SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file Number: 0-22756
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)
- -------------------------------------------------------------------------------
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 __
The number of shares outstanding of the registrant's common stock as of
July 28, 1997 was 8,813,945.
ADVANCED TECHNOLOGY MATERIALS, INC.
Quarterly Report on Form 10-Q
For the Period Ended June 30, 1997
TABLE OF CONTENTS
Page
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheet............................................. 3
Consolidated Statement of Operations................................. 4
Consolidated Statement of Cash Flows................................. 6
Notes to Consolidated Interim Financial Statements................... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................................... 9
Item 3. Quantitative and Qualitative Disclosures about Market Risk.... 13
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K.............................. 14
Signatures............................................................ 15
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Advanced Technology Materials, Inc.
Consolidated Balance Sheet
June 30, December 31,
1997 1996
---- ----
(unaudited)
Assets
Current assets:
Cash and cash equivalents ...... $ 1,338,477 $ 4,437,015
Marketable securities .......... 16,850,826 16,969,073
Accounts receivable, net of
allowance for doubtful accounts
of $185,485 in 1997 and
$141,504 in 1996 ............. 12,526,901 9,377,777
Inventory ...................... 4,698,106 4,541,282
Other .......................... 2,128,039 500,324
--------- -------
Total current assets .............. 37,542,349 35,825,471
Property and equipment, net ....... 9,121,482 8,102,218
Long-term investment .............. 1,250,003 1,000,000
Goodwill and other intangibles .... 5,176,024 5,190,758
--------- ---------
$ 53,089,858 $ 50,118,447
============ ============
Liabilities and stockholders' equity Current liabilities:
Accounts payable .............. $ 3,893,861 $ 3,469,530
Accrued expenses ............... 1,396,441 1,996,587
Accrued commissions ............ 1,765,684 1,378,888
Accrued payroll and benefits ... 860,643 465,280
Notes payable .................. 586,634 621,463
Other .......................... 785,642 790,261
------- -------
Total current liabilities ......... 9,288,905 8,722,009
Notes payable, less current portion 4,726,113 4,944,517
Other long-term liabilities ....... 57,500 59,382
Stockholders' equity:
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 8,807,420 in
1997 and 8,775,810 in 1996 88,074 87,758
Additional paid-in capital ..... 37,412,597 37,234,277
Retained earnings
(accumulated deficit) ......... 1,516,669 (929,496)
--------- --------
Total stockholders' equity ......... 39,017,340 36,392,539
---------- ----------
$ 53,089,858 $ 50,118,447
============ ============
See accompanying notes
Advanced Technology Materials, Inc.
Consolidated Statement of Operations
(unaudited)
Three months ended June 30,
1997 1996
---- ----
Revenues:
Product revenues .................. $ 11,349,862 $ 10,164,431
Contract revenues ................. 2,282,410 2,211,758
--------- ---------
Total revenues ....................... 13,632,272 12,376,189
Cost of revenues:
Cost of product revenues .......... 4,718,632 4,358,087
Cost of contract revenues ......... 1,881,235 1,895,822
--------- ---------
Total cost of revenues ............... 6,599,867 6,253,909
--------- ---------
Gross profit ......................... 7,032,405 6,122,280
Operating expenses:
Research and development .......... 2,174,043 2,185,333
Selling, general and administrative 3,470,349 3,344,420
--------- ---------
5,644,392 5,529,753
--------- ---------
Operating income ..................... 1,388,013 592,527
Interest income ...................... 280,950 271,658
Interest expense ..................... (103,768) (140,163)
-------- --------
Income before income taxes ........... 1,565,195 724,022
Income taxes ......................... 225,601 83,574
======= ======
Net income ........................... $ 1,339,594 $ 640,448
============ ============
Net income per share ................. $ 0.14 $ 0.07
------------ ------------
Weighted average shares outstanding .. 9,617,638 9,413,062
========= =========
See accompanying notes.
Advanced Technology Materials, Inc.
