.63
           April 1 - June 30                                15.88      10.38
           July 1 - September 30                            13.88      10.75
           October 1 - December 31                          18.50      12.25
</TABLE>

     As of February 28, 1997, there were approximately  4,700  stockholders,  of
which approximately 250 were holders of record.

     ATMI has never  paid cash  dividends  on its  capital  stock and  currently
intends to retain future earnings,  if any, for use in its business.  Therefore,
ATMI does not anticipate  paying any cash dividends in the  foreseeable  future.
Certain of the Company's  financing  arrangements  contain  prohibitions  on the
payment of dividends  without the lender's  consent or in  conjunction  with the
Company's failure to comply with various financial covenants.

     The Transfer Agent and Registrar for ATMI Common Stock is Boston EquiServe,
L.P. formerly known as The First National Bank of Boston.
                                       16
<PAGE>
Item 6.         Selected Financial Data.

     The consolidated  statement of operations data set forth below with respect
to the years ended December 31, 1996, 1995 and 1994 and the consolidated balance
sheet data at December 31, 1996 and 1995 are derived from,  and are qualified by
reference to, the audited  Consolidated  Financial Statements included elsewhere
in this report and should be read in conjunction with those financial statements
and notes thereto.  The consolidated  statement of operations data for the years
ended  December  31, 1993 and 1992 and the  consolidated  balance  sheet data at
December  31,  1994,  1993 and  1992 are  derived  from  consolidated  financial
statements  not included  herein.  Amounts for 1993 and all previous  years have
been restated to give effect to the  acquisition of Vector,  which was accounted
for as a pooling of interests.

<TABLE>
<CAPTION>
Consolidated Statement of Operations Data:
(in thousands, except per share data)
                                         Year Ended December 31,
                                         -----------------------
<S>                         <C>       <C>       <C>         <C>         <C>
                               1996      1995       1994        1993       1992
                               ----      ----       ----        ----       ----
Product revenues            $36,504   $21,336   $ 12,538    $  7,174    $ 4,383
Contract revenues             9,846     8,712      7,223       6,070      4,888
                              -----     -----      -----       -----      -----
    Total revenues           46,350    30,048     19,761      13,244      9,271
Cost of revenues             24,281    17,099     11,990       8,243      6,459
                             ------    ------     ------       -----      -----
Gross profit                 22,069    12,949      7,771       5,001      2,812
Operating expenses:
    Research and development  7,627     4,206      3,415       1,864      1,260
    Selling, general,
      and administrative     11,510     8,558      5,588       3,772      3,066
                             ------     -----      -----       -----      -----
    Total operating expenses 19,136    12,764      9,003       5,636      4,326
                             ------    ------      -----       -----      -----
Operating income (loss)       2,933       185     (1,231)       (635)    (1,514)
Other income, net               628       503      3,991          35         86
                                ---       ---      -----          --         --
Income (loss) before taxes
   and minority interest      3,561       688      2,760        (600)    (1,428)
Income taxes                    239       134        124         219        108
                                ---       ---        ---         ---        ---
Income (loss) before
   minority interest          3,321       554      2,636        (819)    (1,536)
Minority interest                 0         0          0         269        380
                                  -         -          -         ---        ---
Net income (loss)             3,321       554      2,636        (550)    (1,156)
                              =====       ===      =====        ====     ======
Net income (loss)
   per share (1)            $  0.35   $  0.07   $   0.35    ($  0.10)   ($ 0.23)
                            =======   =======   ========    ========    =======

Weighted average
   shares outstanding (1)     9,359     8,074      7,595       5,473      5,009
                              =====     =====      =====       =====      =====
</TABLE>

<TABLE>
<CAPTION>
                                                December 31,
                                                ------------
<S>                             <C>       <C>       <C>      <C>       <C>
                                1996      1995      1994     1993      1992
                                ----      ----      ----     ----      ----
Consolidated Balance Sheet Data:
(in thousands)

Cash, cash equivalents,
  and marketable securities     $21,406   $25,465   $12,692  $13,444   $  4,538
Working capital                  27,103    26,224    13,341   14,050      4,678
Total assets                     50,118    49,798    21,251   20,170     10,029

Long-term obligations,
   less current portion           5,004     5,434     1,236      896      1,465
Minority interest                  --        --        --      3,179      3,447
Redeemable convertible
   preferred stock                 --        --        --       --        7,982
Stockholders' equity
   (deficiency)                 36,393    32,897    14,785   12,099      (6,440)
</TABLE>

     (1) The  calculation  of net income  (loss) per share and weighted  average
shares  outstanding  gives effect to: (i) shares issued in conjunction  with the
1994  acquisition of Vector as if the acquisition  occurred prior to all periods
presented,  (ii) the 1993  conversion of all  outstanding  shares of Convertible
Preferred Stock into 4,040,039 shares of Common Stock and (iii) the 1993 payment
of a dividend of 76,102 shares of Common Stock to certain holders of Convertible
Preferred  Stock  effective  upon the closing of the  Company's  initial  public
offering,  in each case for all periods  presented  although  such  inclusion is
antidilutive.

                                       17
<PAGE>

<PAGE>
Item 7.
     Management's  Discussion and Analysis of Financial Condition and Results of
     Operations

Overview

     Founded in 1986,  ATMI  generates  revenues from product sales and contract
research. Most product sales are point-of-use environmental equipment, specialty
materials,  and  delivery  systems  for the  semiconductor  industry.  ATMI also
receives royalties for certain product sales from third parties.

     Since  1986,  a  significant  portion  of  ATMI's  revenues  has come  from
contracts  with United States  government  agencies.  The programs in which ATMI
participates  may extend for several  years,  but are usually  funded  annually.
There can be no assurance  that the  government  will continue its commitment to
programs to which ATMI's  development  projects are  applicable or that ATMI can
compete successfully to obtain program funding.

     ATMI has  used a  targeted  acquisition  strategy  to  assist  in  building
critical mass and market position in the niches the Company serves. In 1994 ATMI
acquired  Vector,  and in conjunction with the sale of Novapure product lines to
Millipore in September 1994, formed EcoSys by merging the retained operations of
Novapure with those of Vector.  In 1995, ATMI acquired the Guardian product line
from Messer  Greisheim  Industries and folded that product line into EcoSys.  In
1995, ATMI acquired  Epitronics  Corporation,  and in early 1996,  combined that
business  with  the  formerly  known  Diamond  Electronics  division  under  the
Epitronics name.

     The following table sets forth, for the periods  indicated,  the percentage
relationship to total revenues of certain items in ATMI's consolidated statement
of operations:
<TABLE>
<CAPTION>
                                                       Year Ended December 31,
                                                       -----------------------
<S>                                                   <C>       <C>       <C>
                                                       1996      1995      1994
                                                       ----      ----      ----
Product revenue .................................      78.8%     71.0%     63.5%
Contract revenue ................................      21.2      29.0      36.5
                                                       ----      ----      ----
      Total revenues ............................     100.0     100.0     100.0
Cost of revenues ................................      52.4      56.9      60.7
                                                       ----      ----      ----
Gross profit ....................................      47.6      43.1      39.3
      Research and development ..................      16.5      14.0      17.3
      Selling, general, and administrative ......      24.8      28.5      28.3
                                                       ----      ----      ----
            Total operating expenses ............      41.3      42.5      45.6
                                                       ----      ----      ----
Operating income (loss) .........................       6.3       0.6      (6.3)
Other income, net................................       1.4       1.6      20.2
                                                        ---       ---      ----
Income before taxes..............................       7.7       2.2      13.9
Income taxes.....................................       0.5       0.4       0.6
                                                        ---       ---       ---
Net income.......................................       7.2%      1.8%     13.3%
</TABLE>
                                       18
<PAGE>

<PAGE>

     The following table sets forth revenues,  cost of revenues and gross profit
for products and contracts, as a percentage of each category:

<TABLE>
<CAPTION>
                                                     Year Ended December 31,
                                                     -----------------------
<S>                                           <C>            <C>          <C>
                                               1996           1995         1994
                                               ----           ----         ----
Products:
  Revenues ........................           100.0%         100.0%       100.0%
  Cost of revenues ................            43.7           45.0         46.6
                                               ----           ----         ----
Gross profit ......................            56.3%          55.0%        53.4%
Contracts:
  Revenues ........................           100.0%         100.0%       100.0%
  Cost of revenues ................            84.7           86.0         85.2
                                               ----           ----         ----
Gross  profit .....................            15.3%          14.0%        14.8%

</TABLE>

Results of Operations
Years Ended December 31, 1996, 1995, and 1994.

     Revenues.  In 1996,  ATMI's total revenues  improved 54.3% to approximately
$46,350,000 from $30,048,000 in 1995. Total revenues for 1995 were 52.1% greater
than 1994's $19,761,000.  Product sales were $36,504,000, up 71.1% in 1996, from
1995's product sales of $21,336,000. Product sales for 1996 were 78.8% of ATMI's
total revenues,  and in 1995, 71.0%. In turn, 1995 showed a 70.2% increase above
product sales of $12,538,000 in 1994. Product sales in 1994 were 63.4% of ATMI's
total revenues.