Consolidated Statement of Operations
(unaudited)
Six months ended June 30,
1997 1996
---- ----
Revenues:
Product revenues .................. $ 21,197,316 $ 17,743,508
Contract revenues ................. 4,900,651 4,694,752
--------- ---------
Total revenues ....................... 26,097,967 22,438,260
Cost of revenues:
Cost of product revenues .......... 9,329,662 7,607,245
Cost of contract revenues ......... 4,038,945 3,928,608
--------- ---------
Total cost of revenues ............... 13,368,607 11,535,853
---------- ----------
Gross profit ......................... 12,729,360 10,902,407
Operating expenses:
Research and development .......... 4,112,106 4,048,215
Selling, general and administrative 6,188,905 5,919,948
--------- ---------
10,301,011 9,968,163
---------- ---------
Operating income ..................... 2,428,349 934,244
Interest income ...................... 555,181 549,926
Interest expense ..................... (205,428) (262,702)
-------- --------
Income before income taxes ........... 2,778,102 1,221,468
Income taxes ......................... 331,937 111,574
======= =======
Net income ........................... $ 2,446,165 $ 1,109,894
============ ============
Net income per share ................. $ 0.26 $ 0.12
------------ ------------
Weighted average shares outstanding .. 9,583,528 9,364,302
========= =========
See accompanying notes.
Advanced Technology Materials, Inc.
Consolidated Statement of Cash Flows
(unaudited)
Six months ended June 30,
1997 1996
---- ----
Operating activities
Net income ................................... $ 2,446,165 $ 1,109,894
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation and amortization ............. 1,349,856 1,039,977
Changes in operating assets and liabilities
Increase in accounts receivable .......... (3,149,124) (267,573)
Increase in inventory .................... (156,824) (1,295,529)
Increase in other assets ................. (1,752,337) (210,579)
Increase (decrease) in accounts payable .. 424,331 (35,874)
Increase in accrued expenses ............. 182,013 1,473,314
Increase (decrease) in other liabilities . (6,501) 214,960
------ -------
Total adjustments ............................ (3,108,586) 918,696
---------- -------
Net cash (used) provided
by operating activities ..................... (662,421) 2,028,590
-------- ---------
Investing activities
Capital expenditures ......................... (2,229,764) (2,522,619)
Long term investment ......................... (250,003) --
Sale of marketable securities ................ 118,247 4,821,185
------- ---------
Net cash (used) provided
by investing activities ..................... (2,361,520) 2,298,566
---------- ---------
Financing activities
Proceeds from issuance of notes payable ...... -- 727,216
Principal payments on notes payable .......... (253,233) (4,366,193)
Proceeds from the exercise of stock
options and warrants .................... 178,636 32,505
------- ------
Net cash used by financing activities ........ (74,597) (3,606,472)
------- ----------
Net increase (decrease) in cash
and cash equivalents .................... (3,098,538) 720,684
Cash and cash equivalents, beginning
of period ................................... 4,437,015 3,609,265
========= =========
Cash and cash equivalents,
end of period ........................... $ 1,338,477 $ 4,329,949
=========== ===========
See accompanying notes.
Advanced Technology Materials, Inc.
Notes To Consolidated Interim Financial Statements
(unaudited)
1. Basis of Presentation
The accompanying unaudited interim financial statements of Advanced
Technology Materials, Inc. ("ATMI" or the "Company") have been prepared in
accordance with the instructions to Form 10-Q and Rule 10.01 of Regulation S-X
and do not include all of the financial information and disclosures required by
generally accepted accounting principles.
In the opinion of the Company's management, the financial information
contained herein has been prepared on the same basis as the audited Consolidated
Financial Statements contained in the Company's Form 10-K for the year ended
December 31, 1996, and includes adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the unaudited quarterly results set
forth herein. The Company's quarterly results have, in the past, been subject to
fluctuation and, thus, the operating results for any quarter are not necessarily
indicative of results for any future fiscal period.
2. Per Share Data
Earnings per common share is computed using the treasury stock method based
on the weighted average number of common and common equivalent shares
outstanding during the period. Shares from the assumed exercise of options and
warrants granted by the Company have been included in the computation of
earnings per share for all periods, unless their inclusion would be
antidilutive.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, which is required to be adopted on December 31,
1997. This Statement simplifies the computation of earnings per share and makes
the computation more consistent with those of other countries. The
implementation will require the disclosure of basic and diluted earnings per
share. The Company will adopt this Statement during the fourth quarter of 1997.
Pro forma basic earnings per share under the new computation are $.15 and $.28
for the three months and six months ended June 30, 1997, respectively.