     EcoSys effluent  treatment product sales led ATMI's product revenue growth.
With its technology  leadership and full service philosophy in the environmental
niche of the  semiconductor  market,  EcoSys managed to increase market share in
the face of a softening  capital  equipment  market.  Sales to Pacific Rim-based
companies  continued to be strong. The December 1995 acquisition of the Guardian
product line was also responsible for a portion of the revenue growth.

     This year, sales of effluent gas treatment  products were approximately 54%
of  ATMI's  revenues,   about   $25,076,000.   Last  year,  EcoSys   contributed
$16,889,000,  about  56% of  revenues.  In  1994,  51% of  ATMI's  total  sales,
$10,078,000,  were EcoSys product sales. While not a significant factor to date,
a continued slowdown in capital equipment spending in the semiconductor industry
could have a negative effect on EcoSys revenue growth during 1997.

     The SDS  product  line  has  begun  to  have a  significant  impact  on the
Company's  revenue  growth.  The revenue  from this product line changed in late
1996 from a royalty stream to a product revenue steam. As a result,  the sale of
this product represented  approximately 9% of total revenues in 1996, up from 3%
for the entire 1995 year's revenues.

     General  increases in government  funding of ATMI research  resulted in the
growth  of  contract  revenues.  For  1996,  government  funding  grew  13.0% to
$9,846,000,  from $8,712,000 in 1995 and increased 20.6% in 1995 from $7,222,000
in 1994.  The  increased  research  funding  in 1996 was  primarily  focused  on
materials  development,  device  processing and device design  activities within
NovaMOS and  Epitronics.  The 1995  growth was  primarily  related to  increased
funding of substrate fabrication and materials development projects.
                                       19
<PAGE>
     Gross  Profit.   ATMI's  gross  profit  improved  this  year  by  70.4%  to
$22,069,000  compared to 1995,  when gross profit of $12,949,000 had grown 66.6%
from  $7,771,000 in 1994. As a percentage of revenues,  gross profit improved to
47.6% in 1996 from 43.1% in 1995 and increased in 1995 from 39.3% in 1994.

     In 1996,  ATMI's sales mix  continued to shift  toward  greater  volumes of
high-margin  products.  Consequently,  our product revenue gross margin improved
75.3% to $20,565,000  from  $11,728,000 in 1995 and increased 75.0% in 1995 from
$6,700,000 in 1994. Product gross margin improved to 56.3% of revenues,  up from
55.0% in 1995 and  53.4% in 1994.  The  improved  product  margins  in 1996 were
attributed  primarily to the  significant  increases in royalties in  connection
with SDS product line growth.  Additionally,  sales of the SDS product commenced
late in the year when the Company began manufacturing the product and recognized
margins higher than the average ATMI product margin.  The effect of the SDS more
than offset some slight  declines in margin  realized on sale of EcoSys products
due to geographic and product mix shifts to comparatively lower margin sales.

     Gross profit on contract  revenue  increased in 1996 by 23.3% to $1,505,000
from  $1,221,000 in 1995 which was an increase of 14.0% over 1994 at $1,071,000.
Gross margin on  contracts  over the last three years have  remained  relatively
stable.  As a percent of contract  revenues,  gross margin increased to 15.3% in
1996  from  14.0% in 1995  which was a  decrease  from  14.8% in 1994.  Contract
margins can vary slightly from year to year based on the mix of cost-type,  firm
fixed  price  and  cost  share   arrangements.   Additionally,   different   fee
arrangements  and  indirect  cost  absorption  can  contribute  to  some  margin
variability.

     Research  and  Development  Expenses.  ATMI  targets  areas to maintain its
competitive  advantage.  For  1996,  our  R&D  spending  rose  significantly  to
$7,627,000,  up 81.3% from last year.  Primary  drivers for the increase in 1996
was  expansion  of product  development  efforts  within  EcoSys  and  increased
spending to expand and protect the SDS  technology  portfolio.  R&D  expenses of
$4,206,000 in 1995 was an increase of 23.2% from 1994 R&D of $3,415,000.  R&D as
a percentage of revenues has increased to 16.5% in 1996,  compared with 14.0% in
1995, which was a decrease from 17.3% of revenues in 1994.

     Selling,  General,  and  Administrative  Expenses.  Increasing in line with
ATMI's  growth,  ATMI's  variable  selling  costs grew in 1996.  ATMI also added
administrative  staff in 1996 to support  revenue growth and incurred  increased
costs related to the businesses acquired in 1995. As a result, the 1996 S,G&A
expenses of $11,510,000,  were approximately 34.5% above last year's expenses of
$8,558,000  which in turn were up 53.2% from 1994 S,G&A  expenses of $5,588,000.
The growth in 1995 was due again to variable  selling cost increases and also to
the  expansion  of the  Company's  marketing  staff.  S,G&A as a  percentage  of
revenues has decreased to 24.8% in 1996,  compared with 28.5% in 1995, which was
a slight increase from 28.3% of revenues in 1994.

     Other Income,  Net. Most of ATMI's other income stems from interest income,
offset by interest expense on the Company's outstanding debt. In 1996, net other
income  grew  by  24.8%  to  $628,000.  The  Company's  invested  cash  balances
throughout  1996 were  significantly  higher  than in 1995 due to the  Company's
public offering in October 1995.  Increased  interest  expense in 1996 partially
offset the effect of the increased  interest earned on cash investments.  In
1995, net other income of $503,000 grew by 29% from the 1994 amount of $390,000,
exclusive of 1994's non-recurring  transactions.  Again the 1995 interest income
growth was due to having the proceeds of the October 1995  offering for the last
quarter  of  the  year.  The  1994   non-recurring   transaction   involved  the
restructuring  of the Novapure  joint  venture and the sale of assets for a $4.6
million gain.  Offsetting this gain were transaction and consolidation  expenses
of $1 million for the restructuring,  acquiring Vector, and combining Vector and
Novapure into EcoSys.
                                       20
<PAGE>
     Income Taxes. ATMI's income tax expense related primarily to state taxes on
income generated,  partially offset by the utilization of loss carryforwards and
available state tax credits. Minimal federal taxes paid in 1996 and 1995 related
to  alternative  minimum  taxes  arising  from  the  use of net  operating  loss
carryforwards.  Income  tax  expense  in 1996 was  $239,000,  up 78.4%  from the
$134,000 in 1995 which, in turn, were up 8.5% from $124,000 in 1994.

Liquidity and Capital Resources

     The 1996 year was ATMI's first in generating cash from operations. Net cash
generated of $4,280,000 was due  principally to the increased  profitability  of
the  Company  for the  year.  In 1995,  ATMI  used net  cash for  operations  of
$1,226,000,  primarily  to fund a  significant  increase in accounts  receivable
because of end-of-the-year  product shipments.  In 1994,  $1,342,000 in net cash
was used in operations, primarily funding ATMI operating losses.

     The amount of the Company's  working capital has not changed  significantly
since the closing of the 1995 public  offering.  Working capital was $27,103,000
at December 31, 1996, compared to $26,224,000 at December 31, 1995.

     The Company's  investing  activities include capital  expenditures in 1996,
1995, and 1994 of $4,694,000, $3,604,000 and $1,785,000,  respectively. The 1996
capital  expenditures  were  primarily  focused on  manufacturing  expansion for
EcoSys and NovaMOS and laboratory construction for customer application work for
EcoSys.  The 1995 and 1994  capital  was  spent  on  renovations  and  leasehold
improvements for the Danbury and San Jose facilities,  upgrades to the Company's
information systems and purchase of laboratory equipment.

     Among  other  investing  activities  for  1996,  ATMI  sold  $4,886,000  in
marketable  securities and made a $4 million payment in connection with the 1995
acquisition  of Guardian.  During  1995,  ATMI made a $1 million  investment  in
Candescent  Technologies  Corporation (formerly Silicon Video Corporation),  and
purchased  $11,213,000 of marketable  securities with the proceeds received from
the 1995 public  offering.  When the Company  restructured  Novapure  and sold a
portion of its assets in 1994, ATMI received net proceeds of approximately  $2.5
million.

     Through the end of 1996,  ATMI had used $2.0 million from capital leases in
financing  capital  equipment  purchases.  Financial  institutions have provided
collateral-based   loans  for  $3.3  million.   The  State  of  Connecticut  has
contributed  loans of almost $2.0 million.  About $6.6 million was been extended
to ATMI by parties to the Company's acquisition activities.  At year end, nearly
$5.6 million of loans and financing remained  outstanding.  Notes payable extend
through June 2002 with interest  rates from 5.4% to 9.5%.  ATMI made payments of
$1,144,000  on notes  payable this year.  Last year,  notes paid were  $741,000,
while in 1994, payments totaled $1,050,000.  In December 1996, ATMI was extended
a $10  million  unsecured  line of  credit by its  commercial  bank to assist in
financing future activities.

     ATMI believes the cash generated from operations and the proceeds from last
year's common stock offering  together with existing sources of liquidity,  will
satisfy  projected working capital and cash  requirements,  at least through the
end of 1998.  However,  ATMI believes the level of financial resources available
to it is an important competitive factor in its industry and may seek additional
capital  prior  to  the  end of  that  period.  The  Company  considers  raising
additional capital on an on-going basis as market factors and its needs suggest.
Additionally,  ATMI considers,  on a continuing basis, potential acquisitions of
technologies  and  businesses  complementary  to its current  business which may
require additional cash.
                                       21
<PAGE>
Inflation

     During the last three years,  inflation has not had a significant impact on
ATMI's operating results.

Safe Harbor Statement

     Statements  which  are not  historical  facts in this  report  are  forward
looking statements, made on a good faith basis. Such forward looking statements,
including those  concerning the Company's  expectations  for demand and sales of
new and existing products, semiconductor industry and market segment growth, and
market and technology opportunities, all involve risk and uncertainties.  Actual
results may differ  materially  from  forward  looking  statements,  for reasons
including,  but not limited to, changes in the pattern of semiconductor industry
growth or the markets the Company sells products for,  customer  interest in the
Company's products,  product and market  competition,  delays or problems in the
development and  commercialization  of the Company's products,  or technological
change affecting the Company's core thin film competencies.


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-16.

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.
                                       22
<PAGE>

<PAGE>
                                    PART III

Item 10.  Directors and Executive Officers of the Registrant

The executive officers and directors of the Company are as follows:

<TABLE>
<S>                        <C>    <C>
Name                       Age    Position with the Company
----                       ---    -------------------------
Eugene G. Banucci, Ph.D.   53     President, Chief Executive Officer,
                                     Chairman of the Board and Director
Peter S. Kirlin, Ph.D.     36     Executive Vice President
Duncan W. Brown, Ph.D.     44     Vice President and Director,
                                     President of Epitronics
Daniel P. Sharkey          40     Vice President, Chief Financial Officer
                                     and Treasurer
Ward C. Stevens, Ph.D.     42     Vice President and Secretary
Nicholas J. Wood           33     Vice President - Marketing
Mark A. Adley              37     Director
Gary A. Andersen           60     Director
John A. Armstrong, Ph.D.   62     Director
Robert S. Hillas           47     Director
Stephen H. Mahle           51     Director

</TABLE>
     Eugene  G.  Banucci,  Ph.D.,  a  founder  of the  Company,  has  served  as
President,  Chief Executive Officer,  Chairman of the Board and a 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 the
Company  since  December  1995.  From 1991 to 1995,  Dr.  Kirlin  served as Vice
President of Microelectronics  and General Manager of the NovaMOS division,  and
from 1988 to 1991, he was Director of  Superconductor  Materials and Electronics
for the Company.  Prior to joining  ATMI,  Dr.  Kirlin was a Project  Leader and
Research  Engineer for American  Cyanamid  Company.  Dr. Kirlin has written more
than 30 published articles and holds 7 issued U.S. patents.

     Duncan W. Brown,  Ph.D.,  a founder of ATMI, has served as a Vice President
since 1986 and as a Director since 1990.  Dr. Brown was also named  President of
Epitronics  Corporation  in March  1996.  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  MIT  and  Harvard
University,  and an Academic  Associate at IBM's  Research  Division.  Dr. Brown
holds 15 issued U.S. patents and has published several technical articles.

     Daniel P. Sharkey has served as Chief Financial  Officer since joining ATMI
in 1990. He was also elected Vice  President  and  Treasurer in September  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.
                                       23
<PAGE>
     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.  Dr.  Stevens
holds  12  issued  U.S.  patents  and  is  the  author  of  numerous  scientific
publications.

     Nicholas J. Wood has served as the Company's Vice President-Marketing since
August  1995.  From 1985 to 1995,  Mr.  Wood  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.

     Mark A. Adley has served as a director  of the Company  since  1991.  Since
1996,  Mr.  Adley has been a Managing  Director at Credit  Suisse  First  Boston
Corporation  where he was a Director from 1994 to 1996.  From 1992 through 1993,
Mr.  Adley  served  as  an  investment  manager  for  Clipper  Asset  Management
Corporation, the General Partner of The Clipper Group, L.P. ("Clipper").  During
1991,  Mr. Adley served as an  investment  manager for Clipper.  Mr. Adley was a
Director at CS First Boston  Merchant  Bank during 1990 and, at The First Boston
Corporation,  was a Vice  President from 1989 to 1990 and an Associate from 1985
to 1988.

     Gary A.  Andersen has served as a director of the Company  since 1994.  Mr.
Andersen  was  President,   Chief  Executive   Officer  and  a  director  of  RF
Monolithics,  Inc., a manufacturer  of products  based on surface  acoustic wave
technology,  from 1986 to 1996.  Previously,  Mr. Andersen served as Director of
National  Accounts at Valid Logic  Systems,  National  Sales  Manager for Memory
Systems at Mostek Corporation and OEM Marketing Manager at Intel Memory Systems.

     John A.  Armstrong,  Ph.D.  has served as a director of the  Company  since
1993.  Dr.  Armstrong  is  presently  a  visiting  professor  of  physics at the
Massachusetts  Institute of  Technology.  Previously,  he was Vice  President of
Science and Technology for IBM from 1987 until his retirement in 1993.

     Robert S. Hillas has served as a director of the  Company  since 1987.  Mr.
Hillas has been a Managing  Director of E.M.  Warburg,  Pincus & Co., Inc. since
1993.  From  1985 to  1992,  Mr.  Hillas  served  as a  General  Partner  of DSV
Management  Ltd.,  the General  Partner of DSV  Partners  IV, a venture  capital
limited partnership, and from 1981 to 1992, as a General Partner of DSV Partners
III, a venture capital limited partnership.

     Stephen H. Mahle has served as a director of the Company  since March 1996.
Mr.  Mahle has been  President  of the Brady  Pacing  Business,  a  division  of
Medtronic,  Inc.,  since  1995.  From  1989 to 1995,  Mr.  Mahle  served as Vice
President  and General  Manager of the Brady Pacing  Business.  Previously,  Mr.
Mahle  served  in a variety  of  marketing  and  product  development  roles for
Medtronic, Inc.

     All directors hold office until the next annual meeting of the stockholders
of the Company or until their  successors  have been duly elected and qualified.
Executive  officers serve at the discretion of the Company's Board of Directors.
There are no family relationships among the executive officers and directors nor
are there any arrangements or  understandings  between any executive officer and
any other person pursuant to which the executive officer was selected.

Section 16(a)  Beneficial Ownership Reporting Compliance

     Section 16(a) of the Securities Exchange Act of 1934, as amended,  requires
the Company's  executive officers and directors and persons who beneficially own
more than ten percent of the Company's Common Stock to file reports of ownership
and changes in ownership  with the  Securities  and Exchange  Commission.  Based
solely on reports and other  information  submitted by the  executive  officers,
directors  and such  beneficial  owners,  the Company  believes  that during the
fiscal year ended December 31, 1996, all such reports were timely filed.
                                       24
<PAGE>

Item 11.  Executive Compensation


Summary Compensation

     The  following   table  sets  forth  certain   information   regarding  the
compensation  paid by the Company to the Company's Chief  Executive  Officer and
each of the other four most highly  compensated  executive officers for services
in all capacities to the Company and its  subsidiaries for the fiscal year ended
December 31, 1996.
<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE


                                                         Long Term
                                                       Compensation
                                                          Awards
                                   Annual Compensation    ------
                                   -------------------  Securities    All Other
                                                        Underlying    Compen-
Name and Principal Position   Year  Salary($) Bonus($)  Options(#)  sation($)(1)
---------------------------   ----  ------------------  ----------  ------------
<S>                           <C>   <C>        <C>        <C>            <C>
Eugene G. Banucci             1996  181,300    40,000         --         2,121
  President, Chief Executive  1995  155,250    40,000     35,000         2,875
     Officer and Chairman     1994  145,300    40,000         --         1,530
     of the Board

Peter S. Kirlin               1996  111,100    30,000         --            --
   Executive Vice President   1995   96,560    35,000     25,000           400
                              1994   91,300    20,000         --            --

Nicholas J. Wood (2)          1996  121,200    15,000         --            --
   Vice President - Marketing 1995   41,667    16,526     36,000            --
                              1994       --        --         --            --

Daniel P. Sharkey             1996   110,000   20,000         --         1,678
   Vice President, Chief      1995   103,000   25,000     15,000         1,583
     Financial Officer        1994    98,000   20,000         --           529
     and Treasurer

Ward C. Stevens               1996   101,000   25,000         --           890
   Vice President, Secretary  1995    96,000   10,000      5,000         1,823
                              1994    93,000   10,000         --           579

</TABLE>
     (1) Represents  premiums paid for life  insurance and long term  disability
policies  of which the  Company is not the  beneficiary  and  flexible  spending
contributions toward health care costs not covered by Company plans.

     (2) Mr. Wood joined the Company on August 28, 1995.
                                       25
<PAGE>

<PAGE>
Option Exercises and Year-End Values

     The following table sets forth information concerning option holdings as of
December  31,  1996  with  respect  to the  individuals  named  in  the  Summary
Compensation Table.
<TABLE>
<CAPTION>
                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                        AND FISCAL YEAR-END OPTION VALUES

                                    Number of Securities   Value of Unexercised
                  Shares           Underlying Unexercised  in-the Money Options
                Acquired           Options at FY-End (#)     at FY-End ($)(1)
                   on     Value    ---------------------     ----------------
Name            Exercise Realized   Exercisable         Exercisable
                   (#)     ($)              Unexercisable         Unexercisable
-------------   --------------------------------------------------------------
<S>                  <C>    <C>      <C>      <C>        <C>           <C>
Eugene G. Banucci     --        --   103,975  30,400     1,651,194     238,100
Peter S. Kirlin ..   6,000   73,679   54,234  25,540       847,573     236,057
Nicholas J. Wood .    --        --     7,200  28,800        39,600     158,400
Daniel P. Sharkey    4,000   50,222   69,875  21,000     1,103,247     214,750
Ward C. Stevens ..   9,375  121,245   74,725   5,400     1,231,315      44,850
</TABLE>
     (1) Based on the fair  market  value of the  Company's  Common  Stock as of
December 31, 1996 ($17.25) minus the exercise price of the options.