3. Inventory
Inventory is comprised of the following:
June 30, December 31,
1997 1996
---- ----
Raw materials $4,281,642 $4,143,818
Work in process 1,354,313 686,898
Finished goods 14,060 369,846
------ -------
5,650,015 5,200,562
Obsolescence reserve (951,909) (659,280)
-------- --------
$4,698,106 $4,541,282
========== ==========
4. Income taxes
ATMI's income tax expense relates primarily to state taxes on income
generated, partially offset by the utilization of loss carryforwards and
available state tax credits. Minimal federal taxes in 1997 and 1996 relate to
alternative minimum taxes arising from the use of net operating loss
carryforwards. ATMI has utilized substantially all its federal net operating
loss carryforwards as of June 30, 1997.
5. Mergers and Acquisitions
On April 7, 1997, the Company executed a Merger and Exchange Agreement (the
"ADCS Agreement") to acquire all of the issued and outstanding equity interests
in Advanced Delivery & Chemical Systems Nevada, Inc. and its related entities
("ADCS"). ADCS is engaged in the manufacture and sale of ultra-high purity
semiconductor thin film materials and associated delivery systems. The ADCS
Agreement is subject to approval by ATMI's stockholders and the satisfaction of
other customary conditions. Transaction costs of approximately $2 million will
be recognized in the period the transaction closes.
Pursuant to the ADCS Agreement, holders of interests in ADCS will receive
between 5,468,750 and 6,250,000 shares of common stock of a newly created
holding company in exchange for their interests. The actual number of shares to
be issued to the holders of equity interests in ADCS depends upon the average
closing price of ATMI's common stock during a 20 day trading period ending five
days prior to stockholder approval of the ADCS Agreement. Additionally, as part
of the transaction, ATMI will become a subsidiary of the holding company. The
acquisition is intended to be accounted for as a pooling of interests. ATMI
intends to continue the business currently performed by ADCS by combining it
with the semiconductor thin film and delivery system product lines of the
NovaMOS division of ATMI, under the name ADCS.
On May 17, 1997, the Company, executed an Agreement and Plan of Merger (the
"LSL Agreement") to acquire all of the issued and outstanding stock in Lawrence
Semiconductor Laboratories, Inc. ("LSL"). LSL is an outsourcer of epitaxial
processing of silicon wafers using chemical vapor deposition technology to meet
customer specifications. Epitaxial processing is one of many steps involved in
transforming a silicon wafer into a semiconductor chip, the primary functional
component of most electronic products. The LSL Agreement is subject to approval
by ATMI's stockholders and the satisfaction of other customary conditions.
Transaction costs of approximately $1.5 million are expected to be recognized.
Additionally, LSL would incur a fee of approximately $750,000 to its investment
banker and a break-up fee in connection with another transaction of
approximately $1.8 million upon consummation of the acquisition of LSL. All of
these non-recurring costs will be recognized in the period the transaction
closes.
Pursuant to the LSL Agreement, stockholders in LSL will receive between
approximately 3,714,285 and 4,588,235 shares of common stock of ATMI (or a newly
created holding company if the pending acquisition of ADCS and related entities
is consummated) in exchange for their shares. The actual number of shares to be
issued to the LSL stockholders depends upon the average closing price of ATMI's
common stock during a 20 day trading period ending three days prior to
stockholder approval of the LSL Agreement and changes in the net book value of
LSL up to the time of closing. The acquisition is intended to be accounted for
as a pooling of interests. The Company intends to continue the business
currently performed by LSL by combining it with its Epitronics division which
provides epitaxial services for gallium arsenide and other advanced materials.
As of June 30, 1997, approximately $1,430,000 of non-recurring transaction
costs have been classified on the balance sheet as other current assets until
the aforementioned transactions close.
Item 2. 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 Technical Group, Inc. ("Vector"), and in conjunction with
the sale of certain Novapure product lines to Millipore Corporation in September
1994, formed ATMI EcoSys Corporation ("EcoSys") by merging the retained
operations of Novapure with those of Vector. In 1995, ATMI acquired the Guardian
product line from Messer Griesheim Industries, Inc. 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. In April 1997 and May 1997, ATMI announced intended
acquisitions of ADCS and LSL. ADCS manufactures and distributes ultra-high
purity semiconductor thin film materials. LSL is an outsourcer of epitaxial
processing of silicon wafers using chemical vapor deposition technology to meet
customer specifications. ATMI intends to combine the operations of ADCS with the
operations of ATMI's NovaMOS division and to combine the operations of LSL with
the operations of ATMI's Epitronics division following shareholder approval of
these transactions, which is anticipated during the third quarter of 1997.