Non-Competition Agreements

     Eugene G. Banucci, Duncan W. Brown, Ward C. Stevens and Peter S. Kirlin are
parties to agreements with the Company containing  covenants not to compete with
the Company during their employment and for two years thereafter.

Director Compensation

     The Company's directors do not receive any cash compensation for service on
the Board of Directors or any committee  thereof but are reimbursed for expenses
incurred in connection with attending meetings of the Board of Directors and any
committee thereof. In October 1993, the Company granted options for the purchase
of  22,500  shares  of the  Company's  Common  Stock  to  John A.  Armstrong  in
consideration  of consulting  services  performed for the Company.  The exercise
price of the options is $3.55 per share,  which was the fair market value of the
Company's  Common Stock on the date of grant,  and the options vest ratably over
five years on each of the first five anniversary dates of the grant date. In May
1994,  the  Company  granted  options for the  purchase of 22,500  shares of the
Company's  Common Stock to Gary A. Andersen in  consideration of his services on
the Board of  Directors.  The exercise  price of the options is $5.00 per share,
which was the fair market  value of the  Company's  Common  Stock on the date of
grant,  and the options  vest  ratably over five years on each of the first five
anniversary  dates of the grant date.

                                       26
<PAGE>
     In December  1994, the Company  granted  options for the purchase of 22,500
shares of the Company's Common Stock to Robert S. Hillas in consideration of his
services on the Board of Directors.  The exercise  price of the options is $5.50
per share,  which was the fair market value of the Company's Common Stock on the
date of grant, and the options were immediately vested as to 50% of the grant in
consideration  of past  service on the Board of  Directors  and vested as to the
remaining 50% of the grant on December 9, 1995. In May 1995, the Company granted
options for the purchase of 22,500 shares of the Company's  Common Stock to Mark
A.  Adley in  consideration  of his  services  on the  Board of  Directors.  The
exercise  price of the  options  is $8.50 per share,  which was the fair  market
value of the Company's  Common Stock on the date of grant,  and the options were
immediately  vested as to 40% of the grant in  consideration  of past service on
the Board of Directors  and the  remaining  60% vest ratably over three years on
each of the first three  anniversary dates of the grant date. In March 1996, the
Company  granted  options  for the  purchase of 22,500  shares of the  Company's
Common Stock to Stephen H. Mahle in  consideration  of his services on the Board
of Directors.  The exercise price of the options is $10.50 per share,  which was
the fair market value of the  Company's  Common Stock on the date of grant,  and
the options vest  ratably over five years on each of the first five  anniversary
dates of the grant date.

                                       27
<PAGE>

<PAGE>
Item 12.  Security Ownership of Certain Beneficial Owners and Management

     The following  table sets forth certain  information  regarding  beneficial
ownership  of the  Company's  Common  Stock as of February  28, 1997 by (i) each
person  known by the Company to own  beneficially  more than five percent of the
outstanding  Common  Stock of the  Company,  (ii) each  director of the Company,
(iii) each executive officer named in the Summary  Compensation  Table, and (iv)
all  directors  and  executive  officers  of the  Company as a group.  Except as
otherwise  indicated,  all shares are owned  directly.  Except as  indicated  by
footnote,  and subject to community property laws where applicable,  the persons
named in the table have sole  voting and  investment  power with  respect to all
shares of Common Stock indicated.
<TABLE>
<CAPTION>

                                         Shares      Percent
                                       Beneficially    of
                                          Owned       Class
                                          -----       -----
Name and Address of Beneficial Owner
------------------------------------
<S>                                     <C>           <C>
J.P. Morgan & Co.,
  Incorporated (1)
  60 Wall Street
  New York, NY 10260 ..............     1,120,950     12.7%

Eugene G. Banucci (2) ............        314,691      3.5%
Ward C. Stevens (3) ...............       178,764      2.0%
Duncan W. Brown (4) ...............       172,771      1.9%
Daniel P. Sharkey (5) .............        69,875       *
Peter S. Kirlin (5) ...............        54,234       *
Robert S. Hillas (6) ..............        30,977       *
Mark A. Adley (7) .................        16,500       *
John A. Armstrong (5) .............        13,500       *
Gary A. Andersen (5) ..............         9,000       *
Nicholas J. Wood (5) ..............         7,200       *
Stephen H. Mahle (8) ..............         4,600       *

All directors and executive officers
  as a group (11 persons) (9) .....       872,112      9.4%
</TABLE>

*less than 1%

     (1)  The  shares  shown  as  beneficially  owned  by  J.P.  Morgan  &  Co.,
Incorporated  were those reported as beneficially  owned by it as of January 31,
1997 in Amendment  No. 3 to its Schedule 13G filed with the SEC.  Such  schedule
indicates  that J.P.  Morgan & Co.,  Incorporated  has sole  voting  power  with
respect  to  701,100  shares  and sole  dispositive  power  with  respect to all
1,120,950 shares.

     (2) Includes  103,975  shares  issuable  upon  exercise of options that are
exercisable within 60 days of February 28, 1997 and 5,659 shares either owned by
Dr.  Banucci's  spouse or issuable  upon  exercise of options  within 60 days of
February 28, 1997 by Dr.  Banucci's  spouse.  Dr. Banucci  disclaims  beneficial
ownership of the shares held by his spouse.
                                       28
<PAGE>
     (3)  Includes  74,725  shares  issuable  upon  exercise of options that are
exercisable within 60 days of February 28, 1997 and 5,537 shares either owned or
issuable  upon  exercise of options  within 60 days of February  28, 1997 by Dr.
Steven's spouse. Dr. Stevens disclaims  beneficial  ownership of the shares held
by his spouse.

     (4)  Includes  69,637  shares  issuable  upon  exercise of options that are
exercisable within 60 days of February 28, 1997 and 4,634 shares either owned or
issuable  upon  exercise of options  within 60 days of February  28, 1997 by Dr.
Brown's spouse. Dr. Brown disclaims  beneficial  ownership of the shares held by
his spouse.

     (5) Consists  entirely of shares issuable upon exercise of options that are
exercisable within 60 days of February 28, 1997.

     (6)  Includes  11,250  shares  issuable  upon  exercise of options that are
exercisable within 60 days of February 28, 1997.

     (7)  Includes  18,000  shares  issuable  upon  exercise of options that are
exercisable within 60 days of February 28, 1997. Does not include 189,500 shares
beneficially  owned by  Merchant  Investments,  Inc.  ("Merchant").  Mr. Mark A.
Adley,  a director of the  Company,  is employed by Credit  Suisse  First Boston
Corporation,  a  wholly-owned  subsidiary of Credit  Suisse First  Boston,  Inc.
("CSFBI"),  which  indirectly  wholly  owns  Merchant.   Pursuant  to  an  Asset
Management  Agreement  among  CSFBI,  certain  affiliates  of  CSFBI  (including
Merchant) and The Clipper  Group,  L.P.  ("Clipper"),  Clipper  manages  certain
investments for such persons, including these shares. Under the Asset Management
Agreement,  Clipper  has sole power to vote  these  shares but does not have the
power (sole or shared) to dispose of any such shares.  Mr. Adley  disclaims  any
beneficial ownership of the shares owned by Merchant.

     (8)  Includes  4,500  shares  issuable  upon  exercise of options  that are
exercisable within 60 days of February 28, 1997.

     (9) Includes  446,057 shares  issuable to executive  officers and directors
pursuant to options which are  exercisable  within 60 days of February 28, 1997.
Does not include an aggregate of 189,500  shares as to which a certain  director
disclaims beneficial ownership (See Note (7)).

Item 13.  Certain Relationships and Related Transactions

     There are no relationships or transactions required to be reported herein.

                                       29
<PAGE>

<PAGE>

                                     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  schedules  listed in the Index to  Consolidated  Financial
Statements and Financial Statement Schedule on page F-1 hereof are filed as part
of this report, commencing on page F-2 hereof.

     All other financial statement schedules 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

     3.01 (a)  Restated  Certificate  of  Incorporation,  filed in  Delaware  on
December 1, 1993 (Filed as Exhibit 3.01 (a) to the  Company's  Form 10-K for the
year  ended  December  31,  1993,  File   No.0-22756   ("1993  Form  10-K")  and
incorporated herein by reference)

     (b)  Certificate  of Amendment  to Restated  Certificate  of  Incorporation
(Filed as Exhibit 3.01 to Form 10-Q for the quarter  ended June 30,  1995,  File
No.0-22756 ("June 30, 1995 Form 10-Q") and incorporated herein by reference)

     3.02 Bylaws  effective  on  December 1, 1993 (Filed as Exhibit  3.02 (a) to
1993 Form 10-K and incorporated herein by reference)

     4.01 Specimen  Certificate  representing  shares of Common Stock,  $.01 par
value,  of the registrant  (Filed as Exhibit 4.01 to the Company's  Registration
Statement or amendments  thereto on Form S-1,  Registration  No. 33-69634 ("Form
S-1") and  incorporated  herein by  reference)  10.01 (a) Teaming  Agreement for
DARPA Contract Proposal and Resulting Program Relating to Barium  Titanate-Based
DRAM Technology  dated August 10,1992  between  Advanced  Technology  Materials,
Inc.,  IBM,  Texas  Instruments,  Micro  Semiconductor,  Inc.  and Lam  Research
Corporation  (Filed as Exhibit 10.04 (a) to Form S-1 and incorporated  herein by
reference)

     (b) Amendment No. 1 to the Teaming  Agreement dated November 5, 1992 (Filed
as Exhibit 10.04 (b) to Form S-1 and incorporated herein by reference)

     (c) Amendment No. 2 to the Teaming  Agreement dated February 4, 1993 (Filed
as Exhibit 10.04 (c) to Form S-1 and incorporated herein by reference)

     (d) Agreement with the United States  Defense  Advanced  Research  Projects
Agency  (DARPA)  dated  April  8,  1993  re:  "Ultra-Dense  Capacitor  Materials
Processing  Partnership" for $5,020,194  (Filed as Exhibit 10.04 (d) to Form S-1
and incorporated herein by reference)

     10.02 Form of Key Employee Agreement between Advanced Technology Materials,
Inc. and each of Eugene G. Banucci,  Duncan W. Brown,  Ward C. Stevens and Peter
S.  Kirlin  (Filed  as  Exhibit  10.05 to Form S-1 and  incorporated  herein  by
reference)

     10.03 (a) License,  Marketing and Development  Agreement  between  Advanced
Technology  Materials,  Inc. and Millipore  Corporation  dated November 17, 1987
(Filed as Exhibit 10.07 (a) to Form S-1 and incorporated herein by reference)

                                       30
<PAGE>
     (b)  Agreement  of  Amendment,  Amendment  #1  to  License,  Marketing  and
Development  Agreement  dated June 27,  1991 (Filed as Exhibit 10.07 (b) to Form
S-1 and incorporated herein by reference)

     (c)  Agreement  of  Amendment,  Amendment  #2  to  License,  Marketing  and
Development  Agreement dated October 1, 1992 (Filed as Exhibit 10.07 (c) to Form
S-1 and incorporated herein by reference)

     (d)  Agreement  of  Amendment,  Amendment  #3  to  License,  Marketing  and
Development  Agreement  dated  September 26, 1994 (Filed as Exhibit 10.06 (d) to
Form 10-K for the year ended  December 31, 1994,  File No.  0-22756  ("1994 Form
10-K") and incorporated herein reference)

     10.04 (a) Letter Agreement between Advanced Technology Materials,  Inc. and
Silicon Valley Bank dated September 29, 1994 (Filed as Exhibit 10.08 (a) to 1994
Form 10-K and incorporated herein by reference)

     (b) Promissory  Note from Advanced  Technology  Materials,  Inc. to Silicon
Valley Bank dated  September  7, 1994  (Filed as Exhibit  10.08 (b) to 1994 Form
10-K and incorporated herein by reference)

     (c) Negative Pledge Agreement by and between Advanced Technology Materials,
Inc. and Silicon  Valley Bank dated August 31, 1994 (Filed as Exhibit  10.08 (c)
to 1994 Form 10-K and incorporated herein by reference)

     10.05  Agreement of Lease between Melvyn J. Powers and Mary P. Powers d/b/a
M&M Realty and  Advanced  Technology  Materials,  Inc.  dated  December 23, 1994
(Filed as Exhibit 10.09 to 1994 Form 10-K and incorporated herein by reference)

     10.06 Lease Agreement between Montague Oaks Associates,  Phase III and ATMI
EcoSys  Corporation  dated February 7, 1995 (Filed as Exhibit 10.10 to 1994 Form
10-K and incorporated herein by reference)

     10.07 (a) Loan and Financing  Agreement by and between Advanced  Technology
Materials,  Inc. and the Connecticut  Development  Authority dated June 27, 1995
(Filed as Exhibit 10.01(a) to June 30, 1995 Form 10-Q)

     (b)  Promissory  Note  from  Advanced  Technology  Materials,  Inc.  to the
Connecticut  Development  Authority  dated June 27, 1995 (Filed as Exhibit 10.01
(b) to June 30, 1995 Form 10-Q)

     (c) Security Agreement by and between Advanced Technology  Materials,  Inc.
and the Connecticut  Development Authority dated June 27, 1995 (Filed as Exhibit
10.01(c) to June 30, 1995 Form 10-Q)

     (d) Stock  Subscription  Warrant  granted  to the  Connecticut  Development
Authority  dated June 27, 1995 (Filed as Exhibit  10.01(d) to June 30, 1995 Form
10-Q)

     10.08 (a) Letter Agreement between Advanced Technology Materials,  Inc. and
Silicon Valley Bank dated  September 22, 1995 (Filed as Exhibit  10.08(d) to the
Company's  Form 10-K for the  December 31, 1995,  File No.  0-22756  ("1995 Form
10-K") and incorporated herein by reference)

     (b) Promissory  Note from Advanced  Technology  Materials,  Inc. to Silicon
Valley Bank dated September 22, 1995 (Filed as Exhibit 10.08(d) to the 1995 Form
10-K and incorporated herein by reference)

     10.09 Loan  Agreement  between  Advanced  Technology  Materials,  Inc.  and
Silicon Valley Bank dated December 27, 1996 (Filed herewith)

     11.01 Statement re: computation of per share earnings (Filed herewith)

     21.01 Subsidiaries of the registrant (Filed herewith)

     23.01 Consent of Ernst & Young LLP (Filed herewith)

     27.01 Financial Data Schedule (Filed herewith)



b) Reports on Form 8-K

         None
                                       31
<PAGE>

<PAGE>
                                       F-1

   Index to Consolidated Financial Statements and Financial Statement Schedule


Report of Independent Auditors                                             F-2

Consolidated Balance Sheet at December 31, 1996 and 1995                   F-3

Consolidated Statement of Income for the years ended December 31, 1996,
1995 and 1994                                                              F-4

Consolidated Statement of Stockholders' Equity for the years
ended December 31, 1996, 1995 and 1994                                     F-5

Consolidated Statement of Cash Flows for the years
ended December 31, 1996, 1995 and 1994                                     F-6

Notes to Consolidated Financial Statements                                 F-7


Financial Statement Schedule

Schedule II - Valuation and qualifying accounts                           F-16

                                       F-1
<PAGE>

<PAGE>
                         Report of Independent Auditors


The Board of Directors and Stockholders of
Advanced Technology Materials, Inc.


     We have audited the  accompanying  consolidated  balance  sheet of Advanced
Technology  Materials,  Inc. as of December  31, 1996 and 1995,  and the related
consolidated statements of income,  stockholders' equity and cash flows for each
of the three  years in the period  ended  December  31,  1996.  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 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 provide a reasonable basis for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material respects, the consolidated financial position of
Advanced  Technology  Materials,  Inc.  at December  31, 1996 and 1995,  and the
consolidated  results of its operations and its cash flows for each of the three
years in the period ended  December  31,  1996,  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 14, 1997
                                      F-2
<PAGE>

<PAGE>
<TABLE>
<CAPTION>
                       Advanced Technology Materials, Inc.
                           Consolidated Balance Sheet
                           --------------------------

                                                                December 31,
Assets                                                     1996            1995
------                                                     ----            ----
<S>                                                <C>             <C>
Current assets:
Cash and cash equivalents (Note 1)                 $  4,437,015    $  3,609,265
Marketable (Notes 1 and 2)                           16,969,073      21,855,473
securities
Accounts receivable, net of allowance
 for doubtful accounts
 of $141,504 in 1996, $93,491 in 1995 (Note 3)        9,377,777       9,233,015
Inventories (Notes 1 and 4)                           4,541,282       2,647,142
Other                                                   500,324         345,486
                                                        -------         -------
Total current assets                                 35,825,471      37,690,381


Property and equipment, net (Notes 1 and 5)           8,102,218       5,575,343

Long-term investment (Note 6)                         1,000,000       1,000,000
Goodwill and other long term assets,
 net (Notes 1 and 11)                                 5,190,758       5,532,216
                                                      ---------       ---------
                                                   $ 50,118,447    $ 49,797,940
                                                   ============    ============


Liabilities and stockholders' equity
Current liabilities:
Accounts payable                                   $  3,469,530    $  3,121,355
Accrued expenses                                      1,996,587       1,799,322
Accrued commissions                                   1,378,888         984,443
Accrued payroll and benefits                            465,280         210,717
Notes payable, current portion (Note 7)                 621,463       4,725,238
Other                                                   790,261         625,495
                                                        -------         -------
Total current liabilities                             8,722,009      11,466,570

Notes payable, less current portion (Note 7)          4,944,517       5,257,155
Other long-term liabilities                              59,382         177,086