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:
Three Months Six Months
Ended Ended
June 30, June 30,
--- ---
1997 1996 1997 1996
---- ---- ---- ----
Product revenues ............. 83.3% 82.1% 81.2% 79.1%
Contract revenues ............ 16.7 17.9 18.8 20.9
---- ---- ---- ----
Total revenues ......... 100.0 100.0 100.0 100.0
Cost of revenues ............. 48.4 50.5 51.2 51.4
Gross profit ................. 51.6 49.5 48.8 48.6
Operating expenses:
Research and development 15.9 17.7 15.7 18.0
Selling, general
and administrative . 25.5 27.0 23.7 26.4
---- ---- ---- ----
Total operating expenses ..... 41.4 44.7 39.4 44.4
Operating income ............. 10.2 4.8 9.4 4.2
Other income, net ............ 1.3 1.1 1.3 1.3
Income before taxes .......... 11.5 5.9 10.7 5.5
Income taxes ................. 1.7 0.7 1.3 0.5
Net income ................... 9.8% 5.2% 9.4% 5.0%
The following table sets forth revenues, cost of revenues and gross profit
for products and contracts, as a percentage of each category:
Three Months Six Months
Ended Ended
June 30, June 30,
--- ---
1997 1996 1997 1996
---- ---- ---- ----
Products:
Revenues ........ 100.0% 100.0% 100.0% 100.0%
Cost of revenues 41.6 42.9 44.0 42.9
Gross profit ... 58.4% 57.1% 56.0% 57.1%
Contracts:
Revenues ........ 100.0% 100.0% 100.0% 100.0%
Cost of revenues 82.4 85.7 82.4 83.7
Gross profit ... 17.6% 14.3% 17.6% 16.3%
Results of Operations
Three Months Ended June 30, 1997 and 1996.
Revenues. Total revenues increased 10.1% to approximately $13,632,000 in
the three months ended June 30, 1997 from approximately $12,376,000 in the same
three month period in 1996. Product revenues increased 11.7% to approximately
$11,350,000 in the three months ended June 30, 1997 from approximately
$10,164,000 in the comparable period in 1996. The product revenue growth was
primarily attributable to the continued expansion of SDS product sales. Contract
revenues, which are funded solely by United States government agencies,
increased 3.2% to approximately $2,282,000 in the quarter ended June 30, 1997
from approximately $2,212,000 in the same three month period in 1996. The
increase in the 1997 quarter reflects a general increase in government funding
of the Company's research activities.
Gross Profit. Gross profit increased 14.9% to approximately $7,032,000 in
the quarter ended June 30, 1997 from approximately $6,122,000 in the quarter
ended June 30, 1996. As a percentage of revenues, gross margin increased to
51.6% in the three month period in 1997 from 49.5% of revenues in the three
month period in 1996.
Gross profit from product revenues increased 14.2% to approximately
$6,631,000 in the three months ended June 30, 1997 from approximately $5,806,000
in the same three month period a year ago. As a percentage of product revenues,
gross margin increased to 58.4% in the 1997 period from 57.1% in the 1996 period
due principally to higher margin on the product mix within the EcoSys product
lines.
Gross profit on contract revenues increased 26.9% to approximately $401,000
in the quarter ended June 30, 1997 from approximately $316,000 in the same
quarter a year ago. As a percentage of contract revenues, gross margin increased
to 17.6% in the first quarter of 1997 from 14.3% in the first quarter of 1996.
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 margin
variability.
Research and Development Expenses. Research and development expenses
decreased 0.5% to approximately $2,174,000 in the first three months of 1997
from approximately $2,185,000 in the first three months of 1996. This slight
decrease was attributable to the corresponding increase in government contract
revenues for the quarter which funded a slightly larger portion of the Company's
research expenses. As a percentage of revenues, research and development
expenses decreased to 15.9% in the 1997 quarter from 17.7% in the 1996 quarter.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 3.8% to approximately $3,470,000 in the three
months ended March 31, 1997 from approximately $3,344,000 in the same three
month period in 1996. The increase in the 1997 quarter was primarily due to
increased administrative costs related to an increase in headcount, including
expenses related to the ISO 9000 certification process underway at the Company.
As a percentage of revenues, these expenses decreased to 25.5% in the three
month period in 1997 from 27.0% in the comparable period in 1996.