Stockholders' equity: (Note 10)
Preferred stock, par value $.01:
  1,000,000 shares authorized;
  none issued and outstanding                                --              --
Common stock, par value $.01:
  15,000,000 shares authorized;
issued and outstanding 8,775,810
  in 1996 and 8,721,61                                   87,758          87,216
Additional paid-in capital                           37,234,277      37,060,652
Accumulated deficit                                    (929,496)     (4,250,739)
                                                       --------      ----------
Total stockholders' equity                           36,392,539      32,897,129
                                                     ----------      ----------
                                                   $ 50,118,447    $ 49,797,940
                                                   ============    ============
</TABLE>
See accompanying notes.
                                      F-3
<PAGE>

<PAGE>
<TABLE>
<CAPTION>

                       Advanced Technology Materials, Inc.
                        Consolidated Statement of Income
                        --------------------------------

                                                  Year ended December 31
                                                  ----------------------
                                           1996            1995            1994
                                           ----            ----            ----
<S>                                <C>             <C>             <C>
Revenues (Note 1):
    Product revenues               $ 36,503,728    $ 21,336,408    $ 12,538,246
    Contract revenues                 9,845,973       8,711,924       7,222,403
                                      ---------       ---------       ---------
Total revenues                       46,349,701      30,048,332      19,760,649

Cost of revenues:
    Cost of product revenues         15,939,051       9,608,831       5,838,310
    Cost of contract revenues         8,341,455       7,490,568       6,151,215
                                      ---------       ---------       ---------
Total cost of revenues               24,280,506      17,099,399      11,989,525
                                     ----------      ----------      ----------
Gross profit                         22,069,195      12,948,933       7,771,124

Operating expenses:
    Research and development (Note 1) 7,626,534       4,205,997       3,414,536
    Selling, general,
      and administrative             11,509,827       8,557,730       5,588,171
                                     ----------       ---------       ---------
                                     19,136,361      12,763,727       9,002,707
                                     ----------      ----------       ---------
Operating income (loss)               2,932,834         185,206      (1,231,583)

Interest income                       1,113,548         737,948         501,884
Interest expense (Note 7)              (485,660)       (234,951)       (111,612)
Other income, net (Notes 11 and 12)        --              --         3,601,042
                                      ---------       ---------       ---------
                                        627,888         502,997       3,991,314

Income before taxes                   3,560,722         688,203       2,759,731

Income taxes (Note 9)                   239,479         134,157         123,600
                                        -------         -------         -------
Net income                         $  3,321,243    $    554,046    $  2,636,131
                                   ============    ============    ============

Net income per share (Note 1)      $       0.35    $       0.07    $       0.35
                                   ============    ============    ============
Weighted average shares outstanding
  (Note 1)                            9,359,021       8,074,032       7,595,193
                                      =========       =========       =========

</TABLE>




See accompanying notes.
                                      F-4
<PAGE>

<PAGE>
<TABLE>
<CAPTION>

                       Advanced Technology Materials, Inc.
                 Consolidated Statement of Stockholders' Equity
                 ----------------------------------------------

                                           Additional
                               Common       Paid-in    Accumulated
                               Stock        Capital     Deficit       Total
                              ---------   ----------  -----------   ----------
<S>                             <C>      <C>          <C>           <C>

Balance at December 31, 1993    $69,406  $19,470,767  $(7,440,916)  $12,099,257

Issuance of 24,440 common shares
pursuant to the exercise of
employee stock options              244       11,529         --          11,773

Issuance of 74,017 common shares
pursuant to the exercise of
warrants                            740       36,760         --          37,500

Net income                         --           --      2,636,131     2,636,131
                              ---------    ---------    ---------     ---------

Balance at December 31, 1994     70,390   19,519,056   (4,804,785)   14,784,661

Issuance of 137,571 common shares
pursuant to the exercise of
employee stock options            1,376      111,979         --         113,355

Sale of 1,525,000 common shares,
net of issuance costs            15,250   17,177,317         --      17,192,567

Issuance of 20,000 common shares
pursuant to the acquisition of
Epitronics                          200      202,300         --         202,500

Compensation from the issuance of
common stock options               --         50,000         --          50,000

Net income                         --           --        554,046       554,046
                              ---------    ---------    ---------     ---------


Balance at December 31, 1995     87,216   37,060,652   (4,250,739)   32,897,129

Issuance of 54,199 common shares
pursuant to the exercise of
employee stock options              542      173,625         --         174,167

Net income                         --           --      3,321,243     3,321,243
                              ---------    ---------    ---------     ---------
Balance at December 31, 1996    $87,758  $37,234,277  $  (929,496)  $36,392,539
                                =======  ===========  ===========   ===========
</TABLE>

See accompanying notes.

                                      F-5
<PAGE>

<PAGE>
<TABLE>
<CAPTION>

                       Advanced Technology Materials, Inc.
                      Consolidated Statement of Cash Flows
                      ------------------------------------


                                                  Year ended December 31,
                                                  -----------------------
                                              1996           1995          1994
                                              ----           ----          ----
<S>                                     <C>           <C>            <C>
Operating activities
Net income                              $3,321,243       $554,046    $2,636,131
Adjustments to reconcile net income to net cash
 provided (used) by operating activities
  Depreciation and amortization          2,295,336      1,409,086     1,058,950
  Gain on restructuring of joint venture      --             --      (4,609,634)
  Stock option compensation                   --           50,000          --
  Gain on disposal of property and equipment  --             --         (20,626)
  Changes in operating assets and liabilities
   Increase in accounts receivable        (144,762)    (3,774,193)     (904,666)
   Increase in inventory                (2,118,192)      (478,952)     (553,327)
   Increase in other assets               (215,263)      (134,087)      (16,196)
   Increase in accounts payable            348,175        595,692       423,895
   Increase in accrued expenses            846,273        324,345       730,414
   (Decrease) increase in
     other liabilities                     (52,938)       227,927       (86,669)

Total adjustments                          958,629     (1,780,182)   (3,977,859)
                                           -------     ----------    ----------
Net cash provided (used)
 by operating activities                 4,279,872     (1,226,136)   (1,341,728)
                                         ---------     ----------    ----------
Investing activities
 Capital expenditures                   (4,694,246)    (3,604,139)   (1,784,946)
 Long-term investment                         --       (1,000,000)         --
 Sale (purchase) of
   marketable securities, net            4,886,400    (11,212,815)    2,432,635
 Payments to Vector shareholders              --             --         (93,309)
 Payments for acquisitions              (4,000,000)      (550,000)         --
 Proceeds from sale of assets              597,970           --            --
 Net cash received from
   joint venture restructuring                --             --       2,457,308
                                         ---------     ----------    ----------
 Net cash (used) provided
   by investing activities              (3,209,876)   (16,366,954)    3,011,688
                                        ----------    -----------     ---------
Financing activities
 Proceeds from issuance of notes payable   727,216      2,588,169     1,011,438
 Principal payments on notes payable    (1,143,629)      (741,133)   (1,049,605)
 Proceeds from sale of common stock           --       17,192,567          --
 Proceeds from exercise of stock options
 and warrants                              174,167        113,355        49,273
                                           -------        -------        ------

Net cash (used) provided
   by financing activities                (242,246)    19,152,958        11,106
                                          --------     ----------        ------

Net increase in cash and cash equivalents  827,750      1,559,868     1,681,066
Cash and cash equivalents, beginning
 of year                                 3,609,265      2,049,397       368,331
                                         ---------      ---------       -------
Cash and cash equivalents, end of year  $4,437,015     $3,609,265    $2,049,397
                                        ==========     ==========    ==========

</TABLE>

See accompanying notes.

                                      F-6
<PAGE>

<PAGE>

                       Advanced Technology Materials, Inc.
                   Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies

Company's Activities

     The activities of Advanced Technology Materials,  Inc. and its subsidiaries
(the  Company")  are  focused  on  providing   products  and  services  to  the
semiconductor  industry. The Company is engaged in the development,  manufacture
and sale of equipment and materials based on the Company's  proprietary chemical
vapor  deposition  ("CVD")  technologies.  Revenues are derived from the sale of
point-of-use  environmental  equipment  and  specialty  materials  and  delivery
systems for the semiconductor  industry.  The Company also derives revenues from
contract  research  and  development  activities  related  to  high  performance
semiconductor  materials  and  devices and  royalties  generated  under  various
license agreements.

Principles of Consolidation

     The  consolidated  financial  statements  include the  accounts of Advanced
Technology Materials,  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 and cost-reimbursement-type contracts are recognized using the
percentage of completion  method based upon costs incurred and estimated  future
costs.  Contract revenues from the U.S.  Government were $9,845,973,  $8,711,924
and  $7,018,455  for  the  years  ended  December  31,  1996,   1995,  and  1994
respectively.

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 and  reevaluates
such designation as of each balance sheet date.
                                      F-7
<PAGE>


<PAGE>
                       Advanced Technology Materials, Inc.
                   Notes to Consolidated Financial Statements
                                   (continued)


     The  cost of  securities  sold is based on the  specific  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 on 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 ten years.

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

     Fair  values  of cash  and cash  equivalents,  short-term  investments  and
short-term  debt  approximate  cost due to the short period of time to maturity.
The fair value of long term debt approximates the carrying amount.

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,  1996,  no such
impairment  existed.  Goodwill  and other  long term  assets  are  stated net of
accumulated amortization of $292,500 and $75,386 at December 31, 1996 and 1995,
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 earnings and
earnings  per share,  as if the fair value based method of  accounting  had been
applied, are presented in Note 10.

Per Share Data

     Earnings  per common share are  computed  using the  treasury  stock method
based  on the  weighted  average  number  of  common  shares  and  common  stock
equivalent shares  outstanding  during the period.  Shares outstanding have been
restated to include those shares that would have been issued in connection  with
the Vector  acquisition (see Note 11) in each of the periods  presented.  Shares
from the assumed  exercise of options and  warrants  granted by the Company have
been included in the computations of earnings per share for all periods,  unless
their inclusion would be antidilutive.
                                      F-8
<PAGE>

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

                                                            December 31,
                                                            ------------

                                                        1996               1995
                                                        ----               ----
<S>                                              <C>                <C>
U.S. Government Obligations ..............        $9,537,690        $14,080,978
Corporate Obligations ....................         7,431,383          7,774,495
                                                   ---------          ---------
                                                 $16,969,073        $21,855,473
                                                 ===========        ===========
</TABLE>

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


3. Accounts Receivable

     Amounts due from  various  agencies of the United  States  Government  were
approximately  22% of accounts  receivable  for both December 31, 1996 and 1995,
respectively. Unbilled accounts receivable amounted to $757,172 and $586,358 and
customer  advances,  included in other  liabilities,  amounted  to $275,653  and
$446,995 at December 31, 1996 and 1995, respectively.

     Credit is extended to commercial  customers based on an evaluation of their
financial   condition  and  collateral  is  not  generally   required.   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,
                                                        ------------
                                                      1996                 1995
                                                      ----                 ----
<S>                                             <C>                  <C>
Raw materials                                   $4,143,818           $2,252,841
Work in process                                    686,898              614,069
Finished goods                                     369,846               59,291
                                                   -------               ------
                                                 5,200,562            2,926,201

Obsolescence reserve                              (659,280)            (279,059)
                                                  --------             --------
                                                $4,541,282           $2,647,142
                                                ==========           ==========
</TABLE>

                                      F-9
<PAGE>

<PAGE>
5. Property and Equipment
<TABLE>
<CAPTION>
Property and equipment is comprised of the following:
                                                          December 31,
                                                          ------------
                                                      1996                 1995
                                                      ----                 ----
<S>                                            <C>                   <C>
Machinery and equipment ..............         $11,610,508           $8,734,575
Furniture and fixtures ...............             708,072              565,020
Leasehold improvements ...............           3,516,401            2,218,837
                                                 ---------            ---------
                                                15,834,981           11,518,432
Accumulated depreciation
   and amortization ..................          (7,732,763)          (5,943,089)
                                                ----------           ----------
                                                $8,102,218           $5,575,343
                                                ==========           ==========

</TABLE>
     Depreciation  expense for the years ended December  31,1996,  1995 and 1994
was $1,895,142, $1,333,700 and $1,058,950, respectively.

6. Long-Term Investment

     On April 1, 1995, the Company purchased $1,000,000 of convertible preferred
stock of Candescent  Technologies  Corporation  ("CTC"),  formerly Silicon Video
Corporation,  a San Jose-based  developer of flat panel displays.  This stock is
convertible into common shares on a one-to-one  basis and has certain  dividend,
liquidation,  and voting rights equivalent with other preferred  stockholders of
CTC.  In  conjunction  with  this  investment,  the  Company  has  expanded  its
collaboration  with  CTC to  include  further  joint  research  and  development
programs and manufacturing  rights related to certain  components of CTC's "Thin
CRT." The investment is recorded at cost.

7. Notes Payable
<TABLE>
<CAPTION>
Notes payable consist of the following:
                                                             December 31,
                                                             ------------
                                                        1996             1995
                                                        ----             ----
<S>                                                 <C>              <C>
Note payable in conjunction
 with acquisition of Guardian Systems,
 bearing interest at 5.4%,
 due on January 4, 1996  .....................     $      --         $4,000,000
Note payable in conjunction with
 acquisition of Guardian Systems,
 bearing interest at 8.5% and 8.25%
 at December 31, 1996 and 1995, due
 in three annual installments
 beginning January 1, 1999 ...................       2,000,000        2,000,000
Term loan with Connecticut state
 agency, bearing interest at 6% at
 December 31, 1996 and 1995,
 respectively, due through June 2002 .........       1,300,000        1,300,000
Term loan with Connecticut state
 agency, bearing interest at 5%,
 due on April 1, 2001 ........................         500,000             --
Equipment credit line with a
 commercial bank, bearing interest
 at 9% and 9.5% at December 31, 1996
 and 1995, respectively, due through
 June 2000 ...................................       1,701,453        2,018,808
Other notes payable ..........................          64,527          663,585
                                                        ------          -------
                                                     5,565,980        9,982,393
Less current portion .........................        (621,463)      (4,725,238)
                                                      --------       ----------
                                                    $4,944,517       $5,257,155
                                                    ==========       ==========
</TABLE>
                                      F-10
<PAGE>
<TABLE>
<CAPTION>
The approximate aggregate debt maturities are as follows:

<S>                                               <C>
Year ending December 31:
         1997                                     $  621,463
         1998                                        687,056
         1999                                      1,246,011
         2000                                        933,562
         2001                                      1,344,731
         thereafter                                  733,157
                                                     -------
                                                  $5,565,980
                                                  ==========

</TABLE>
     The  seven-year  term  loan of  $1,300,000  is  collateralized  by  various
equipment,  leasehold  improvements and renovations in the Company's Connecticut
facility.

     The Company's  equipment  credit lines bear interest at prime plus 1/2% per
annum and are  collateralized  by certain  assets.  The Company is in compliance
with  the  credit  line  covenants,  including  maintaining  certain  liquidity,
leverage, and tangible net worth levels.

     In December,  1996,  the Company  obtained a $10 million  unsecured line of
credit  with  a  commercial  bank  which  permits  borrowing  levels  tied  to a
percentage of accounts  receivable and inventories.  This line bears interest at
prime (with LIBOR  options)  and expires on  December  26,  1997.  There were no
borrowings under this line at December 31, 1996.

     Interest  paid was  $481,129,  $239,482  and  $111,612  for the years ended
December 31, 1996, 1995 and 1994, respectively.

8. Leases

     The  Company  leases  office and  manufacturing  facilities  under  several
operating  leases.  The lease for its Danbury,  Connecticut  facility expires in
August  2005 while the EcoSys San Jose,  California  facility  lease  expires in
March 2002.  Rental  expense was  $889,594,  $435,908 and $345,976 for the years
ended December 31, 1996, 1995 and 1994, respectively.

     The following is a schedule of future  minimum lease payments for operating
leases as of December 31, 1996:
<TABLE>
<CAPTION>
<S>                                                                 <C>
                                                                    Operating
Year ending December 31:                                             Leases
------------------------                                             ------
         1997                                                       $   875,356
         1998                                                           765,886
         1999                                                           763,734
         2000                                                           685,865
         2001                                                           694,096
         thereafter                                                   1,826,849
                                                                      ---------
Total minimum lease payments                                         $5,611,786
                                                                     ==========
</TABLE>
                                      F-11
<PAGE>


9. Income Taxes

     At December 31, 1996, the Company had loss  carryforwards for United States
federal  income tax  purposes  of  approximately  $2,800,000  and  research  and
development tax credit carryforwards of approximately  $326,000 expiring in 2001
through  2010.  It also had  alternative  minimum  tax credit  carryforwards  of
approximately  $85,000, with no expiration.  For state tax purposes, the Company
had loss  carryforwards  of approximately  $1,800,000  expiring between 1997 and
2000.

     Significant components of the Company's deferred tax assets and liabilities
are as follows:
<TABLE>
<CAPTION>
                                                           December 31,
                                                           ------------
                                                       1996           1995
                                                       ----           ----
<S>                                             <C>            <C>
Deferred tax assets:
   Accrued liabilities ......................      $139,000       $282,000
   Net operating loss carryforwards
    and tax credits .........................       829,000      1,823,000
   Inventory reserves .......................       577,000        281,000
   Other, net ...............................       161,000        482,000
                                                    -------        -------
                                                  1,706,000      2,868,000
Deferred tax liabilities - none .............             -              -

Net deferred tax assets .....................     1,706,000      2,868,000
Valuation allowance .........................    (1,706,000)    (2,868,000)
                                                 ----------     ----------
Amount recognized in the financial statements   $         -    $         -

</TABLE>
     The reconciliation of income tax computed at the U.S. federal statutory tax
rates to the Company's tax expense is:
<TABLE>
<CAPTION>
                                             1996           1995           1994
                                             ----           ----           ----
<S>                                    <C>              <C>            <C>
U.S. statutory rate .............      $1,210,600       $233,900       $935,700
State income taxes ..............         317,500        149,700         81,900
Net operating loss
 carryforward utilization .......      (1,263,100)      (263,600)      (894,000)
Other, net ......................         (25,271)        14,157           --
                                          -------         ------         ------
                                         $239,479       $134,157       $123,600
                                         ========       ========       ========
</TABLE>


10. 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
$17,192,567  were from 1,525,000  shares sold by the Company while 75,000 shares
were sold for various  selling  shareholders.  Costs of the offering,  including
underwriting commissions, amounted to $1,488,683.