Other Income, Net. Other income increased 35.1% to approximately $177,000
in the quarter ended June 30, 1997 from approximately $131,000 in the quarter
ended June 30, 1996. The increase in the 1997 quarter related to a decrease in
interest expense as a result of decreases in outstanding debt balances.
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 1997 and 1996 related
to alternative minimum taxes arising from the use of net operating loss
carryforwards. Income tax expense in the quarter ended June 30, 1997 was
$226,000 up from $84,000 in the same quarter a year ago. The Company's loss
carryforwards have been substantially utilized at June 30, 1997, causing
effective tax rates to increase. The Company expects the tax rates to approach
approximately 40% by the end of the current year.
Earnings per Share. Earnings per share improved to $.14 for the first
quarter of 1997 compared with a $.07 earnings per share in the first quarter of
1996. Earnings per share in the 1997 period reflects the 2.2% increase in
weighted average shares outstanding from approximately 9,413,000 in the first
quarter of 1996 to approximately 9,618,000 in the first quarter of 1997, a
result of exercised stock options under the Company's existing stock plans and
the dilutive effect of a higher stock price when calculating common stock
equivalents.
Six Months Ended June 30, 1997 and 1996.
Revenues. Total revenues increased 16.3% to approximately $26,098,000 in
the six months ended June 30, 1997 from approximately $22,438,000 in the same
six month period in 1996. Product revenues increased 19.5% to approximately
$21,197,000 in the six months ended June 30, 1997 from approximately $17,744,000
in the comparable period in 1996. The product revenue growth was primarily
attributable to the continued expansion of SDS product sales and higher sales
levels at EcoSys. Contract revenues, which are funded by United State government
agencies, increased 4.4% to approximately $4,901,000 in the six months ended
June 30, 1997 from approximately $4,695,000 in the same six month period in
1996. The increase in the six months ended June 30, 1997 reflected a general
increase in government funding of the Company's research activities.
Gross Profit. Gross profit increased 16.8% to approximately $12,729,000 in
the six months ended June 30, 1997 from approximately $10,902,000 in the six
months ended June 30, 1996. As a percentage of revenues, gross margin increased
to 48.8% in the six month period in 1997 from 48.6% of revenues in the six month
period in 1996.
Gross profit from product revenues increased 17.1% to approximately
$11,868,000 in the six months ended June 30, 1997 from approximately $10,136,000
in the same six month period a year ago. As a percentage of product revenues,
gross margin decreased to 56.0% in the 1997 period from 57.1% in the 1996 period
due principally to product mix variability within the EcoSys product lines
offset by manufacturing margins on SDS product sales which are at a level that
is higher than the average ATMI product margin. Prior to November 1996, revenues
for the SDS product line consisted of royalty payments.
Gross profit on contract revenues increased 12.5% to approximately $862,000
in the six months ended June 30, 1997 from approximately $766,000 in the same
quarter a year ago. As a percentage of contract revenues, gross margin increased
to 17.6% in the first quarter of 1997 from 16.3% in the first quarter of 1996.
Research and Development Expenses. Research and development expenses
increased 1.6% to approximately $4,112,000 in the first six months of 1997 from
approximately $4,048,000 in the first six months of 1996. Increased development
efforts surrounding the Company's ferroelectric thin film technology and related
applications was the primary cause for the increase, offsetting reduced spending
related to other technology development efforts. As a percentage of revenues,
research and development expenses decreased to 15.7% in the first half of 1997
from 18.0% in the first half of 1996.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 4.5% to approximately $6,189,000 in the six
months ended June 30, 1997 from approximately $5,920,000 in the same period in
1996. The increase in the 1997 period was primarily due to increased corporate
administrative costs, increased product shipments and increased product
marketing activity. As a percentage of revenues, these expenses decreased to
23.7% in the first half of 1997 from 26.4% in the comparable period in 1996.
Other Income, Net. Other income increased 22.0% to approximately $350,000
for the six months ended June 30, 1997 from approximately $287,000 in for the
six months ended June 30, 1996. The increase in the first six months of 1997
related to a decrease in interest expense as a result of decreases in
outstanding debt balances.
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 1997 and 1996 related
to alternative minimum taxes arising from the use of net operating loss
carryforwards. Income tax expense for the six months ended June 30, 1997 was
$332,000, up from $112,000 in the same six months a year ago. The Company's loss
carryforwards have been substantially utilized, causing effective tax rates to
increase. The Company currently estimates its tax rates to approximate 40% by
the end of the current year.