     An  amendment  of  the  Company's  Restated  Certificate  of  Incorporation
approved by its shareholders in May 1995,  provided for an increase in the
Company's authorized common shares to 15,000,000.

                                      F-12
<PAGE>

<PAGE>
Stock Plans

     In May 1995, the Company's  shareholders  approved the adoption of the 1995
Stock Plan  ("1995  Plan"),  which  provides  for the  granting of up to 500,000
nonqualified  stock  options,   "incentive  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,  provides for
the granting of up to 1,115,833  nonqualified stock options and "incentive stock
options" ("ISOs").

     Under the terms of both 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, 1993 ........      724,046       $.28-$7.00
  Granted .......................................      156,900      $5.00-$6.38
  Canceled ......................................      (22,910)      $.44-$7.00
  Exercised .....................................      (24,440)      $.28-$ .53
                                                       -------       ---- -----

Options outstanding at December 31, 1994 ........      833,596       $.28-$7.00
  Granted .......................................      305,950     $6.88-$13.88
  Canceled ......................................      (27,670)      $.53-$6.38
  Exercised .....................................     (137,571)      $.28-$5.50
                                                      --------       ---- -----

Options outstanding at December 31, 1995 ........      974,305      $.28-$13.88
  Granted .......................................       92,500     $9.88-$17.63
  Canceled ......................................      (53,590)     $.53-$12.50
  Exercised .....................................      (54,999)     $.28-$12.50
                                                       -------      ---- ------
Options outstanding at December 31, 1996 ........      958,216      $.28-$17.63
                                                       =======      ==== ======
</TABLE>
     At December  31,  1996,  options for 567,066  shares are  exercisable,  and
options  for  239,043  shares are  available  for grant.  The  weighted  average
exercise  price of options are $4.99 and $3.43 for 1996 and 1995,  respectively.
The weighted average remaining contractual life of these options is 6.5 years.

     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 and  earnings  per share  would  have been  reduced to the pro forma
amounts indicated below:
<TABLE>
<CAPTION>
                                       1996                  1995
                                       ----                  ----
      <S>                          <C>                     <C>
      Net earnings:                $3,000,000              $488,000
      Earnings per share:              $.32                   $.06
</TABLE>
                                      F-13
<PAGE>
     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 earnings and earnings per
share in future years due to the timing of stock option  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 1996 and 1995:
<TABLE>
<CAPTION>
                                                  1996                 1995
                                                  ----                 ----
     <S>                                     <C>                  <C>
     Expected dividend yield                      none                 none
     Risk free interest rate                     6.25%                6.10%
     Expected volatility                         54.6%                58.2%
     Expected life of options                7.5 years            7.5 years
</TABLE>
     The weighted  average fair value of stock options  granted in 1996 and 1995
was $8.21 and $6.72, respectively.

Warrants

     In  connection  with its  initial  public  offering,  the  Company  granted
warrants to its  underwriters  to purchase  131,250  common shares at $11.25 per
share,  which became exercisable on November 23, 1994 and expire on November 23,
1998.  Additional  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 70,000 shares at exercise  prices ranging
from $10.13 to $11.25, of which 30,000 are vested as of December 31, 1996.


11. Mergers and Acquisitions

     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  thermal  destruction  units  used  in the
treatment of effluent in the semiconductor industry. The product line has become
part of the Company's Ecosys operation.

     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 years ended December
31, 1995 and 1994,  assuming the purchase of all the above  businesses  had been
consummated as of the beginning of each period presented, are as follows:
                                      F-14
<PAGE>
<TABLE>
<CAPTION>
                                                         1995               1994
                                                         ----               ----
<S>                                               <C>                <C>
Revenues .................................        $35,466,000        $25,660,000
Net income ...............................            813,000          2,371,000
Net income per common share ..............               $.10               $.31
</TABLE>
     On September  15, 1994,  the Company  issued  698,505  shares of its Common
Stock and  $93,309 in cash in  exchange  for all of the  issued and  outstanding
shares  of  common  stock  of  Vector.   In  connection  with  this  acquisition
approximately  $1.0 million of costs were charged to other  income,  net,  which
were  non-recurring  in nature and  consisted  primarily of  professional  fees,
compensation  costs, and provisions for miscellaneous  costs associated with the
integration and consolidation of Vector with the Company.

     The Vector acquisition was treated as a pooling of interests.  For the nine
months  ended  September  30, 1994 prior to the  acquisition,  revenues  and net
income of  Vector  included  in the  financial  statements  are  $3,149,037  and
$207,604.


12. Asset Sale and Restructuring Agreement

     On September 28, 1994, the Company executed an Asset Sale and Restructuring
Agreement whereby certain assets of a majority owned subsidiary,  valued at $.02
million,  were sold in exchange  for  approximately  $2.7  million in cash and a
royalty  on future  sales of  certain  products.  A gain of  approximately  $4.6
million was recognized as a result of the transaction which is included in other
income,  net.  Revenue  generated by these assets was  $4,568,955.  The net loss
incurred was $25,528 for the period from January 1, 1994 to September 28, 1994.


13.  Geographic Data

     During 1996 and 1995, the Company had export sales of approximately 31% and
29%,  respectively.  Sales to Asia,  primarily Korea, were approximately 27% and
24% of the Company's revenues.

<TABLE>
<CAPTION>
Quarterly Results of Operations (unaudited)

(Thousands of Dollars, except per share amounts)

1996                          --------------Quarter-----------------       Year
----                                                                       ----
                               First     Second      Third     Fourth
                               -----     ------      -----     ------
<S>                          <C>        <C>        <C>        <C>        <C>
Net sales ...............    $10,062    $12,376    $12,145    $11,767    $46,350
Gross profit ............      4,780      6,122      5,786      5,381     22,069
Net income ..............        469        640        975      1,237      3,321

Income per share ........       $.05       $.07       $.10       $.13       $.35

</TABLE>
<TABLE>
<CAPTION>
1995                            -------------Quarter-----------------      Year
----                                                                       ----
                               First     Second      Third     Fourth
                               -----     ------      -----     ------
<S>                           <C>        <C>        <C>        <C>      <C>
Net sales ................    $6,066     $7,185     $7,996     $8,801   $30,048
Gross profit .............     2,520      3,102      3,343      3,984    12,949
Net income (loss) ........      (158)       166        302        345       554

Income (loss) per share ..     $(.02)      $.02       $.03       $.04      $.07
</TABLE>
                                      F-15
<PAGE>

<PAGE>
<TABLE>
<CAPTION>
                                   Schedule II

                       ADVANCED TECHNOLOGY MATERIALS, INC.
                         VALUATION & QUALIFYING ACCOUNTS

                                    Balance at
                                    Beginning   Charged to            Balance at
 Year Ended                           of          Cost/                  End of
 ----------                         Period       Expense   Deductions   Period
                                    ------       -------   ----------   ------
<S>                                 <C>         <C>        <C>        <C>
December 31, 1994
   Allowance for doubtful accounts  $ 42,399    $ 48,045   $  8,003   $ 82,441
   Inventory obsolescence reserve    139,117     215,100     77,849    276,368
December 31, 1995
   Allowance for doubtful accounts    82,441      62,000     50,950     93,491
   Inventory obsolescence reserve    276,368     126,776    124,085    279,059
December 31, 1996
   Allowance for doubtful accounts    93,491      60,000     11,987    141,504
   Inventory obsolescence reserve    279,059     380,221          0    659,280
</TABLE>
                                      F-16
<PAGE>


<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.

Advanced Technology Materials, Inc.

March 26, 1997
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.
<TABLE>
<CAPTION>
Signature                      Title                                      Date
---------                      -----                                      ----
<S>                            <C>                                      <C>
                               President, Chief Executive
                               Officer, Chairman of the Board
/S/ Eugene G. Banucci          and Director                             3/26/97
Eugene G. Banucci, Ph.D.

                               Vice President, Chief Financial
                               Officer and Treasurer (Chief
/S/ Daniel P. Sharkey          Accounting Officer)                      3/26/97
Daniel P. Sharkey


                               Vice President, President-
/S/ Duncan W. Brown            Epitronics, and Director                 3/26/97
Duncan W. Brown, Ph.D.


                               Director
/S/ Mark A. Adley                                                       3/26/97
Mark A. Adley


                               Director
/S/ Gary Andersen                                                       3/26/97
Gary Andersen


                               Director
/S/ John A. Armstrong                                                   3/26/97
John A. Armstrong, Ph.D.


                               Director
/S/ Robert S. Hillas                                                    3/26/97
Robert S. Hillas


                               Director
/S/ Stephen H. Mahle                                                    3/26/97
Stephen H. Mahle
</TABLE>
                                      S-1
<PAGE>

<PAGE>
<TABLE>
<CAPTION>
                    EXHIBIT INDEX



Exhibit
 No.      Description
 ---      -----------
<S>       <C>
10.09     Loan  Agreement  between  Advanced  Technology  Materials,  Inc.  and
           Silicon Valley Bank dated December 27, 1996

11.01     Statement re: computation of earnings per common share

21.01     Subsidiaries of the registrant

23.01     Consent of Ernst & Young LLP

27.01     Financial Data Schedule
</TABLE>
<PAGE>

<PAGE>