Earnings per Share. Earnings per share improved to $.26 for the six months
ended June 30, 1997 compared with a $.12 earnings per share for the six months
ended June 30, 1996. Earnings per share in the 1997 period reflects the 2.3%
increase in weighted average shares outstanding from approximately 9,364,000 in
the first six months of 1996 to approximately 9,584,000 in the first six months
of 1997, a result of exercised stock options under the Company's existing stock
plans and the dilutive effect of a higher stock price when calculating common
stock equivalents.
Liquidity and Capital Resources
Net cash used by operations was approximately $662,000 during the six
months ended June 30, 1997 compared to $2,029,000 provided during the same six
month period of 1997, despite generating approximately $1,336,000 more of net
income in the six month period ended June 30, 1997 than the preceding year's six
month period ended June 30, 1996. Working capital fluctuations in the first
quarter of 1997 resulted in a significant use of cash, primarily increases in
accounts receivable, and other assets which were partially offset by increases
in accounts payable and accrued expenses. The Company has used a significant
amount of cash for transaction costs associated with the pending mergers noted
above. These costs will be expensed in the period in which the transactions
close.
The Company utilized approximately $2,362,000 in cash in investing
activities compared to a generation of approximately $2,299,000 in cash in the
same quarter a year ago. During the first six months of 1997, cash was used for
the purchase of approximately $2,200,000 in capital equipment, primarily related
to installation of SDS manufacturing capacity in Danbury and epitaxial capacity
at Epitronics' Phoenix facility. In the previous year's first six months, the
Company incurred approximately $2,500,000 in capital expenditures and sold a net
amount of approximately $4,800,000 in marketable securities.
The Company utilized approximately $75,000 from financing activities during
the first six months of 1997 compared to a utilization of cash of approximately
$3,606,000 in the first six months of 1996. The first six months of 1996
included a $4 million debt payment related to the Company's acquisition of its
Guardian line of environmental equipment.
ATMI believes its existing cash balances and marketable securities,
together with existing sources of liquidity and anticipated funds from
operations, will satisfy its projected working capital and other cash
requirements through at least the end of 1998. However, ATMI believes the level
of financing resources available to it is an important competitive factor in its
industry and may seek additional capital prior to the end of that period.
Additionally, ATMI considers, on a continuing basis, potential acquisitions of
technologies and businesses complementary to its current business which may
require additional cash.
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 expressing confidence about 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 3. Quantitative and Qualitative Disclosures about Market Risk
Not Applicable
PART II- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits.
Exhibit
No. Description
2.01 Agreement and Plan of Merger and Exchange
(the Reorganization)
2.02(a) Agreement and Plan of Merger
(the Lawrence Acquisition)
2.02(b) Agreement and Plan of Merger, first amendment dated June 6, 1997
(the Lawrence Acquisition)
2.02(c) Agreement and Plan of Merger, second amendment dated July 30, 1997
(the Lawrence Acquisition)
11.01 Statement re: computation of per share earnings
(Filed herewith)
27.01 Financial Data Schedule
All schedules and exhibits to the Agreements and Plans of Mergers listed
will be filed upon request.
b. Reports on Form 8-K.
On April 21, 1997, the Company filed a Current Report on Form 8-K dated
April 7, 1997 reporting in Item 5 thereof the execution of the ADCS Agreement to
acquire all of the issued and outstanding equity interests in ADCS. The ADCS
Agreement is subject to shareholder approval and other customary conditions.
SIGNATURES
Pursuant to the requirements 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.
August 12, 1997
By /S/ Eugene G. Banucci
- ------------------------
Eugene G. Banucci, Ph.D., President, Chief Executive
Officer, Chairman of the Board and Director
By /S/ Daniel P. Sharkey
- ------------------------
Daniel P. Sharkey, Vice President, Chief Financial
Officer and Treasurer (Chief Accounting Officer)
EXHIBIT INDEX
Sequentially
Numbered
Exhibit No. Description
2.01 Agreement and Plan of Merger and Exchange (the Reorganization)
2.02(a) Agreement and Plan of Merger (the Lawrence Acquisition)
2.02(b) Agreement and Plan of Merger, first amendment dated June 6, 1997
2.02(c) Agreement and Plan of Merger, second amendment dated July 30, 1997
11.01 Statement re: computation of per share earnings
Financial Data Schedule
All schedules and exhibits to the Agreements and Plans of Mergers listed
will be filed upon request.